



COURT OF APPEAL FOR ONTARIO

CITATION: Goderich-Exeter Railway Company
    Limited v. Shantz Station Terminal Ltd., 2020 ONCA 560

DATE: 20200909

DOCKET: C67132

Huscroft, Zarnett and Coroza
    JJ.A.

BETWEEN

Goderich-Exeter Railway Company Limited

Plaintiff

(Appellant)

and

Shantz
    Station Terminal Ltd.
and Parrish and Heimbecker
    Limited

Defendants

(Respondents)

Kenneth Peel and George Karayannides,
    for the appellant

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

Heard: in writing

On
    appeal from the judgment of Justice Catrina D. Braid of the Superior Court of
    Justice, dated May 31, 2019 with reasons reported at 2019 ONSC 1914, and from a
    costs order, dated September 9, 2019 with reasons reported at 2019 ONSC 5192.

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
    railways equipment and assetsits railcarsbeyond 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 railways 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 judges 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&Hs
    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.

GEXRs 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 CNs
    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
    CNs 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 CNs agreement with GEXR,
    especially as it relates to GEXRs 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 GEXRs 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 CNs 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. GEXRs tariffs were different than the CN tariff
    for demurrage that was specifically referred to in the MOU.

GEXRs Demands for Payment of Demurrage and
    P&Hs 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 CNs 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 GEXRs action, dealing
    with the issues in four steps.

[32]

First, she rejected GEXRs argument that the
CTA
and GEXRs 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&Hs 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&Hs position),
    preclude a finding of an implied contract between the parties.

[35]

Fourth, she rejected GEXRs 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 GEXRs 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 GEXRs action.

ANALYSIS

(1)

Is There an Entitlement to Demurrage in the
    Absence of a Contract?

The Standard of
    Review

[38]

GEXRs 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 SCC 33, [2002] 2 S.C.R. 235, at para. 8.

The Common Law
    Required A Contract

[39]

There is strong authority for the proposition
    that, at common law, a shippers 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
N.Y. Central R.
    Co. v. Joseph Dolan & Sons Ltd.
, [1929] 1 D.L.R. 817 (Ont. C.A.), at
    p. 820, 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 v. Neptune Bulk Terminals (Canada) Ltd.
,
    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
    Association et al. v. Canadian Pacific Railway and Canadian National Railway et
    al.
, [1959] S.C.R. 239, Rand J. stated at p. 244:

[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
(1926), Brandeis J. stated at p. 262:

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 consignees 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 railways 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 railways equipment (subject to compliance
    with the statutory regulation of rates and charges of railways).

The Provisions
    of the CTA 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) and Canadian Millers
    Association
, [1979] 2 F.C. 809 at p. 822, affd [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

113(1)(c) without delay, and with
    due care and diligence, receive, carry and deliver the traffic

114(1) afford 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](1)(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 GEXRs tariff charges for
    demurrage were unreasonable.

[56]

I disagree with GEXRs 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 GEXRs 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 [CNs 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:

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 v. Canada (Attorney General)
, 2014 SCC 40, [2014] 2
    S.C.R. 135, that:

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 GEXRs 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.
, 2018 ONSC 5156 (Div. Ct.) at para. 44;
2484234
Ontario
    Inc. v. Hanley Park Developments Inc.
, 2020 ONCA 273, at para. 42.
    Accordingly, a trial judges 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 railways 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 judges 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 Ry. Co. of Canada v. McMillan
, [1889] 16
    S.C.R. 543, at pp. 549-50:
Canadian National Ry. Co. v. Canadian Industries
    Ltd.
, [1940] 3 D.L.R. 621 (Ont. S.C.), at pp. 624-627, affd [1940] O.W.N.
    452 (C.A.), affd [1941] S.C.R. 591.

[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 Limited
, 2009 CanLII 15893 (Ont. Sup. Ct.), 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 CanLII 7408 (Ont.
    Ct. J.), 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, 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 GEXRs 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 GEXRs 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 GEXRs argument that the trial
    judge in effect held it to be bound by the MOUs 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 judges 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 judges 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 defendants enrichment and the plaintiffs
    corresponding deprivation occurred in the absence of a juristic reason:
Moore
    v. Sweet
, 2018 SCC 52, [2018] 3 S.C.R. 303, 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 GEXRs 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.

Released: G.H. September 9, 2020

B. Zarnett J.A.

I agree. Grant Huscroft J.A.

I agree. S. Coroza J.A.





[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, GEXRs 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.


