Supreme Court of Canada
Mills (J.W.) & Son Ltd. et al. v. R.,  S.C.R. 63
J.W. Mills & Son Limited, Kuehne & Nagel (Canada) Limited and Overland Import Agencies Ltd. Appellants;
Her Majesty The Queen Respondent.
1970: May 12, 13; 1970: June 1.
Present: Fauteux C.J. and Abbott, Martland, Judson, Ritchie, Hall, Spence, Pigeon and Laskin JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Criminal law—Conspiracy to limit facilities for transporting articles—Conspiracy to prevent or lessen competition in the transportation of articles—Amendment to indictment—Combines Investigation Act, R.S.C. 1952, c. 314, as amended by 1960 (Can.), c. 45, s. 13.
The appellants, who are freight forwarders, were found guilty, after a trial before a judge of the Exchequer Court of Canada, on each of the two following counts of an indictment laid under the Combines Investigation Act: (1) Conspiracy to limit unduly the facilities for transporting or dealing in articles or commodities that may be the subject of trade or commerce, contrary to s. 32(1) (a) of the Act, and (2) conspiracy to prevent or lessen, unduly, competition in the transportation of articles or commodities that may be the subject of trade or commerce, contrary to s. 32(1) (c) of the Act. The activities of the appellants as import pool car operators consisted in effecting the consolidation of different kinds of imported goods at west coast ports and in arranging for their transportation by rail carriers in mixed pool cars to their destination in eastern Canada, thus obtaining for their importer clients the advantage of the consolidation rate for pool cars of mixed goods.
The appellants argue that they provide simply a service unrelated to articles which are the subject of transportation or of facilities therefor. They also contend that only physical means of transport came within the term “facilities” in s. 32(1) (a) and that their service operations had nothing to do with the
availability of rail service for those who required it. In this Court neither the fact of conspiracy nor the element of undueness is contested.
Held: The appeal should be dismissed and the conviction on both counts affirmed.
As to the second count, the accused were clearly within s. 32(1)(c) of the Act in preventing or lessening unduly “competition in the transportation” of the imported articles by rail. This provision is not limited in its application to persons who are themselves in the transportation business or who control means of transportation. It extends to those who are in a position to use or command transportation services for the carriage of goods in transit.
As to the first count, the operations of the accused, to which the rail carriage was integral, are comprehended by the term “facilities for transporting” goods. The physical means of transport were intimately involved and were enough to bring the accused within the bite of the statute. It cannot be said therefore that there were no physical means of transportation involved in the operations of the accused.
APPEAL from a judgment of Gibson J. of the Exchequer Court of Canada, convicting the appellants on an indictment laid under the Combines Investigation Act. Appeal dismissed.
Raymond Lette, Q.C., and J. Rousseau, for the first two appellants.
J.G. Alley, for the other appellant.
S.F. Sommerfeld, Q.C., and D.Q. Patterson, for the respondent.
The judgment of the Court was delivered by
LASKIN J.—The three appellants before this Court are freight forwarders who were found guilty, after a trial before Gibson J. of the Exchequer Court of Canada1, on each of two counts of an indictment laid under paras, (a) and (c) respectively of s. 32(1) of the Combines Investigation Act, R.S.C. 1952, c. 314, as amended by 1960, c. 45, s. 13.
The indictment (which also included two other firms from whose acquittal there is no appeal) charged two illegal conspiracies in the following words:
(1) … to limit unduly the facilities for transporting or dealing in articles or commodities that may be the subject of trade or commerce, to wit, articles or commodities, imported from designated areas in the orient into the Province of British Columbia and transported by railway in railway cars, the railway cars each ordinarily containing a pool shipment of two or more different kinds of the said articles or commodities, at east bound import freight rates, to points in Canada, east of the Manitoba-Ontario boundary, to the City of Toronto and elsewhere in the Province of Ontario and to the City of Montreal and elsewhere in the Province of Quebec and did thereby commit an indictable offence contrary to section 32(1) (a) of the Combines Investigation Act.
(2) … to prevent, or lessen, unduly, competition in the transportation of articles or commodities that may be the subject of trade or commerce, to wit, articles or commodities imported from designated areas in the orient into the Province of British Columbia and transported by railway in railway cars, the railway cars each ordinarily containing a pool shipment of two or more different kinds of the said articles or commodities at east bound import freight rates, to points in Canada, east of the Manitoba-Ontario boundary, to the City of Toronto, and elsewhere in the Province of Ontario, and to the City of Montreal and elsewhere in the Province of Quebec and did thereby commit an indictable offence contrary to section 32(1)(c) of the Combines Investigation Act.
Admissions were made by the Crown as well as by the accused, pursuant to s. 562 of the Criminal Code. Among those made by the accused were the following:
1. That during the period described in the Indictment eighty (80%) per cent—ninety-five (95%) percent of all import pool car traffic coming within the terms of Canadian Freight Association tariffs 70A, 70B and 70C was carried by the Canadian National Railway and the Canadian Pacific Railway.
2. That during the period described in the Indictment approximately eighty-five (85%) percent of all import pool car traffic referred to in Paragraph 1
was handled by the accused corporations, but the portion of the traffic handled by the defendant, Johnston Terminals Limited, was less than three (3%) to five (5%) percent of the total traffic handled by the accused corporations.
Counsel for the accused characterized these as “a straight market admission”, and as designed to support a defence to the charges that the market specified in the indictment was too narrow. After all the evidence was in, and, indeed, after counsel for the accused had addressed the Court, Crown counsel successfully moved to amend the indictment to introduce the words “which could be” after the words “the Province of British Columbia and” and before the words “transported by railway” in each count of the indictment. Objection was taken to the proposed amendment as going to destroy a defence at a time when other evidence to meet the amendment could no longer be introduced. Alternatively, it was contended that as a term of allowing the amendment the accused should be allowed to withdraw the admissions previously quoted. These contentions were rejected on the ground that there was no prejudice to the accused.
The propriety of allowing the amendment was one of the grounds of appeal. Although conceding that the matter was within the trial judge’s discretion, counsel for the accused submitted that it was unfairly, that is, not judicially, exercised. This Court did not deem it necessary to hear Crown counsel on the point, being of the view unanimously that not only was the trial judge entitled in the circumstances to allow the amendment, but also that on the merits of the market factor the evidence that was addressed to the charges as originally laid would not have raised a successful defence on that issue.
The nub of this appeal is whether the impugned activities of the accused relate merely to services or to work and labour, unconnected with “facilities for transporting any article” or with “competition in the transportation of an article”. Neither the fact of conspiracy nor the element of undueness is contested; and, apart from the rejected argument on the amendment of the indictment, there is no issue here on the relevant
market, either as to the range of imported goods or as to their source or destination.
The activities of the accused as import pool car operators, around which their conspiracy developed, became possible with the amendment of Eastbound Import Tariff 70A, effective July 1, 1955. (Subsequent amendments through Tariffs 70B and 70C need no elaboration because they did not alter the situation brought about by the amendment to Tariff 70A.) The tariffs mentioned covered a wide range of goods imported from countries in the Orient and brought by ship to west coast ports, and thence carried by rail to points in Canada east of the Manitoba-Ontario border. Substantially, the importers were Toronto and Montreal business firms who had their imported goods shipped to the port of Vancouver.
Prior to the amendment of Tariff 70A in 1955, these importers could not mix different goods for rail carriage in a single car in order to get a carload rate; they had to endure the higher less than carload rate, unless they had a sufficient quantity of the same goods to make up a full carload of at least 30,000 pounds. As a result of the amendment (and I need not expatiate on its competitive feature, as against water and truck transportation, to attract eastern Canada consignees), consolidation of different kinds of imported goods into carload lots at carload rates became permissible. The rail carriers themselves, the Canadian National Railways and the Canadian Pacific Railway, were precluded by a promulgated rule from themselves effecting a consolidation of goods into a mixed pool car, but would do so on proper authorization of importers or their agents. In this respect their services included (1) sorting the goods to be consolidated after they were unloaded from the ship; (2) loading the goods into the pool car or cars; and (3) carrying them to their destination, Toronto or Montreal, where they would be collected by the consignees.
Since the rail carriers (apparently to avoid the possibility of discrimination or of charges thereof) could not do the mixing to make up a carload of goods, eastern Canada importers had the choice of either banding together to get the advantage of the pool car consolidation rate (which would mean, in any event, having some representatives at least at Vancouver if not also in Toronto or Montreal) or of using freight forwarders such as the accused. The latter, indeed, actively pursued this business and it was admitted that over 80 per cent of the import pool car traffic during the period January 1, 1956 to August 1, 1966, specified in the indictment, was handled by the accused, and that not more than 20 per cent of the goods imported from the Orient and covered by Tariffs 70A, 70B and 70C was carried by truck transport during this period.
The freight forwarders operated by obtaining general authorizations from the importers, addressed to shipping line agents, to secure release of goods consigned to the importers at Vancouver. By an examination of the ship manifest, the cargo of the authorizing importers was identified, and thereafter so-called rider sheets, describing the goods, were made up for presentation to the rail carrier with instructions thereon as to car loading. The rail carrier, as already noted, did the sorting and loading, but only according to these directions. The freight forwarder paid the rail carrier the applicable carriage rate, and, of course, its bill to its importer clients included these payments in the composite charge for its services. This overall charge was not a regulated one.
It is, of course, the case that the accused freight forwarders neither own the imported goods nor have any beneficial interest in them, nor do they ever come into possession of them. They are not consignees of the goods but they do control their movement from shipside, at least so long as their authorizations from importer clients remain in effect. Again, they own no physical means of transportation and have no control over the rail carriers, save as rail carrier services are by law available to and must be provided for those who wish to use them.
On the foregoing facts, the accused mount the argument that they provide simply a service un-
related to articles which are the subject of transportation or of facilities therefor, and that they can no more be found guilty than could the importers themselves in making use of rail carriers to get the consolidation rate for pool cars of mixed goods. In so far as this contention invites this Court to apply agency law as an exonerating feature in the application and administration of s. 32(1) (a) and (c) of the Combines Investigation Act, I would reject it. The accused are no less entrepreneurs in their own right in acting for others. The analogy of the travel agent purchasing group or charter rate air tickets is misconceived if there is no article of commerce involved but only passenger travel. Moreover, no issue of criminality is raised under s. 32(1) (a) and (c) in the absence of a forbidden conspiracy merely because a freight forwarder acts as an import pool car operator for a group of importers.
In my opinion, the accused are clearly within s. 32(1)(c) in preventing or lessening unduly “competition in the transportation” of the imported articles by rail. This provision is not limited in its application to persons who are themselves in the transportation business or who control means of transportation. It extends to those who are in a position to use or command transportation services for the carriage of goods in transit, and who combine in the forbidden manner to restrict others from making use of such services for the carriage of such goods, not because the rail carrier cannot provide the service but because of the control of goods in transit for which rail carriage is required. Utilization of rail transportation is at the very heart of the business of the accused, and it is immaterial that they neither own nor possess the goods that they send on by rail, or that they neither own nor control the rail service. I would, therefore, affirm the conviction on the second count.
In addressing himself to the two counts of the indictment, the learned trial judge saw the main issues in the case as turning on the question of the market and on the question of undueness, neither of which is of concern here. In addition, he referred to the concept of competition as being central both to paras, (a) and (c) of s. 32(1). His reasons do not disclose any consideration of the key phrase “facilities for transporting any article” in s. 32(1) (a) other than in his references to the conspiracy as involving “control of the channels of distribution”.
In a broad sense, it may be said that s. 32(1) (a), which does not refer to any limitation of competition, is concerned with maintaining competitive access to “facilities for transporting” goods. But it was the contention of the accused that only physical means of transport came within the term “facilities”, and that their service operations (even if it brought them within the ban of s. 32(1) (c)) had nothing to do with the availability of rail service for those who required it.
I do not find at all helpful judicial interpretations of the word “facilities” in cases arising under different statutes, and especially when the word does not have the contextual connection in which it appears in the Combines Investigation Act.
I agree with the trial judge that (whatever be the meaning of “facilities”) conspiring persons may be guilty under s. 32(1) (a) without owning or controlling “facilities” for transporting goods as they may be under s. 32(1)(c) without owning or possessing or being associated with any transportation operation as agents thereof. If, as is uncontested, the accused dominated the channels of distribution to eastern Canada of the imported goods laid down at Vancouver, the Court cannot ignore the centrality of rail carriage in that distribution. It is no answer to a charge under s. 32(1) (a) to say that this hold on rail carriage was simply a consequence of the elimination of competition (in obtaining the authorizations of importers to see to the effective movement of their goods at the favourable mixed carload rate), and that therefore it was not itself culpable. In my opinion, the operations of the
accused, to which the rail carriage was integral, are comprehended by the term “facilities for transporting” goods. The physical means of transport were intimately involved, and even if they did not represent the entirety of the activities of the accused in their particular business, they are enough to bring the accused within the bite of the statute. It is evident that these accused limited to themselves (and unduly) facilities for transporting to eastern Canada the categories of imported goods covered by the relevant tariffs. I do not agree, therefore, with counsel for the accused that there were no physical means of transport involved in the operations of the accused.
It is unnecessary to go beyond this conclusion in the present case in respect of the meaning of the phrase “facilities for transporting… any article”. I would add that the fact that the same conduct may bring the accused within both paras. (a) and (c) of s. 32(1) is a matter for those laying the charges. The trial juge reflected his appreciation of the matter by imposing one fine in respect of both convictions.
I would, therefore, affirm the conviction on the first count as well, and in the result I would dismiss the appeal.
Solicitors for the first two appelants: Lette, Marcotte & Biron, Montreal
Solicitors for the other appellant: Davis & Company, Vancouver.
Solicitor for the respondent: D.S. Maxwell, Ottawa.
  2 Ex. C.R. 275.