Decision No. 360-R-2014

INTRODUCTION

[1] On May 26, 2014, the Canadian Canola Growers Association (CCGA) filed a complaint with the Canadian Transportation Agency (Agency). CCGA submits that the Canadian National Railway Company (CN) and the Canadian Pacific Railway Company (CP) have failed to meet their level of service obligations in relation to the receiving, carrying and delivering of cereal, pulse and oilseed crops from elevators in western Canada to port terminals and other North American destinations.

[2] CCGA is a not-for-profit corporation comprised of five provincial associations representing canola growers. In a submission dated June 23, 2014, CCGA confirmed that it is the sole applicant in these proceedings and that the five member associations are not parties to the application.

[3] On July 4, 2014 both respondents filed motions to dismiss the complaint on, among other things, the grounds that the applicant does not present a justiciable case. The Agency determined that it was in the interests of natural justice that a decision be rendered first on those motions.

[4] The respondents seek to have the application struck in its entirety. Their motions to dismiss have been filed pursuant to sections 22 and 32 of the Canadian Transportation Agency General Rules, SOR/2005-35.

[5] CN raised the following:

1. CCGA does not have standing to file the complaint under section 116 of the CTA;
2. The complaint does not disclose a justiciable complaint;
3. The complaint is moot; and,
4. The complaint, on its face, does not disclose a failure by CN to meet its statutory service level obligations.

[6] CP raised the following:

1. CCGA has no standing;
2. The Agency has no jurisdiction to hear the matter raised by the CCGA;
3. The complaint cannot be adjudicated; and,
4. The complaint is an abuse of process.

Issue

[7] Should the respondents’ motions be allowed?

Conclusion

[8] The Agency finds that CCGA’s complaint does not disclose a reasonable cause of action and that this is a sufficient reason to dismiss the complaint. Accordingly, for the following reasons, the Agency allows the motions, in part, and dismisses the application.

POSITIONS OF THE PARTIES

CN

[9] CN submits that there is no substance to CCGA’s complaint. CN states that CCGA’s complaint is of unmanageable breadth and devoid of any detail, concrete circumstances or facts that would permit the Agency to investigate and test CN’s performance against its service level obligations and subsequently render a determination of the complaint. CN further states that a complaint under section 116 of the Canada Transportation Act (CTA) requires the Agency to test the railway company’s performance against its statutory service obligations and whether those services are reasonable in the circumstances. CN claims that a real complaint involving concrete circumstances is necessarily required to determine whether CN’s statutory level of service requirements have been respected.

[10] According to CN, CCGA fails to present the Agency with even one concrete instance when CN is alleged to have breached its obligations to provide adequate and suitable accommodation for the traffic in respect of an identifiable shipper and over an identifiable transportation corridor. CN contends that the mere fact of unfilled car orders, devoid of any context, cannot logically or legally establish a breach of CN’s level of service obligations.

[11] CN also states that CCGA refers to “publically available documents” without placing them on the record before the Agency, which places the burden of searching out this information on CN and the Agency instead of the applicant.

[12] CN argues that the Agency must dispose of complaints on the basis of the evidentiary record provided to it and the Agency cannot convert a complaint into a monitoring and evidence gathering process. CN refers to the findings in Canadian National Railway Co. v. Paterson Grain, 2010 FCA 225 (Paterson Grain), paragraphs 33 to 35. CN argues that those paragraphs indicate that when the evidence is insufficient to allow the Agency to make a determination as to the question of whether a railway company has breached its level of service obligations, the Agency has no option but to dismiss the complaint. According to CN, that is the situation in the present case.

[13] CN submits that CCGA has made no distinction between CN and CP. CN states that in order to properly discharge its role, the Agency must be able to separately inquire whether each company has respected its statutory service obligations.

CP

[14] CP submits that CCGA’s complaint is broad and ill-defined and that the complaint does not allege a failure to meet service obligations in the context of any specific circumstances, shippers or movements.

[15] CP states that CCGA provides no evidence that the matters raised are attributable to any failure by CP to meet its common carrier obligations. CP argues that the complaint can neither be responded to nor determined.

[16] CP asserts that the Agency’s jurisdiction under sections 113 to 116 of the CTA does not extend beyond investigations and orders particular to the complainant. CP contends that the level of service regime cannot be used to find the system-wide breach and then grant relief sought by a sole complainant as in this case. CP argues that it is not appropriate for the Agency to entertain a level of service complaint that would amount to an inquiry into the entire operations of the grain handling transportation system.

[17] CP argues that the standard imposed upon the railway companies by sections 113 to 116 of the CTA is reasonableness in the circumstances as outlined in Supreme Court of Canada (SCC) level of service decision of A. L. Patchett & Sons Ltd. v. Pacific Great Eastern Railway Company, [1959] S.C.R. 271 where the court explained that the determination of a service complaint requires the balancing of interests of the railway company with those of the complainant in the context of the particular facts of the case.

[18] CP maintains that in the present case, the Agency cannot consider a request for a declaration of a breach on behalf of 43,000 non parties under section 116 of the CTA. There would be a myriad of permutations and levels of the common carrier obligations owed to shippers relevant to such a broad class, each determinable on an individual basis. Many of those interests could conflict with one another.

[19] CP states that any consideration of the railway companies’ common carrier obligations must be contextual but, in this case, CCGA’s complaint is predicated entirely on decontextualized observations and assumptions with no tangible evidence whatsoever that the alleged backlog is attributable to any failure by the railway companies to meet their common carrier obligations. CP contends that the complaint is so general as to effectively shift the burden of proof to CP.

[20] CP also refers to Paterson Grain, which stated that:

[…] The plain fact is that the evidence before the Agency was not sufficient for it to provide the respondents with the remedy which they sought. Hence, in those circumstances, the only possible conclusion was the dismissal of the complaints.

[21] CP maintains that the same limitations apply in the present circumstances.

CCGA

[22] CCGA argues that the issuance of a finding relating to systemic problems is a legitimate exercise of the Agency’s jurisdiction under section 116 of the CTA and that there is sufficient evidence in the application for the Agency to investigate and determine the complaint. CCGA states that “if there are specific circumstances that CN believes render the service resulting in a failure of this magnitude ‘reasonable’, it is up to CN to lead evidence sufficient to support such a finding.”

[23] Furthermore, CCGA submits that to dismiss the complaint because CCGA is unable to particularize the degree of failure between CN and CP would go against a previous Agency decision. In Decision No. LET-R-171-2006 (Noramerica Inc. v. CN and BNSF Railway Company), the Agency held that dismissing a complaint on account of purported lack of particulars as between the two railway companies would defeat the purpose of the level of service provisions in the CTA. The Agency allowed that complaint to proceed.

[24] CCGA states that it has no obligation to assist CN and CP in building their defence to its complaint. CCGA states that it is not the responsibility of a complainant to search out and analyze information that may assist the respondent in fashioning its response, nor to search out all information that is conceivably relevant to its complaint.

[25] CCGA further submits that the allegation that it is effectively imposing on the Agency the task of searching out information relevant to its complaint or embarking on the kind of monitoring and evidence gathering to which the Federal Court of Appeal referred to in Paterson Grain is incorrect. In that case, the Federal Court of Appeal determined that, after having found that there was insufficient evidence to establish a breach, the Agency had no jurisdiction to continue monitoring or investigating the complaint.

ANALYSIS AND FINDINGS

Test respecting reasonable cause of action

[26] According to the well-known test applicable to a motion to dismiss established by the Supreme Court of Canada, a case will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleadings disclose no reasonable cause of action (R. v. Imperial Tobacco Canada Ltd., [2011] S.C.C. 42 (Imperial Tobacco) Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, at para. 15; Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, at p. 980). The test sets a very high bar. In that respect, the burden is on the party seeking the pleading to be struck.

[27] In Imperial Tobacco, the Supreme Court of Canada reviewed the purpose of this test at paragraphs 19 through 22 as follows:

[19] The power to strike out claims that have no reasonable prospect of success is a valuable housekeeping measure essential to effective and fair litigation. It unclutters the proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial.

[20] This promotes two goods -- efficiency in the conduct of the litigation and correct results. Striking out claims that have no reasonable prospect of success promotes litigation efficiency, reducing time and cost. The litigants can focus on serious claims, without devoting days and sometimes weeks of evidence and argument to claims that are in any event hopeless. The same applies to judges and juries, whose attention is focused where it should be -- on claims that have a reasonable chance of success. The efficiency gained by weeding out unmeritorious claims in turn contributes to better justice. The more the evidence and arguments are trained on the real issues, the more likely it is that the trial process will successfully come to grips with the parties’ respective positions on those issues and the merits of the case.

[21] Valuable as it is, the motion to strike is a tool that must be used with care. The law is not static and unchanging. Actions that yesterday were deemed hopeless may tomorrow succeed. Before Donoghue v. Stevenson, [1932] A.C. 562 (H.L.) introduced a general duty of care to one’s neighbour premised on foreseeability, few would have predicted that, absent a contractual relationship, a bottling company could be held liable for physical injury and emotional trauma resulting from a snail in a bottle of ginger beer. Before Hedley Byrne & Co. v. Heller & Partners Ltd., [1963] 2 All E.R. 575 (H.L.), a tort action for negligent misstatement would have been regarded as incapable of success. The history of our law reveals that often new developments in the law first surface on motions to strike or similar preliminary motions, like the one at issue in Donoghue v. Stevenson. Therefore, on a motion to strike, it is not determinative that the law has not yet recognized the particular claim. The court must rather ask whether, assuming the facts pleaded are true, there is a reasonable prospect that the claim will succeed. The approach must be generous and err on the side of permitting a novel but arguable claim to proceed to trial.

[22] A motion to strike for failure to disclose a reasonable cause of action proceeds on the basis that the facts pleaded are true, unless they are manifestly incapable of being proven: Operation Dismantle Inc. v. The Queen, [1985] 1 S.C.R. 441, at p. 455. No evidence is admissible on such a motion: r. 19(27) of the Supreme Court Rules (now r. 9-5(2) of the Supreme Court Civil Rules). It is incumbent on the claimant to clearly plead the facts upon which it relies in making its claim. A claimant is not entitled to rely on the possibility that new facts may turn up as the case progresses. The claimant may not be in a position to prove the facts pleaded at the time of the motion. It may only hope to be able to prove them. But plead them it must. The facts pleaded are the firm basis upon which the possibility of success of the claim must be evaluated. If they are not pleaded, the exercise cannot be properly conducted.

[28] The Federal Court of Appeal in Painblanc v. Kastner, (1994) 176 N.R. 68, found that a plaintiff who starts proceedings simply in the hope that something will turn up (fishing expedition) can be struck. The jurisprudence clearly states that the first step in determining whether a cause of action exists requires having regard to the particulars of the application to ascertain whether there are material facts in support of the allegations. It is the allegations of fact that must be examined, not the conclusions of law. Chavali v. Canada, 2001 FCT 268 (CanLII), 2001 FCT 268 at para 21, 202 FTR 166, aff’d Chavali v Canada, 2002 FCA 209 (CanLII).

[29] It is a very basic rule that where a claim is exceedingly general and lacks specifics it prevents a respondent from providing a proper response, thus making it impossible for the decision maker to adjudicate the issue. In this case, this means that CCGA, at the outset, must state in its application the material facts necessary for CN and CP to be able to formulate a reasonable cause of action. In other words, CCGA must present a case for CN and CP to answer.

[30] CCGA’s application must therefore have the following characteristics:

1. Its pleading must state facts, not merely conclusions; and
2. Its pleading must include material facts to which CN and CP can respond and not bare allegations. A material fact could be described as “one that is essential in order to formulate a complete cause of action” (Delaney & Friends Cartoon Productions Ltd. v. Radical Entertainment Inc. et al [2005] B.C.J. No. 573, 2005 BCSC 371, at para. 9).

[31] This basic principle, if not met, may result in the dismissal of the complaint.

[32] CCGA’s application contends that CN and CP did not fulfill their common carrier statutory obligations for the movement of Western Canadian grains and oilseeds this crop year.

[33] The task at this stage is to consider whether CCGA put forward allegations and facts supporting its position that the respondents have breached their level of service obligations and has disclosed a reasonable cause of action.

Do the pleadings disclose a reasonable cause of action?

The law

[34] Sections 113 to 115 of the CTA set out the statutory obligations of federally-regulated railway companies and include the services that a railway company must provide to shippers to accommodate the traffic. Section 113 of the CTA deals with level of service obligations under which a railway company shall provide, according to its powers, adequate and suitable accommodation for the receiving, loading, carrying, unloading and delivering of all traffic offered for carriage on its railway. More specifically, paragraph 113(1)(c) of the CTA provides that a railway company shall without delay and with due care and diligence receive, carry and deliver the traffic.

[35] Section 116 of the CTA requires the Agency to investigate a complaint with respect to the level of service offered and if the Agency determines that a railway company is not fulfilling its level of service obligations it has remedial powers which are set out under subsection 116(4) of the CTA. If a railway company is found not to have fulfilled its level of service obligations, the Agency may order remedies that are relevant to the nature of the breach that has been identified.

[36] At paragraph 38 of its application, CCGA describes the respondents’ alleged failure as follows:

1. By failing to provide suitable and adequate accommodation for the carriage of grain in the current crop year;
2. By failing to receive, carry and deliver grain without delay and with due care and diligence;
3. By failing to furnish and use all proper appliances, accommodation and means necessary for receiving, loading and carrying grain; and
4. By failing to move grain in an expeditious, timely and efficient manner.

[37] CCGA formulates its causes of action as follows:

• Beginning in September 2013, the number of railcars supplied by each of CN and CP to grain shippers began to fall short of what was required to accommodate the grain traffic being offered for carriage on their respective rail networks. By the end of November 2013, there were in excess of 20,000 “open” car orders, placed in the current crop year, that remained unfilled and that the railways had no plan to fulfil. Both carriers accordingly entered the winter months with a substantial backlog of demand for rail service from the grain industry;

• As of February 18, 2014, the railway companies, including CN, were approximately 51,000 cars behind on outstanding orders. As of April 1, 2014, that number was 65,000 cars. CCGA estimates that this backlog represents approximately 5.9 million tonnes of grain that could have been shipped and for which railcars have not been supplied by CN and CP;

• Dwell times for loaded railcars at elevators also increased, sometimes reaching as high as 20 days. Such delay creates logistical issues for the elevator in that it has to work around loaded cars when additional empty cars arrive on site.

[38] However, CCGA makes no distinction between CN and CP.

[39] When asked by CN to identify how specifically CN has failed to fulfill its service obligations CCGA responded that CN has failed to fulfill its statutory obligations by:

1. Failing to provide suitable and adequate accommodation for the carriage of grain in the current crop year;
2. Failing to receive, carry and deliver grain without delay and with due care and diligence;
3. Failing to furnish and use all proper appliances, accommodations and means necessary for receiving, loading and carrying Grand; and
4. Failing to move grain in an expeditious, timely and efficient manner.

[40] The jurisprudence dictates that the applicant bears the burden of enunciating in the pleadings the facts upon which they rely for each cause of action alleged. In other words, the applicant’s legal conclusion that the respondents failed to meet their statutory obligations must be supported by the necessary factual basis. The allegation must be more than bare allegations of wrongdoing.

[41] There is a distinction between pleadings of fact and pleadings of legal conclusion. This distinction is explained by Justice Conrad, speaking for the majority of the Alberta Court of Appeal in Tottrup v. Alberta (Minister of Environmental Protection), 2000 ABCA 121, at paragraph 11:

[…] it is not the allegation of a duty at law that is critical, but the facts alleged supporting such a duty. For example, a statement of claim alleging only that “A” breached a duty owed to “B” thereby causing damage does not, in my view, disclose a cause of action. Pleadings are allegations of fact and, in my view, where negligence is alleged, that allegation must be supported by facts capable of sustaining a determination that a duty was owed, that an act or omission occurred breaching that duty, and that damages resulted. On a motion to strike it is the allegations of fact that must be examined to determine whether a cause of action exists.

[42] The Agency is of the opinion that CCGA’s application presents no material facts or evidence as to which car orders were not filled, or when or why the car orders were not filled or how CN’s or CP’s level of service obligations have been breached with respect to these car orders.

[43] Furthermore, CCGA did not submit any material facts or evidence setting out whether all of the car orders were requested from CN or CP or some other railway company providing service. CCGA does not submit material facts or evidence relating to dwell times or its actual cause. CCGA lacks material facts to support its claim that the performance of CN and CP has been sub‑optimal, creating problems for terminal, producers and grain companies.

[44] Mere statements to the effect that: (1) upwards of 65,000 open car orders have not been filled; (2) dwell times for loaded railcars at elevators increased to sometimes as high as 20 days; and (3) CN’s and CP’s performance has been sub-optimal, thus creating problems for terminals, producers and grain companies are not sufficient to establish a prima facie case. There has to be some link between the allegations and the material facts. CCGA provides no details about any of the events that comprise the allegations listed. The language it uses is vague and general.

[45] Furthermore, the Agency notes and agrees with CP’s statement that CCGA’s complaint provides no specific information connecting the matters raised to any failure by CP to meet its common carrier obligations. The Agency finds that the allegations are no more specific with respect to CN. As a result, the Agency finds that the complaint can neither be responded to by CP or CN nor determined by the Agency.

[46] CCGA states that the Agency cannot dismiss a complaint because the complainant is unable to particularize the degree of failure as stated in Decision No. LET-R-171-2006. In this regard, the Agency notes that, unlike the present case, the Normerica case concerned particular movements under one bill of lading for CN/BNSF and included distinct incidents of a perceived breach.

[47] As such, the Agency is of the opinion that CN and CP cannot adequately respond to the allegations in CCGA’s complaint because they are too vague.

[48] Furthermore, the Agency is of the opinion that CCGA fails to link the allegations in its complaint to specific railway company breaches in their level of service obligations, which constitute necessary material facts. It is not sufficient for a party to simply state its conviction that there has been a violation of sections 113 to 116 of the CTA. Allegations must be set out with supporting facts.

[49] The Agency finds that CCGA’s complaint discloses no reasonable cause of action. The Agency therefore dismisses CCGA’s complaint on the basis that CCGA has not presented a case that can be adjudicated.

[50] In light of the foregoing, the Agency finds that it is not necessary to address the other grounds raised in the respondents’ motions to dismiss.

CONCLUSION

[51] The Agency allows the motions, in part, and dismisses CCGA’s complaint.