Decision No. 346-R-1990

June 27, 1990

June 27, 1990

IN THE MATTER OF the crossing of the Canadian National Railway Company and Bingeman Park Road, at mileage 60.0 Guelph Subdivision, in the City of Kitchener, in the Province of Ontario;

IN THE MATTER OF Railway Transport Committee Order No. R-28247 dated January 25, 1979 which ordered the Canadian National Railway Company to install automatic protection at the crossing and reserved apportionment of the cost of the installation, operation and maintenance of the automatic protection for further decision of the Railway Transport Committee;

IN THE MATTER OF Railway Transport Committee Order No. R-33288, dated February 3, 1982 which ordered the costs of installation, operation and maintenance of the automatic protection to be shared equally between the Canadian National Railway Company and Bingeman Park Farms Limited;

IN THE MATTER OF the Report of Mr. L.R. Porter, the Inquiry Officer appointed pursuant to section 81 of the former National Transportation Act, R.S.C. 1970, c. N-17 to make an inquiry and report to the Railway Transport Committee of the Canadian Transport Commission on:

  1. What costs are admissible as annual maintenance costs at the crossing;
  2. whether a fixed amount should be paid annually by Bingeman Park Farms Limited and, if so, what amount;
  3. whether a formula taking inflation into account should be used to determine what amount Bingeman Park Farms Limited should pay annually and, if so, what formula; and

IN THE MATTER OF section 216 of the Railway Act, R.S.C., 1985, c. R-3.

File No. 30762.1090


BACKGROUND

The crossing in question has been determined to be a "farm crossing" as the railway company constructed the line severing the land and the land on both sides of the railway tracks has remained in one parcel. The crossing lies within the boundaries of the City of Kitchener and the land is used by the Bingeman family for a large commercial enterprise known as Bingeman Park Farms Limited

Due to the nature of the commercial enterprise, a substantial number of vehicles and pedestrians utilize the crossing annually. Following several accidents, some of which were fatal, the Railway Transport Committee (hereinafter the RTC) issued Order No. R-28247 dated January 25, 1979 which ordered the Canadian National Railway Company (hereinafter CN) to install automatic signal protection at the crossing. A decision on cost apportionment was deferred for further consideration of the RTC and on February 3, 1982 Order No. R-33288 was issued which ordered that the costs of installation, operation and maintenance were to be shared equally between CN and Bingeman Park Farms Limited.

In October of 1982, Bingeman Park Farms Limited paid to CN the amount of $16,015.62 which was 50 percent of the installation cost. Bingeman Park Farms Limited's share of the costs of operation and maintenance for the automatic protection is the subject of a long-standing dispute between the parties which culminated in the appointment of Mr. L.R. Porter to inquire into the matter and report back to the RTC.

According to the RTC Decision dated February 3, 1982 at page 11 (copy attached), annual operation and maintenance costs were estimated at $1,500.00. Invoices sent to Bingeman Park Farms Limited for its 50 percent share, however, indicated that the actual costs were closer to $2,500.00. Therein lies the root of the dispute.

Subsequently, RTC Order No. R-33288 was made a decree of the Supreme Court of Ontario and an action was brought by CN against Bingeman Park Farms Limited for recovery of the amounts invoiced, together with interest at the rate of 11 percent per annum. The action, however, was interrupted by the appointment of Mr. L.R. Porter as Inquiry Officer.

REPORT OF THE INQUIRY OFFICER

On May 17, 1985 the Canadian Transport Commission appointed Mr. L.R. Porter, pursuant to section 81 of the former National Transportation Act, to make an inquiry into and to report upon the costs involved in the annual maintenance of the crossing and to direct the person appointed to:

  1. Review the relevant documentation and bills in the presence of the two parties;
  2. Assess the annual maintenance costs provided for in Order No. R-33288;
  3. Recommend to the Committee
    1. what costs are admissible as annual maintenance costs at the crossing;
    2. whether a fixed amount should be paid annually by Bingeman and, if so, what amount;
    3. whether a formula taking inflation into account should be used to determine what amount Bingeman should pay annually and, if so, what formula.

Mr. Porter met with both parties at the site on July 11, 1985 and requested information on various occasions during his investigation. Following the site meeting and in the absence of an agreement, CN submitted a without prejudice proposal dated September 11, 1985 which suggested an adjustment of the invoices, and future assessments, to provide for an attribution of a lesser number of hours allocated to maintenance of the crossing in question, thereby reducing the amount invoiced from $7,041.87 to $5,023.71, exclusive of any interest. On December 13, 1985, the solicitor for Bingeman Park Farms Limited proposed to Mr. Porter a lump sum payment of a further $12,000.00 which would completely end its liability with respect to this matter.

Mr. Porter's report (copy attached), dated February 7, 1986, contained the following two options for the RTC to consider:

  1. That Bingeman Park Farms Limited be assessed a further lump sum payment in the amount of $16,015.62 in full satisfaction of their liability for 100% of the installation costs of the automatic protection and that CN be assessed 100% of the outstanding costs of maintenance of the automatic protection and maintenance costs thereafter; or
  2. That Bingeman Park Farms Limited pay $5,656.00 to cover the accounts from February 1, 1982 to January 31, 1986 and that further rates be reviewed at a later date depending on the inflation rate.

Both parties to the dispute were invited to provide to the RTC their comments on Mr. Porter's recommendations. On March 11, 1986, CN submitted that the railway company was not in favour of the lump sum payment suggested by Option 1 "as the sum does not acknowledge the responsibility of the Bingemans, together with CNR, to share extraordinary expenses over and above the usual maintenance costs, including replacement costs in the event of accident, changes at the crossing, or other extraordinary situation. As well, there are replacement costs beyond usual or routine maintenance that may arise during the existence of the present level of crossing protection, and the first option's proposed allocation to CN of all present and future maintenance does not ... fairly coincide with or recognize the conclusions of the Railway Transport Committee in its decision of February 3, 1982."

On March 14, 1986, the solicitor for Bingeman Park Farms Limited responded stating that his client would be willing to pay the lump sum payment in the amount of $16,015.62 as suggested in Option 1 in full satisfaction of Bingeman Park Farms Limited's liability provided that CN be required to pay for all past, present and future maintenance costs associated with the crossing, including any replacement signal apparatus. In a letter dated February 28, 1989, Mr. Jamieson Martin of Clement, Eastman, Dreger, Martin and Meunier, solicitor for Bingeman Park Farms Limited, stated that his client would, in fact, be willing to pay a lump sum payment in the amount of $21,000.00 provided that CN would be responsible for all outstanding, present and future maintenance costs at the crossing and that Bingeman Park Farms Limited would make no further or additional contributions to a proposed new crossing whenever such new crossing becomes a reality.

FINDINGS

By letter dated October 23, 1986, Bingeman Park Farms Limited requested that the matter be held in abeyance for a period of time as major developments that could significantly impact on the Bingeman crossing were being considered. These developments refer to the establishment of another crossing near the farm crossing at mileage 60.0 and could involve closing the farm crossing. On December 4, 1986, CN agreed to such a deferral, but without prejudice to CN's position in all circumstances, that the Bingemans remain liable for some measure of maintenance costs and services to that date in accordance with the original RTC Order. Further lengthy exchange of correspondence occurred between the parties and the RTC and, finally, on December 7, 1987, CN requested the RTC to act to affirm and enforce its Decision of February 3, 1982 and to direct Bingeman Park Farms Limited to pay the outstanding charges and future costs. As no application for the proposed new crossing has been received, the National Transportation Agency (hereinafter the Agency) has decided to finalize its consideration of the report of the Inquiry Officer and render its decision thereon.

Option 1

With respect to the recommendation contained in Option 1, i.e. that a further lump sum payment equal to 50 percent of the original installation charges be assessed to Bingeman Park Farms Limited and that 100 percent of maintenance costs past, present and future be the responsibility of CN, the Agency is of the view that this is unacceptable. The rationale for RTC Order No. R-33288 was that both parties would derive equal benefits from the automatic protection and should, therefore, pay equally for both the construction and maintenance of that protection. Unless the Agency knows at what moment the crossing will be closed, it cannot determine whether the payment suggested by Mr. Porter will amount to equal payments for both parties. While the Agency recognizes that Option 1 would solve the problem between the parties for the future, acceptance of the lump sum recommendation would amount to amendment of RTC Order No. R-33288. The Agency is not convinced that any rationale has been suggested by the parties which would warrant such a variance. The dispute here is not related to the original apportionment as it was made by RTC Order No. R-33288.

Option 2

RTC Order No. R-33288 states that "The costs of the installation, operation and maintenance of the said signal protection shall be shared equally by the Canadian National Railway Company and Bingeman Park Farms Limited." (emphasis added). CN has in place a system which generates charges based on the cost of such performance of work. The recommendation in Option 2, which refers to a predetermined amount based on an average number of crossings, an estimate of the number of hours spent at each crossing and indexed by a yearly estimate of the inflation rate, does not adequately address the directive in the Order which is to pay the costs. Acceptance of this option would also require an amendment to the original Order which the Agency does not feel is warranted in these circumstances.

Mr. Porter states on page 3 of his report: "The Railway has proposed to reduce the maintenance costs by approximately $2,000.00 for outstanding charges between February 1st, 1982, and February 1st, 1985. Therefore, it is self-evident that the Bingemans have been overcharged." With respect, the Agency does not agree that CN's settlement offer should be construed as an admission by CN that Bingeman Park Farms Limited has been overcharged.

CONCLUSION

While the Agency agrees that a solution to the dispute which is acceptable to both parties is desirable, the report of the Inquiry Officer does not provide either such a solution or a recommendation which the Agency is prepared to accept. As stated above, either option suggested by Mr. Porter would require an amendment to the original Order. The Agency is not prepared to make such an amendment as it is convinced that the provisions of RTC Order No. R-33288 are fair and reasonable in the circumstances.

For the reasons stated above, the Agency hereby rejects the recommendations of the report of the Inquiry Officer, Mr. L.R. Porter, dated February 7, 1986.

The Agency is deeply concerned about the length of time it has taken to deal with this matter to date. The Agency is also aware that this dispute is really no closer to resolution despite the efforts of all involved. The Agency would remind Bingeman Park Farms Limited, however, that the crossing in question is the subject of a subsisting Order which requires Bingeman Park Farms Limited to pay its share of the maintenance costs. As the costs assessed Bingeman Park Farms Limited are in accordance with the generally accepted billing practices of CN and do not appear to be unreasonable, the Agency hereby determines that Bingeman Park Farms Limited should comply with the terms of that Order.

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