In the Supreme Court of British Columbia

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation: Snaw-Naw-As First Nation v. Attorney General of Canada, 2020 BCSC 979 Date: 20200630 Docket: 154903 Registry: Victoria

Between: Snaw-Naw-As First Nation Plaintiff

And:

Attorney General of Canada and Island Corridor Foundation Defendants

Before: The Honourable Mr. Justice Punnett

Reasons for Judgment

Counsel for the Plaintiff: K. Brooks and M. Price

Counsel for the Defendant: J. Chow, Q.C. Attorney General of Canada and D. McIntosh

Counsel for the Defendant: G. Plant, Q.C. Island Corridor Foundation and S. Gyawali

Place and Date of Trial: Victoria, B.C. February 24-28, 2020; and June 8, 2020 Place and Date of Judgment: Victoria, B.C. June 30, 2020

Snaw-Naw-As First Nation v. Attorney General of Canada Page 2

Introduction

[1] The E&N Railway (the “Railway”) on Vancouver Island runs from Victoria to Courtenay, with a branch line from Parksville to Port Alberni and a spur from the main line in Nanaimo to a rail yard and barge loading facility. The Railway, now owned and operated by the defendant Island Corridor Foundation (“ICF”), transects 1.3 km of the plaintiff First Nation’s reserve lands in Nanoose. This strip of land (the “Lands”) is subject to a right of way in favour of ICF (the “ROW”).

[2] At issue is whether the Lands remain alienated from the plaintiff and subject to the ROW given the Railway infrastructure has deteriorated and rail service has been discontinued except for freight traffic on the Nanaimo spur line.

[3] The plaintiff seeks:

a) A declaration that the lands subject to the ROW revert to the administration and control of Canada for the use and benefit of Snaw- Naw-As as a part of the Snaw-Naw-As reserve upon the cessation of railway operations; b) In the alternative, a declaration that the lands subject to the ROW revert to the administration and control of Canada in trust for Snaw-Naw-As upon the cessation of railway operations. c) A declaration that the lands subject to the ROW are no longer being used for railway operations, and as such are no longer being used for railway purposes; d) A declaration that the lands subject to the ROW have reverted to the administration and control of Canada for the use and benefit of Snaw- Naw-As as part of the Snaw-Naw-As reserve; e) In the alternative, that the lands subject to the ROW have reverted to the administration and control of Canada in trust for Snaw-Naw-As.

[4] ICF submits the Lands continue to be used for railway purposes and that the ROW has never been formally or informally abandoned, nor is there any intention to do so.

Background

[5] The history of the Lands in issue is summarized by the “Agreed Statement of Facts Re: Historical Facts” filed by the parties: Snaw-Naw-As First Nation v. Attorney General of Canada Page 3

Creation of SFN Reserve 1. Snaw-Naw-As First Nation, also known as the Nanoose Indian Band (“SFN”), is a band within the meaning of the Indian Act, R.S.C. 1985, c.1-5. 2. On or about January 4, 1877, the Joint Indian Reserve Commission allotted the Nanoose Indian Reserve (“SFN Reserve”). From this date forward, both Canada and British Columbia acted on the basis that the Reserve was controlled and administered by Canada for the use and benefit of SFN. 3. In or about 1878 the SFN Reserve was surveyed and it was determined that the SFN Reserve contained approximately 209 acres. 4. On July 30, 1938, British Columbia transferred the administration and control of, among other things, the SFN Reserve to Canada by Order in Council 1036. 5. The SFN Reserve is held for the use and benefit of SFN, pursuant to s. 18(1) of the Indian Act. Railway Right-of-Way over SFN Reserve 6. In 1871, pursuant to Term 11 of the Terms of Union dated May 16, 1871, BC agreed to join Canada on the basis that Canada was to “secure the completion” of a rail line across British Columbia: The Government of the Dominion undertake to secure the commencement simultaneously, within two years from the date of the Union, of the construction of a railway from the Pacific towards the Rocky Mountains, and from such point as may be selected, east of the Rocky Mountains, towards the Pacific, to connect the seaboard of British Columbia with the railway system of Canada; and, further to secure the completion of such railway within ten years from the date of the Union. 7. An agreement was reached between Robert Dunsmuir and his financiers to build the Esquimalt & Nanaimo Railway (the “Railway"), and in 1883 BC passed An Act relating to the Island Railway, the Graving Dock, and Railway Lands of the Province, S.B.C. 1884 c.14 (the “Settlement Act'). 8. The Settlement Act granted to Canada the land necessary to construct the Railway, and exempted any Indian reserve, settlements or naval or military reserve from the land grant. 9. The Settlement Act also incorporated the E&N Railway Company; whose purpose was to construct the Railway between Esquimalt and Nanaimo. 10. On or about April 21, 1887, by way of a Dominion Land Grant, Canada conveyed the lands to E&N Railway Company for the construction of the railroad. The relevant portions of the 1887 Land Grant stated: Snaw-Naw-As First Nation v. Attorney General of Canada Page 4

Now know ye that we do by these presents in consideration of the premise and under and by virtue of the said Act of Parliament of Canada [...] of Our Privy Council for Canada, Grant, Assign and Convey unto the Esquimalt and Nanaimo Railway Company, its successors and assigns, All and Singular the land situated on Vancouver Island which had been granted to Us by the Act of the Legislature of the Province of British Columbia passed in the Forty Seventh year of Our reign, chaptered Fourteen and entitled “An Act relating to the Island Railway, the Graving Dock, and Railway lands of the Province” in aid of the construction of the said line of Railway in as far as such lands are vested in Us and held by Us for the purposes of the said Railway or to aid in the construction of the same ... 11. By operation of s. 6 of the Settlement Act, this grant did not include the SFN Reserve. 12. In or about 1905, the Canadian Pacific Railway (CPR) acquired the E&N Railway Company (“E&N (CPR)”. 13. As the E&N Railway had been declared to be a “work for the general advantage of Canada” by s. 1 of the Act respecting the Esquimalt and Nanaimo Railway Company, S.C. 1905, c. 90, it fell within the purview of s. 6 of the Railway Act, R.S.C. 1906, c. 37. 14. To facilitate the extension of the E&N Railway line from Nanaimo to Port Alberni, the E&N (CPR) sought a right of way across the Snaw- Naw-As Reserve. 15. E&N (CPR)’s authority to “take possession of, use or occupy” Crown lands was pursuant to section 172 of the Railway Act, R.S.C. 1906, c.37 (“1906 Railway Act”). Subsection 172(2) states that: Any company may, with such consent, upon such terms as the Governor in Council prescribes, take and appropriate, for the use of its railway and works, so much of the lands of the Crown lying on the route of the railway as have not been granted or sold, and as is necessary for such railway ... 16. Subsection 172(3) further states that … a railway company acquiring Crown lands “may not alienate any such lands so taken, used or occupied.” 17. The SFN Reserve is Crown land within the meaning of subsections 172 (2) and (3) of the 1906 Railway Act. 18. Section 46 of the Indian Act, R.S.C. 1906, c. 81 (1906 Indian Act), as amended by SC 1911, c 14, permitted the taking of reserve lands for “the purposes of any railway” with the consent of the Governor in Council. It stated: No portion of any reserve shall be taken for the purpose of any railway, road, public work, or work designed for any public utility without the consent of the Governor in Council, but any company or municipal or local authority having statutory Snaw-Naw-As First Nation v. Attorney General of Canada Page 5

power, either Dominion or provincial, for taking or using lands or any interest in lands without the consent of the owner may, with the consent of the Governor in Council as aforesaid, and subject to the terms and conditions imposed by such consent, exercise such statutory power with respect to any reserve or portion of a reserve; ... 19. On October 16, 1907, E&N (CPR) requested permission from the Department of Indian Affairs for a right of way across the SFN reserve amounting to a strip of land about 50 feet wide on either side of the centre line of the Railway containing approximately 10.79 acres. 20. On November 30, 1908, the right of way plans were certified by the Department of Railways and Canals as lands “actually required for Railway purposes". 21. On or about July 30, 1912, the Governor in Council consented to the taking [of] a right of way of 10.78 acres of land through the SFN Reserve, pursuant to s. 46 of the Indian Act. The taking was formalized by federal Order in Council P.C. 2017. In consenting to the taking, the Governor in Council stated: On a memorandum dated 4th July, 1912, from the Acting Superintendent General of Indian Affairs, submitting that the Esquimalt & Nanaimo Railway Company has applied to the Department of Indian Affairs for right of way, to comprise an area of 10.78 acres, through the Nanoose Indian Reserve, in the District of Nanoose, in the Province of British Columbia, and a plan is on record in the said Department bearing a certificate of the Chief Engineer of the Department of Railways and Canals that the area applied for is actually required for railway purposes and as such … the Company should be allowed to acquire under section 46 of the Indian Act … The Minister recommends, as the railway company has deposited to the credit of the Receiver General full payment for the said 10.78 acres at the valuation of the Department of Indian Affairs, that, under section 46 of the Indian Act, authority be given for the sale thereof to the said Railway Company ... 22. On September 12, 1912, Canada issued a grant by Letters Patent for the right of way to E&N (CPR) on payment of $650. [Footnotes omitted.] [Emphasis added.]

[6] I will refer to the 1912 grant described above as the “Grant” in these reasons.

[7] The history of the Railway up to the 1912 date of the Grant was reviewed by the Supreme Court of Canada in British Columbia (Attorney General) v. Canada Snaw-Naw-As First Nation v. Attorney General of Canada Page 6

(Attorney General); An Act respecting the Vancouver Island Railway (Re), [1994] 2 S.C.R. 41 pp. 58-61.

[8] The Railway network includes three segments and a converted section:

a) Victoria Subdivision: 225 km railway line between Victoria and Courtenay;

b) Port Alberni Subdivision: 64 km segment between Parksville and Port Alberni;

c) Wellcox Spur: 5 km spur from the main line (Victoria Subdivision) to a rail yard and barge loading facility on the Nanaimo waterfront; and

d) Lake Cowichan Subdivision: a converted rail corridor west of Duncan.

[9] The plaintiff’s reserve is bisected by the Railway and B.C. Highway 19 which runs parallel to the Lands. There is no direct road connection between the upper and lower portions of the reserve. There is a pedestrian walkway over Highway 19 between Mallard Way and Capilano Road. Superior Road, located south of the reserve, crosses Highway 19 and the Railway at a controlled intersection and provides access to the upper portion of the reserve via Northwind Drive and Gaylyn Place. The upper portion of the reserve is also accessible via Capilano Road from the southbound lane of Highway 19. The lower portion of the reserve is accessible via Lanzville Road from Highway 19 or Superior Road.

[10] The Railway was built and operated by the Esquimalt & Nanaimo Railway Company, which was acquired in or about 1905 by the Canadian Pacific Railway (“CPR”) as a subsidiary. Starting in 1979 VIA Rail operated the passenger service on the Railway, but CPR retained ownership.

[11] In 1998, CPR divested operations of the Railway to RailAmerica. RailAmerica purchased the Port Alberni to Nanaimo section and leased the Nanaimo to Victoria/Parksville to Courtenay sections. Snaw-Naw-As First Nation v. Attorney General of Canada Page 7

[12] In 2003, RailAmerica announced its intention to shut down its rail service and to sell its assets and leave Vancouver Island. In response Vancouver Island Rail Corporation (“VIRC”) was formed to maintain the rail and operate the system.

[13] VIRC proposed the establishment of a Vancouver Island Corridor Foundation made up of the affected regional governments and First Nations who would own and control the Railway corridor. In 2003, ICF was formed as a federally incorporated society and registered as a charity.

[14] ICF membership is restricted to members from the five Regional Districts and fourteen First Nations along the Railway corridor. Three Nations have not applied to be members. The current members are:

Regional Districts 1. Capital Regional District 2. Cowichan Valley Regional District 3. Nanaimo Regional District 4. Comox Regional District; and 5. Alberni Clayoquot Regional District First Nations 1. Malahat First Nation 2. Cowichan Tribes 3. Lake Cowichan First Nation 4. Halalt First Nation 5. Stz-uminus First Nation 6. Snuneymuxw First Nation 7. Snaw-Naw-As First Nation 8. Qualicum First Nation 9. K’omoks First Nation 10. Hupacasath First Nation; and 11. Tseshaht First Nation.

[15] ICF’s bylaws provide for a Board of Directors made up of six individuals nominated by the Regional Districts, and six individuals nominated by the First Nations. Snaw-Naw-As First Nation v. Attorney General of Canada Page 8

[16] The purposes of ICF include:

a. to acquire, preserve and develop for the Corporation and its objects, but for no other purposes, the Island Corridor which lies North-South from Victoria to Courtenay and East-West from Nanaimo to Port Alberni on Vancouver Island, with ancillary lands, structures and all other property rights attached thereto (the “Island Corridor”) and the infrastructure and other assets that constitute the E & N Railroad and are located on the Island Corridor (the “Railroad”); b. to maintain the continuity of the lands on which the Railway lies as a continuous connection for the use of all communities, while respecting and supporting First Nations interests and traditional lands and uses; c. to contribute to safe and environmentally sound passenger and freight rail services along the Railroad; d. to encourage a flexible infrastructure along the Island Corridor which will encourage a wide range of economic and trade activity for the benefit of all communities lying adjacent to the Island Corridor; e. to preserve archaeological resources, historic landmarks, structures, artifacts, and historic routes along the Island Corridor for historical purposes and for ongoing and future use by the community; f. to create trails, parks, gardens, greenways and other public areas for use of members of the public along the length of the Island Corridor; g. to conserve the environmental and spiritual features and functions of the Island Corridor in respect of the land, water and natural resources for the general benefit of the public; and h. to do all such charitable activities that are incidental and beneficial to the attainment of the purposes stated above.

[17] In 2005 CPR transferred its portion of the line (Victoria-Courtenay) to ICF and in 2006 RailAmerica transferred its portion of the line (Parksville-Port Alberni) to ICF.

[18] The transfer to ICF was for good and valuable consideration, including:

a. ICF assumed and agreed to observe, pay, discharge, and perform certain CPR obligations and liabilities; and b. ICF agreed to hold and develop the Railway, including the Lands, in a manner consistent with and intended to achieve the ICF Purposes, and to incur expenses and make expenditures toward that end.

[19] As of 2006, ICF owned the entire Railway and branch lines.

[20] In 2006, ICF contracted with Southern Railway of Vancouver Island (“SVI”) to operate the rail line. SVI is a for-profit subsidiary of the Southern Railway of British Snaw-Naw-As First Nation v. Attorney General of Canada Page 9

Columbia (a subsidiary of the Washington Companies), and these groups operate several railways across the world. Between 2006 and 2011, SVI operated passenger services on behalf of VIA Rail and between 2006 and 2014 ran freight traffic on the

Railway. The passenger traffic operated once daily between Courtenay and Victoria, with annual ridership between 35,000 and 44,000.

[21] In 2010, the B.C. Ministry of Transportation and Infrastructure (“MOTI”) released two studies evaluating the economic potential of the Railway. It estimated the cost of rehabilitating the rail corridor from Victoria to Courtenay for freight and VIA Rail passenger services to be between $70 million and $130 million.

[22] On April 5, 2011, SVI and VIA Rail decommissioned passenger rail service indefinitely due to safety concerns about the railway infrastructure. Freight service between Parksville and Duncan continued at a slow speed. In November 2014, SVI and ICF announced the discontinuance of the remaining freight service between Duncan and Parksville. This however did not end all rail traffic on the Railway.

[23] SVI continues to operate freight traffic on the Railway within the Nanaimo operating area, consisting primarily of shipments that arrive by barge at the Wellcox Yard. Shipments are loaded onto rail cars and moved by rail to their destinations in the yard or to customers in the Nanaimo area. Because the rail cars cannot currently travel over the entire Railway, product is transloaded from rail to trucks to ship to final destinations. From 2016 to 2019 freight volume coming into Nanaimo by barge grew from 518 rail cars to 1,234 rail cars.

[24] Seaspan has approved a business proposal to undertake an upgrade to the rail car marine facility in Nanaimo for $935,000 to occur in 2020.

[25] As the rail operator, SVI holds Operating Permit #2009-09, issued under Part 2 of the Railway Safety Act, R.S.C. 1985, c. 32 (4th Supp.). This Permit has never been varied, cancelled, or altered since its issuance in 2009.

[26] A formal process must be undertaken to declare or designate the Railway “inactive” and to apply to close the Railway. Neither ICF nor SVI have taken any Snaw-Naw-As First Nation v. Attorney General of Canada Page 10 formal or informal steps to close, abandon, sell, or otherwise shut down the Railway, nor do they intend to do so. The entire Railway is treated under all laws and regulations as an active Railway, although such do not require that actual freight and passenger services be provided.

[27] ICF, SVI, and ICF’s stakeholders operate on the basis that the Railway is open and remains active and they continue to conduct business, undertake activities, satisfy all safety regulations, and incur expenses on this basis. For example, ICF and SVI work to maintain:

a) the Railway roadbed;

b) sightlines along the Railway corridor;

c) vegetation along the Railway corridor;

d) signals and crossings along the entirety of the Railway;

e) and the entirety of the Railway to ensure mandatory safety regulations are met.

[28] They also control and monitor, 24 hours per day 7 days a week, the entire Railway by a centralized rail traffic controller including the section that crosses the plaintiff’s reserve.

[29] ICF and SVI have spent significant amounts for maintenance and upkeep of the Railway. SVI is generally responsible for all operating and maintenance expenses within the Nanaimo operating area. The costs of maintenance along the remainder of the Railway are addressed by both ICF and SVI with SVI typically paying for the day-to-day maintenance and ICF paying for larger issues such as with the rail subgrade.

[30] ICF states it has spent millions of dollars relating to its purpose of preserving and developing rail along the corridor between 2012 and 2019. SVI has spent over three million dollars in maintenance between January 2011 and March 2019. SVI Snaw-Naw-As First Nation v. Attorney General of Canada Page 11 patrols the railway over its entire length at least twice a month, conducts regular maintenance including brush clearing, maintains and services signal crossings, repairs and replaces irons, ties, bolts, conducts resurfacing and ballasting, repairs and clears culverts, performs general cleanup and repairs environmental damages. As well SVI pays all utilities required for the corridor.

[31] Between 2011 and 2019 SVI invoiced regional districts and others such as the Capital Regional District, City of Nanaimo, District of North Cowichan, Regional District of Nanaimo, City of Langford and MOTI over $7 million for projects and activities required on the Railway.

[32] Despite the above activities. it is not disputed that the maintenance carried out does not rehabilitate the Railway, that the track outside the Nanaimo area cannot support rail traffic in its present condition and that there are no funds available at this time to restore the Railway. Nor is it disputed there is no business case for operating the Railway for either freight or passenger traffic. Any restoration of railway services will depend on public funds.

[33] In 2011 and 2012 the provincial and the federal governments announced funding of $7.5 million each for restoration of the rail corridor. however the funding conditions were not met and there are no funding requests in process.

[34] ICF continues in its efforts to restore rail services. ICF was and is willing to restore the rail service in an “incremental” way. Its mandate remains to restore rail service to the entire corridor. It is clear the proposed restoration of rail service to the corridor is a long-term project.

[35] The short-term prospects are illustrated by the E&N Stations being no longer used to facilitate railway services: the Nanaimo station has been converted to a pub; the Parksville station is used for the Parksville Potters Guild; the Duncan station is used for the Duncan Station & Cowichan Valley Museum; the Qualicum station is a multipurpose space for community groups; and the Westhills-Langford station is now simply a shelter. Snaw-Naw-As First Nation v. Attorney General of Canada Page 12

[36] After trial but before reasons for judgment were given the plaintiff applied to re-open the trial to have admitted as evidence a new Island Rail Corridor Condition Assessment (the “Updated Condition Assessment”) released by MOTI on April 28, 2020 which set out the estimated costs of restoring service to the Railway in various stages.

[37] Before proceeding with the merits of the application, I first turn to an issue respecting the pleadings and the plaintiff’s application to re-open the trial.

Issue of Relief Claimed

[38] Upon the plaintiff opening its case, ICF took exception to the plaintiff claiming that CPR transferring the Railway to ICF breached the restraint on alienation in the 1912 Order in Council.

[39] The plaintiff submits the ROW should be returned since CPR discontinued its use as a railway and donated it to ICF in 2006. The plaintiff argues that the ROW must be used for E&N (CPR)’s railway and works and that E&N (CPR) could not and cannot alienate the ROW. They argue that as a result the ROW expired when E&N (CPR) advertently or inadvertently caused the ROW to terminate in purporting to transfer the ROW along with its other assets to ICF.

[40] ICF submits the allegation of breach of the provision restraining alienation was not pleaded and is not before the Court. ICF argues the relief sought by the plaintiff does not include a claim for a declaration setting aside the Grant based on the transfer to ICF, nor does the Notice of Civil Claim advance a claim against the grantor CPR hence that issue cannot be adjudicated in this proceeding. In addition, ICF submits that even if the claim was validly before the Court, three likely defences would be limitation issues, laches and acquiescence, none of which have been pleaded by ICF, as the issue was not raised in the plaintiff’s pleadings.

Law on Pleading Issue

[41] A defendant is entitled to know the case to be met. “[C]ases should not be decided on grounds not raised…This rule is an instance of natural justice: each party Snaw-Naw-As First Nation v. Attorney General of Canada Page 13 is entitled to know and respond to the case it must answer”: Saadati v. Moorhead, 2017 SCC 28 at para. 9. This requires that the material facts be pleaded. In Sahyoun v. Ho, 2013 BCSC 1143, Voith J. explained:

[16] The new Rules alter the structure in which pleadings are to be prepared. The core object of a notice of civil claim, however, remains the same. That object is concisely captured in Frederick M. Irvine, ed., McLachlin and Taylor, British Columbia Practice, 3rd ed., vol. 1 (Markham, Ont.: LexisNexis Canada Inc., 2006) at 3-4 - 3-4.1: If a statement of claim (or, under the current Rules, a notice of civil claim) is to serve the ultimate function of pleadings, namely, the clear definition of the issues of fact and law to be determined by the court, the material facts of each cause of action relied upon should be stated with certainty and precision, and in their natural order, so as to disclose the three elements essential to every cause of action, namely, the plaintiff’s right or title; the defendant’s wrongful act violating that right or title; and the consequent damage, whether nominal or substantial. The material facts should be stated succinctly and the particulars should follow and should be identified as such... … [21] In Homalco Indian Band v. British Columbia (1998), 25 C.P.C. (4th) 107 (B.C.S.C.), a case which is often referred to because of the succinctness and clarity with which it describes the object and required structure of an appropriate pleading, Justice K. Smith, as he then was, said: 5. The ultimate function of pleadings is to clearly define the issues of fact and law to be determined by the court. The issues must be defined for each cause of action relied upon by the plaintiff. That process is begun by the plaintiff stating, for each cause, the material facts, that is, those facts necessary for the purpose of formulating a complete cause of action: Troup v. McPherson (1965), 53 W.W.R. 37 (B.C.S.C.) at 39. The defendant, upon seeing the case to be met, must then respond to the plaintiff's allegations in such a way that the court will understand from the pleadings what issues of fact and law it will be called upon to decide.

[22] Furthermore, notwithstanding the changes in form that are required by the present Rules and by Form 1, certain essential aspects of the structure of pleadings also remain the same. In Homalco, Justice Smith described that structure and said: 6. A useful description of the proper structure of a plea of a cause of action is set out in J.H. Koffler and A. Reppy, Handbook of Common Law Pleading, (St. Paul, Minn.: West Publishing Co., 1969) at p. 85: Of course the essential elements of any claim of relief or remedial right will vary from action to action. But, on analysis, the pleader will find that the facts prescribed by the substantive law as necessary to constitute a cause of action in Snaw-Naw-As First Nation v. Attorney General of Canada Page 14

a given case, may be classified under three heads: (1) The plaintiff's right or title; (2) The defendant's wrongful act violating that right or title; (3) The consequent damage, whether nominal or substantial. And, of course, the facts constituting the cause of action should be stated with certainty and precision, and in their natural order, so as to disclose the three elements essential to every cause of action, to wit, the right, the wrongful act and the damage. If the statement of claim is to serve the ultimate purpose of pleadings, the material facts of each cause of action relied upon should be set out in the above manner. As well, they should be stated succinctly and the particulars should follow and should be identified as such: Gittings v. Caneco Audio-Publishers Inc. (1988), 26 B.C.L.R. (2d) 349 (C.A.) at 353. ... [25] A material fact is one that is essential in order to formulate a complete cause of action. If a material fact is omitted, a cause of action is not effectively pled… [26] More recently, in Jones v. Donaghey, 2011 BCCA 6, 96 C.P.C. (6th) 10, the court explained that a material fact is one that, when resolved, will have legal consequences as between the parties to the dispute. At para. 18, the court provided that “a material fact is the ultimate fact, sometimes called ‘ultimate issue’, to the proof of which evidence is directed. It is the last in a series or progression of facts. It is the fact put ‘in issue’ by the pleadings. Facts that tend to prove the fact in issue, or to prove another fact that tends to prove the fact in issue, are evidentiary or ‘relevant’ facts”. See also British Columbia Teachers’ Federation v. British Columbia, 2012 BCSC 1722 at paras. 15-17 [BCTF].

[42] The Notice of Civil Claim sets out the history of the Lands. Regarding the transfer to ICF it states:

25. The Island Corridor Foundation was formed in 2003 as a not-for-profit charitable society. CPR and RailAmerica donated the sections of the railway lands they each owned to the Island Corridor Foundation which now owns the entire E & N Railway corridor and branch lines.

[43] For convenience I repeat the relief claimed:

c) A declaration that the lands subject to the ROW are no longer being used for railway operations, and as such are no longer being used for railway purposes; d) A declaration that the lands subject to the ROW have reverted to the administration and control of Canada for the use and benefit of Snaw- Naw-As as part of the Snaw-Naw-As reserve; e) In the alternative, that the lands subject to the ROW have reverted to the administration and control of Canada in trust for Snaw-Naw-As.

[44] Part 3: Legal Basis of the Notice of Civil Claim reads as follows:

1. The E & N Railway Company’s authority to take Crown lands is set out in the Consolidated Railway Act, 1879, 42 Victoria, c. 9. 2. Subsection 7(3) of the Consolidated Railway Act, permits a railway company to take and appropriate Crown lands for the use of their railway and works but prohibits the railway company from alienating those lands. 3. As a result of the prohibition on alienation of Crown lands taken for railway purposes, the lands must revert to the Crown when the lands are no longer used for the railway company’s railway and works. 4. The Snaw-Naw-As Reserve is Crown land within the meaning of subsection 7(3) of the Consolidated Railway Act. 5. The ROW through the Reserve was obtained pursuant to a taking authorized by the Governor in Council pursuant to s. 46 of the Indian Act, R.S.C. 1906, c. 81. 6. the facts set out above establish that: a. the ROW is no longer being used for the railway; and b. there is no reasonable prospect that the infrastructure for the railway will be restored to a condition sufficient for the operation of a railway. 7. As a result of the restraint on alienation of Crown lands taken for railway purposes, the land subject to the ROW revert to Shaw-Naw- As, or in the alternative to the Crown, in trust for Shaw-Naw-As. ...

[45] The plaintiff submits the issue of alienation was pleaded at paragraph 7 of the legal basis. However, the context of paragraph 7 is relevant and must be read as part of the legal basis and pleadings as a whole.

[46] Paragraph 7 is the only mention of alienation and appears in the context of the allegation that the Railway is not being for railway purposes nor will it be. Its wording regarding alienation even references “railway purposes”. The pleadings are Snaw-Naw-As First Nation v. Attorney General of Canada Page 16 clearly limited to the operation of the railway, its alleged cessation of operations and the legal effect of such given the conditions of its grant. Nowhere in the facts pleaded, the relief sought or the legal basis is the transfer to ICF referenced as an act of alienation because ICF is not a railway company. Indeed, it is not only not pleaded but in context the issue of its breach by the transfer is not apparent.

[47] On the issue of alienation, the plaintiff’s Notice of Civil Claim fails to “clearly define the issues of fact and law to be determined by the court”. The defendant ICF was caught by surprise during the plaintiff’s opening. This is clear from their Response to Civil Claim which does not respond to the issue of alienation alleged to have arisen from ICF’s acquisition of the Railway. As counsel for ICF noted, several possible defences would have been raised including possible limitation issues, laches and acquiescence.

[48] No application was brought to amend the pleadings, presumably as doing so would likely have resulted in an adjournment of this long outstanding matter. As a result, the issue of an alleged breach of the grant by the transfer from CPR to ICF is not before the Court and I need not address the suggested defences nor the issue of the CPR being a necessary party. I decline to consider the plaintiff’s submission on alienation by the transfer to ICF.

Application to Re-Open

[49] At trial the parties were aware that the Updated Condition Assessment was being prepared. It was however not released until April 28, 2020, some two months after trial. It analyzes the condition of the various segments of the Railway and sets out the estimated costs of restoring passenger and freight service in sequential phases termed “Initial”, “Intermediate”, and “Ultimate”, with progressively higher capacity and cost. For the entire corridor, the Initial phase would cost a total of $326,448,391, the Intermediate phase $552,023,932 (including the cost of the Initial phase), and the Ultimate phase $728,778,304 (including the cost of the Initial and Intermediate phases). Snaw-Naw-As First Nation v. Attorney General of Canada Page 17

[50] The plaintiff seeks admission not of the whole assessment, but rather a four- page Executive Summary which sets out an overview of the condition of the corridor and the above noted cost estimates.

Law on Re-Opening

[51] The court in its inherent jurisdiction has a broad discretion to re-open the evidence in a civil action. That discretion is wider before judgment is rendered than it is after. In A.B. v. C.D., 2014 BCSC 1676, Dardi J. summarized the legal framework as follows:

[29] Before judgment has been rendered, the court has a broad discretion, pursuant to its inherent jurisdiction to control its own process, to re-open the evidence in a civil action: Clayton v. British American Securities Ltd. (1934), 49 B.C.R. 28 (C.A.); Morrison v. Hicks (1991), 80 D.L.R. (4th) 659 (B.C.C.A.). The scope of the discretion to re-open is generally narrower where judgment has been issued, and the test becomes even more rigorous depending on whether or not the order has or has not been entered: Vander Ende v. Vander Ende, 2010 BCSC 597 at para. 84. [30] While it is well settled that the ambit of the court's inherent discretion is unfettered, the authorities mandate that it be exercised sparingly and cautiously so as to prevent an abuse of process: Clayton; G.C.H. v. H.E.H., 2009 BCSC 4 at para. 14; K.F.P. v. D.J.P., 2004 BCSC 466 at para. 23 and Hodgkinson v. Hodgkinson, 2006 BCCA 158. [31] The authorities do not mandate any rigid test. In order to invoke the court's inherent powers to control its process and to remedy what might otherwise be a substantial injustice, the applicant need not establish the omission of a material fact. Nor is the question of whether the evidence could have been presented at trial by the exercise of due diligence necessarily determinative: Giraud v. Giraud, 44 B.C.L.R. (3d) 98; Bronson v. Hewitt, 2010 BCSC 871 at para. 33. The factors for consideration in an application to re- open include the relevance of the proposed evidence, the effect, if any, of re- opening on the orderly and expeditious conduct of the trial, and whether the other party would be prejudiced if the re-opening is permitted: Vander Ende at para. 84. [32] The jurisprudence establishes that the fundamental consideration on an application to re-open is whether to do so is in the interests of justice and whether a miscarriage of justice would occur if the proposed evidence is not received: Bell v. Bell, 2001 BCCA 148 at para. 23; Moradkhan v. Mofidi, 2013 BCCA 132 at para. 24; Stevens v. Plachta, 2006 BCCA 479 at para. 15. [33] The threshold test for establishing a miscarriage of justice is high. As aptly observed by the court in Aquiline Resources Inc. et al v. Wilson et al, 2005 BCSC 1461 at para. 9, although the term is often used, there has been little judicial consideration of the term. In Lin v. Tang, (1997) 147 D.L.R. (4th) Snaw-Naw-As First Nation v. Attorney General of Canada Page 18

577 (C.A.) at para. 64 Huddart J.A., after observing that the "miscarriage of justice is a difficult concept", wrote as follows: In my view, miscarriage of justice means that which is not justice according to law. A miscarriage of justice will almost always be procedural. The blemish must be such as to make the judicial procedure at issue not a judicial procedure at all. [34] The court in Aquiline applied an objective test and concluded at para. 12 that a miscarriage of justice constitutes a "result that would leave one party with such an unfair benefit or advantage at the expense of the other that a reasonable person would regard it as shocking and unconscionable". [35] It is also key to observe the fundamental principle that a claimant, in his or her case or in proper reply evidence, must produce and tender all relevant evidence. The objective of the rule is to prevent the potential for unfair surprise, confusion and prejudice, and the consequent distortion of the trial process: Spoor v. Nicholls, 2001 BCCA 426.

Position of the Plaintiff on Re-Opening

[52] As noted, the plaintiff submitted at trial that rehabilitating the track was not economically feasible given the 2009-2010 estimated costs were between 70 million and 130 million dollars. All parties were aware at trial that the Updated Condition Assessment was in draft form but not yet released. The plaintiff submits the updated information is highly relevant to the disposition of this matter as it indicates rehabilitation of the Railway requires an investment three times greater than the figures in evidence at trial. They submit its admission into evidence will have minimal if any effect on the orderly and expeditious conduct of the trial, that no new legal arguments are advanced, there will be no delay resulting, it will not prejudice the defendant nor will it undermine the integrity of the court process or amount to a miscarriage of justice. They submit that to not admit it would amount to a miscarriage of justice.

Position of the Defendants on Re-Opening Application

[53] The Crown submits the application to re-open relates to the main issue at trial, that is whether the ROW is currently being used for railway purposes, and given they took no position on that issue, they take no position on this application.

[54] ICF opposes the application to re-open. They submit the proposed evidence is inadmissible expert opinion evidence, that if admitted it would not directly Snaw-Naw-As First Nation v. Attorney General of Canada Page 19 influence the result and that the evidence could have been obtained by reasonable diligence before trial. They note the threshold for a miscarriage of justice is high and that the consequences of not admitting the evidence are not shocking or unconscionable. Further they submit re-opening should not occur where the evidence is marginally relevant opinion evidence. They also note the report is substantial, includes technical information, estimates, opinions, assumptions and inferences, none of which have been tested at trial. As a result, ICF does not accept the report.

Discussion of Application to Re-Open

[55] I turn first to ICF’s argument that the Updated Condition Assessment constitutes expert opinion evidence which should not be admitted on an application to re-open.

[56] In McKnight v. Bourque, 2018 BCSC 1342, DeWitt-Van Oosten J. (as she then was) described expert opinion evidence as follows:

[52] Expert opinion evidence is evidence that provides information likely to be outside the experience and knowledge of the fact finder: R. v. Mohan, [1994] 2 S.C.R. 9. This form of evidence is presumptively inadmissible at common law, but if the criteria for admissibility are established, the opinion is admitted to assist the trier of fact with issues of a unique or technical nature that call for specialized knowledge — matters that are not understood by the average person: Mohan at pp. 23–24. See also R. v. Bingley, 2017 SCC 12; White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23.

[57] The plaintiff does not seek to admit the Updated Condition Assessment as expert opinion evidence. They submit its admission is limited to evidence of the most current cost estimates to rehabilitate the track and the fact it will be used to evaluate future options for the right of way.

[58] The court is not being asked to assess the validity of such estimates but rather simply to accept that they exist and will be relevant to any future funding options for the Railway. The plaintiff does not seek the admission of the cost estimates or condition assessments as accurate, given the bases for such (that is, the rest of the report beyond the Executive Summary) are not before the court, nor Snaw-Naw-As First Nation v. Attorney General of Canada Page 20 have they been tested at trial. Instead, the court is being asked to treat the evidence as factual background evidence as to the information available to and commissioned by MOTI which may be used to make decisions relating to the Railway in the future. In that sense the evidence the plaintiff seeks to tender is not expert opinion evidence and thus is not inadmissible on that basis.

[59] ICF submits there are two threshold requirements the plaintiff must meet before their application can be granted. That is, would the evidence if presented at trial have changed the result and could the evidence have been obtained before the trial by the exercise of reasonable diligence. They rely on a decision of the Federal Court of Appeal in Tsleil-Waututh Nation v. Canada (Attorney General), 2018 FCA 104. However, as noted in A.B. in British Columbia, the test is not rigid nor is the issue that the evidence “could have been presented at trial by the exercise of due diligence necessarily determinative” (at para. 31). In addition, whether the evidence could or would change the result cannot be a factor when the outcome is as yet unknown: Adrangi v. Manesh, 2015 BCSC 1130 at para. 11. Finally, the test in Tsleil-Waututh was in the context of a judicial review and as the Federal Court of Appeal noted, the principles governing judicial review applications differ from those governing trials (at para. 12).

[60] The issue of due diligence is of limited relevance in this application. The parties had anticipated the Updated Condition Assessment would be available before trial, but it was not released by MOTI until after the trial. This was beyond either party’s control. At trial the parties referred to the most recent information they had regarding the assessment, including its purpose, scope, cost, and anticipated timeline for completion.

[61] The evidence is relevant in the context in which the plaintiffs seek to rely on it; that it, on the issue of the economic feasibility of the Railway. ICF disputes the applicability of the plaintiff’s arguments regarding economic feasibility; however, the plaintiff is still entitled to make its case and present such arguments. In that context, admission of the evidence does not lead to procedural unfairness as it was not and Snaw-Naw-As First Nation v. Attorney General of Canada Page 21 is not disputed that rehabilitation of the right of way will depend on government funding as the freight and passenger services are not economically viable. This is the case whether the cost of rehabilitation is based on the 2010 estimates or the 2020 estimates.

[62] The existence and pending release of the Updated Condition Assessment was known to both parties and referred to at trial. Given the evidence that was already presented at trial, the evidence at issue in this application is not strictly “new” evidence but rather an update to the evidence already before the court. Its admission would not be prejudicial to ICF, nor would it have a negative effect on the orderly and expeditious conduct of the trial. In this context, it is in the interests of justice for the court to have before it the most up-to-date and complete evidence available.

[63] I am satisfied it would be unfair to the plaintiffs and unconscionable for the court to reject this evidence. As a result, the application is granted and the evidence admitted as sought. Costs of the application shall be in the cause.

Position of the Plaintiff

[64] The plaintiff alleges the ROW through their reserve lands impedes access, restricts development, causes social and economic losses and affects the cultural importance of the land to the plaintiff.

[65] They argue that in a practical sense the Railway corridor has been abandoned. Only the small portions of the Railway in the Nanaimo area continue to operate. They further submit ICF has failed to secure funding to restore and operate the Railway, that there is no business case for such and that it will never operate as a railway again. They submit it is a fiction to state the ROW is held for railway purposes.

[66] They submit also that ICF has effectively abandoned or discontinued Railway services as evidenced by the disrepair of the track through the Lands. They say it is no answer for ICF to argue it has not formally abandoned or discontinued the rail Snaw-Naw-As First Nation v. Attorney General of Canada Page 22 line. The plaintiff notes that before ICF acquired the railway, CPR had tried several times to discontinue the Railway without success. That was only achieved by selling the assets to ICF such that the Railway became subject to provincial legislation rather than federal laws that had mandated CPR to continue to operate it. They submit ICF has effectively “discontinued” the railway without fear of mandated operation under provincial law.

[67] They further submit that at the time it was granted it was stated the ROW lands were “actually required for Railway purposes”, hence that was a strict requirement of necessity especially when read in the context of the Crown’s fiduciary obligation to minimally impair Aboriginal interests.

Position of Island Corridor Foundation

[68] ICF submits the ROW continues as an inseparable part of a transportation corridor that was foundational to the economic and social development of Vancouver Island and remains necessary and relevant today.

[69] ICF acknowledges the Grant must be read down so the ROW is subject to a condition that the Lands be used for “railway purposes”.

[70] ICF submits there are two issues before the court:

a) whether the lands subject to the right of way are no longer being used for railway operations and as such are no longer being used for railway purposes, and

b) if so, whether the lands subject to the right of way revert to the administration and control of Canada for the use and benefit of the plaintiff as part of its reserve.

[71] ICF takes no position on the second issue if the court decides the ROW is no longer in effect.

[72] Regarding the first issue, ICF submits: Snaw-Naw-As First Nation v. Attorney General of Canada Page 23

a) the Lands continue to be used for a railway purpose;

b) alternatively, if the Lands themselves are not being used for a railway purpose, the Railway, of which the Lands are an integral and inseparable part, continues to be used for a railway purpose; and

c) in the further alternative, if neither the Lands nor the Railway are at this time being used for a railway purpose, that ICF, among others:

i. Intends to use the Lands for a railway purpose in the future; and

ii. is engaging in development efforts towards that end.

[73] Regarding the plaintiff’s claim that “there is no reasonable prospect that the infrastructure for the railway will be restored to a condition sufficient for operating a railway”, ICF submits the question of “reasonable prospect” has no bearing on the case. ICF submits the fact that ICF exists to preserve and develop the Railway is relevant as a statement of present intent as it relates to the question of whether the Lands are being used for railway purposes.

[74] ICF notes that it is not for the Court to predict if ICF will be successful, to assess the “reasonableness” of its “prospects”, nor predict the outcome of what ultimately will be political choices relating to public infrastructure. This, they submit, would be wholly speculative. If the Court does conduct such analysis, they submit there is a reasonable prospect that the Railway will be used for a railway purpose.

Position of Attorney General of Canada

[75] Canada takes no position whether the ROW is currently in use for railway purposes. Should the plaintiff prove its case on that factual issue, the only remaining issue is the form the remedy should take: whether the Court should immediately declare the Lands to be part of the plaintiff’s reserve, or whether, as Canada submits, the Lands should revert to Canada in trust so that Canada may address certain practical matters in consultation with the plaintiff before the Lands are added to the reserve. Snaw-Naw-As First Nation v. Attorney General of Canada Page 24

Law and Discussion

[76] It has been shown and indeed is self-evident that bifurcation of the plaintiff’s reserve lands by the ROW Lands imposes limitations on the reserve lands on each side and impedes access and development.

[77] The authorities are clear, and it is not in issue: there are circumstances where a court will find that lands held for railway purposes have ceased to be so held and as a result ownership of the right of way ends. However, counsel have located no authorities holding that a right of way be set aside where the owner holds the lands expressly for railway purposes, uses them for alleged railway purposes, even if in a limited way, and intends to continue to do so. Nor have authorities been found by counsel which hold that a right of way may be set aside on the basis of something that may happen in the future.

[78] The relevant portions of the Letters Patent state:

Whereas the Lands hereinafter described are part and parcel of those set apart for the use of the Nanoose Band of Indians; And whereas we have thought fit to authorize the sale and disposal of the Lands hereinafter mentioned, in order that the proceeds may be applied for the benefit, support and advantage of the said Indians, in such a manner as We shall be pleased to direct from time to time… Now know ye that in consideration of the said sum six hundred and fifty dollars [paid] by them the said Esquimalt and Nanaimo Railway Company to Our said Superintendent General of Indian Affairs in hand well and truly paid to Our use at or before the sealing of these Our Letters Patent We by these Presents, do grant, sell, alien, convey and assure unto the said Esquimalt and Nanaimo Railway Company, their successors and assigns for ever; all that Parcel or Track of Land situate lying and being in the Nanoose Indian Reserve in the District of Nanoose in the Province of British Columbia in our Dominion of Canada. [The Letters Patent then provides space for the description of the Lands referred to in the recitals. The description of the Lands in the Letters Patent reads as follows:] Containing by admeasurement Ten acres and seventy-eight hundredths of one acre be the same more or less. Composed of the Right of Way of the Esquimalt and Nanaimo Railway in and through the said Indian Reserve which may be more particularly described as follows … [metes and bounds description]. [Emphasis added.] Snaw-Naw-As First Nation v. Attorney General of Canada Page 25

[79] The Grant set out in the Letters Patent is unqualified, stating the Grant is “all that Parcel or Track of Land”. But, the Order in Council of July 30, 1912 (P.C. 1912-2017), under which the Letters Patent were issued, states:

On a memorandum dated 4th July, 1912, from the Acting Superintendent General of Indian Affairs, submitting that the Esquimalt & Nanaimo Railway Company has applied to the Department of Indian Affairs for right of way, to comprise an area of 10.78 acres, through the Nanoose Indian Reserve, in the district of Nanoose, in the province of British Columbia; and a plan is of record in the said Department bearing a certificate of the Chief Engineer of the Department of Railways and Canals that the area applied for is actually required for railway purposes and is such as the Company should be allowed to acquire under section 46 of the Indian Act; [Emphasis added.]

[80] ICF does not contend that the Grant was the entire fee and acknowledges that it was subject to a condition, namely that the lands were to be used for “railway purposes”.

[81] There is no dispute the Railway today is not in a condition fit for full freight and passenger service along the entire right of way. However, ICF submits there is no legal requirement it be in such condition nor is ICF under a legal obligation to restore the Railway to what it once was.

[82] It is also not disputed that the Railway as a whole is not economically justified as a commercial carrier and that any significant restoration or improvement of the Railway requires government funding.

[83] The evidence does establish that stakeholders, including the ICF, regional governments and first nations, local governments and senior government, all show an interest in restoration of rail service. The efforts to restore rail service have included applications to both the provincial and federal governments to assess the condition of the Railway. It is acknowledged that substantial sums are required to restore the Railway infrastructure to permit full Railway operations as made clear by the Updated Condition Assessment. Snaw-Naw-As First Nation v. Attorney General of Canada Page 26

[84] The defendants take issue with the plaintiff’s concerns regarding access to their lands and development on their reserve noting that even if the Lands were returned to the plaintiff, the highway remains and impedes access to their reserve. The defendants’ position has been and remains that they are supportive of the plaintiff obtaining access across the highway and would cooperate to make the track changes necessary to provide access. They note as well there are two other ways to access the upper portion of the reserve.

[85] Section 172 of the Railway Act, R.S.C. 1906, c. 37 (“1906 Railway Act”), permitted a railway company, defined in s. 2(4) of that Act as, “every such company and any person having authority to construct or operate a railway” to take and appropriate Crown lands for the use of a railway but prohibited the railway company from alienating those lands. Section 172 states:

(1) No company shall take possession of, use or occupy any lands vested in the Crown, without the consent of the Governor in Council. (2) Any company may, with such consent, upon such terms as the Governor in Council prescribes, take and appropriate, for the use of its railway and works, so much of the lands of the Crown lying on the route of the railway as have not been granted or sold, and as is necessary for such railway … (3) The company may not alienate any such lands so taken, used or occupied. (4) Whenever any such lands are vested in the Crown for any special purpose, or subject to any trust, the compensation money which the company pays therefor shall be held or applied by the Governor in Council for the like purpose or trust.

[86] However, if the lands were reserve lands, the consent of the Governor in Council was required, subject to terms and conditions pursuant to s. 46 of the Indian Act, R.S.C.1906, c. 81 (“1906 Indian Act”), as amended by S.C. 1911, c. 14:

No portion of any reserve shall be taken for the purposes of any railway, road or public work, or work designed for any public utility without the consent of the Governor in Council, but any company or municipal or local authority having statutory power, either Dominion or provincial, for taking or using lands or any interest in lands without the consent of the owner may, with the consent of the Governor in Council as aforesaid, and subject to the terms and Snaw-Naw-As First Nation v. Attorney General of Canada Page 27

conditions imposed by such consent, exercise such statutory power with respect to any reserve or portion of a reserve; … [Emphasis added.]

[87] In addition, the Certificate of Railway Purposes stated that the purpose of the expropriation must be “actually required … for Railway purposes”. Such wording is also used in the order by which the Governor in Council consented to the taking, pursuant to s. 46 of the 1906 Indian Act.

[88] As is apparent, there were two limiting conditions attached to the taking of the Lands. First, the Lands cannot be alienated and second, they must be used for Railway purposes (the “Railway Purposes Restriction”). These conditions create a reversionary interest.

[89] As the issue of alienation of the Lands by the transfer to ICF is not before the court, the sole remaining issue is whether the ROW remains required for Railway purposes.

[90] The plaintiff submits the Railway Purposes Restriction has been breached by the fact the Railway has not continued to operate and the Grant of the ROW was not indefinite.

[91] The plaintiff submits the duration of the ROW is not dictated by the fact the grantee wants or intends to use the lands for railway purposes; rather the test asks whether the lands are actually required for that purpose. The plaintiff argues the focus of the inquiry is present reality, not some speculative future. That is, the ROW “endures only so long as the right of way is required for the purpose” of a railway, hence the question is whether there is some present actual requirement for the lands for the purpose of a Railway.

[92] ICF submits work is done every day to advance railway purposes for the public good and that while rail traffic has been discontinued, the Railway has not been formally or informally abandoned nor is there any intention to do so. Snaw-Naw-As First Nation v. Attorney General of Canada Page 28

[93] The plaintiff submits the test for determining whether the Lands are required for Railway purposes requires the application of certain principles:

a) it is an objective assessment not determinable at the sole will of ICF: Opetchesaht Indian Band v. Canada, [1997] 2 S.C.R. 119;

b) there is an obligation to minimally impair Aboriginal interests in land, hence a strict and narrow assessment is necessary to determine whether the Lands are being used for Railway purposes: Osoyoos Indian Band v. Oliver (Town), 2001 SCC 85;

c) inefficient uses of the lands is a type of action or inaction that “must trigger the right of reversion”: Canada (A.G.) v. Canadian Pacific Ltd., 2000 BCSC 933 (sub nom. Squamish Indian Band v. Canadian Pacific Ltd) (“Squamish”) at para. 251, aff’d 2002 BCCA 478.

[94] I will first address the issue of minimal impairment.

Minimal Impairment

[95] The plaintiff argues that the Railway Purposes Restriction must be read against the Crown’s fiduciary obligation to minimally impair Aboriginal interests upon a taking of reserve lands. Hence, they submit there must be a “strict and narrow assessment of whether the [Lands] are being used to provide Railway Services.”

[96] It has been established that the location of the ROW as it crosses the plaintiff’s reserve bisects the reserve and from the plaintiff’s perspective, interferes with it as a functioning whole, economically, socially and culturally, particularly given the small size of the reserve.

[97] There is a fiduciary duty on the part of the Crown to the Indian Band when the Crown has determined that a taking of reserve land is in the public interest. That fiduciary duty was considered in Osoyoos where an interest in a strip of land was taken from the Osoyoos Indian Band’s reserve for an irrigation canal to be managed and controlled by the Town of Oliver. The issue was whether the interest taken was Snaw-Naw-As First Nation v. Attorney General of Canada Page 29 a full interest in that land such that it was no longer part of the reserve or whether it was only an “easement” and as a result the land was still “in the reserve” and subject to taxation by the Band. The Majority concluded, based on the special nature of reserve land and the Crown’s fiduciary duty when taking such land, that only an easement had been taken and the lands remained “in the reserve”.

[98] Justice Iacobucci noted that reserve land is in some respects “fundamentally similar” to Aboriginal title land:

[42] The features common to both the aboriginal interest in reserve land and aboriginal title include the facts that both interests are inalienable except to the Crown, both are rights of use and occupation, and both are held communally. Thus, it is now firmly established that both types of native land rights are sui generis interests in the land that are distinct from "normal" proprietary interests: St. Mary's Indian Band, supra, at para. 14. Native land rights are in a category of their own. There are three implications that follow from the nature of the aboriginal interest in reserve lands that are important in the context of this case. [43] First, it is clear that traditional principles of the common law relating to property may not be helpful in the context of aboriginal interests in land: St. Mary's Indian Band, supra. Courts must "go beyond the usual restrictions imposed by the common law", in order to give effect to the true purpose of dealings relating to reserve land: see Blueberry River Indian Band, supra, at para. 7, per Gonthier J. This is as true of the Crown's purpose in making a grant of an interest in reserve land to a third party as it is of an Indian band's intentions in surrendering land to the Crown. [44] All members of the Court of Appeal acknowledged this Court's jurisprudence on the applicability of common law principles in the context of native land rights. Newbury J.A. wrote (at para. 93) that "a non-technical approach may be justified" even in the context of expropriation, and that form should generally not be permitted to "trump substance" wherever Indian interests may be affected. However, the majority went on to hold (at para. 94) that "in the case of an expropriation under s. 35, where the primary parties are the federal and provincial governments by whom common law concepts of real property are well understood, 'formalistic' words of limitation will ... be the focus of the inquiry". This view is based on the mistaken assumption that the inapplicability of common law rules in relation to Indian lands has to do with the capacity of the parties to the transaction. However, the principle that it is inappropriate to apply common law real property rules to Indian lands was developed because of the sui generis nature of aboriginal interests in land. In the result, the transfer at issue in this case cannot be treated as a regular, commercial transaction. [45] Second, it follows from the sui generis nature of the aboriginal interest in reserve land and the definition of "reserve" in the Indian Act that an Indian band cannot unilaterally add to or replace reserve lands. The intervention of Snaw-Naw-As First Nation v. Attorney General of Canada Page 30

the Crown is required. In this respect, reserve land does not fit neatly within the traditional rationale that underlies the process of compulsory takings in exchange for compensation in the amount of the market value of the land plus expenses. The assumption that the person from whom the land is taken can use the compensation received to purchase replacement property fails to take into account in this context the effect of reducing the size of the reserve and the potential failure to acquire reserve privileges with respect to any off- reserve land that may thereafter be acquired. [46] Third, it is clear that an aboriginal interest in land is more than just a fungible commodity. The aboriginal interest in land will generally have an important cultural component that reflects the relationship between an aboriginal community and the land and the inherent and unique value in the land itself which is enjoyed by the community. This view flows from the fact that the legal justification for the inalienability of aboriginal interests in land is partly a function of the common law principle that settlers in colonies must derive their title from Crown grant, and partly a function of the general policy "to ensure that Indians are not dispossessed of their entitlements": see Delgamuukw, supra, at paras. 129-31, per Lamer C.J.; Mitchell, supra, at p. 133.

[99] He then noted regarding the fiduciary duty:

[51] The intervener the Attorney General of Canada submits that when Canada's public law duty conflicts with its statutory obligation to hold reserve lands for the use and benefit of the band for which they were set apart, then a fiduciary duty does not arise. The Attorney General argues that the existence of a fiduciary duty to impair minimally the Indian interest in reserve lands contradicts the legislative purpose of s. 35 to act in the greater public interest and that the opening phrase of s. 18(1) of the Indian Act, "Subject to the provisions of this Act ...", effectively releases the Crown from its fiduciary duty regarding s. 35 takings. In addition, the Attorney General contends that a fiduciary obligation to impair minimally the Indian interest in reserve lands contradicts the principles of fiduciary law which impose a duty of utmost loyalty on the fiduciary to act only in the interests of the person to whom the duty is owed. Thus, the Attorney General submits that the holding in Guerin, supra, that the surrender of an Indian interest of land gives rise to a fiduciary duty on the part of the Crown to act in the best interests of the Indians does not extend to the context of expropriation, and that the duty of the Crown to the band in the case of an expropriation of reserve land is similar to its duty to any other land holder -- to compensate the band appropriately for the loss of the lands. [52] In my view, the fiduciary duty of the Crown is not restricted to instances of surrender. Section 35 clearly permits the Governor in Council to allow the use of reserve land for public purposes. However, once it has been determined that an expropriation of Indian lands is in the public interest, a fiduciary duty arises on the part of the Crown to expropriate or grant only the minimum interest required in order to fulfill that public purpose, thus ensuring a minimal impairment of the use and enjoyment of Indian lands by the band. This is consistent with the provisions of s. 35 which give the Governor in Snaw-Naw-As First Nation v. Attorney General of Canada Page 31

Council the absolute discretion to prescribe the terms to which the expropriation or transfer is to be subject. In this way, instead of having the public interest trump the Indian interests, the approach I advocate attempts to reconcile the two interests involved. [53] This two-step process minimizes any inconsistency between the Crown's public duty to expropriate lands and its fiduciary duty to Indians whose lands are affected by the expropriation. In the first stage, the Crown acts in the public interest in determining that an expropriation involving Indian lands is required in order to fulfill some public purpose. At this stage, no fiduciary duty exists. However, once the general decision to expropriate has been made, the fiduciary obligations of the Crown arise, requiring the Crown to expropriate an interest that will fulfill the public purpose while preserving the Indian interest in the land to the greatest extent practicable. [54] The duty to impair minimally Indian interests in reserve land not only serves to balance the public interest and the Indian interest, it is also consistent with the policy behind the rule of general inalienability in the Indian Act which is to prevent the erosion of the native land base: Opetchesaht Indian Band v. Canada, [1997] 2 S.C.R. 119, at para. 52. The contention of the Attorney General that the duty of the Crown to the Band is restricted to appropriate compensation cannot be maintained in light of the special features of reserve land discussed above, in particular, the facts that the aboriginal interest in land has a unique cultural component, and that reserve lands cannot be unilaterally added to or replaced. [55] As the Crown's fiduciary duty is to protect the use and enjoyment of the Indian interest in expropriated lands to the greatest extent practicable, the duty includes the general obligation, wherever appropriate, to protect a sufficient Indian interest in expropriated land in order to preserve the taxation jurisdiction of the band over the land, thus ensuring a continued ability to earn income from the land. Although in this case the taxation jurisdiction given to bands came after the Order in Council of 1957, the principle is the same, namely that the Crown should not take more than is needed for the public purpose and subject to protecting the use and enjoyment of Indians where appropriate.

[100] The plaintiff submits these principles are relevant to the evidence at trial respecting the significant impact the Railway corridor has on the ability of the plaintiff to develop their reserve lands, including its impact on:

a) the Nation’s ability to develop the lands, in conformity with their economic development plan;

b) the safety of their community;

c) their day-to-day convenience; and,

d) their ability to make decisions about their reserve land. Snaw-Naw-As First Nation v. Attorney General of Canada Page 32

[101] The plaintiff submits the fiduciary obligation of minimal impairment continues and applies not to just the taking but to the retention, in this case of the right of way. In addition, the special nature of reserve lands must be considered. They state in their submissions:

… b. The obligation to minimally impair Aboriginal interests in land calls for a strict and narrow assessment of whether the Nanoose Lands are being used to provide Railway Services;

[102] That the taking of reserve lands is to have minimal impact in accordance with the Crown’s fiduciary obligation is not disputed. In this instance, the Governor in Council’s consent by way of the 1912 Order in Council clearly recognized that fiduciary obligation, referring to the lands are “actually” required for railway purposes.

[103] However, applying the principle of minimal impairment as suggested by the plaintiff is not supported by the authorities. In Osoyoos the minimal impairment principle only applied to the taking of the land. That is, the minimal impairment principle was already applied by the Governor in Council when he consented to the Grant. The plaintiff provides no authority to suggest that the minimal impairment principle bears any relevance to the continued holding of the right of way. To accede to its submission would be to create a right to have takings by the Crown continually re-assessed and subjected to the minimal impairment analysis as circumstances change over the years. In my opinion that would amount to imposition of an additional condition on the Grant beyond the Railway Purposes Restriction. Such would create ongoing uncertainty for railways and other undertakings.

[104] The principle of minimal assessment does not apply to the question of whether the Nanoose Lands are being used for railway purposes.

Objective Assessment

[105] The plaintiff submits the question of whether the ROW terminates because it is no longer required for railway purposes is an objective test. While the test is Snaw-Naw-As First Nation v. Attorney General of Canada Page 33 objective in that the life of a right of way is not determined solely by the will of the right of way holder, the assessment of whether the ROW in this case is required for railway purposes goes beyond simply asking whether it is presently being used to support rail traffic. A broader contextual analysis applies.

[106] In Opetchesaht a right of way had been taken over the Hupacasath First Nation’s reserve lands for an electrical transmission line. In 1992 the Nation applied for a declaration that s. 28(2) of the Indian Act, R.S.C. 1952, c. 149, did not authorize the grant of a right of way for an indefinite period. The plaintiff submits Opetchesaht assists in determining when a purpose for such a taking expires.

[107] The relevant portion of the right of way in Opetchesaht at para. 8 reads:

That the rights hereby granted may be exercised by the Permittee for such period of time as the said right-of-way is required for the purpose of an electric power transmission line.

[108] The Court held that s. 28(2) of the Indian Act, which spoke of grants for a “period”, did not mean a grant for an indefinite period could not be made. However, use of the word “required” in the grant meant the right of way terminated when it was no longer needed for the purposes of an electric power transmission line. Justice Major for the majority stated:

[26] In my opinion, as previously stated, the statutory easement was granted for an indeterminate period. It was not known in 1959 nor is it now known exactly when the right will terminate but clearly, the easement will terminate when it is no longer required for a transmission line. This is a period whose end is readily ascertainable. [27] The permit provides that the respondent Hydro is entitled to use the reserve lands in question for as long as it requires a transmission pole line to pass through the portion of the reserve over which it is currently constructed. It is not difficult to image a number of circumstances which this requirement would expire. While all are speculative, there is the possibility that the generating station at Sproat Falls might be abandoned, that demographic changes in the area might affect the location, size and requirement of the transmission poles. More remote is the possibility of electricity being replaced by another energy source. It is obvious that technology has affected the way we live in ways that were earlier unimaginable. The example of the Canadian experience with the railways is apposite. Even 50 years ago, this country’s railroads appeared to be a permanent fact of Canadian travel and Snaw-Naw-As First Nation v. Attorney General of Canada Page 34

transportation. Today, we have seen many railway lines abandoned in favour of airlines and highways. [28] Nor can the permit be characterized as perpetual because its duration is purely under the control of the respondent Hydro. In Canada (Attorney General) v. Canadian Pacific Ltd., [1986] 1 C.N.L.R. 1 (B.C.S.C.), aff’d [1986] B.C.J. No. 407 (C.A.), it was held that a grant of an interest in reserve land for so long as required for railway purposes was not an interest determinable at the sole will of the railroad. The Court of Appeal found that the reserve land was no longer required for railway purposes, and that therefore, the transfer of the land from CP to its subsidiary, Marathon Realty Corporation, was void. [29] The duration of the easement in the instant case is similarly qualified. It endures only so long as the right-of-way is required for the purpose of an electric transmission line. The respondent Hydro has some discretion as to the decisions it makes with respect to the placement and utility of transmission lines. However, since the word “required” is used, it would be wrong to conclude that the expiry of the permit is solely dependant upon the will of the respondent Hydro. Whether the line is required is a justiciable issue: Canadian Pacific Railway Co. v. Town of Estevan, [1957] S.C.R. 365; Canada (Attorney General) v. Canadian Pacific Ltd., supra. See also The Queen v. Bolton, [1975] F.C. 31 (T.D.), at p. 35. [Emphasis added.]

[109] The plaintiff further submits it is not enough that there continues to be infrastructure on the land associated with the original purpose of the grant such as tracks. They submit the example the Court provides in Opetchesaht about the generating station being abandoned implies that the transmission line is still in place but it is no longer transmitting electricity. The question they say is whether the lands continue to be required for the original purpose. If not, then the right of way terminates.

[110] The Court of Appeal in Squamish stated:

[120] In concluding, as I do, that Meredith J. and this court were right in Kettle Valley in holding that the restriction on alienation necessarily implies that the land expropriated from the Crown would revert to the Crown upon ceasing to be used for railway purposes, I recognize that the legislation and policies in other countries are of limited value. But, having regard to the extent to which the law and policy of this country were influenced by the precedent created in the United Kingdom and the United States, they have value, particularly in the field of railway construction. I would hold that Kettle Valley, in finding a necessary implication that cessation of use for railway purposes would cause the land to revert to the Crown, was rightly decided. Snaw-Naw-As First Nation v. Attorney General of Canada Page 35

[111] The plaintiff submits the question is whether the Lands are required for the purpose of the Railway noting that the purpose of a railway is to transport people or goods. The plaintiff’s submission then is that as presently managed by ICF, the ROW is not being used for railway purposes, hence the right of reversion is triggered.

[112] They submit that the Railway generally, and the Lands in particular, are no longer required for Railway purposes because:

a) rail traffic has ceased; b) the track cannot support rail traffic; c) there is no money to restore the Railway; d) there is no viable business case; e) non-railway services are being provided; f) the track over the Nanoose Lands has been effectively abandoned g) ICF does not have tools to provide Railway Services; h) There is no reasonable hope the ICF will be able to provide Railway Services; and, i) ICF has effectively abandoned or discontinued Railway Services.

Cessation of Rail Traffic

[113] The plaintiff refers to the statement of Justice Saunders (as she then was) in Squamish that the relevant lands revert on cessation of rail traffic:

[260] This tangle of legal issues and the present and historical circumstances leads, in my view, to the conclusion that Lot J and a portion of Block I have reverted to Canada, and the balance of Block I will revert to Canada on cessation of rail traffic. Both Lot J and Block I are then to be held by Canada for the use and benefit of an Indian Band. [Emphasis added.]

[114] However, in Squamish “Block I” consisted of a portion of the rail line affected by the decision of CPR to discontinue railway operations on another rail line:

[128] After removal of the Kits Trestle, the only access to the Kits Wye has been from the south by the line built by the V&LI Railway Company. CPR has decided to discontinue railway train operations on a portion of that line in Vancouver. When that occurs, it will no longer be possible to provide rail service to Molson’s Brewery. Once this service is discontinued, it is not Snaw-Naw-As First Nation v. Attorney General of Canada Page 36

contemplated that either Lot J or Block I will be required ever again by CPR for operations on a rail line. [Emphasis added.]

[115] As a result, the reference to “the balance of Block I” reverting to Canada “on cessation of rail traffic” was in the context of clear evidence the CPR had no future intention to provide railway train operations on that Block “ever again” and indeed could not do so once the other rail line was no longer in operation.

[116] The mere cessation of rail traffic then does not necessarily result in reversion of the right of way. The court in Opetchesaht did not say the right of way expired when the transmission line was no longer used but rather when the easement was no longer required and that is “a period whose end is readily ascertainable”. In Squamish the court used the wording “cessation of rail traffic”, however that was in the factual context noted above.

[117] The plaintiff also submits that the Railway over the Lands is akin to the electrical transmission corridor in Opetchesaht where the court gave examples of circumstances where the electrical lines would no longer transmit electricity. They say that the absence of electricity/trains – the purpose for which the lines exist – is evidence that the right of way is no longer required. Therefore, the plaintiff submits on this fact alone, the ROW expires pursuant to the Railway Purposes Restriction. However, the examples the court gave in Opetchesaht, and the analogy to rail traffic, were apparently based on the assumption the transmission line would no longer be required when transmission of electricity ceased.

[118] Neither Opetchesaht nor Squamish stand for the proposition that an absence of electricity or rail traffic alone is sufficient to say the right of way is not required. As the Court ultimately concluded in Opetchesaht at para. 29, “Whether the line is required is a justiciable issue.”

Abandonment

[119] The plaintiff also argues ICF has effectively abandoned the Lands. Snaw-Naw-As First Nation v. Attorney General of Canada Page 37

[120] In Re McKellar, [1972] 3 O.R. 16 (H.C.), aff’d [1973] 3 O.R. 178 (C.A.), the court held that any right of reversion would not arise until the lands in question were formally abandoned via application to the Canadian Transport Commission:

The material filed also shows that the C.N.R. proposes to abandon its line and station where it occupies the lands which were formerly part of Vickers St. and its application to the Canadian Transport Commission for approval of such abandonment is still pending. Until that approval is obtained the C.N.R. cannot legally abandon that line: Railway Act, R.S.C. 1970, c. R-2, s. 106. However, as the application is pending I am of the opinion that the parties are entitled to ask the Court to determine what their rights will be, if and, when the use of parcel A for railway purposes is formally abandoned and that abandonment has been properly approved. Until then any right of reverter or re-entry will not arise. A somewhat similar situation was discussed in Fitzmaurice v. Board of School Trustees of Township of Monck, [1949] O.W.N. 786, [1950] 1 D.L.R. 239.

[121] Outside of the railway context, the possibility that lands may be used for the purpose granted can be sufficient to prevent a reversionary right being triggered. In Fitzmaurice v. Board of School Trustees of Township of Monck, [1950] 1 D.L.R. 239 (Ont. H.C.), the property in question was conveyed to the School Trustees with a right of reversion if “the said lands [were] not…required or used for Public School purposes”. The school was temporarily closed in 1945 and remained closed in 1949 at the time of the hearing. The plaintiff alleged since it was not being used it was not required for school purposes. The school was still useable unlike the Railway here and there was evidence it might be used again. The court concluded at p. 240:

I am not satisfied that the school is not required, or may not be required, as a school; in fact the evidence convinces me that the school trustees are acting very wisely under all the circumstances. The proper interpretation of the word “use” under the circumstances, is wider than might appear upon first consideration. So long as the property is not being used for any other purpose than a school, and so long as the school is ready and equipped for use as a school, it would appear to me that it may well be interpreted as being presently used. Clearly the evidence shows that under all the circumstances it is required.

[122] As a result, the fact that the school had not been in use for years and was being maintained for possible future use was sufficient to find it was still being “used” for the granted purpose. Snaw-Naw-As First Nation v. Attorney General of Canada Page 38

[123] De facto abandonment must be clear and complete. In the 1995 Indian Claims Commission, Inquiry into the Claim of the Sumas Band (Ottawa: February 1995), the Panel referred to the United Kingdom decision Metropolitan Realty Company v. Fowler, [1893] AC 416 (C.A.), which considered when reversion may be triggered. In that case, a special Act authorized Metropolitan to construct an underground railway and provided, regarding lands under a highway, that the company did not have to wholly take such lands but might appropriate and use the subsoil and under-surface. At issue was whether the company was liable for land tax. It was argued that the company had only an easement, hence no tenement or hereditament was vested in them hence no tax applied. On appeal it was determined it was a hereditament and as such taxable. Lord Watson stated:

To appropriate, according to its natural meaning, is to take and keep a thing by exclusive right; and, as I construe their Act, the authority which it confers upon the company is, to take and exclusively possess as much of the subsoil below highways as may be required for the purposes of the undertaking. There is no substantial distinction between the interest which they get by appropriation, and that which they acquire by purchasing in terms of the Lands Clauses Act. It maybe that if their railway undertaking was wholly abandoned their statutory title to the subsoil of highways would cease, and the land which they possess by virtue of it would revert to the original owner. But their Act gives them an interest in perpetuity, if they choose to avail themselves of it; and, at all events, until abandonment actually takes place, the quality of their purchased and of their appropriated rights will, for all practical purposes, be identical. [Emphasis added.]

[124] As a result, complete abandonment was viewed as a possible basis for reversion of the interest in the land.

[125] It appears then, that while circumstances other than formal abandonment procedures may trigger a reversionary right, there is a reluctance to extinguish a landowner’s property right (or in this case a right of way holder’s right) for anything less than clear and complete abandonment.

[126] In this case, the Railway has not been formally abandoned under either federal or provincial legislation. While rail service has been suspended on most of the railway line and will not resume unless it is safe to do so, that is not formal Snaw-Naw-As First Nation v. Attorney General of Canada Page 39 abandonment. No formal abandonment has occurred nor has the Railway been informally or de facto abandoned.

Interpretation of “Railway Purposes”

[127] The defendant ICF submits the phrase “for railway purposes” is to be interpreted purposively noting:

In this case the lands at issue were granted a century ago so that a railway could be constructed, operated, maintained and continued, with all of the ancillary activities that are part and parcel of what it means to build, operate, protect, maintain, secure and support a public railway. A hundred years later, the railway is still there. The tracks have not been torn up. The corridor is still being used for railway purposes. Work is done every day to advance those purposes. Island Corridor Foundation was formed, acquired the railway and continues for the express purpose of advancing railway purposes. It does so not for private profit, but for the public good. Its work is not building condos or high rises or strip malls, but operating, repairing, refurbishing, repurposing, reimagining a 21st century railway for a 21st century Vancouver Island.

[128] “Purpose” is defined in the Oxford English Dictionary as “That which a person sets out to do or attain; an object in view; a determined intention or aim” or “The reason for which something is done or made, or for which it exists; the result or effect intended or sought; the end to which an object or action is directed; aim.” In other words, “railway purposes” is not restricted to the actual running of trains but includes other acts including actions taken to run a railway.

[129] Additionally, the authorities use the word “required” as opposed to “used” for railway purposes, a broader concept that may embrace a longer period of time.

[130] The plaintiff on the other hand submits the test of whether a right of way terminates because it is no longer required for railway purposes is an objective test determined by whether the lands are actually used for that purpose. As the plaintiff puts it, the “inquiry focuses on present reality, not some speculative future.” The plaintiff submits the right of way “endures only so long as the right-of-way is required for the purpose”. The question, they submit, is whether there is some present actual Snaw-Naw-As First Nation v. Attorney General of Canada Page 40 requirement for the lands for the purposes of a railway, relying on Opetchesaht at para. 29.

[131] The plaintiff’s submission takes a narrow view of “use”, “required” and “no longer required”, that is, the Lands are no longer required for railway purposes when either actual use as a railway carrying traffic has ceased or there is a situation where there is no likelihood it will return.

[132] There is a lack of authority on what constitutes a “railway purpose”. In Southern Manitoba Railway v. Meeches et al., 2008 MBQB 272, the Court granted an injunction prohibiting the defendant Swan Lake First Nation from impeding the plaintiff railway company from removing railway track from a line that had operated across their reserve. The Court stated:

[13] Both parties agree whatever the nature of the interest of the railway company in the reserve land, that interest terminates when the land is no longer used “for railway purposes.” The basis for this understanding appears to be a combination of the original Order-in-Council which authorized, under s. 35 of the Indian Act, the expropriation of the land "for railway purposes;" the legislative provisions which authorize the expropriation of land by the railway; and the case law (see e.g. Squamish Indian Band v. Canadian Pacific Ltd., 2002 BCCA 478). The dispute between the parties relates to when the land ceased to be used for railway purposes. Swan Lake argues that the land ceased being used for railway purposes on January 19, 2007 when the Motor Transport Board granted SMNR permission to discontinue the railway operation. [14] On the other hand, SMNR argues that, as the installation of the track is necessarily a use of the land for a railway purpose, so too is the dismantling of it. SMNR argues that the reversionary interest of the Crown could not include a $1,000,000 windfall in the salvage value of the track. [15] The parties have referred to no case law which is of any assistance in determining what constitutes a "railway purpose." In the one case to which reference was made (Canada (Attorney General) v. Canadian Pacific Ltd., supra), the court held that the railway could not claim a continued interest in its right-of-way for the purpose of constructing a building for the company's offices. The court found that, because the land was no longer being used for railway service, the land had reverted to the Crown. But in that case, the track had already been removed from the land, so it was not necessary for the court to decide the issue in this case - whether the removal of the track was a use of the land for railway purposes. [16] In view of the lack of authority on the question of what constitutes a "railway purpose," this will be a case of first impression. As such, there is a Snaw-Naw-As First Nation v. Attorney General of Canada Page 41

serious issue to be tried as to when the reversionary interest of the Crown takes effect.

[133] There is also authority that the expression “railway purposes” is to be read broadly. In Canadian Pacific Ltd. v. Matsqui Indian Band (1998), 162 D.L.R. (4th) 649 (Fed. C.A.), the court noted that while “railway purposes” was not defined in the various Railway Acts, “railway” has consistently been given a “very wide meaning” and that “railway” purposes and railway “lands” have been defined as encompassing real property in the widest sense:

[20] While "Railway purposes" is not an expression defined in the various Railway Acts, the word "railway" itself has been defined and given a very wide meaning which has not substantially changed throughout the years. In the 1970 version of the Railway Act, for example, (R.S.C. 1970, c. R-2), "railway" is defined as meaning: ... any railway that the company has authority to construct or operate, and includes all branches, extensions, sidings, stations, depots, wharfs, rolling stock, equipment, stores, property real or personal and works connected therewith, and also any railway bridge, tunnel or other structure that the company is authorized to construct ... On the other hand, the word "lands" is defined in a very broad manner as meaning: ... the lands, the acquiring, taking or using of which is authorized by this or the Special Act, and includes real property, messuages, lands, tenements and hereditaments of any tenure, and any easement, servitude, right, privilege or interest in, to, upon, under, over or in respect of the same; … [31] As noted in para. 18, railway companies were entitled at all relevant times to take and hold reserve lands for the construction, maintenance and operation of a railway. It is true, as counsel for the appellants submit, that the power of compulsory taking for public purposes should be interpreted in such a way as to appropriate only that land or interest in the land that is necessary for the accomplishment of these purposes. However, as I have noted earlier, "railway" purposes and railway "lands" have been defined as encompassing real property in the widest sense and this is not the proper occasion to argue that the Crown took away more than was needed by the CN for the construction of its railway. [32] In order to determine the nature and extent of a railway company's interest in reserve lands "and, by the same token, the nature and extent of what was taken away from a band ", resort must be had "to the language of the statutes, to any agreements between the original parties and to subsequent actions and declarations of the parties" (Canadian Pacific Ltd. v. Paul, supra, para. 25 at 665). Snaw-Naw-As First Nation v. Attorney General of Canada Page 42

[134] As well, in Squamish when CPR made a late-in-day proposal to use lands for office buildings, after it had already sought to alienate the lands by selling them, the trial court gave a wide interpretation of what constitutes a railway purpose when it accepted that CPR’s proposed use could amount to a railway purpose:

[245] Only in the late spring of 1999, facing an impending trial, did CPR present its proposal to use the land to house offices of the railway. If implemented, this plan will allow CPR to vacate other premises. Candidly CPR said if they otherwise must lose the property, it would be better for CPR to use the lands for this office purpose. [246] I take it as obvious that the offices referred to by CPR as ones which would occupy this land, including freight and claims, are necessary for the running of a railway. They can be housed, of course, virtually in any location in Vancouver, although there may be convenience in their location near or in the business centre of the city. … [255] So the issue is whether the proposed office use of the land by CPR, presented only in 1999, is sufficient to permit CPR to retain possession of the land. [256] I do not consider the late presentation of the proposal, by itself, to be fatal. This property has been in legal limbo since 1989. On several occasions CPR pressed for a trial date to resolve the issue. The main cause of delay was the ongoing Federal Court litigation which occupied the other parties, and while CPR is criticized for its “use it if we have to lose it” proposal, I would not conclude on the evidence that the proposal is not a legitimate business plan presented in good faith. Essentially the restraint on alienation reduces the property’s land value to CPR to zero, and makes construction of an office building a sensible business proposal in the interests of the overall railway enterprise. Further, the proposed use is for railway purposes. Freight and claims offices are integral and necessary to the operation of a railway. And while it may not strictly be “necessary” to house the office on this land, in the context of the Railway Act where the word “necessary” could rarely be applied to any parcel of land, some greater functional interpretation must be given. [Emphasis added.]

[135] The court concluded that CPR’s plan to construct offices did not save the property for CPR as the lands were cut off from the dedicated road bed hence would no longer be “lands ‘lying on the route of the railway’, as required by s. 99 of the 1888 Railway Act and s. 189 of the 1927 Indian Act” (para. 257). This, combined with the CPR having already lifted the track and abandoned other parts of the line, Snaw-Naw-As First Nation v. Attorney General of Canada Page 43 resulted in the finding that CPR intended to cease all railway traffic on the lands in issue.

Has ICF Continued to Use the Lands for a Railway Purpose?

[136] As noted earlier, considerable evidence was led respecting the alleged non- use of the ROW for railway purposes. The evidence relied on by the plaintiff was that the Railway traffic, other than over the limited areas referred to, has ceased, that the maintenance being carried out is not rehabilitating the Railway nor can the track currently support rail traffic over much of the corridor. There is also evidence of historical safety concerns and non-compliance with British Columbia Safety Authority requirements. The evidence also shows that portions of the ROW are now also used for trails and that railway stations have been repurposed.

[137] The plaintiff led evidence to the effect that the Railway has been undergoing a cessation of operations for an extended period of time, noting the efforts of CPR to cease operations and the unsuccessful efforts of ICF over the past 14 years to restart railway traffic. Significantly they note the substantial costs involved in bringing the railway line back to a useable state and submit there is no money, funding commitments or business case that will result in restoration of the Railway. All of which in their view leads to the conclusion the railway line has ceased being used for railway purposes and will never resume bearing rail traffic. They submit the mere lack of a formal abandonment or discontinuation is not an answer.

[138] Unlike the authorities relied on, this is not the same as a spur line, power line or canal serving one purpose but rather a corridor, the whole of which is necessary for the purpose of the Railway to be fulfilled. ICF’s railway purposes relate to the whole corridor that was the subject of the original Grant and is not limited to just the 1.3 km segment of the ROW on the Lands at issue.

[139] Nor is this a situation where a railway company has abandoned a line or sought to sell it or change its use to a non-railway purpose. Here ICF exists for the purpose of preserving, developing, restoring, and running the Railway. This is relevant as a statement of present intent which is an aspect of the inquiry into Snaw-Naw-As First Nation v. Attorney General of Canada Page 44 whether the Lands are being used for railway purposes. If, for example, ICF had plans to tear up the tracks and use the Lands for a non-railway purpose or if ICF ceased its efforts to resume rail traffic, then the court could find the Lands were not being used for a railway purpose and declare the ROW extinguished. That however is not the case.

[140] The lack of funds presently limits the ability of ICF to restore rail services, but ICF has not abandoned its efforts to fulfill its mandate. It maintains the Railway corridor to the extent possible with present funding.

[141] I accept the future of the Railway is unclear and will depend on funding from various levels of government which is uncertain. Indeed, the likelihood of its future use for rail traffic may be bleak given it depends on the largess of government. However, government support of passenger rail service is not uncommon. As evidenced by the Updated Condition Assessment, the provincial government has apparently not foreclosed the possibility of restoring service on the Railway. To the contrary, they have invested resources studying the viability of such. ICF, its stakeholders and other levels of government do not consider the corridor abandoned. Nor do they consider the future potential of the corridor hopeless. They at least contemplate its future use as an active railway as a possibility.

[142] Objectively then it cannot be said the ROW is no longer required for railway purposes.

Inefficient Use of the Lands

[143] The plaintiff submits that inefficient uses of the Lands is a type of action or in-action that “must trigger the right of reversion”, relying on the Squamish trial decision at para. 251:

[251] The question is whether there is only one limitation upon CPR’s title, that it cannot be alienated, or whether there is a second, that it must meet other criteria. Does the Railway Act only prohibit alienation, or is CPR’s title determinable upon the happening of an event or existence of a circumstance other than unlawful alienation. Thus far I have held only, in relation to the first issue, that CPR did not acquire fee simple absolute because of the Snaw-Naw-As First Nation v. Attorney General of Canada Page 45

prohibition on alienation. However, in my view, to ask the question is to answer it. On the theme that nature abhors a vacuum, one may consider what could happen if CPR did not use the property for railway or other purposes and could not alienate it - the land could sit fallow indefinitely. One can postulate countless possibilities of inefficient use of the property if there are no conditions on which the property returns to the Crown. It becomes clear that certain events or non-events, other than alienation of the property, must trigger the right of reversion. [Emphasis added.]

[144] The plaintiff submits the Court of Appeal in Squamish confirmed the trial judge’s holding that the result of failing to use expropriated lands for sufficient railway right of way purposes would cause the land to return to the original holder. Indeed, the Court of Appeal held that the principle that expropriated lands are held subject to reversion to their owners would have been clearly known to federally- regulated railway companies at the turn of the 20th century. The Court stated that the notion that takings were subject to the Railway Purposes Restriction was a “basic principle”.

[145] The alleged inefficient use argument must in my view be read in the context of why more use is not being made of the land at issue. It is not a matter determined simply by, for example, no trains running over the track or a section of track. As seen in Squamish, a failure to use a rail line coupled with the clear intention of never using it again would appear to qualify as inefficient. Deliberate non-use with a lack of intention to use the land for railway purposes will not preserve the right-of-way for a right holder who nonetheless seeks to retain it. However, a failure to use the land because reconstruction is required or funds need to be raised, as in the present case, is not the same as leaving the land to “sit fallow indefinitely”. What constitutes “inefficient use” therefore is a matter of context. If the land has a planned use as in this case, that is not necessarily inefficient.

[146] ICF makes its best efforts to maintain the Railway with present funding and has the intention to continue to use the Lands for railway purposes. ICF is not leaving the Lands to sit fallow indefinitely. Their use is not “inefficient” such that it triggers the right of reversion. Snaw-Naw-As First Nation v. Attorney General of Canada Page 46

Conclusion

[147] The desire of the plaintiff to have the Lands returned to their reserve is understandable. However, for the reasons given the ROW has not ceased to be used for railway purposes. The claim is dismissed.

[148] In light of the conclusion I have reached respecting the plaintiff’s claim, I need not address the claim against the Crown seeking reversion to the plaintiff, not the Crown.

[149] No submissions were made concerning costs. The parties have liberty to apply if required.

“The Honourable Mr. Justice Punnett”