Decision No. 208-R-2014

INTRODUCTION

[1] 667803 BC Ltd. (applicant) filed an application with the Canadian Transportation Agency (Agency) pursuant to section 103 of the Canada Transportation Act (CTA) for a private crossing at mileage 48.85 of the Canadian National Railway Company’s (CN) Fraser Subdivision, Dunster, near McBride, in the province of British Columbia.

[2] The applicant requests an order which shall include the following terms and conditions:

1. No annual fee shall be paid by the applicant to CN;
2. No general liability shall be carried by the applicant for the benefit of CN;
3. The applicant shall pay for reasonable maintenance costs, subject to the following conditions:
1. CN post a 30-day notice of any maintenance closure of the crossing;
2. CN provide the applicant with a written estimate of maintenance costs;
3. The applicant be given an opportunity to supply labour and materials for any maintenance;
4. CN shall not reasonably deny the applicant an opportunity to supply maintenance labour and materials;
5. Given the applicant’s organic farming business, CN shall not use pesticides on its tracks within the land.
4. CN shall not remove the existing crossing until this matter has been decided by the Agency.

BACKGROUND

[3] In 2003, the applicant purchased District Lot (DL) 3284, as well as Fractional NW ¼, Fractional NE ¼ and Fractional S ½ of DL 7668 (Land). The applicant operates an organic farm and an ecotourism business on the Land.

[4] CN’s tracks divide the Land in two, with DL 3284 and approximately the northern half of DL 7668 being completely surrounded by the river meander and the tracks, and thus isolated from the southern half of the Land and from access to public roads.

[5] On November 19, 2003, the applicant and CN entered into a “License for Private Crossing JDE #1033584” (2003 Agreement) which provided for terms and conditions related to the construction, maintenance and use of the private crossing over CN’s railway line.

[6] On October 11, 2013, the applicant filed an application with the Agency, requesting, among other things, that the Agency make an interim order restricting CN from removing the existing crossing until the matter has been decided by the Agency.

[7] In Decision No. LET-R-129-2013, the Agency requested the parties’ comments on the issue of jurisdiction prior to considering the application under section 103 of the CTA, as the Agency has no jurisdiction to resolve a dispute relating to a crossing when a private agreement is in effect.

[8] The Agency issued Decision No. LET-R-6-2014 where it found that the “License for Private Crossing JDE #1033584” had been terminated, and that clause 11(b) of the said Agreement did not operate to foreclose any further application for a crossing.

[9] In Decision No. LET-R-10-2014, the Agency advised that it would proceed to examine the application under section 103 of the CTA and opened pleadings. In that Decision, the Agency also referred the applicant to a three-part test adopted by the Supreme Court of Canada and informed the applicant that should it wish to pursue the request for an interim order, it must file a submission and supporting evidence to meet that three-part test.

[10] On February 27, 2014, the applicant filed a submission for an interim order restricting CN from removing the existing crossing until the Agency renders its final decision in this case.

PRELIMINARY MATTERS

Applicant’s request for an interim order restricting CN from removing the existing crossing

[11] The applicant submits that the Agency should grant the requested interim order on the basis that the continued existence of the crossing meets the three-part test for interlocutory injunctions, as there is a serious question to be tried, that it would suffer irreparable harm if the order is not granted, and that its harm would be significantly greater than any harm suffered by CN if the order is not granted.

[12] CN argues that such an interim order is unnecessary and unwarranted as the crossing remains in place and CN has no plans to remove it while this proceeding is ongoing.

[13] The applicant acknowledges CN’s position that it will not remove the crossing while the application is being heard.

[14] CN has agreed that it will not remove the crossing while this proceeding is ongoing. The Agency is therefore of the opinion that the applicant’s request for an interim order has been rendered moot.

CN’s request for an order requiring the applicant to pay all past due amounts owed to CN

[15] CN requests that all additional terms and conditions to be attached to the Agency’s order as requested by the applicant, if any, be made strictly conditional on the applicant first paying all past due amounts owed to CN.

[16] The applicant submits that as the first page of Appendix I to CN’s answer indicates, the amounts allegedly owed by the applicant to CN are made up of annual lease payments from 2004 to 2013, plus the sightline vegetation clearing invoice.

[17] The applicant maintains that CN performed no services for the annual fee, that it performed no necessary or useful services for the amount of the November 2012 invoice, and that much of the debt is the result of CN refusing to implement a more equitable arrangement such as it now accepts.

[18] In light of the fact that these amounts relate to a private agreement between the parties, the Agency has no jurisdiction to order the applicant to pay past due amounts owed to CN. Instead, this would be a matter to be determined by the civil courts.

ISSUE

[19] Is the applicant entitled to a suitable crossing pursuant to section 103 of the CTA? If so, should the Agency include in any order the terms and conditions requested by the applicant?

THE LAW

[20] Section 103 of the CTA provides that:

(1) If a railway company and an owner of land adjoining the company’s railway do not agree on the construction of a crossing across the railway, the Agency, on the application of the owner, may order the company to construct a suitable crossing if the Agency considers it necessary for the owner’s enjoyment of the land.

(2) The Agency may include in its order terms and conditions governing the construction and maintenance of the crossing.

(3) The owner of the land shall pay the costs of constructing and maintaining the crossing.

POSITIONS OF THE PARTIES

Crossing

[21] The applicant submits that CN’s tracks effectively divide the applicant’s Land in two, with DL 3284 and the northern half of DL 7668 being completely surrounded by the river meander to the north and CN’s tracks to the south, thus isolated from the southern half of the Land. The applicant adds that the residence and workshops on the Land require the crossing to access public highways. The applicant further submits that these facts make the crossing necessary for the applicant’s enjoyment of its Land.

[22] CN states that provided the applicant has first satisfied the Agency that a private crossing is necessary for the enjoyment of the applicant’s Land, CN has no objection to the existence of a crossing pursuant to section 103 of the CTA. However, CN objects to certain conditions requested by the applicant.

Annual fee

[23] CN did not respond to the applicant’s request.

General liability

[24] CN did not respond to the applicant’s request.

Reasonable maintenance costs

[25] CN refers to the applicant’s statement that it should be responsible for “reasonable” maintenance costs. CN points out that all crossing maintenance is, however, undertaken as a result of necessary safety and operational considerations consistent with Transport Canada’s Canadian Railway-Roadway Grade Crossings Standards, with all associated costs determined in accordance with the Agency’s Guide to Railway Charges for Crossing Maintenance and Construction (Guide). CN adds that it would therefore be inappropriate for any such costs to be conditioned on the applicant’s own determination of what is “reasonable”. According to CN, section 103 of the CTA stipulates no such discretion but instead simply specifies that the “owner of the land shall pay the costs of constructing and maintaining the crossing.”

[26] The applicant does not dispute the scale of charges laid out in the Agency’s Guide. Rather, on the basis of its past experience, it disputes whether the invoiced maintenance carried out by CN under the 2003 Agreement was required and whether CN actually used the full labour and materials it had charged the applicant.

[27] The applicant states that, for example, when the crossing was constructed, CN charged the applicant approximately $3,000.00 plus taxes in labour and equipment to install the crossing. The applicant argues that the only work CN performed was to angle cut and drill bolt holes in the crossing planks and install them, which is less than an hour’s work. The applicant further submits that it cleared the sightline, built the crossing approaches, provided and installed stop signs, and provided and installed culverts as required under the 2003 Revised Estimate. The applicant refers to another example with respect to an invoice for “vegetation control”, presumably clearing the crossing sightline. The applicant states that it regularly clears the sightline each summer as the vegetation grows.

[28] The applicant contends that it is the unfairness of the cost charges cited in the above two examples that prompted it to request that the Agency apply a reasonableness standard for any future unilateral initiation of maintenance by CN on the crossing. The applicant adds that the reasonableness requested is the standard generally understood in law and not “the Applicant’s own determination of what is ‘reasonable’ as CN submits in its Answer.”

Maintenance – posting of a 30-day notice and written estimate of costs

[29] The applicant requests that CN post a 30-day notice of any maintenance closure of the crossing and that CN provide it with a written estimate of the maintenance costs.

[30] CN has no objection to providing an estimate of costs prior to undertaking any major work planned ahead of time. CN points out that such estimate can likewise serve as a notice to the applicant.

[31] CN states that the nature of railway operations may require certain work to be done on an urgent basis, such that a cost estimate and a 30-day notice (or in some instances, any notice at all) are simply not feasible. CN requests that any order of the Agency reflect that reality.

Maintenance – supplying labour and materials

[32] The applicant requests that it be given an opportunity to supply labour and materials for any maintenance and that CN shall not reasonably deny the applicant an opportunity to supply maintenance labour and materials.

[33] CN has no objection to the applicant supplying some maintenance materials, such as planking, to the extent that such materials are provided on a timely basis and conform to CN’s safety and operational standards. CN submits that it would, however, be entirely inappropriate for the applicant to supply labour given the highly specialized expertise required for railway work, which must also be co-ordinated with rail operations that typically continue during the course of, and notwithstanding, any crossing maintenance work.

[34] The applicant states that it has been supplying labour and materials for crossing maintenance on a regular basis for about a decade. It acknowledges that some maintenance of the tracks may require “the highly specialised expertise required for railway work” but that, in many cases, such as vegetation control, no such expertise is required. The applicant adds that in other cases, it could provide labour and materials under the supervision of a CN specialized expert.

Maintenance – use of pesticides

[35] The applicant requests that, given its organic farming business, CN shall not use pesticides on its tracks within the Land.

[36] The applicant requests that the Agency order CN not to use pesticides on its tracks within the confines of the applicant’s Land. CN states that such a request is entirely outside the scope of an order under section 103 of the CTA, which can only address the terms and conditions of the construction and maintenance of the crossing itself and not those of the surrounding lands and adjacent rail lines. CN submits that the applicant would have no recourse to restrict the use of pesticides on the lands of other (non-rail) neighbouring properties and it would be inappropriate to co-opt the Agency’s jurisdiction under section 103 of the CTA to restrict CN’s use of its own property in a manner entirely unrelated to the existence of a private crossing. According to CN, the applicant’s request is therefore out of order and should be dismissed.

[37] The applicant states that as it has no other neighbours aside from CN, the issue of any recourse available to it against CN as stated in CN’s answer is not relevant. The applicant is of the opinion that to the extent that pesticides are used to maintain crossing sightlines, they are relevant to an application pursuant to section 103 of the CTA and can appropriately be the subject of an Agency order. The applicant adds that, otherwise, any harm caused by such use would have to be considered under nuisance or trespass law.

[38] The applicant concludes that the Agency has the authority to make an order pursuant to section 103 of the CTA with all the terms and conditions set out in the application.

ANALYSIS AND FINDINGS

Crossing

[39] A landowner may rely on subsection 103(1) of the CTA which provides that if a railway company and an owner of land adjoiningthe company’s railway do not agree on the construction of a crossing across the railway, the Agency, on the application of the owner, may order the railway company to construct a suitable crossing for the owner’s enjoyment of the land.

[40] As stated above, the applicant owns land on both sides of CN’s railway line, which meets the threshold of having property adjacent to the railway line.

[41] The applicant submits that the residence and workshops on the Land require the crossing to access public highways. CN has no objection to the existence of a crossing pursuant to section 103 of the CTA.

[42] The Agency therefore finds that the crossing is required for the applicant’s enjoyment of its Land.

[43] Subsection 103(3) of the CTA requires that the costs of construction and maintenance of a crossing shall be borne by the applicant. This principle has been confirmed by the Federal Court of Appeal (FCA) in Fafard v. Canadian National Railway Company, [2003] FCA 243. In Canadian Pacific Railway Company v. Canadian Transportation Agency, [2005] FCA 400, at paragraph 35, the FCA stated that: “In all cases other than those covered by section 102, the land owner, and not the railway company, is responsible for the costs of constructing and maintaining a crossing.”

[44] Having found that a crossing at that location is required for the applicant’s enjoyment of his Land pursuant to section 103 of the CTA, the Agency finds that CN must provide a suitable crossing to the applicant, with the costs of any construction and maintenance of the crossing to be borne by the applicant. As the crossing is already in place, the costs of constructing the crossing should only consist of those costs required to ensure that the crossing is suitable.

[45] Although the costs of construction and maintenance of such crossings are the responsibility of the landowner, the Agency may set the terms and conditions governing the construction and maintenance of the crossing.

Annual fee

[46] The Agency notes that CN did not respond to this issue.

[47] In Order No. 1989-R-296, the National Transportation Agency found that:

In situations where a private crossing agreement is entered into by a landowner and a railway company, provision is often made for the payment by the licensee of compensation to the railway company in the form of annual or administrative fees. However, if the right to cross is established by the exercise of a statutory discretion, the policy of the Agency and its predecessors has been not to provide for compensation where a mere easement is created without any real or appreciable injury or damage to the railway company or its property; […]

[48] In addition, the Guide states that: “No scheduled maintenance rates are to be charged for crossings having only passive warning systems such as reflectorized signboards.” This was noted by the Agency in Decision No. 539-R-2008 where, as the proposed crossing would only have a passive warning system, the Agency found that no set yearly maintenance fee should be charged by the railway company to the landowner.

[49] Applying those principles to the facts of this case, the Agency finds that an annual fee to CN is not warranted, as CN does not allege any real or appreciable damage to CN or its property.

General liability

[50] The Agency notes that CN did not respond to this issue.

[51] In Decision No. 474-R-2001, the Agency expressed the opinion that a person for whose benefit a right of crossing is established by the exercise of a statutory discretion ought not to be responsible to insure the railway company against liability. Should there be an issue of liability at the crossing, this would be a matter to be determined by the civil courts in the province in which the crossing is located.

[52] Applying those principles to the facts of this case, the Agency finds that the applicant is not responsible for insuring CN against liability.

Reasonable maintenance costs

[53] With respect to the parties’ references to the reasonableness of maintenance costs, the Agency is of the opinion that the reasonableness of past maintenance costs is outside the scope of this case as it relates to a private agreement between the parties. As such, the Agency will not consider the reasonableness of past maintenance costs.

[54] With respect to future maintenance costs, the applicability of the scale of charges laid out in the Agency’s Guide is not at issue. As such, the Agency is of the opinion that it is not necessary to address the reasonableness of future costs.

Maintenance – posting of a 30-day notice and written estimate of costs

[55] CN has no objection to providing an estimate of costs prior to undertaking any major work and asserts that such estimate can likewise serve as notice. The Agency addressed a similar issue in Decision No. 171-R-2008, where the Agency found that the railway company had to provide the applicant with a written estimate of the costs of construction and maintenance prior to undertaking any related work.

[56] CN indicates that certain works may need to be done on an urgent basis such that a cost estimate and a 30-day notice (or in some instances, any notice at all) are simply not feasible. CN requests that any order of the Agency reflect this. The Agency is of the opinion that CN’s position is reasonable as it takes into account safety and operational considerations which may necessitate work being done on an urgent basis.

[57] The Agency finds that when and where operationally possible, CN shall provide the applicant with a written estimate of the costs of construction and maintenance prior to undertaking any related work. This written estimate will also constitute notice.

Maintenance – supplying labour and materials

[58] While CN has no objection to the applicant supplying some maintenance materials, such as planking, to the extent that such materials are provided on a timely basis and conform to CN’s safety and operational standards, CN states that it would be entirely inappropriate for the applicant to supply labour.

[59] As for the applicant providing labour, the Agency notes that the applicant acknowledges that some maintenance of the tracks may require “the highly specialised expertise required for railway work.” However, the applicant’s position is that it could, for example, provide vegetation control. The applicant also suggests that it could provide labour under the supervision of a CN specialized expert.

[60] The Agency finds that the applicant may provide some materials to the extent that such materials are provided on a timely basis and conform to CN’s safety and operational standards.

[61] The Agency notes that subsection 103(1) of the CTA provides that the Agency “may order the [railway] company to construct a suitable crossing.” If Parliament had intended to allow a landowner to perform the work, it would not have used the term “railway” in that provision. The Agency is of the opinion that this principle also extends to maintenance work. As a result, the Agency finds it reasonable to interpret subsection 103(2) of the CTA as requiring that the “terms and conditions governing the construction and maintenance of the crossing” be set out in a way that recognizes that Parliament intended that the works be performed by the railway company. As such, the Agency will not authorize the applicant to supply labour for the maintenance of the crossing.

Maintenance – use of pesticides

[62] The applicant requests that CN not use pesticides. CN states that such a request is entirely outside the scope of an order under section 103 of the CTA. CN contends that the provision only addresses terms and conditions of the construction and maintenance of the crossing itself, not the surrounding lands and adjacent rail lines.

[63] The Agency agrees with CN, and is of the opinion that it does not have jurisdiction under the CTA to restrict the use of pesticides by CN.

CONCLUSION

[64] Accordingly, the Agency concludes that a crossing is necessary for the applicant’s enjoyment of its Land, and the applicant is, pursuant to section 103 of the CTA, entitled to a private crossing.

[65] Pursuant to subsection 103(3) of the CTA, the costs of any construction and maintenance of the crossing shall be borne by the applicant.

[66] No annual fee shall be paid by the applicant.

[67] No general liability shall be carried by the applicant for the benefit of CN.

[68] CN will provide the applicant with a written estimate of the costs of construction and maintenance of the crossing prior to undertaking any major work, with such estimate serving as at least a 30-day notice of any maintenance closure of the crossing, when the work is not required to be done on an urgent basis.

[69] The applicant may provide some materials to the extent that such materials are provided on a timely basis and conform to CN’s safety and operational standards. The applicant is not authorized to supply labour for the maintenance of the crossing. The written estimate should be adjusted to give a credit to the applicant for any materials it provides.