Goderich-Exeter Railway Company Limited v. Shantz Station Terminal Ltd. et al.

[Indexed as: Goderich-Exeter Railway Company Ltd. v. Shantz Station Terminal Ltd.]

Ontario Reports

Court of Appeal for Ontario

Huscroft, Zarnett and Coroza JJ.A.

September 9, 2020

152 O.R. (3d) 285 | 2020 ONCA 560

Case Summary

Transportation law — Rates and service charges — Demurrage charges — Appeal by plaintiff from dismissal of its claim for demurrage dismissed — Appellant railway transported grain for respondents — Trial judge did not err in holding appellant had not established express or implied contract with respondents to be paid demurrage or required elements of unjust enrichment — A contract, express or implied, between railway and shipper was required for claim for demurrage — In light of parties' conduct, trial judge did not err in finding that there was no implied contract between respondents and appellant permitting it to charge them demurrage.

Appeal by the plaintiff from the dismissal of its claim against the respondents for demurrage. The respondent P&H entered into an agreement with CN to ship grain by rail from Western Canada to Ontario. Pursuant to an agreement CN had with the appellant, the appellant carried the grain along its Guelph Line to the Shantz Station where it was unloaded. The Shantz Station was owned by a subsidiary of P&H. The appellant claimed that its railcars were detained for longer than the free time stipulated in tariffs it had issued while the respondents unloaded them at the Shantz Station, and that, as the shippers of the grain, the respondents were liable to pay demurrage. The trial judge dismissed the claim, holding that the appellant had not established an express or implied contract with the respondents to be paid demurrage, nor the required elements of a claim for unjust enrichment. The appellant argued that a railway was entitled to charge demurrage to a shipper that detained its railcars in the absence of any agreement and that the trial judge erred in failing to find an implied contract or to give relief under the doctrine of unjust enrichment.

Held, the appeal should be dismissed.

A contract, express or implied, between a railway and a shipper was the required basis for a claim for demurrage. Although a railway was entitled to payment of lawfully payable rates in exchange for service, the entitlement to payment must be from a person who had contracted, expressly or impliedly, to have the railway carry or deliver freight. There was no common law right to charge demurrage to a non-contracting party. The provisions of the Canada Transportation Act, S.C. 1996, c. 10 concerning tariffs did not authorize the charging of demurrage to persons who had no contract with the railway. The Act did not authorize railway companies to impose tariffs on third parties. There was no express contract between P&H and the appellant. In light of the parties' conduct, including the contract between P&H and CN to which the appellant was not privy, the contract between CN and the appellant to which the respondents were not privy, and P&H's repeated statements to the appellant that it would not honour any of the appellant's claims for demurrage, the trial judge did not err in finding that there was no implied contract between the respondents and the appellant permitting it to charge them demurrage. The elements of a claim for unjust enrichment were also not established. The evidence did not establish such a claim, because it did not establish any enrichment of the respondents or corresponding deprivation of the appellant, especially not one that occurred without juristic reason.

Cases referred to

2484234 Ontario Inc. v. Hanley Park Developments Inc. (2020), 150 O.R. (3d) 481, [2020] O.J. No. 1875, 2020 ONCA 273, 14 R.P.R. (6th) 1; Canadian Industries Ltd. v. Canadian National Railways, 1941 16 (SCC), [1941] S.C.R. 591, [1941] S.C.J. No. 39, [1941] 4 D.L.R. 561, 53 C.R.T.C. 162, affg 1940 346 (ON CA), [1940] O.J. No. 266, [1940] 4 D.L.R. 629, [1940] O.W.N. 452, 52 C.R.T.C. 31 (C.A.), varg 1940 355 (ON SC), [1940] O.J. No. 222, [1940] 3 D.L.R. 621 (H.C.J.); Canadian National Railway Co. v. Canada (Attorney General), [2014] 2 S.C.R. 135, [2014] S.C.J. No. 40, 2014 SCC 40, 371 D.L.R. (4th) 219, 458 N.R. 150, J.E. 2014-941, 240 A.C.W.S. (3d) 262, EYB 2014-237426, 2014EXP-1666, 67 Admin. L.R. (5th) 220; Canadian National Railway Co. v. Neptune Bulk Terminals (Canada) Ltd., [2006] B.C.J. No. 1600, 2006 BCSC 1073, [2007] 2 W.W.R. 623, 60 B.C.L.R. (4th) 96; Canadian Pacific Ltd. v. Canada (National Transportation Agency), 1980 161 (SCC), [1980] 1 S.C.R. 319, [1980] S.C.J. No. 4, 33 N.R. 157, affg 1979 4160 (FCA), [1979] F.C.J. No. 95, [1979] 2 F.C. 809, 99 D.L.R. (3d) 52, 26 N.R. 482 (C.A.); Grand Trunk Railway Co. of Canada v. McMillan (1889), 1889 5 (SCC), 16 S.C.R. 543, [1889] S.C.J. No. 26; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991, 2002 DFQ para. 10,056; Moore v. Sweet, [2018] 3 S.C.R. 303, [2018] S.C.J. No. 52, 2018 SCC 52, 430 D.L.R. (4th) 315, 84 C.C.L.I. (5th) 1, 43 C.C.P.B. (2d) 161, [2019] I.L.R. para. I-6120, 298 A.C.W.S. (3d) 401, EYB 2018-304424, 2019 CFLG para. 27,501, 2018EXP-3200; New York Central Railroad Co. v. Joseph Dolan & Sons Ltd. (1928), 1928 487 (ON CA), 63 O.L.R. 341, [1928] O.J. No. 135, 35 C.R.C. 333, [1929] 1 D.L.R. 817 (C.A.); Norfolk & Western Railway Co. v. Great Lakes Brick & Stone Ltd., [1995] O.J. No. 1465, 19 B.L.R. (2d) 285, 55 A.C.W.S. (3d) 673, 1995 7408 (Gen. Div.); North-West Line Elevators Association v. Canadian Pacific Railway Co., 1959 54 (SCC), [1959] S.C.R. 239, [1959] S.C.J. No. 6, 17 D.L.R. (2d) 241, 77 C.R.T.C. 241; Railink Canada Ltd. (Southern Ontario Railway) v. Fedmar Ltd., 2009 15893 (S.C.J.); Simpson v. 603418 Ontario Inc. (c.o.b. J.P. Motors Sales), [2018] O.J. No. 4508, 2018 ONSC 5156 (Div. Ct.); St. John Tug Boat Co. v. Irving Refining Ltd., 1964 88 (SCC), [1964] S.C.R. 614, [1964] S.C.J. No. 38, 46 D.L.R. (2d) 1, 49 M.P.R. 284; Turner, Dennis & Lowry Lumber Co. v. Chicago, M. & S. P. R. Co., 271 U.S. 259, 46 S. Ct. 530, 70 L. Ed. 934 (1926)

Statutes referred to

Canada Transportation Act, S.C. 1996, c. 10, ss. 6 [as am.], 87 [as am.], 113(2), 117 [as am.], 118, 119 [as am.], (2)(a), 120.1, 126 [as am.], (1) [as am.]

APPEAL from the judgment of Braid J., [2019] O.J. No. 2815, 2019 ONSC 1914, and from a costs order, [2019] O.J. No. 4571, 2019 ONSC 5192.

George Karayannides, for appellant.

Forrest Hume, Monika Gehlen and Robert Reynolds, for respondents.

The judgment of the court was delivered by

ZARNETT J.A.:

Introduction

[1] The appellant, Goderich-Exeter Railway Company Limited ("GEXR"), appeals from the dismissal of its claim against the respondents for "demurrage". Demurrage is a charge by a railway to a shipper for the detention of the railway's equipment and assets -- its railcars -- beyond a specified amount of "free time" allowed for loading or unloading.[^1] When properly payable, demurrage compensates the railway for the extended use of its assets and equipment and encourages their prompt return to the transportation network.

[2] The issue at the core of this appeal concerns the source of a railway's entitlement to charge demurrage, specifically whether a contract is required as the foundation for the claim.

[3] The respondent, Parrish and Heimbecker Limited ("P&H"), entered into an agreement with Canadian National Railway ("CN") to ship grain by rail from Western Canada to Ontario. CN carried the grain for much of the rail journey. Pursuant to an agreement CN had with GEXR, GEXR carried the grain on its final leg, along the GEXR operated Guelph Line to a facility (the "Shantz Station") where it was unloaded. The Shantz Station is owned by the respondent Shantz Station Terminal Ltd. ("SSTL"), a subsidiary of P&H.

[4] GEXR claimed that its railcars were detained for longer than the "free time" stipulated in tariffs it had issued while the respondents unloaded them at the Shantz Station, and that, as the shippers of the grain, the respondents were liable to pay demurrage. The trial judge dismissed the claim, holding that GEXR had not established an express or implied contract with the respondents to be paid demurrage, nor the required elements of a claim for unjust enrichment.

[5] In this court, GEXR does not assert an express contract. It argues that the trial judge was wrong to require a contract between it and the respondents. It submits that a railway is entitled to charge demurrage to a shipper that detains its railcars, in the absence of any agreement. Alternatively, GEXR argues that the trial judge erred in failing to find an implied contract or to give relief under the doctrine of unjust enrichment. Finally, GEXR seeks leave to appeal the trial judge's refusal to stay her costs award.

[6] For the reasons that follow, I would dismiss the appeal. A contract, express or implied, between a railway and a shipper is the required basis for a claim for demurrage. There was no express contract between P&H and GEXR. Furthermore, in light of the parties' conduct -- including the contract between P&H and CN to which GEXR was not privy, the contract between CN and GEXR to which the respondents were not privy, and P&H's repeated statements to GEXR that it would not honour any of GEXR claims for demurrage -- the trial judge did not err in finding that there was no implied contract between the respondents and GEXR permitting it to charge them demurrage.

[7] The elements of a claim for unjust enrichment were also not established by GEXR. Nor did the trial judge err in exercising her discretion not to defer making a costs award or refusing to stay the award she made.

The Factual Context

GEXR Operates the Guelph Line Under a Lease from CN

[8] The Guelph Line is a rail line owned by CN that runs from Georgetown, Ontario to London, Ontario. GEXR obtained the right to operate a railroad on the Guelph Line in 1998, under a lease from CN that had a 20-year term.

[9] Pursuant to a Certificate of Fitness issued under the Canada Transportation Act, S.C. 1996, c. 10 (the "CTA"), GEXR was the only authorized operator on the Guelph Line for the term of the lease and had all the obligations and status of a railroad under federal legislation.

GEXR's Interchange Agreement with CN

[10] CN and GEXR entered into the Guelph Line Operating, Marketing and Interchange Agreement in November 1998 (the "Interchange Agreement").

[11] The Interchange Agreement gave CN the right to contract with shippers to carry freight over its own lines and onward to points on the Guelph Line, even though GEXR was the operator of the Guelph Line. Article 11.2 provided that CN would continue to market services on the Guelph Line, and would be entitled to publish tariffs, enter into contracts, and collect for CN's own account all related revenues for traffic to and from stations on the Guelph Line which travelled over CN lines. GEXR was to be paid a haulage fee by CN for such traffic. As noted below, CN referenced this provision when contracting with P&H to carry grain to the Shantz Station.

[12] The Interchange Agreement also contained a provision CN seems to have ignored when it subsequently contracted with P&H. Article 11.5 of the Interchange Agreement provided that GEXR would have the right to publish tariffs or enter into contracts governing incidental services to "normal interline movements", including for demurrage.

P&H contracts with CN to carry grain to the Shantz Station

[13] P&H is a grain company. It ships grain from Western Canada for supply to flour mills in Eastern Canada.

[14] Starting in 2001, negotiations took place between CN and P&H about CN being the carrier for such shipments, which would travel to a grain terminal to be built by P&H in Ontario close to four flour mills that P&H supplied. After various proposed sites on CN-operated lines proved to be unworkable, CN proposed that the terminal be built on the Guelph Line (the line operated by GEXR).

[15] The trial judge found that, notwithstanding that the Guelph Line was GEXR operated, "P&H wanted solely to deal with CN and wanted no commercial relations with GEXR".

[16] In March 2003, CN entered into a memorandum of understanding (the "MOU") with P&H, to which GEXR was not a party. The MOU contemplated that P&H would ship grain from Western Canada to a terminal that it would construct, using CN as carrier. The MOU referenced the Interchange Agreement CN had with GEXR, including the substance of article 11.2, which provided that CN had the right to contract for carriage to stations on the Guelph Line and to collect all related revenues. The MOU did not refer to article 11.5 of the Interchange Agreement or otherwise to the prospect of GEXR claiming demurrage from P&H. The MOU referred to a CN tariff under which demurrage would be charged.

[17] The MOU provided for arbitration of disputes between P&H and CN.

[18] The trial judge found that the MOU was an agreement solely between CN and P&H, and that among other things it reflected "CN's assurances to P&H that only CN would invoice P& H for demurrage". She noted the inconsistency between the Interchange Agreement provision by which CN had agreed that GEXR would be allowed to charge interline customers demurrage, and the MOU provisions by which CN assured P&H that only CN (and not GEXR) would charge demurrage. She stated: "[f]or reasons that are unclear, portions of the MOU are directly contrary to CN's agreement with GEXR, especially as it relates to GEXR's ability to bill accessorial charges".

The Shantz Station and the shipment and unloading of grain

[19] On the strength of the MOU, SSTL was incorporated as a P&H subsidiary. In 2003, it constructed and opened the Shantz Station at Breslau, Ontario, located on the Guelph Line, for the purpose of unloading grain of P&H, its sole customer.

[20] From the time the Shantz Station was built until November 2018, railcars carrying P&H grain travelled on CN lines from Western Canada to Ontario, and ultimately to the Shantz Station. The trial judge found that those shipments were pursuant to contractual commitments between P&H and CN, whereas GEXR's involvement was pursuant to its contract with CN.

[21] When P&H wished to send shipments, CN would create a waybill or bill of lading for each shipment that described P&H as shipper and consignee with the "care of party" listed as Shantz Station. The grain was then carried on CN operated lines to CN's MacMillan Yard in Toronto.

[22] In order to move the grain to the Shantz Station, CN would send a waybill to GEXR. GEXR was thereupon required to take railcars from the CN line and interchange them onto the Guelph Line. GEXR engines would pick up the cars at MacMillan Yard and take them to Shantz Station.[^2]

[23] GEXR would provide P&H with a report that listed the car numbers, commodity weight, customer name and address, and destination, and the respondents would direct GEXR regarding the placement of those railcars. After the grain was loaded by the respondents from railcars onto trucks at the Shantz Station, the respondents would notify GEXR when the empty railcars could be picked up. As the trial judge found, the respondents controlled when the empty cars could be released.

Tariffs

[24] As discussed below, the CTA contemplates the issuance and publication of tariffs by railways. Tariffs are the "schedule of rates, charges, terms and conditions applicable to the movement of traffic and incidental services":s. 87. GEXR published tariffs that set out when it would levy demurrage charges, and how they were to be calculated. The tariffs were provided to P&H. GEXR's tariffs were different than the CN tariff for demurrage that was specifically referred to in the MOU.

GEXR's demands for payment of demurrage and P&H's response

[25] Prior to 2010, GEXR sent invoices to P&H claiming payment of demurrage for occasions when the time taken to unload railcars at the Shantz Station exceeded the "free time" in the GEXR tariffs. P&H refused to pay them, asserting that under its agreement with CN, only CN was entitled to charge it for demurrage. Although CN advised GEXR that, in its view, nothing prevented GEXR from claiming demurrage, GEXR did not ultimately pursue payment of the pre-2010 invoices.

[26] In 2010, GEXR again began sending demurrage invoices to P&H. These were met with the same response. As the trial judge found:

P&H told GEXR that only CN has the right to charge and collect demurrage on P&H traffic at Shantz Station. Notwithstanding the position P&H advanced, GEXR kept sending invoices and kept providing services. At all relevant times, the defendants rejected any demurrage invoices GEXR sent to them and did not pay demurrage to GEXR.

[27] Although for a time CN agreed to send demurrage invoices to the respondents and remit what was paid to GEXR, parts of the invoices were disputed. Among other reasons, P&H was not prepared to pay CN for delays that it attributed to CN's conduct. In any event, that invoicing arrangement did not subsist. GEXR and the respondents reverted to their original positions. GEXR took the position it was entitled to charge demurrage directly to the respondents calculated under its tariffs. The respondents took the position that they had no obligation to pay GEXR any demurrage charges at all.

The action and the arbitration

[28] In October 2012, GEXR commenced action seeking judgment against the respondents for $378,074 for invoiced but unpaid demurrage charges, plus ancillary relief.

[29] In April 2012, P&H commenced an arbitration against CN, seeking among other things indemnity from CN as a result of the claims against it for demurrage by GEXR. GEXR was not a party to the arbitration.

[30] Prior to the action coming to trial, the arbitrator ruled that CN was in violation of the MOU to the extent it breached its promise to be the only carrier to charge P&H for demurrage in connection with traffic to Shantz Station. Final determination of the remedy to P&H was deferred pending the result of the action. The findings of the arbitrator were not relied upon in the action, since, as the trial judge noted, GEXR was not a party to it.

The Trial Judgment and Costs Award

[31] The trial judge dismissed GEXR's action, dealing with the issues in four steps.

[32] First, she rejected GEXR's argument that the CTA and GEXR's issuance of tariffs under it gave GEXR the right to charge demurrage to a shipper without the need for any contract between them. She stated "[a] railway may not charge demurrage to a party with whom it has no contract".

[33] Second, the trial judge held that there was no express contract between GEXR and the respondents on which to base a claim for payment of demurrage. She stated:

GEXR was not a party to a contract for the carriage of goods to Shantz Station. P&H did not pay freight charges to GEXR or receive bills of lading from GEXR for the goods that were shipped to Shantz Station. I find that there was no express contract between GEXR and P&H for the payment of demurrage.

[34] Third, she held there was no implied contract requiring such payment. Noting that the respondents had rejected every request for payment of demurrage that GEXR had made, she concluded:

The facts in this case do not give rise to an implied contract for payment of demurrage. P&H's repeated denials of any liability for demurrage, together with the long periods of time in which GEXR did not bill for demurrage (and appeared to accept P&H's position), preclude a finding of an implied contract between the parties.

[35] Fourth, she rejected GEXR's claim that it was entitled to payment based on the doctrine of unjust enrichment. In her view, GEXR had not established an enrichment of the respondents or that GEXR had suffered a corresponding deprivation.

[36] The trial judge refused to defer dealing with costs until after the completion of the arbitration between P&H and CN, in which P&H had claimed indemnity for its costs of defending GEXR's claims against it. She awarded the respondents costs of $250,000 all inclusive.

The Issues on Appeal

[37] On the merits appeal, GEXR raises four arguments:

(a) It submits that a railway has a long-standing common law right to charge demurrage to a shipper even in the absence of any contract between them.

(b) It submits that the publication of tariffs by a railway and their provision to a shipper are, in light of the CTA, a sufficient basis for an entitlement to demurrage.

(c) It submits the trial judge erred in failing to find that an implied contract existed for the payment of demurrage by the respondents to GEXR.

(d) It submits the trial judge erred in failing to find that the required elements for a claim in unjust enrichment had been established.

In seeking leave to appeal costs, GEXR argues that the costs order should have been stayed until after P&H completed seeking indemnity from CN in their arbitration, as the claim included indemnity for costs of defending GEXR's action.

Analysis

(1) Is there an entitlement to demurrage in the absence of a contract?

The standard of review

[38] GEXR's first two points are closely connected and appropriately dealt with together. In essence, they both raise the central question of whether a demurrage claim must be based on an express or implied contract. Accordingly, they raise a question of law. The standard of review on this issue is correctness: Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, at para. 8.

The common law required a contract

[39] There is strong authority for the proposition that, at common law, a shipper's obligation to pay freight charges -- that is, charges for the movement of traffic -- is based on a contract with the carrier. In some cases, that contract may be implied. For example, in New York Central Railroad Co. v. Joseph Dolan & Sons Ltd. (1928), 1928 487 (ON CA), 63 O.L.R. 341, [1928] O.J. No. 135, [1929] 1 D.L.R. 817 (C.A.), at p. 820 D.L.R., this court adopted, with approval, the following statement:

Ordinarily, the person from whom the goods are received for shipment assumes the obligation to pay the freight charges; and his obligation is ordinarily a primary one. This is true even where the bill of lading contains, as here, a provision imposing liability upon the consignee. For the shipper is presumably the consignor; the transportation ordered by him is presumably on his own behalf; and a promise by him to pay therefor is inferred (that is, implied in fact), as a promise to pay for goods is implied, when one orders them from a dealer.

[40] Demurrage, as "one of those rates or charges . . . [that] relates to the movement of traffic" is a subset of freight charges: Canadian National Railway Co. v. Neptune Bulk Terminals (Canada) Ltd., [2006] B.C.J. No. 1600, 2006 BCSC 1073 at paras. 95-96. Accordingly, the basis for a claim for demurrage would be the existence of a contract between the shipper and the carrier.

[41] In support of its argument that no contract is necessary, GEXR points to the fact that charges for demurrage by railways have both a long history and a firm underpinning in business efficacy and fairness. It submits that descriptions of the nature of the claim do not state that it is a function of contract.

[42] For example, in North-West Line Elevators Assn. v. Canadian Pacific Railway Co., 1959 54 (SCC), [1959] S.C.R. 239, [1959] S.C.J. No. 6, Rand J. stated, at p. 242 S.C.R.:

[T]he principle of exaction for delay in loading and unloading in water transportation has been known and applied for centuries. Its appropriateness to railway carriage can be assumed to have been recognized and acted upon both in England and in North America certainly from the middle of the nineteenth century.

Delay in loading or unloading cars of freight violates the implied understanding when equipment is placed at the disposal of shipper or consignee that no more than reasonable time shall be taken for either purpose. The profitable and efficient use of equipment is an important item of the costs reflected in the freight rates charged and is an essential in good railway management. That a railway is to supply expensive equipment in order to furnish, gratis, a storage means for shippers and consignees, reveals, on its mere statement, its own absurdity

(Citation omitted; Emphasis added)

[43] As a further example, in Turner, Dennis & Lowry Lumber Co. v. Chicago, M & St. P. Ry. Co., 271 U.S. 259, 46 S. Ct. 530 (1926), Brandeis J. stated, at p. 262 U.S.:

One cause of undue detention (of rail cars) is lack of promptness in loading at the point of origin, or in unloading at the point of destination. Another cause is diversion of the car from its primary use as an instrument of transportation by employing it as a place of storage, either at destination or at reconsignment points, for a long period while seeking a market for the goods stored therein. To permit a shipper so to use freight cars is obviously beyond the ordinary duties of a carrier. The right to assess charges for undue detention existed at common law. Now, they are subject, like other freight charges, to regulation by the Commission. Demurrage charges are thus published as a part of the tariffs filed pursuant to the statutes.

(Emphasis added)

[44] I do not read either statement as suggesting that there is a right to charge demurrage to a party with whom the railway has no contract at all.

[45] The dispute in Turner was between a person to whom lumber had been shipped and the railway that carried it. It was not a dispute between parties who had no contractual relationship. Brandeis J. rejected the consignee's contention that the demurrage charge was a penalty which could not be legally imposed by the railway or approved by its statutory regulator. His reference to demurrage previously having been a common law right does not suggest, at least as viewed through the lens of Ontario law, that it existed outside of contract; it simply contrasted how the right was previously governed (exclusively by the common law, which governed when and how a contract came into existence and the extent to which it could be enforced) with how the right came to be regulated (in part by statute).

[46] The issue in North-West Line Elevators was whether the Board of Transport Commissioners (then the statutory regulator of railway rates and charges) had correctly considered itself to be without authority to disallow a railway's tariff that provided for demurrage charges to shippers. In dismissing the appeal, Rand J. did not say anything that suggested a railway could charge demurrage to a person with whom it had no contract to ship or carry goods. Rather, his statement is more consistent with the view that, where there is a contract between a shipper and a railway for the movement of freight, a right to charge demurrage will be implied into that contract as the freight rates otherwise charged will necessarily have been based on the profitable and efficient use of the railway's equipment (subject to compliance with the statutory regulation of rates and charges of railways).

The provisions of the [CTA](https://www.canlii.org/en/ca/laws/stat/sc-1996-c-10/latest/sc-1996-c-10.html) do not authorize the charging of demurrage to non-contracting parties

[47] The CTA imposes obligations on railways to provide service and regulates their rates and charges, including charges for demurrage. Although demurrage is not specifically referred to in the CTA, I agree with the trial judge that it is subject to the Act. In Canadian Pacific Ltd. v. Canada (National Transportation Agency), 1979 4160 (FCA), [1979] 2 F.C. 809, [1979] F.C.J. No. 95, at p. 822, aff'd 1980 161 (SCC), [1980] 1 S.C.R. 319 (dealing with predecessor legislation to the CTA), the court stated that "demurrage is sufficiently related to the transportation of goods to be part of the rates in respect of the movement of goods within the meaning of [the statute]".

[48] The fact that the CTA regulates the charging of rates or charges, including demurrage, to persons who contract with the railway is one thing; it is quite another to view the CTA as creating the right to charge demurrage to persons with whom a railway has no contract at all.

[49] In support of the argument that the CTA creates a right to charge demurrage to persons with whom a railway has no contract, GEXR relies on the combined effect of a number of provisions.

[50] First, it points to the provisions of the CTA that provide that a railway company shall provide a certain level of service. For example, a railway has a service obligation to:

113(1)(a) furnish, at the point of origin, at the point of junction of the railway with another railway, and at all points of stopping established for that purpose, adequate and suitable accommodation for the receiving and loading of all traffic offered for carriage on the railway.

(c) without delay, and with due care and diligence, receive, carry and deliver the traffic

114(1) . . . afford to all persons and other companies all adequate and suitable accommodation for receiving, carrying and delivering traffic on and from its railway, for the transfer of traffic between its railway and other railways and for the return of rolling stock.

[51] Second, GEXR stresses that the CTA makes clear that the railway is to be compensated for providing service. Section 113(2) provides that "Traffic must be taken, carried to and from, and delivered at the points referred to in paragraph 113(a) on the payment of the lawfully payable rate."

[52] Third, GEXR points to the fact that the CTA defines what a lawfully payable rate is, namely, the rates that are contained in the duly issued and published tariffs of the railway: s. 119(2)(a).

[53] The CTA prevents a railway from requiring payments other than lawfully payable rates. With one exception, only rates that have been published in a tariff are lawful rates. A railway company is obliged, at the request of a shipper, to issue a tariff in respect of the movement of traffic on its railway, and if the railway company proposes to increase a rate in a tariff for the movement of traffic it must publish a notice of the increase at least 30 days before its effective date. The only exception to the published tariff requirement is where the parties have a "confidential contract": ss. 117-119, 126.

[54] Finally, GEXR points to the fact that the CTA provides protection to parties who feel unfairly charged, as it provides a means of challenging the reasonableness of tariff charges: s. 120.1.

[55] Taken together, GEXR submits that these provisions entail that a railway is entitled to charge demurrage in accordance with its published tariff in the absence of having any contract with the person to whom it wishes to levy that charge. It notes that the respondents at no time complained under s. 120.1 of the CTA that GEXR's tariff charges for demurrage were unreasonable.

[56] I disagree with GEXR's submission. Although a railway is entitled to payment of lawfully payable rates in exchange for service it is obliged to provide, the entitlement to payment must be from a person who has contracted, expressly or impliedly, to have the railway carry or deliver freight.

[57] The substance of GEXR's argument was rejected in Neptune Bulk Terminals, a case in which CN had issued a tariff that required terminal owners, with whom it had no contract, to pay demurrage. There the court stated:

It is true, as CN argues, that the CTA does not expressly limit the application of a tariff to the party with whom CN contracts. Nor, however, does the CTA expressly or by implication permit CN to impose its tariffs on parties with whom it has no contract of carriage. The CTA does not authorize railway companies to impose tariffs on third parties. It requires railway companies to publish tariffs in order to inform prospective customers as to the nature and amount of the rates, charges and penalties they will be expected to pay pursuant to the contract of carriage.

In summary, I conclude that [CN's tariff] is binding only on parties with whom CN contracts for the carriage of goods. Tariffs published by CN become enforceable when a party enters into a contract with CN which incorporates the terms of the tariff. As there was no contract of carriage between the parties in this case, Neptune is not liable for demurrage charges described in the tariff: at paras. 104, 107.

[58] In my view, the conclusion in Neptune Bulk Terminals was correctly followed by the trial judge.

[59] The correctness of the conclusion in Neptune Bulk Terminals is not diminished because it predated the introduction into the CTA of s. 120.1, providing shippers with an opportunity to contest the reasonableness of tariff charges.

[60] Section 120.1 of the CTA provides:

120.1(1) If, on complaint in writing to the Agency by a shipper who is subject to any charges and associated terms and conditions for the movement of traffic or for the provision of incidental services that are found in a tariff that applies to more than one shipper other than a tariff referred to in subsection 165(3), the Agency finds that the charges or associated terms and conditions are unreasonable, the Agency may, by order, establish new charges or associated terms and conditions.

[61] The reasonableness challenge process requires a complaint by a shipper who is "subject to" charges found in a tariff. Section 120.1 does not provide that a person automatically becomes subject to those charges without there being any contract between it and the railway.

[62] Nor do the provisions of the CTA that contemplate, but do not require, confidential contracts, support the argument that if there is no "confidential contract" tariffs permit the charging of demurrage in the absence of any contract at all.

[63] The exception to the rule that a railway may charge only what is in a published tariff is when the parties have made a "confidential contract" that complies with certain requirements. A confidential contract is a contract between a shipper and a railway "that the parties agree to keep confidential" respecting, among other things, "rates to be charged", reductions in rates or charges in a published tariff, or rebates or allowances from such tariff rates and charges: s. 126(1).

[64] GEXR relies on the statement of Rothstein J. in Canadian National Railway Co. v. Canada (Attorney General), [2014] 2 S.C.R. 135, [2014] S.C.J. No. 40, 2014 SCC 40, that [at para. 26]:

Confidential contracts provide an alternative to the historic requirement that a railway company could only charge a rate in respect of the movement of traffic if the rate was set out in a tariff that had been issued and published by the railway company: at para. 26.

Effectively, GEXR submits that if confidential contracts are one alternative, the other must involve no contract. In my view, that conclusion does not follow.

[65] The contrast drawn by Rothstein J. is between charges that are lawful because they are in a contract that the parties have agreed to keep confidential and that otherwise meets the requirements of s. 126, and charges that are lawful because they are in an issued and published tariff. Nothing in the statement of Rothstein J. speaks to or suggests the ability to charge demurrage under a tariff to a person who is not in any type of contractual relationship with the railway.

Conclusion

[66] There is no common law right to charge demurrage to a non-contracting party. The provisions of the CTA concerning tariffs do not authorize the charging of demurrage to persons who have no contract with the railway.

[67] The CTA regulates what a railway may charge to persons who expressly or impliedly contract for their services, and how those persons are to be notified, before expressly or impliedly contracting for those services, what those rates and charges will be. As the court stated in Neptune Bulk Terminals, "The CTA does not authorize railway companies to impose tariffs on third parties": at para. 104. Or, to adopt the respondents' formulation, the existence of an issued and published tariff is a necessary, but not a sufficient, condition for a railway to charge demurrage.

[68] Accordingly, I would reject GEXR's first two grounds of appeal.

(2) Was there an implied contract?

The standard of review

[69] Whether a contract exists, including whether an implied contract should be recognized, is a question of mixed fact and law: Simpson v. 603418 Ontario Inc. (c.o.b. J.P. Motors Sales), 2018 ONSC 5156, [2018] O.J. No. 4508, at para. 44; 2484234 Ontario Inc. v. Hanley Park Developments Inc. (2020), 150 O.R. (3d) 481, [2020] O.J. No. 1875, 2020 ONCA 273, at para. 42. Accordingly, a trial judge's finding that there was no implied contract should not be disturbed on appeal, absent palpable and overriding error of fact or the trial judge having made an extricable legal error: Housen, at paras. 10, 36.

The trial judge did not commit an extricable error of law

[70] In a situation where the shipper deals directly and solely with a railway, engaging it to carry or deliver goods to a particular location on the railway's own line, it is clear that a contract between the shipper and the railway to pay freight charges and thus to pay demurrage, can be readily implied: N.Y. Central R., at p. 820; North-West Line Elevators, at p. 244. The rates and charges payable under the implied contract are of course subject to the CTA provisions that regulate them.

[71] In the case at bar, a more complex arrangement existed. On the trial judge's findings, P&H expressly contracted with CN to carry freight not only along CN lines, but beyond them to the Shantz Station. CN, under its express contract with GEXR, was able to have the freight carried by GEXR from the CN lines to the Shantz Station.

[72] There were thus two express contracts in place, one between CN and P&H to which GEXR was not a party, and one between CN and GEXR to which neither respondent was a party. In my view, the trial judge did not commit an extricable error of law when she refused to also imply a further contract between GEXR and the respondents.

[73] The law does not require such an implication. Courts have recognized that in this type of situation, privity of contract may exist only between the shipper (the respondents) and the originating carrier (here, CN) and not between the shipper and the connecting or destination carrier (here, GEXR): Grand Trunk Railway Co. of Canada v. McMillan (1889), 1889 5 (SCC), 16 S.C.R. 543, [1889] S.C.J. No. 26, at pp. 549-50 S.C.R.; Canadian Industries Ltd. v. Canadian National Railways, 1940 355 (ON SC), [1940] O.J. No. 222, [1940] 3 D.L.R. 621 (H.C.J.), at pp. 624-27 D.L.R., vard 1940 346 (ON CA), [1940] O.J. No. 266, [1940] O.W.N. 452 (C.A.), affd 1941 16 (SCC), [1941] S.C.R. 591, [1941] S.C.J. No. 39.

[74] In Canadian Industries, the following proposition was quoted with approval:

. . . the acceptance of goods by a railway for conveyance to points off its own line imposed (in the absence of special circumstances) the obligation of a common carrier on such railway till the goods were delivered at their destination. The only contract of carriage to which the shipper was a party was that made with the carrier to whom the goods were first delivered: at p. 624.

(Emphasis added)

[75] GEXR relies on two cases in which the court implied a contract between a shipper (consignee) and a connecting or destination carrier. In my view, neither assists GEXR. At their highest, all they show is that while the law does not require the contract that the GEXR contends for be implied, it does not forbid it. It all depends on the facts.

[76] In Railink Canada Ltd. (Southern Ontario Railway) v. Fedmar Ltd., 2009 15893 (S.C.J.), Milanetti J. upheld a decision of the Small Claims Court allowing a railway, that was the destination carrier, to charge demurrage to the ultimate consignee of the shipment. She stated:

Whether there is a paper contract or not, there is clearly a common understanding between these two parties. SOR was required and mandated to deliver the goods to FedMar at their request. FedMar alone controls the timing of receipt and return of the cars. This may also be seen as a relationship of convenience: at para. 18.

[77] FedMar does not lay down a rule of law. It turned on its facts, in particular, the finding of a common understanding. The trial judge distinguished FedMar on its facts. She held that there was no common understanding between the respondents and GEXR that could support the implication of the contract contended for by GEXR.

[78] GEXR also relies on Norfolk & Western Railway Co. v. Great Lakes Brick & Stone Ltd., [1995] O.J. No. 1465, 1995 7408 (Gen. Div.), where the court stated, at para. 21:

It was clearly established that it is an accepted custom on a through carriage, that the destination carrier is also a party to the contract . . . . "A delivering carrier has the required privity to sue a shipper, or a property acquiring consignee".

(Citations omitted)

[79] Norfolk & Western Railway also turned on its facts, specifically the finding that an accepted custom had been established, something the trial judge did not find to have been established or applicable in this case.

[80] As a general matter, for a contract to be implied, the conduct of the parties must objectively manifest that an offer of one party has been accepted by the other resulting in a meeting of the minds. Where the terms upon which services made available by one party are made known to the other, who uses the services while remaining silent about the terms, acceptance of the terms may be implied: Saint John Tug Boat Co. Ltd. v. Irving Refinery Ltd., 1964 88 (SCC), 1964, S.C.R. 614 at pp. 622-23.

[81] The trial judge appropriately focussed on the conduct of GEXR and the respondents. That conduct included GEXR's provision of its tariffs to P&H, and the respondents' control over when railcars would be released back to GEXR, facts that could support the finding of an implied contract. But the conduct also included the respondents' repeated statements to GEXR that the dealings between them did not and would not give rise to any obligation to pay demurrage to GEXR. Those statements were made before 2010 and continued thereafter. They pre-existed and continued during the services provided by GEXR that underlie its claims in the action, and are inconsistent with the basis for any implied contract.

[82] This was not a case of the use of services coupled with silence about the terms on which they were offered. It was open to the trial judge to find, on all the facts, that there was no implied acceptance of GEXR's terms, that no meeting of the minds had been objectively manifested, and thus to refuse to find an implied contract.

[83] I do not accept GEXR's argument that the trial judge in effect held it to be bound by the MOU's provisions by which CN agreed that P&H would not have to pay demurrage to GEXR. The trial judge found that GEXR was neither a party to nor bound by the MOU. She held that the conduct of GEXR and the respondents failed to show a meeting of the minds about the payment of demurrage to GEXR.

[84] In my view the trial judge's finding that there was no implied contract was not tainted by an extricable error of law.

The trial judge made no palpable and overriding errors of fact

[85] The trial judge's findings of fact were well supported by the record. In my view, her finding that there was no implied contract was also not the product of any palpable and overriding error.

Conclusion

[86] I would not give effect to this ground of appeal.

(3) No unjust enrichment

[87] Under the principled framework to unjust enrichment a plaintiff will succeed "if he or she can show: (a) that the defendant was enriched; (b) that the plaintiff suffered a corresponding deprivation; and (c) that the defendant's enrichment and the plaintiff's corresponding deprivation occurred in the absence of a juristic reason": Moore v. Sweet, [2018] 3 S.C.R. 303, 2018 SCC 52, at para. 37.

[88] I agree with the trial judge that the evidence does not establish such a claim, because it does not establish any enrichment of the respondents or corresponding deprivation of GEXR, let alone one that occurred without juristic reason. GEXR carried grain to the Shantz Station pursuant to its agreement with CN in exchange for haulage fees from CN. To be sure, the Interchange Agreement gave GEXR the opportunity to contract with interline customers for payment of demurrage, but GEXR failed to contract with the respondents for such payments.

[89] Whether that was due to a failure by CN to honour its arrangements with GEXR by making contradictory arrangements with P&H in the MOU, or a failure of GEXR to appropriately structure its arrangements with CN so that it could refuse service to any interline customer that was not prepared to commit to pay it demurrage, matters not. The circumstances fall well outside the notion that some benefit was conferred on the respondents "which justice does not permit one to retain", the notion that lies at the heart of the doctrine of unjust enrichment: Moore v. Sweet, at para. 35.

[90] I would not give effect to this ground of appeal.

(4) The costs appeal

[91] In my view, it was completely within the discretion of the trial judge to refuse to defer dealing with costs until the completion of the P&H arbitration with CN. She made no error in principle. That arbitration could not affect GEXR's obligation to pay costs as the unsuccessful party in its action against the respondents.

[92] I would not grant leave to appeal costs.

Conclusion

[93] For these reasons, I would dismiss the appeal.

[94] If the parties are unable to agree on costs of the appeal they may make written submissions. The submissions of the respondents shall be made within ten days of these reasons. The submission of GEXR shall be made ten days thereafter. The submissions shall not exceed three pages each.

Appeal dismissed.

Notes

[^1]: A shipper is a person who sends or receives goods by means of, among other modes, a railway: Canada Transportation Act, S.C. 1996, c. 10, s. 6.

[^2]: Although the railcars were not the property of GEXR, GEXR's claim was that it paid car hire costs to the railcar owners for the period from its receipt of the cars until they were interchanged to another carrier. Delay in being able to put the cars to other uses or send them to another carrier could affect GEXR economically.