May 5, 1904

LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

During the recess I took occasion to look into this section and to consider it in the light of the objection made by my hon. friend the leader of the opposition. If I remember rightly, the objection he raised was that in the event of the government undertaking to operate the eastern division on the expiration of the lease for fifty years, the Grand Trunk Pacific Company would, as the owners of the western division, have running rights over the eastern division to such extent as might be necessary to carry on their business arising on the western division, and that there were no reciprocal arrangements with respect to the user of the western division by the government as owners of the eastern division. Now, I would like to draw my hon. friend's attention to section 24 of the original agreement : and in constructing that section, I would ask him to bear in mind that three separate properties are being dealt with. In sections * a ' and ' b ' it is the property called ' the eastern division ; in section ' c ' it is the western division; in section * e ' it is the Intercolonial Railway. So that what is in contemplation here is that the company, as owners of the western division and as lessees of the eastern division, shall have the right to operate these two divisions in their entirety ; but, in addition to that, they will, under section * e,' obtain the right to use the Intercolonial Railway. On the other hand, the government, as the owner of the Intercolonial Railway and of any other lines of railway in the present or the future, acquire the right of user of the eastern division and also of the western division. Now, how are these rights dealt with ? The government, as the proprietor of the eastern division, reserves to itself-that is to say, takes from the lease- the right with respect to its ownership of the Intercolonial Railway and of any other lines of railway, present and future, to have running powers over the eastern division. That is a reservation ; and my hon. friend will observe that that is the word used in sections ' a ' and ' b.' Rut when you come to deal with the western division, which is not to be leased, but is an independent property belonging to the lessees of the eastern division the word used is not ' reserves,' but that the government ' secures ' to itself certain rights Mr. OSLER.

over the western division ; and with respect to the Intercolonial Railway, it will be observed that in section 1 e ' the company ' secures ' to itself certain rights over the Intercolonial. Now, what is the effect of that ? In order to construe section ' c.' you must paraphrase it in this way : the lease shall contain the proper and usual provisions securing to the government, in respect of its ownership, present and future, of the Intercolonial Railway and any other lines of railway, running powers and haulage rights over the western division. It secures those rights in respect of its ownership of the Intercolonial and any other lines of railway, present and future. There is no limitation ; it secures them for all time. The government is not dealing with the company as lessees, but as owners of the western division. Bear in mind that the amendment is only applicable to the eastern division. It is not applicable to the Intercolonial Railway ; because, with respect to the Intercolonial Railway, the company has secured in perpetuity rights over the Intercolonial under section ' e,' ih the same way as the government has secured rights over the western division in perpetuity under section ' c '-or rather will secure rights when the covenants are made.

The position is this. The company are the owners of the western section and the government own the Intercolonial Railway. Between the two there is a section that will be in the possession of the company for fifty years under lease, but which may l'evert eventually, at the expiration of that period, to the government, and the rights of the government with respect to the western division as well as the rights of the company with respect to the Intercolonial Railway are fixed. But with respect to the intervening part, they are not fixed so far as the company is concerned, and it is in order to supplement that omission that the company ask for this amendment. The company own absolutely the western division and the government own the eastern division and the Intercolonial. With respect to the western division, the government secures rights in perpetuity over it. With respect to the Intercolonial, the company acquire rights in perpetuity over that line, and with respect to the intervening portion, the government reserve rights to the Intercolonial pending the lease, but at the expiration of the lease, if the property reverts to the Grown, the company will have over that eastern extension the same rights it would have over the Intercolonial

Topic:   HE VISED EDITION-
Permalink
?

Mr. R.@

Ij. BORDEN. Are we to understand that the rights which are to be secured to the Grand Trunk Pacific, under subclause ' e ' of clause 24 of the agreements are rights in perpetuity ?

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

Yes, over the Intercolonial.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Are we also to understand that any rights granted under subsection ' d ' are rights in perpetuity ?

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

The government are securing in the abstract rights which they may confer on any company which may desire them. There is no company mentioned.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

But when we come to the concrete, when we have a company asking to make use of the same, it would seem to follow logically from the argument of my hon. friend that these running powers are to be granted in perpetuity.

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

Not necessarily.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

With all deference to the opinion of my hon. friend, I doubt very much whether that would not be the construction.

Topic:   HE VISED EDITION-
Permalink
CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

Clause 10 of the supplementary agreement is not in perpetuity.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

All these stipulations are dependent on the construction of the lease, provided for in section 20, which lease is to be for a period of fifty years, and that lease according to the provision of paragraph 24 of the original agreement, must contain proper and usual provisions. The words used are :

The said lease shall also contain proper and usual provisions.

The government reserves in respect of its ownership, present and future, of the Intercolonial, and any other line or lines ol' railway, running powers, and haulage rights over the western division, and also the right to grant running powers and haulage rights to any company desiring to use the eastern division.

Then follows of course, the word ' securing.' The reason for using the word ' securing ' is very plain. The first two paragraphs are reservations. The government is to own the eastern division, and the granting of a lease on that division is to be subject to a reservation. But when you come to deal with the western division, which is not owned by the government, you secure to the government-the word ' reserve ' would not be the proper word there-and to any railway company that may desire to make use of the same, running rowers and haulage rights. But all these are limited by the term of the lease, in which these provisions are to be contained, and the term of the lease is to be a period of fifty years. When that term comes to a conclusion, all the powers granted under the lease must necessarily fall, in the absence of an express and definite stipulation to the contrary. You cannot by merely using the word ' securing,' extend beyond the period of the lease, powers which are contained in it. I have no doubt as to this, except that which may be created by the fact

that my hon. friend argues the contrary. Then you have this amendment providing that for a period of fifty years after the termination of the lease the Grand Trunk Pacific shall have running powers and haulage rights over the eastern division. That very provision does not seem to me at all in consonance with the argument of the Minister of Justice; and if the object which he says the government had in view by section 24 and the amendment to section 21 is to be carried out, one would have expected a somewhat similar provision in respect to the powers which the government might grant to railway companies under section 24, subsection 'b,' but I see nothing of the kind. I am therefore not disposed to concur in the view which my hon. friend takes of this section. Let me point out this. Under section 24, subsection 2, of the original agreement, it is provided that if any question should arise under paragraphs, ' a,' ' c,' and ' e,' it shall be submitted to the board of railway commissioners. Is there any similar provision with regard to any question which may arise under paragraphs ' b ' and ' d ' ? I suppose, there must be some reason for omitting these two paragraphs, but at the present moment I do not recall it.

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

I have no persona! recollection of the object in view at the time these two paragraphs were drawn. Paragraph ' b ' reserves power to the government to grant running powers to any railway desiring to use the eastern division. Paragraph ' d ' secures to any railway company running powers over the western division. Paragraph ' e ' secures to the company running powers over the Intercolonial. These are specific cases. The others are reservation of power generally.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I think I see the reason now. Under ' b ' and ' d ' the terms are to be settled by the government and not by the board of railway commissioners. But does not the Minister of Justice think that after all this must be limited by the term of the lease ? Can there be an extension of these provisions beyond the term of the lease in the absence of express stipulations to the contrary ?

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

My answer is that the covenant there is not with the company as lessees. Take, for instance, subsection c. That is not a covenant with them as lessees at all, it is a covenant with them as owners of the western division. They covenant there with respect to a property not affected by the lease at all. They give to us running powers over the western division that does not come within the operation of the lease, and they covenant, as owners of the western division, with us as owners of the eastern division, and in respect of our ownership of that line and any

other line present and future. There Is no limitation as to the time, so that it covers our ownership of any other lines that we may acquire. It may be that at the expiration of the fifty years or thereafter, we may become owners of all the lines east of Lake Superior, and this is with respect to the government ownership of lines. What was in contemplation was with respect to government-owned roads, that they should have at all times running rights over this western division.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

That may have been the intention but we have to take the words of the paragraph before us. The government is granting a lease to a company which will be the owner of the western division. The government reserves in the least its own right to run over the eastern division, the absolute ownership being in the government, subject to the rights conferred by the lease. The government reserves certain haulage powers and running rights. The company to whom that lease is granted happens to own a line of railway extending further west, which connects with the eastern division ; and the company, on its part, is to secure to the government running powers over that line. Well, all these are limited, it seems to me, by the terms of the lease, in the absence of express stipulation to the contrary. It would have been perfectly possible, and perfectly proper, for the government to have provided, in subsection c and subsection d that the running powers and haulage rights therein referred to should not be limited by the term of the lease. But inasmuch as the government has not made that provision, and inasmuch as section 24 itself says that the provisions with respect to these matters are to be the proper and usual provisions, it would seem to me to follow almost irresistibly-I would 'have said quite irresistibly-that the powers conferred by section e and section d are limited by the term of fifty years for which the lease is to continue. I do not quite see, notwithstanding the argument of the Minister of Justice (Mr. Fitzpatrick) how they can continue for an indefinite period. Of course, my hon. friend is forced to the contention that they must continue for ever. My opinion is that sections c, d and e do not create these powers in perpetuity but merely for the period of fifty years. And I think it will be rather new to the country that this lease is to give to the Grand Trunk Pacific Railway Company running powers and haulage rights over the Intercolonial for ever. Because I do not think that impression was derived- from the words of this contract by any hon. gentleman in this House during the discussion we had last session. For my part, I am free to confess, the idea never entered my mind until I heard it announced by my hon. friend the Minister of Justice this evening. It is a stipulation of the greatest possible importance, if the running Mr. FITZPATRICK.

powers and haulage rights over the Intercolonial are not to be confined to thd period of fifty years, but are to extend to all time in the future, and that conclusion forms a necessary part of the argument of the Minister of Justice

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

Does not the hon. gentleman (Mr. R. L. Borden) see that there is reason to limit the reservation to fifty years, because at the end of fifty years there is no reason for the reservation, because the property reverts to the owner? But that does not refer to the western division, for there we are dealing with an independent property. It is quite right to stipulate that the lessee shall have the right of passage over joint property. I do not see any objection to making the right of passage beyond the lease, and I do not see any objection to stipulating that the owner of the joint property, not the lessee, should have the right of passage over the property.

Topic:   HE VISED EDITION-
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Let us take the hon. gentleman's (Mr. Fitzpatrick's) illustration. Suppose you had an ordinary lease, and reserved to the landlord the right of way over the property, and, in the same lease, a right of way was granted to the landlord over adjoining property of the lessee-I think it beyond doubt, in the absence of express stipulation to the contrary, that the right of way would expire at the termination of the lease. That is only putting it in another form and perhaps one in which we can grasp it more readily. Accepting the hon. gentleman's illustration, it seems to me that in the absence of express stipulation to the contrary-and I attach much importance to that- proper and usual provisions ' in a lease are restricted to the term of the lease. That is not only fundamental but elementary so far as the operation of the lease is concerned, unless you can point out in the lease itself some provision which, in express terms or by necessary implication, extends a particular provision beyond the period for which the lease is granted.

Topic:   HE VISED EDITION-
Permalink
CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

Is it to be supposed that if the gentleman who drew that document had had in his mind that he was going to secure to the government for all time running rights and haulage powers over some 1,500 miles of a railway he would have put these provisions in a lease expiring in fifty years ? They are entirely apart from anything connected with the lease. They would naturally be a part of a separate and distinct agreement ; and the words here would have been that the

parties shall enter into an agreement for these things in perpetuity. It is the last thing any draughtsman would have thought of, it seems to me, to put such provisions to last in perpetuity, in a lease which expires in fifty years. Can it be possible that, in a matter of such vital importance, of enormous value to the government and to the companies that are intended to be benefited, provisions to inure to their benefit for all time should be considered as coming within ' proper and usual provisions ' in a lease of fifty years. The very last thing the hon. gentleman would have done would have been so to express himself, if, when he drew the original agreement, he thought, for a moment. he was going to obtain perpetual rights over the western division. I cannot imagine that the hon. gentleman would have failed to use the words distinctly providing for perpetual user, for perpetual powers. The hon. gentleman refers to the words ' present and future '

Topic:   HE VISED EDITION-
Permalink
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

Ownership present and future-clause A.

Topic:   HE VISED EDITION-
Permalink
CON
LIB

May 5, 1904