Patrick O'Rourke

The appeal concerned whether the federal government remained constitutionally bound to ensure operation of passenger rail service on the Victoria to Nanaimo portion of the Vancouver Island railway, whether continuous-operation language in historic railway agreements had statutory force overriding general railway legislation, and whether an Order-in-Council discontinuing service on another portion of the line was ultra vires after a missed five-year reconsideration.

The majority held that Term 11 of the British Columbia Terms of Union imposed only a construction obligation, not an operational one, and that later political arrangements could not themselves attain constitutional status absent grounding in the constitutional text.

The majority further held that the Dunsmuir Agreement was ratified but not incorporated into federal legislation as a statutory obligation, and that a 1912 provincial enactment could not impose an operational statutory duty on a federally regulated railway.

On the administrative issue, the majority held that the continuation order did not lapse for want of timely reconsideration and remained capable of variation under s. 64 of the National Transportation Act, 1987.

The appeal was allowed, with two judges dissenting.

The federal government introduced legislation to limit its cost-sharing obligations to certain provinces under the Canada Assistance Plan.

British Columbia referred questions to the Court of Appeal regarding whether the federal government had the authority to unilaterally limit its obligations and whether the doctrine of legitimate expectations prevented the introduction of such legislation without provincial consent.

The Supreme Court of Canada held that the federal government had the authority to amend the Plan, as parliamentary sovereignty allows Parliament to amend its statutes.

The Court further held that the doctrine of legitimate expectations does not apply to the legislative process and cannot create substantive rights to veto proposed legislation.