Letter Decision No. LET-R-248-2004

[1] This is further to Wabush Mines Inc.'s (Wabush) requests for interim relief filed as part of its complaint for level of service of July 30, 2004 against Quebec North Shore and Labrador Railway Company Inc. (QNSL) in which Wabush is seeking:

1. an interim order requiring QNSL to continue to haul its traffic from Wabush Lake Junction to Ross Bay Junction at the rate of XXXXX per tonne currently charged by QNSL or any other rate the Canadian Transportation Agency (Agency) determines to be fair and reasonable, and
2. an interim order prohibiting QNSL from imposing the new proposed scheduled service between Ross Bay Junction and Arnaud Junction and requiring QNSL to continue to haul its traffic when tendered (i.e., on a non-scheduled basis) at the rate currently charged by QNSL or any other such rate that the Agency determines is fair and reasonable.

[2] This is also in respect to QNSL's motion of August 10, 2004, in which QNSL requests that the Agency dismiss the portion of Wabush's complaint relating to the service offered by QNSL between Ross Bay Junction and Arnaud Junction. In addition, should the Agency refuse to issue the interim orders sought by Wabush, QNSL applied to the Agency for an order to adjourn all proceedings with respect to Wabush's complaint until such time as the Agency considers reasonable after the arbitrator has issued its decision in the final offer arbitration (FOA) process involving the parties.

Background

[3] On July 30, 2004, Wabush filed a level of service complaint against QNSL requesting the Agency to issue:

1. an order requiring QNSL to issue a tariff as required by section 118 of the Canada Transportation Act (CTA) for the movement of its traffic between Wabush Lake Junction and Ross Bay Junction;
2. an order under subsection 116(4) of the CTA requiring QNSL to continue to haul its traffic from Wabush Lake Junction to Ross Bay Junction, and;
3. an order under subsection 116(4) of the CTA prohibiting QNSL from imposing a new scheduled service and requiring QNSL to continue to provide Wabush with the service it has always provided between Ross Bay Junction and Arnaud Junction.

[4] In addition and because the proposed implementation of the new scheduled service and/or the withdrawal of service from Wabush Lake Junction was to take effect on August 1, 2004, Wabush also requested that the Agency issue interim orders on an urgent basis by August 9, 2004. This deadline has now been extended until September 8, 2004 as Wabush is facing a labour dispute at its Scully Mines and, therefore, does not anticipate being able to tender any traffic to QNSL before such a date.

[5] Upon receipt of Wabush's complaint, QNSL vigorously objected to Wabush's allegation of breach of service and Wabush's request for interim relief. As part of its answer to the interim relief sought by Wabush, QNSL filed a motion requesting that the Agency dismiss the portion of Wabush's complaint relating to the service offered by QNSL between Ross Bay Junction and Arnaud Junction. QNSL submits that the Agency has no jurisdiction over this portion of Wabush's complaint as the question raised by Wabush, the scheduled service offered or proposed to be offered by QNSL between the above two points, is also before an arbitrator appointed by the Agency under Part IV of the CTA, Final Offer Arbitration. In addition to its request to dismiss, QNSL filed an application requesting the Agency to adjourn all the proceedings surrounding Wabush's complaint at least until such time as the arbitrator issues its decision on the final offer between Ross Bay Junction and Arnaud Junction.

[6] Following receipt of Wabush's complaint and requests for interim relief and QNSL's motion to dismiss and its application to adjourn, the Agency initiated pleadings. The pleadings were completed on August 19, 2004. Although the time lines established by the Agency and/or agreed to by the parties for the filing of their respective submissions were brief, both parties filed extensive and comprehensive submissions with the Agency.

[7] While the Agency will not set out these submissions in detail, the quality of the submission received greatly facilitated the Agency's understanding and examination of the issues raised by Wabush's request for interim orders and QNSL's motion to dismiss and its application to adjourn.

Motion to dismiss Wabush's complaint between Ross Bay Junction and Arnaud Junction

[8] As mentioned above, Wabush, in its level of service complaint filed on July 30, 2004, requested in part that the Agency issue an order under subsection 116(4) of the CTA prohibiting QNSL from imposing a new scheduled service and requiring QNSL to continue to provide Wabush with the non-scheduled service it has always provided between Ross Bay Junction and Arnaud Junction.

[9] The core of QNSL's motion to dismiss this portion of Wabush's complaint is based on the fact that on April 30, 2004, Wabush submitted the matters of the rates charged or proposed to be charged by QNSL for the movement of its iron ore traffic between Ross Bay Junction and Arnaud Junction as well as the conditions associated with the movement of such traffic to FOA. One of the conditions of carriage included in Wabush's FOA submission is the matter of scheduled service offered or proposed to be offered by QNSL between Ross Bay Junction and Arnaud Junction.

[10] It is clear in this case that Wabush's application for FOA filed on April 30, 2004 and the portion of Wabush's level of service complaint filed on July 30, 2004 dealing with the movement of iron ore between Ross Bay Junction and Arnaud Junction raise similar issues. That is, both the FOA proceedings and the above identified portion of the level of service complaint involve and are related to the issues of rates and scheduled service charged or offered or proposed to be charged or offered by QNSL between Ross Bay Junction and Arnaud Junction.

[11] QNSL's position is that as the issues of the rates and scheduled service charged and offered or proposed to be charged and offered by QNSL between Ross Bay Junction and Arnaud Junction are subject to FOA, the Agency has no power to make the requested level of service determination or to issue the order or interim order requested by Wabush with respect to the rate and service between Ross Bay Junction and Arnaud Junction. Simply put, QNSL maintained that once a matter has been referred to FOA, the Agency automatically loses jurisdiction over the entire matter.

[12] The Agency disagrees with QNSL's position. The FOA process put in place by Parliament in Part IV of the CTA is only one of the regulatory means by which shippers and carriers are able to resolve their rate and service disputes. The CTA provides for a myriad of provisions designed to assist shippers and carriers negotiating and resolving their rates and service problems such as level of service (113 to 116), tariffs (117 to 120), joint rates (121 to 125), confidential contracts (126), interswitching (127 to 128) competitive line rates (129 to 137) and FOA (159 to 169).

[13] Where Parliament intended to limit or restrict the jurisdiction of the Agency over a provision of its enabling statute and/or to limit or restrict the access to one remedy as a consequence to the existence or the use of another remedy, it stated so explicitly in the CTA. As examples, subsections 126(2) and 132(2) of the CTA respectively provide that no party to a confidential contract or benefiting from a competitive line rate established by the Agency is entitled to submit a matter governed by the contract or the competitive line rate to the Agency for final offer arbitration under section 161. Therefore, if it was demonstrated upon application by a railway company pursuant to subsection 162(1) of the CTA that a matter included in a shipper's submission for FOA was covered by an existing valid confidential contract (and that the railway company has not agreed to the matter being referred to FOA) or a competitive line rate established by the Agency, the Agency, by virtue of subsections 126(2) and 132(2) of the CTA, would have to either not refer the matter to arbitration pursuant to subsection 162(1) of the CTA or, if the matter had already been referred to FOA, would have to discontinue the FOA and/or have such a matter withdrawn from the FOA pursuant to section 162.1 of the CTA. Similarly, subsection 116(2) of the CTA provides that if a railway company and a shipper agree, by means of a confidential contract, on the manner in which service obligations under section 113 of the CTA are to be fulfilled by the company, the terms of that agreement are binding on the Agency in making its determination. Therefore, upon application by a shipper that a railway company has breached its level of service obligations as provided for in section 113 of the CTA, the Agency's authority to determine what is a reasonable and adequate level of service would clearly be restricted by the terms and conditions of the existing and valid confidential contract entered into between the parties.

[14] In the present case however, there is nothing in the CTA that suggests that once a matter has been referred to FOA, the Agency is automatically stripped of its jurisdiction over the entire matter and, therefore, of its authority to examine a level of service application filed in respect of such a matter. To rule otherwise would be tantamount to depriving the level of service remedy of its inherent nature. That is, to ensure that railway companies, at all times and on an ongoing basis, fulfill their minimum reasonable service requirements. If the Agency were to accept that the remedy of level of service is unavailable to shippers simply because a matter has been referred to FOA or is governed by an arbitrator's decision, it would create situations where shippers would have no recourse against railway companies in terms of railway service.

[15] As an example, a shipper would be at the complete mercy of a railway company in terms of railway service pending the resolution of the matter submitted to FOA. While the Agency acknowledges that paragraph 165(6)(a) of the CTA provides that the decision of the arbitrator is applicable to the parties as of the date on which the submission for arbitration was received by the Agency, this provision does little in protecting shippers in the interim period should a railway company jeopardize the operations of a shipper through the suspension or reduction of railway service or the imposition of exorbitant freight rates. As a further example, a shipper would also have no recourse against a railway company in terms of railway service in respect of all the matters submitted to FOA that are governed by an arbitrator's decision.

[16] The Agency therefore finds that the referral of a matter to FOA does not automatically deprive the Agency of its authority to hear a level of service application involving a similar matter. However, while the Agency does not automatically lose jurisdiction over such matters, it must nevertheless, in exercising its own jurisdiction, be mindful of paragraph 165(6)(a) of the CTA, which provides in part that the decision of the arbitrator on a final offer arbitration is final, binding on and applicable to the parties.

[17] In that context, any jurisdiction the Agency may have in respect of a level of service complaint brought in respect of a matter that has been referred to arbitration and/or is governed by an arbitrator's decision must only be complementary to the FOA process and take into account the fact that the arbitrator's decision on such a matter will be or is binding on the parties. The Agency therefore agrees with QNSL that the level of service provisions under the CTA should not be construed as a right of appeal from an arbitrator's decision on a specific matter.

[18] Being complementary to the FOA remedy, the Agency's jurisdiction to hear a level of service application filed in respect of a matter that has been referred to FOA and/or is governed by an arbitrator's decision should therefore be restricted to determining whether a carrier is abiding by the decision of the arbitrator if the complaint relates to a service matter that has been decided by an arbitrator or, if the complaint relates to a service matter that has yet to be decided by an arbitrator, to ensure that the service offered or proposed to be offered by a railway company pending the date of the decision of the arbitrator is reasonable and does not jeopardize the operations of a shipper.

[19] In the present case, the remedy sought by Wabush between Ross Bay Junction and Arnaud Junction appears to go beyond the scope described above. That is, Wabush is seeking an order from the Agency under subsection 116(4) of the CTA prohibiting QNSL from imposing a new scheduled service and requiring QNSL to continue to provide the service it has always provided to Wabush between Ross Bay Junction and Arnaud Junction without any temporal limitation. While Wabush, in a further submission filed with respect to QNSL's reply on the motion to dismiss and the application to adjourn, clarified that it is only seeking relief for the interim period between the date of the application for FOA and the date of the decision of the arbitrator, the Agency finds that the wording of its original application goes beyond this restricted scope.

[20] Therefore and inasmuch as Wabush's application between Ross Bay Junction and Arnaud Junction is seeking a remedy that will have an effect beyond the date of the arbitrator's decision, the Agency, in order to avoid the possibility of contradictory decisions, should uphold QNSL's motion to dismiss. However and as the Agency does have a complementary jurisdiction under the level of service provisions to ensure that the service offered or proposed to be offered by a railway company until the decision of the arbitrator is reasonable and does not jeopardize the operations of a shipper, the Agency finds that QNSL's motion to dismiss should only be granted in part. That is, the Agency, pursuant to subsection 27(1) of the CTA, finds that it shall remain seized of the matter of the level of service offered or proposed to be offered by QNSL between Ross Bay Junction and Arnaud Junction pending the date of the decision of the arbitrator. In the context of this narrowed level of service complaint between Ross Bay Junction and Arnaud Junction, an examination of Wabush's request for interim relief between these two points pending at least the decision of the arbitrator fits well within the above-noted complementary jurisdiction of the Agency.

[21] The Agency notes that QNSL argued that section 27 of the CTA could not be applied in the present case because of subsection 27(5) of the CTA. Subsection 27(5) of the CTA provides that section 27 does not apply in respect of FOA. The purpose of subsection 27(5) of the CTA is to relieve a shipper from the obligation to demonstrate that it will suffer substantial commercial harm under subsection 27(2) in cases where it makes a submission for FOA. In the present case, however, Wabush's complaint or portion thereof that QNSL wants to have dismissed is not an application for FOA but, rather, a level of service complaint. Accordingly, subsection 27(5) of the CTA does not apply to the present case.

Interim Relief

[22] The authority of the Agency to issue interim relief is provided for in subsection 28(2) of the CTA:

The Agency may, instead of making an order final in the first instance, make an interim order and reserve further directions either for an adjourned hearing of the matter or for further application.

[23] In Decision No. LET-AT-R-356-2001, the Agency confirmed that the three-part test applicable to applications for interlocutory injunctions as well as for stays applies to an application for an interim order under subsection 28(2) of the CTA.

[24] This three-part test has been adopted and applied in Canada by the Supreme Court in Manitoba (Attorney General) v. Metropolitain Stores (MTS) Ltd., [1987] 1 R.C.S. 110 and RJR MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 312.

[25] The Agency, in Decision No. LET-AT-R-356-2001 summarized the three-part test as follows:

The onus to show that an interim order should be granted rests on the applicant. Briefly stated, at the first stage, the applicant must demonstrate that there is a serious question to be tried. At the second stage, the applicant is required to demonstrate that irreparable harm will result if the relief is not granted. The third part of the test requires an assessment of the balance of inconvenience to the parties; in other words, which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction.

Wabush Lake Junction to Ross Bay Junction

Serious issue to be tried

[26] As stated by the Agency in Decision No. LET-AT-R-356-2001, there are no specific requirements which must be met in order to satisfy this test. A preliminary assessment of the merits of the case is sufficient. The threshold is a low one.

[27] As part of its examination of the serious issue to be tried, the Agency must also have regard to the statutory requirement provided by subsection 27(2) of CTA, which states that where an application is made to the Agency by a shipper in respect of a transportation rate or service, the Agency must be satisfied that the applicant would suffer substantial commercial harm if the relief were not granted.

[28] In its complaint filed on July 30, 2004, Wabush, with respect to the movement of its traffic between Wabush Lake Junction and Ross Bay Junction, requests that the Agency issue an order requiring QNSL to issue a tariff as required by section 118 of the CTA as well as an order under subsection 116(4) of the CTA requiring QNSL to continue to haul its traffic.

[29] Certificate of fitness No. 97016 issued to QNSL on June 30, 1997 indicates that QNSL does operate between Wabush Lake Junction and Ross Bay Junction. Such operation is carried on by virtue of a running rights agreement with Northern Lands Railway Company Limited (Northern Lands Railway).

[30] In Decision Nos. 212-R-2001 and 213-R-2001, both issued on May 3, 2001, the Agency confirmed that where a railway line is operated by two or more railway companies, each operating railway company is subject to the statutory level of service obligations provided for in sections 113 and 114 of the CTA.

[31] One of the statutory service obligations imposed on railway companies is the obligation to receive, carry and deliver the traffic that is tendered by a shipper (113(1)(c) of the CTA). While railway companies are compelled to provide service when requested, subsection 113(2) of the CTA provides that such service only need be provided upon payment of the lawfully payable rate.

[32] Under the CTA, lawful rates for the movement of traffic can either be issued and published pursuant to sections 117 to 120 of the CTA, be agreed upon by the parties in a confidential contract pursuant to section 126, be established or prescribed by the Agency pursuant to sections 116, 128 or 132 of the CTA or be established in a final offer selected by an arbitrator under Part IV of the CTA.

[33] QNSL argues that the common carrier obligations normally attached to the right to operate on a railway line do not apply to QNSL because of the Northern Lands Railway Agreement entered into between the Carol Lake Railway Company Limited and the Wabush Lake Railway Company (Wabush Railway) in 1980. QNSL also argues that the obligation to quote a tariff under section 118 of the CTA does not apply to QNSL as it is not the owner of the railway line.

[34] While these arguments are relied on by QNSL in its defence against Wabush's level of service complaint between Wabush Lake Junction and Ross Bay Junction, these arguments do not render the issues raised in Wabush's application non-serious. To the contrary, the Agency finds that QNSL's refusal to provide service to Wabush and/or to quote a rate for the movement of Wabush's traffic between Wabush Lake Junction and Ross Bay Junction, even though QNSL clearly operates the line of railway between these two points, more than meets the low threshold of a serious question to be tried.

[35] With respect to the question of the substantial commercial harm Wabush may suffer if the relief sought were not ultimately granted, the Agency notes that the alleged harm can only be speculative as no traffic has yet to be tendered to QNSL at Wabush Lake Junction because of the labour dispute at Wabush's Scully Mines.

[36] One of the possible consequences of QNSL's refusal to carry Wabush's traffic between Wabush Lake Junction and Ross Bay Junction is the total incapacity for Wabush to move any traffic from its Scully Mines. The mere possibility that the entire production of the Scully Mines is halted, should the labour dispute be resolved, and, therefore, that Wabush is unable to ship its projected output and/or meet its sales commitments, appears, on balance, sufficient to meet the threshold of a serious question to be tried.

[37] Notwithstanding the above, the Agency notes that QNSL submitted that Wabush is able to carry its own iron ore from Wabush Lake Junction to Ross Bay Junction. While QNSL adduced evidence that suggests that money has been spent by Wabush to resume the service of Wabush Railway between Wabush Lake Junction and Ross Bay Junction, the evidence is not clear as to whether Wabush Railway is, from a resources, security and labour perspective, fully operational. Even if the Agency were to accept that Wabush Railway is fully operational and able to immediately resume its service between Wabush Lake Junction and Ross Bay Junction, there is evidence that suggests that such service entails additional delays at Ross Bay Junction due to the hooking and unhooking as well increased cycle time. Wabush alleged that the delay at Ross Bay Junction combined with the longer cycle time substantially reduces its capacity to ship iron ore, thereby causing it substantial commercial harm.

[38] While QNSL argued that the cycle time would not be increased by returning to the old mode (where Wabush Railway was carrying Wabush's traffic to Ross Bay Junction) if Wabush had maintained locomotives, additional ore cars and other carriage capability, QNSL's submission only reinforces the presumption that the return to the old mode is likely to negatively affect Wabush's ability to ship its projected output of iron ore.

[39] In light of the foregoing, the Agency finds that the substantial commercial harm alleged by Wabush in support of its level of service complaint between Wabush Lake Junction and Ross Bay Junction meets the threshold of a serious question to be tried.

The irreparable harm and the balance of inconvenience

[40] As the two latter parts of the three-part test are closely related, the Agency is of the opinion that they should be examined together.

[41] In Decision No. LET-AT-R-356-2001, the Agency briefly summarized what these two tests entail:

At the stage of the irreparable harm test, the issue to be decided is whether a refusal to grant relief could so adversely affect the applicant's own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application (RJR MacDonald, supra,at p. 341) The word "irreparable" refers to the nature of the harm suffered rather than its magnitude.

[...]As stated in RJR MacDonald, supra, at page 341, irreparable harm is "harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other". As examples of the former, the Supreme Court refers to instances where one party will be put out of business by the court's decision, where one party will suffer permanent market loss or irrevocable damage to its business reputation.

As for the balance of inconvenience, this entails a determination of which of the two parties will suffer the greater harm from the granting or refusal of the interim order pending a decision on the merits.

[42] As stated above, one of the possible consequences of QNSL's refusal to carry Wabush's traffic between Wabush Lake Junction and Ross Bay Junction is the inability of Wabush to move any of its traffic, and, therefore, to meet its sales commitments should the labour dispute at its Scully Mines be resolved.

[43] Also and as stated above, even if the Agency were to assume that Wabush Railway could immediately resume its service between Wabush Lake Junction and Ross Bay Junction, an assumption that the Agency is not comfortable making in any event because of the evidence available to it, there is a real likelihood that Wabush's operations could still be significantly adversely affected.

[44] The Agency is of the opinion that the possible stoppage of the production at Wabush's Scully Mines as a result of QNSL's refusal to provide service between Wabush Lake Junction and Ross Bay Junction or the significant adverse impact on Wabush's production and output capacity should Wabush be forced to use any transportation alternative, if any, will jeopardize Wabush's ability to meet its sales commitments. This, in the opinion of the Agency, could affect Wabush's competitive situation in the iron ore market as well as its business reputation.

[45] On the other hand, if QNSL were compelled to continue to provide service to Wabush between Wabush Lake Junction and Ross Bay Junction, it is expected that Wabush will compensate QNSL for the provision of such a service.

[46] In light of the foregoing, the Agency finds that, on balance, Wabush will suffer irreparable harm as a result of QNSL's refusal to provide service between Wabush Lake Junction and Ross Bay Junction. The Agency also finds that the balance of inconvenience favours Wabush. The Agency, therefore, concludes that QNSL should be ordered to continue to provide service to Wabush from Wabush Lake Junction to Ross Bay Junction until the Agency issues its decision on the merit of Wabush's level of service complaint.

[47] The issue of the rate that should be charged by QNSL for such a movement is still to be decided. Paragraph 116(4)(b) of the CTA provides that the Agency may specify the maximum charge that a company may impose with respect to a matter ordered. Section 112 of the CTA provides that a rate established by the Agency under section 116 must be commercially fair and reasonable to all parties.

[48] Wabush, in its original complaint, submitted that a rate of XXXXX per tonne constituted a reasonable rate to be charged for such a movement. QNSL disputed such an assessment and submitted that a rate of XXXXX per tonne would, if granted, compel QNSL to carry Wabush's iron ore between Wabush Lake Junction and Ross Bay Junction at a loss.

[49] The Agency notes that a rate of XXXXX per tonne is the rate that was charged by QNSL for the movement of Wabush iron ore between Wabush Lake Junction and Ross Bay Junction prior to QNSL's refusal to provide service between these two points. This rate was applied and charged by QNSL between April 2004 and July 5, 2004. This fact is important because it indicates the rate agreed upon between the parties for the movement of Wabush iron ore between Wabush Lake Junction and Ross Bay at a time when QNSL's service to Wabush on the Northern Lands Railway only included the movement of iron ore in separate trains. The rate of XXXXX per tonne is also supported by the rate that was charged by QNSL prior to April 2004. The evidence thus indicates that the rate charged by QNSL for the movement of Wabush iron ore between Wabush Lake Junction and Ross Bay Junction since QNSL took over the carriage of Wabush's traffic on the Northern Lands Railway is consistent with a rate of XXXXX per tonne as proposed by Wabush. The Agency therefore finds that a rate of XXXXX per tonne is a commercially fair and reasonable rate to be charged for the movement of Wabush's traffic pending the Agency's decision on the merits of Wabush's level of service complaint.

[50] As such, the Agency, pursuant to subsections 28(2) and 116(4) of the CTA, hereby orders QNSL, pending the decision of the Agency on the merits of Wabush's level of service complaint, to continue to provide Wabush with the same railway service that it has alway provided between Wabush Lake Junction and Ross Bay Junction at a maximum rate of XXXXX per tonne.

Ross Bay Junction to Arnaud Junction

Serious issue to be tried

[51] The application of Wabush with respect to the service offered by QNSL between Ross Bay Junction and Arnaud Junction, as narrowed by the Agency pursuant to section 27 of the CTA, is whether QNSL's proposal to implement a scheduled service prior to the date of the decision of the arbitrator constitutes a breach in QNSL's level of service obligations.

[52] The complaint of Wabush in respect of the scheduled service offered by QNSL is based on the wording of section 3.1 of QNSL's Railway Tariff No. 2004-1. Section 3.1 requires Wabush to provide QNSL with a weekly capacity forecast 10 days before each calendar week. Upon receipt of this weekly forecast, QNSL then undertakes to provide Wabush, 7 days before each calendar week, with a weekly schedule that specifies the scheduled pick up and drop off times at the origin and destination. In addition, Wabush has to make the railway cars available for transportation no later than 1 hour after the scheduled drop off time as specified in the weekly schedule.

[53] There is no doubt that the scheduled service proposed by QNSL between Ross Bay Junction and Arnaud Junction falls within the purview of section 113 and 114 of the CTA.

[54] The Agency notes that QNSL's only argument against there being a serious question to be tried relates to the jurisdiction of the Agency to hear Wabush's complaint over such a matter in the first place. Having determined that the Agency does have jurisdiction to hear the matter of the scheduled service offered or proposed to be offered by QNSL until the decision of the arbitrator, the Agency is satisfied that Wabush's complaint, as narrowed in scope by the Agency, meets the low threshold of a serious question to be tried.

[55] With respect to substantial commercial harm, Wabush alleged that as mining iron ore is an unpredictable business, it cannot operate on a scheduled service where a weekly forecast has to be filed 10 days in advance of the week. Wabush estimates that one third of its train will miss the one-hour schedule windows required in the tariff for the release of the cars following the scheduled time of spotting should this scheduled service be imposed on Wabush. According to Wabush, the result of having one third of its production being unable to meet the scheduling requirements of Tariff No. 2004-1 will result in great delays, lower traffic volumes, loss of sales, and plant slowdown.

[56] QNSL submitted that the harm alleged by Wabush is only potential harm which may have an effect on Wabush's production or capacity output.

[57] As mentioned above, the question of substantial commercial harm in this case can only be speculative as no traffic has yet to be moved under the scheduled service proposed by QNSL because of the ongoing labour dispute at Wabush's Scully Mines. However, there is no doubt that the scheduled service proposed by QNSL between Ross Bay Junction and Arnaud Junction and its estimated impact on Wabush's production or capacity output also raises a serious question to be tried.

The irreparable harm and the balance of inconvenience

[58] The Agency acknowledges that any determination it may make with respect to the irreparable harm that Wabush may suffer if QNSL's proposed scheduled service between Ross Bay Junction and Arnaud Junction were implemented prior to the date of the decision of the arbitrator could ultimately be used in support of or in opposition to one final offer submitted to the arbitrator.

[59] In that context, the Agency emphasizes that its examination of the irreparable harm that Wabush would suffer as a result of the implementation by QNSL of the scheduled service between Ross Bay Junction and Arnaud Junction is only undertaken by the Agency as a means to determine whether, in the short interim period prior to the decision of the arbitrator, QNSL, on balance, should be ordered to maintain the non-scheduled service it has always provided to Wabush. Therefore, while the irreparable harm that Wabush would suffer forms part of the three-part test to obtain interim relief and needs to be examined, great weight should be given in this case to the inconvenience each party may suffer should there be a change in service pending the decision of the arbitrator.

[60] In its submission, Wabush maintained that should the scheduled service proposed by QNSL between Ross Bay Junction and Arnaud Junction be implemented, one third of its train would not be able to meet the requirements of the scheduled service. This, according to Wabush, would result in delays in carrying its traffic to destination, lower volume of traffic moved and loss of sales. Wabush estimated the loss that it would suffer to be around XXXXX per year. Furthermore, because there is limited storage space at the Scully Mines and available cars for the movement of its iron ore, Wabush submitted that should a train miss a scheduled pick-up at origin or miss the return schedule for the empty train at destination, the production at the Scully Mines may have to be temporarily halted or slowed down.

[61] QNSL replied that Wabush's estimate of XXXXX loss per year assumes that any Wabush train that misses the scheduled pick up would not obtain carriage from QNSL. While QNSL stated that any train that misses the scheduled pick up at origin or destination would ultimately be moved, QNSL conceded that such a practice would still delay the movement of Wabush's trains.

[62] It is clear that any delays in the movement of Wabush's traffic would ultimately affect Wabush's operations. If the Agency accepts that one third of Wabush's trains could be delayed because they missed the scheduled pick-up windows at origin or destination, one may conclude that Wabush's sales commitments and/or sales opportunities would be affected. While the exact amount of losses that Wabush may be subject to as a result of such delays is difficult to establish, it is legitimate to assume that some losses will indeed occur. In addition to these losses, such delays could affect Wabush's competitive situation in the iron ore market and its business reputation.

[63] On the other hand, an order requiring QNSL to continue to provide a non-scheduled service between Ross Bay Junction and Arnaud Junction will likely cause little or no harm to QNSL. Indeed, no major change to its operations should be expected as a result of an order requiring it to continue to serve Wabush on a non-scheduled basis as QNSL has been providing such a service to Wabush for decades. It is also expected that QNSL will receive a reasonable rate for the provision of such service.

[64] In light of the foregoing, the Agency finds that, on balance, Wabush will suffer irreparable harm as a result of QNSL's proposal to implement a scheduled service between Ross Bay Junction and Arnaud Junction. The Agency also finds that the balance of inconvenience favours Wabush. The Agency, therefore, concludes that QNSL should be ordered to continue to provide a non-scheduled service to Wabush from Ross Bay Junction to Arnaud Junction. As the Agency's jurisdiction in this case is complementary to that of the arbitrator, any interim order made by the Agency in respect of a service matter currently before an arbitrator should not extend or continue to have effect beyond the date of the arbitrator's decision. Accordingly, as the arbitrator will issue his decision prior to the Agency issuing its final decision on the merit of Wabush's level of service complaint, QNSL is hereby ordered to continue to provide a non-scheduled service to Wabush between Ross Bay Junction and Arnaud Junction until such time as the arbitrator issues its decision on the FOA.

[65] The issue of the rate that should be charged by QNSL for such a service and movement remains to be decided. Contrary to the movement of Wabush's traffic between Wabush Lake Junction and Ross Bay Junction where a pre-existing lawful rate was not in effect, the movement of Wabush traffic between Ross Bay Junction and Arnaud Junction is governed by the lawful rates provided in QNSL's Tariff No. 2004-1.

[66] While the FOA provisions do not provide for an effective remedy against a potential breach in level of service by a carrier prior to the decision of the arbitrator, the Agency finds that paragraph 165(6)(a) of the CTA adequately protects the rights of the parties in respect of the rates charged by a carrier and/or paid by a shipper between the dates of the application for FOA and the decision of the arbitrator. That is, any rates charged by a carrier or paid by a shipper between the dates of the filing of the FOA and the decision of the arbitrator will ultimately, pursuant to paragraph 165(6)(a), have to be subject to an appropriate retroactive adjustment to take into account the rates selected by the arbitrator. In this case, as no traffic has yet to be tendered by Wabush at Ross Bay Junction and/or at Arnaud Junction because of an ongoing labour dispute at Wabush's Scully Mine, any traffic that may move between these two points prior to the decision of the arbitrator will benefit from the protection of paragraph 165(6)(a) of the CTA.

[67] Therefore, because there are lawful rates in effect for the movement of Wabush's traffic between Ross Bay Junction and Arnaud Junction and because there is an adequate legislative remedy that protects the rights of the parties in terms of these rates charged and/or paid between the dates of the application for FOA and the decision of the arbitrator, the Agency will not intervene and set rates (other than the lawful ones already in existence) for the service ordered under subsection 116(4) of the CTA unless there is evidence that the lawful rates in effect that are charged or proposed to be charged are so exorbitant that they create a real level of service problem for Wabush (i.e., because the transportation costs exceed its financial capacity to pay) or there is evidence that the lawful rates that can be charged by QNSL for the service ordered by the Agency are so low that it does not adequately compensate QNSL.

[68] In this case, there is no evidence that the lawful rates charged or proposed to be charged or that can be charged by QNSL under Tariff No. 2004-1 for the movement of Wabush's traffic between Ross Bay Junction and Arnaud Junction is so exorbitant or low that it warrants the intervention of the Agency. Accordingly, the Agency, for the provision of a non-scheduled service to Wabush between Ross Bay Junction and Arnaud Junction, will not set other rates than the lawful ones already in effect.

[69] QNSL submitted that the rates found in its Tariff No. 2004-1 should be applied with an additional premium should the Agency compel it to provide a non-scheduled service. The Agency has examined the rates found in QNSL's Tariff No. 2004-1 and notes that they are higher than the rates which governed the movement of Wabush's traffic on a non-scheduled basis between these two points prior to the issuance of Tariff 2004-1. While QNSL submitted that the rates in effect prior to the issuance of Tariff 2004-1 were the rates of the 1995 arbitration, unadjusted since then to reflect change in QNSL's costs, the Agency nevertheless finds that the rates provided for in Tariff No. 2004-1, being higher than the rates in effect between these two points for a similar service prior to April 2004, cannot be deemed to be so low that it warrants the intervention of the Agency.

[70] As such, the Agency, pursuant to subsections 28(2) and 116(4) of the CTA, hereby orders QNSL, pending the decision of the arbitrator on the FOA filed by Wabush on April 30, 2004, to continue to provide Wabush with the same non-scheduled railway service that it has always provided for the movement of its traffic between Ross Bay Junction and Arnaud Junction at the maximum rates provided in QNSL's Tariff 2004-1.

Laches and clean hands

[71] The Agency notes that in response to the claim for interim relief submitted by Wabush, QNSL raised the equitable doctrine of laches as a defence and claimed that the Agency ought to deny the request as Wabush does not seek this relief from the Agency with clean hands.

[72] The doctrine of laches has been explained by the Supreme Court of Canada in M. (K.) v. M. (H.), (1992), 96 D.L.R. (4th) 289, in the following terms:

there are two distinct branches to the laches doctrine and either will suffice as a defence to a claim in equity.

[...]

mere delay is insufficient to trigger laches under either of the two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable.

[73] The Agency is of the opinion that in the present case QNSL has failed to establish either branch of the doctrine, as described above. QNSL has not demonstrated that Wabush's conduct constituted an implicit acquiescence to the matters raised by its claim for interim relief as filed with the Agency on July 30, 2004, or that circumstances have rendered the Agency's processing of Wabush's claim for interim relief unreasonable or oppressive. In light of the above, the Agency finds that the equitable doctrine of laches does not apply to this case.

[74] QNSL also claimed that by filing an application with the Agency and requesting interim relief from the Agency regarding issues that are already before the arbitrator, Wabush does not seek this relief from the Agency with clean hands. QNSL claimed that as Wabush gave an undertaking pursuant to paragraph 161(2)(c) of the CTA to abide by the arbitrator's decision regarding the movement of goods between Ross Bay Junction and Arnaud Junction, if the Agency were to grant Wabush's request regarding the same movement, whether on an interlocutory or a final basis, Wabush will have effectively circumvented, conflicted and contradicted the award of the arbitrator.

[75] As set forth in the analysis above, while the Agency found that the wording of Wabush's original application between Ross Bay Junction and Arnaud Junction appears to go beyond the limited scope of the Agency's jurisdiction to hear a level of service complaint on a matter that has already been referred to FOA, it is clear from the submission filed by Wabush that its intention was not to repudiate its undertaking filed pursuant to paragraph 161(2)(c) to abide by the arbitrator's decision but rather, to protect its interests in the interim period between the dates of the filing of the FOA and the decision of the arbitrator.

[76] Having limited the scope of Wabush's level of service complaint between Ross Bay Junction and Arnaud Junction to the matter of the service offered by QNSL pending the decision of the arbitrator, any decision that is or could be rendered in respect of this matter will therefore not conflict with the arbitrator's decision and/or the undertaking given by Wabush pursuant to paragraph 161(2)(c) of the CTA.

Application to adjourn the Agency proceedings

[77] The Agency notes that QNSL's application for adjournment was filed so as to apply in the event that the Agency refused to issue the interim orders sought by Wabush. Having issued such interim orders, this application is now moot.

[78] However and because any decision of the Agency on the merit of Wabush's level of service complaint between Ross Bay Junction and Arnaud Junction, as narrowed in scope by the Agency, may entail similar determinations to the one the arbitrator will be making with respect to the FOA filed by Wabush between these two points, the Agency, in order to avoid duplication of proceedings and/or contradictory decisions, will adjourn this portion of Wabush's complaint until such time as the arbitrator issues its decision. Upon issuance of the arbitrator's decision, parties are hereby ordered to immediately notify the Agency of the decision of the arbitrator.

Conclusions

[79] In light of the foregoing, the Agency grants, in part, QNSL's motion to dismiss the portion of Wabush's level of service application dealing with the scheduled service offered or proposed to be offered by QNSL between Ross Bay Junction and Arnaud Junction. However, the Agency, pursuant to subsection 27(1) of the CTA, shall remain seized of the matter of the level of service offered or proposed to be offered by QNSL between Ross Bay Junction and Arnaud Junction prior to the date of the decision of the arbitrator.

[80] The Agency has also examined the interim relief sought by Wabush in support of its level of service complaint filed between Ross Bay Junction and Arnaud Junction, as narrowed by the Agency, as well as the interim relief sought by Wabush in support of its level of service complaint filed between Wabush Lake Junction and Ross Bay Junction and hereby orders QNSL, pursuant to subsections 28(2) and 116(4) of the CTA:

• to continue to provide Wabush with the same non-scheduled railway service that it has always provided for the movement of its traffic between Wabush Lake Junction and Ross Bay Junction at a maximum rate of XXXXX per tonne until such time as the Agency reaches its decision on the merits of Wabush's complaint.
• to continue to provide Wabush with the same non-scheduled railway service it has always provided for the movement of its traffic between Ross Bay Junction and Arnaud Junction at the maximum rates provided in QNSL's Tariff 2004-1 until such time as the arbitrator reaches his decision on the FOA filed by Wabush on April 30, 2004.

[81] Finally, the Agency adjourns the portion of Wabush's complaint between Ross Bay Junction and Arnaud Junction, as narrowed in scope by the Agency, until such time as the arbitrator issues its decision. Upon issuance of the arbitrator's decision, parties are hereby ordered to immediately notify the Agency of the decision of the arbitrator.

Pleadings on the Merit

[82] The Agency will shortly issue new time lines for the continuation of the pleadings on the portion of Wabush's level of service complaint between Wabush Lake Junction and Ross Bay Junction.

Costs

[83] Each party shall bear its own costs in respect of the motion to dismiss and the application to adjourn as well as the requests for interim relief.

[84] Any questions regarding the foregoing, may be directed to either Michel Maisonneuve, Senior Investigations Officer at (819) 953-2235 or Agency Counsel Alain Langlois at (819) 997-9326 or Betty Lobo at (819) 953-2263.