Decision No. 34-R-2017

SUMMARY

[1] This case considers whether the obligation of a railway company and a public passenger service provider (PPSP) to release agreements upon request includes providing the financial terms contained in those agreements and, if so, whether the Canadian Transportation Agency (Agency) should order full disclosure of the Agreement to Jonathan Sher, including the amounts to be paid by VIA to CN.

[2] For the reasons set out below, the Agency finds that subsection 152.4(1) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA) normally requires the disclosure of any agreement in its entirety. In this case, however, disclosure can exclude the amounts to be paid to avoid irreparable harm to CN and VIA.

BACKGROUND

[3] On May 13, 2016, Mr. Sher contacted the Agency requesting assistance in obtaining a copy of the Agreement. Mr. Sher requested a copy of the Agreement from CN, but CN denied his request.

[4] On June 15, 2016, the Agency issued Decision No. LET-R-25-2016 (Show Cause Decision), in which the Agency provided an opportunity to CN and VIA to show cause why the Agency should not order them to provide an unredacted copy of the Agreement to Mr. Sher.

[5] On June 16, 2016, in response to the Show Cause Decision, Mr. Sher requested an opportunity to submit additional information. The Agency granted Mr. Sher until July 4, 2016 to file additional information.

[6] On June 30, 2016, in response to Decision No. LET-R-27-2016, Mr. Sher requested an extension of time to file a submission in this matter. The Agency granted the requested extension and provided Mr. Sher until July 11, 2016 to file a submission.

[7] Mr. Sher failed to file a submission by July 11, 2016.

[8] On July 18, 2016, CN and VIA filed their respective response to the Show Cause Decision.

[9] On July 21, 2016, Mr. Sher requested an opportunity to respond to the information filed by CN and VIA in their respective response. The Agency declined Mr. Sher’s request.

ISSUES

[10] The issues to be addressed are:

1. Does the obligation to release agreements between a railway company and a PPSP upon request include providing the financial terms contained in those agreements?
2. If so, should the Agency order full disclosure to Mr. Sher of the Agreement, including the amounts to be paid by VIA to CN?

THE LAW

[11] Section 152.4 of the CTA provides that:

(1) A railway company or a public passenger service provider must provide to any person who requests it

1. a copy of any agreement entered into on or after the day on which this section comes into force concerning the use of the railway company’s railway, land, equipment, facilities or services; and
2. subject to subsection (2), a copy of any agreement entered into before the day on which this section comes into force concerning the use of the railway company’s railway, land, equipment, facilities or services.

(2) The Agency may, on application by a railway company or a public passenger service provider, exclude an agreement, or any specified portion of an agreement, from the application of paragraph (1)(b) on the grounds that harm would likely result to the applicant if the agreement, or the specified portion, were to be disclosed.

POSITIONS OF THE PARTIES

[12] VIA and CN both submit that the Agreement should not be disclosed, making three main arguments.

First argument: It would be unreasonable for the Agency to depart from Decision No. LET-R-81-2010 (2010 Decision)

VIA

[13] VIA submits that the Agency has consistently treated rate information, including the factors and inputs considered relevant by parties in setting rates negotiated or set by the Agency under section 152.1 of the CTA, as confidential.

[14] VIA alleges that there are no grounds to depart from the 2010 Decision, to which the Show Cause Decision refers.

[15] VIA submits that the Agency’s refusal to order the disclosure of the rates payable by VIA under the VIA-Hudson Bay Railway Company in the 2010 Decision is grounds for refusing disclosure in this case.

CN

[16] CN submits that in the 2010 Decision, the Agency examined a very similar, if not identical, issue and concluded that, had Parliament intended to require a PPSP or a railway company to provide a copy of an agreement regarding the amounts to be paid to any person who applied for it, it would have explicitly stated that requirement in section 152.4 of the CTA, as it did in section 152.1.

[17] According to CN, although statutory tribunals are not bound by their previous decisions, they must nonetheless maintain certain coherence and consistency in decision making and, at all times, make decisions consistent with the statutory provisions enacted by Parliament. CN argues that administrative tribunals must not depart from previous decisions in an unreasonable manner and without valid reasons.

Second argument: Parliament did not intend for the disclosure of an unredacted copy of the Agreement

VIA

[18] VIA submits that maintaining confidentiality serves the public interest by maximizing reliance on market forces and achieving the best possible level of service at the lowest price.

[19] According to VIA, subsection 152.4(1) of the CTA only applies in respect of agreements entered into as a result of the Agency’s adjudication of a dispute under section 152.1, and not to agreements that are privately negotiated.

[20] VIA argues that paragraph 152.4(1)(a) of the CTA only requires the disclosure of agreements concerning the use of a railway company’s infrastructure or services, and that disclosure of agreements with amounts to be paid or the conditions for the use of infrastructure or services are not subject to that paragraph. VIA also argues that had Parliament intended to require the disclosure of an agreement regarding the amounts to be paid, it would have explicitly stated that requirement in section 152.4, as it did in section 152.1.

CN

[21] CN submits that section 152.4 of the CTA contains no requirement to provide the rates of amounts charged for the use of the railway company’s railway, land, equipment, facilities or services. Therefore, CN is of the opinion that it is under no legal obligation to provide an unredacted copy of the Agreement.

[22] CN alleges that, when a statutory provision is clear, as in this case, there is no need to interpret it. CN adds that, in the 2010 Decision, the Agency applied this principle of interpretation in deciding that section 152.4 of the CTA contains no requirement to provide an agreement regarding rates charged for the use of railway. Rather, according to CN, the obligation is to provide an agreement concerning the use of the railway company’s railway, land, equipment, facilities or services.

[23] Finally, CN states that the Agency would be acting without jurisdiction by imposing an obligation that does not fall under its governing legislation.

Third argument: Disclosure of an unredacted copy of the Agreement would cause irreparable harm to VIA and CN

VIA

[24] VIA submits that the Agreement is the most important contractual document respecting CN and VIA’s commercial relationship. The amounts to be paid by VIA are inextricably intertwined with the terms and conditions under which CN is to provide VIA with access to its railway infrastructure. VIA submits that the Agreement was negotiated with the strong expectation that it would be kept confidential.

[25] VIA contends that the disclosure of the Agreement would give competitors knowledge of VIA’s cost structure, enabling them to have a head start in developing competing products or a competitive advantage in future transactions.

[26] VIA argues that the disclosure of the Agreement would allow competitors to use the information to negotiate better rates.

[27] VIA finally submits that the disclosure would undermine its negotiation position with third parties, especially if terms, conditions and rates that reveal where VIA has compromised in the past were disclosed absent the context under which such compromises were reached.

CN

[28] CN submits that the disclosure of the Agreement would cause irreparable harm to CN and its relationships with other PPSPs. According to CN, the terms and conditions of each agreement have great importance to the commercial relationships, and their confidentiality is crucial to ensure the ability of the railway companies to establish meaningful commercial relationships that are ultimately beneficial to customers of PPSPs and shareholders of railway companies.

[29] CN submits that the disclosure of the Agreement would frustrate the negotiation process by setting a baseline amount, and that it would allow other PPSPs to improve their negotiating position at CN’s expense or detriment.

[30] CN adds that the disclosure of the Agreement would disregard Parliament’s choice not to include the rates and conditions within the disclosure provision of the CTA.

[31] CN alleges that finally, under the federal Access to Information regime, such information would never be disclosed given the nature of the information and the probable harm that it would cause CN should it be publicly disclosed. CN points out that it is consistently treating this information confidentially within its company, and very few employees have access to this type of sensitive and proprietary information.

ANALYSIS AND FINDINGS

Issue 1: Does the obligation to release agreements between a railway company and a PPSP upon request include providing the financial terms contained in those agreements?

[32] On May 5, 2010, the Agency issued the 2010 Decision in which it interpreted section 152.4 of the CTA as requiring the PPSP and the railway company to provide an agreement for the use of the railway company’s railway, land, equipment, facilities or services, but not a confidential document in which rates are set by the Agency or an agreement regarding the amounts to be paid for the use of the railway company’s railway, land, equipment, facilities or services.

[33] A single decision does not constitute a consensus that binds an Agency panel for the future. Even if there was consensus, where more than one reasonable interpretation exists, a tribunal is not bound to decide in accordance with the consensus or the previous policy (see Altus Group Limited v. Calgary (City), 2015 ABCA 86).

[34] For the reasons set out below, the Agency will depart from the 2010 Decision.

[35] Pursuant to paragraph 152.4(1)(a) of the CTA, a railway company or a PPSP must provide to any person who requests it a copy of any agreement concerning the use of the railway company’s railway, land, equipment, facilities or services.

[36] Section 152.4 of the CTA cannot be construed as only applying to situations where the amount to be paid has been established by an Agency decision for two main reasons:

• First, when Parliament intends to restrict the application of a right or an obligation to a specific matter to be decided by the Agency, that intent is expressly reflected in the statutory provision. Parliament had such intention in establishing subsection 152.1(2) of the CTA, which provides for the Agency’s intervention when a PPSP and a railway company are “unable to agree in respect of any matter raised in the context of the implementation of any matter previously decided by the Agency”. [Emphasis added] Section 152.4 contains no similar or equivalent wording.

• Second, section 152.1 of the CTA is simply a dispute resolution mechanism. The Agency’s decision on matters submitted to it for determination is binding on the parties for a period of five years (see section 152.3). However, unlike for the level of service arbitration mechanism under subsection 169.38(2) of the CTA, the decision is not deemed to be a contract between the railway company and the PPSP. Therefore, the obligation to provide a copy of “any agreement” under section 152.4 must necessarily refer to any agreement, including privately negotiated agreements, regardless of whether any of the terms resulted of an Agency decision under section 152.1.

[37] Furthermore, section 152.1 of the CTA refers to an agreement “concerning the use” or “concerning the conditions, or the amount to be paid, for that use”.

[38] While section 152.4 only refers to an “agreement concerning the use”, the conditions and the amount to be paid for the use are terms commonly included in an agreement concerning the use.

[39] Parliament used these specific phrases in subsection 152.1(1) of the CTA to ensure that the PPSPs’ access to the dispute resolution mechanism would not be so easy as to discourage commercial negotiations. In fact, the PPSP is only allowed to seek the Agency’s intervention if the PPSP and the railway company are unable to agree. Parliament intended to ensure that, for example, the PPSP could come to the Agency for a determination of the amount to be paid even though it had reached an agreement concerning other aspects of the use of the railway.

[40] In this context, the Agency finds that the most reasonable interpretation of section 152.4 of the CTA is that it requires the disclosure of any agreement, including privately negotiated agreements, in its entirety, upon request.

Issue 2: Should the Agency order full disclosure to Mr. Sher of the Agreement, including the amounts to be paid by VIA to CN?

[41] VIA and CN assert that the disclosure of the Agreement would cause them irreparable harm.

[42] Although subsection 152.4(2) of the CTA permits that applications be made to the Agency to exclude an agreement or any portion of it from disclosure, this provision is only applicable to agreements entered into before the coming into force of the provision on June 22, 2007.

[43] Subsection 152.4(2) of the CTA does not provide for an exemption of disclosure for agreements entered into on or after June 22, 2007.

[44] This indicates that Parliament contemplated the possibility that sensitive commercial information contained in agreements could be released in the public domain by the application of section 152.4 of the CTA for agreements entered into on or after June 22, 2007.

[45] In this case, CN and VIA argue that the disclosure of the amounts to be paid as set out in the Agreement would give an undue advantage to their competitors. The Agency recognizes that, following the 2010 Decision, VIA and CN entered in good faith into the Agreement with the understanding that financial information would not be disclosed. For this reason, the Agency considers that there is a reasonable possibility that VIA and CN would suffer specific direct harm as a result of the disclosure of that information. As such, the Agency will, in this case, exercise its discretion not to enforce the provision in relation to the amounts to be paid as set out in the Agreement.

[46] This exercise of discretion is with respect to the Agreement only. It does not apply to other agreements between VIA and CN, including extensions or renewals of agreements, or future agreements.

CONCLUSION

[47] Subsection 152.4(1) of the CTA requires the disclosure of any agreement in its entirety. However, in this case, the disclosure obligation of VIA and CN may exclude the amounts to be paid.

ORDER

[48] The Agency orders VIA and CN to disclose the Agreement, except for the amounts to be paid (if they wish to redact that information), to Mr. Sher by March 3, 2017.