Decision No. 403-R-2006
July 21, 2006
APPLICATION by the Corporation of the City of Windsor for a review by the Canadian Transportation Agency of the apportionment of costs associated with the expansion of the Banwell Road crossing at mileage 100.06 of the Chatham Subdivision of the Canadian National Railway Company, in the city of Windsor, in the province of Ontario.
File No. R8050/377-100.06
APPLICATION
[1] On March 27, 2006, the Corporation of the City of Windsor (hereinafter the City) filed with the Canadian Transportation Agency (hereinafter the Agency) the application set out in the title.
[2] On May 8, 2006, the Canadian National Railway Company (hereinafter CN) filed its answer to the application. On May 29, 2006, the City filed its reply. In its Decision No. LET-R-140-2006 dated June 7, 2006, the Agency accepted the City's reply.
PRELIMINARY MATTER
[3] Although CN's answer was filed after the prescribed deadline, the Agency, pursuant to section 4 of the Canadian Transportation Agency General Rules, SOR/2005-35, accepts this submission as being relevant and necessary to its consideration of this matter.
ISSUE
[4] The issue to be addressed is whether there is an agreement in place with respect to the expansion of Banwell Road and if not, what proportion of the costs is to be borne respectively by the City and CN.
FACTS
[5] The Banwell Road crossing was installed in 1996 to facilitate development in the East Riverside area.
[6] On February 22, 1996, the City filed an application with the National Transportation Agency (now the Canadian Transportation Agency) to construct a crossing at Banwell Road at mileage 100.06 of the Chatham Subdivision. In its application, the City was proposing to construct the easterly two lanes of an ultimate four-lane cross section on a CN 100-foot right of way. The City also confirmed by letter that "the ultimate four lane cross section will not be constructed until development proceeds adjacent to the road..."
[7] In a letter dated June 20, 1996, the City confirmed to CN that it was accepting all costs associated with the Banwell Road crossing and more specifically "the initial construction and maintenance of the approaches, surface and auto warning devices, the construction and maintenance of drainage within the road right-of-way, the clearing and maintenance of site lines for the crossing, as well as future works associated with the expansion as shown on the plans submitted with the application."
[8] At the time, in 1996, CN Real Estate completed a secondary plan for the Banwell Road crossing and the nearby Clover Avenue crossing to allow for road expansion. In a letter dated June 27, 1996, CN confirmed that it had no objection to the project as set out in the application and noted that the approved plan depicted the present and future requirements for the crossing.
[9] Pursuant to Order No. 1996-R-291 dated August 1, 1996, the Agency authorized the City to construct an at-grade crossing at Banwell Road, across the right of way and track of CN. The cost of constructing and maintaining the road crossing was to be paid by the City. The cost of constructing and maintaining the road approaches to the crossing was also to be paid by the City. CN was to prepare all accounts using rates not in excess of those stipulated in Schedule "A" entitled Directives, or its replacement, for any construction and maintenance work carried out by CN pursuant to this Order.
[10] In undertaking the expansion of the Banwell Road crossing, the City acted as an agent for two developers in the East Riverside area, specifically 1027458 Ontario Inc. and 882885 Ontario Inc.
[11] In 2003, the City and CN began discussions for the widening of the Banwell Road crossing to a four-lane cross section as originally planned in the City's 1996 application. CN provided the City with an estimate of the costs associated with the project. The City replied to CN on July 16, 2003 expressing concerns with the cost estimate for the crossing work. On July 22, 2003, CN responded with a detailed explanation of the reasons for the higher costs of materials and attached a detailed cost estimate.
[12] On April 26, 2004, the City and CN entered into two agreements to carry out the work. The Standard Crossing Reconstruction Agreement and the Standard Unfunded Crossing Warning System Modification Agreement were signed, and attached to the latter agreement was a revised "Detailed Cost Estimate" (Estimate No. GCH-10006) for the project. According to the Standard Unfunded Crossing Warning System Modification Agreement, the City agreed to pay the total actual costs of the crossing warning system modification, based on the "Detailed Cost Estimate".
[13] Both agreements were filed with the Agency pursuant to subsection 101(2) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA), and became orders of the Agency (Order Nos. 2004-AGR-505 and 2004-AGR-506 dated November 24, 2004). Following completion of the construction work, invoices were sent by CN and the City subsequently paid.
POSITIONS OF THE PARTIES
[14] The City submits that in addition to the work required to expand the crossing, CN took the opportunity to upgrade its infrastructure significantly on the premise of expanding the crossing.
[15] In addition, the City states that CN overstated the exchange rate used to purchase the equipment from the United States of America (hereinafter the U.S.) resulting in a profit on an exchange item which should have been invoiced at cost.
[16] CN is of the opinion that the amounts invoiced were the costs incurred with respect to the road crossing warning system upgrade at Banwell Road. CN states that the City was fully aware of the costs of this project and the reasons for the costs prior to entering into an agreement with CN. CN adds that a detailed estimate of these costs had been provided to the City and that the City had undertaken to pay these costs prior to the commencement of the installation.
[17] CN adds that it must upgrade any crossing warning system to the current standard whenever major work such as widening is performed at a crossing and that it did not upgrade its infrastructure on the basis of the crossing expansion. CN applied the new draft Grade Crossing Regulations issued by Transport Canada, which specify the requirements for grade crossing protection. CN points out that while these are still in draft form, they are expected to come into force in the near future and Transport Canada expects railway companies to apply these standards at any new crossings or when making modifications at crossings.
[18] With respect to the U.S. exchange rate, CN submits that it paid for materials ordered from the U.S. in U.S. dollars and that the amount invoiced is the equivalent exchange amount charged in Canadian dollars at the time the material was purchased (August 2004).
[19] CN submits that there is an agreement in place between the parties relating to the Banwell Road crossing and that the agreement identifies the parties responsible for the costs. Therefore, CN is of the opinion that there is no dispute on the apportionment of the costs pursuant to either section 101 of the CTA or to section 16 of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.) [hereinafter the RSA] and the application should be dismissed.
[20] The City submits that it does not dispute the fact that it has entered into an agreement with CN for the Banwell Road crossing, but that CN used this expansion to upgrade its facilities at the costs of the City and the developers. The City considers that this work could have been anticipated and savings could have been made at the time of the original installation.
ANALYSIS AND FINDINGS
[21] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.
[22] The Agency notes that in 1996 CN prepared plans for the Banwell Road crossing to allow for the expansion and that the said plans are referred to in Order No. 1996-R-291 dated August 1, 1996. The Agency further notes that while negotiating the Banwell Road expansion in 2003 and 2004, the City was provided with a detailed estimate (No. GCH-10006) of the costs of the work to be performed. The Agency also notes that explanations of the cost estimates were provided to the City by CN on request, after which the City signed agreements with CN for the crossing construction.
[23] Subsections 101(3) and 101(4) of the CTA state:
(3) If a person is unsuccessful in negotiating an agreement or amendment mentioned in subsection (1), the Agency may, on application, authorize the construction of a suitable road crossing, utility crossing or related work, or specifying who shall maintain the crossing.
(4) Section 16 of the Railway Safety Act applies if a person is unsuccessful in negotiating an agreement relating to the apportionment of the costs of constructing or maintaining the road crossing or utility crossing.
[24] Subsection 16(1) of the RSA states:
The proponent of a railway work, and each beneficiary of the work, may refer the apportionment of liability for the construction, alteration, operational or maintenance costs of the work to the Agency for a determination if they cannot agree on the apportionment and if no recourse is available under Part III of the Canada Transportation Act or the Railway Relocation and Crossing Act. The referral may be made either before or after construction or alteration of the work begins.
[25] As indicated above, subsections 101(3) and 101(4) of the CTA and section 16 of the RSA apply only when a person or the proponent of a railway work is unable to reach an agreement with a railway company in respect of the cost apportionment of the railway work. In the case at hand, because there is an alleged agreement in place in respect of the apportionment of the costs for the expansion of the Banwell Road crossing, the Agency must first determine whether there is such an agreement.
[26] The Agency has reviewed the evidence on file and finds that the parties have negotiated and agreed on all aspects of the expansion of the Banwell Road crossing. That is, the Agency finds that the parties agreed on the construction of the crossing expansion, including a detailed cost estimate of the work, as well as on the subsequent responsibilities for the crossing. The existence of this global agreement is reflected in two signed agreements filed with the Agency.
[27] In light of the fact that the parties have already agreed on all aspects of the crossing expansion, including the questions of cost apportionment, the Agency finds that subsection 101(3) and 101(4) of the CTA and section 16 of the RSA do not apply in this case. Therefore, the Agency has no jurisdiction in this matter.
CONCLUSION
[28] Based on the above findings, the Agency hereby dismisses the City's application.
[29] The Agency also notes that the parties have agreed to refer any contractual dispute relating to the wording or interpretation of the agreements to civil courts for resolution.
Members
- Guy Delisle
- Baljinder Gill
- Date modified: