Decision No. 65-R-2005

February 8, 2005

File No. R8050/456-011.24

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APPLICATION

[1] St. Catharines Hydro Utility Services Inc. (hereinafter SCH) applied to the Canadian Transportation Agency (hereinafter the Agency) for the ruling set out in the title. The application was received on September 27, 2004.

[2] In response to an Agency staff request, SCH submitted copies of Licence Agreement Nos. 63421 and 66104 to the Agency, as well as other documentation related to each of the four utility crossings referenced in the licence agreements set out in the title.

[3] On November 8, 2004, the Canadian National Railway Company (hereinafter CN) filed its answer to the application. SCH filed its reply to the answer on November 22, 2004.

[4] In its reply to CN's answer, SCH advised that Licence Agreement No. 71127 does not provide for the payment of annual licence fees. Accordingly, the Agency, in its Decision No. LET-R-334-2004 dated December 7, 2004, advised SCH and CN that its consideration of the current application will be limited to Licence Agreement Nos. 44995, 63421 and 66104 (hereinafter Licence Agreements) and the associated utility crossings. As a result, there will be no further mention of Licence Agreement No. 71127 or of the associated utility crossing in this Decision.

[5] In its Decision No. LET-R-334-2004, the Agency also required SCH to submit additional information regarding the Licence Agreements, and provided CN with an opportunity to respond to any such additional information submitted by SCH.

[6] On December 10, 2004, SCH requested an extension until December 20, 2004 to file its response to Decision No. LET-R-334-2004. In its Decision No. LET-R-345-2004 dated December 14, 2004, the Agency granted SCH the requested extension and provided CN until December 31, 2004 to file comments on SCH's response.

[7] In its letter dated December 14, 2004, SCH advises that it had previously provided the Agency with all of the documents related to its application. No comments were filed by CN with respect to SCH's response.

[8] Pursuant to subsection 29(1) of the Canada Transportation Act (hereinafter the CTA), the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, the parties have agreed to an extension of the deadline until February 8, 2005.

PRELIMINARY MATTER

[9] Although CN filed its answer to the application and SCH filed its reply to CN's answer after the prescribed deadlines, the Agency, pursuant to section 6 of the National Transportation Agency General Rules, SOR/88-23, accepts these submissions as being relevant and necessary to its consideration of this matter.

ISSUES

[10] The issues to be addressed are: 1) whether there are existing agreements between the parties regarding the payment of compensation by SCH to CN in the form of annual licence fees for the subject utility crossings, and, if not, 2) whether subsection 101(4) of the CTA applies and the compensation imposed by CN for each utility crossing is warranted.

FACTS

[11] Licence Agreement No. 66104, which was executed on December 14, 1978 for the utility crossing located at mileage 9.24 of the Grimsby Subdivision, provides for an annual fee of $30 payable by the licensee to CN. This agreement may be terminated by either party with a 30-day written notice of its intention to terminate the agreement being provided to the other party. Invoice No. 143550 dated December 1, 2003 sent by CN to SCH indicates an invoice amount of $245, plus 7 percent GST, relating to this overhead wire crossing.

[12] Licence Agreement No. 63421, which was executed on July 13, 1973 for the utility crossing located at mileage 11.35 of the Grimsby Subdivision, provides for an annual fee of $15 to be paid by the licensee to CN. CN sent a letter dated May 28, 1993 to the Public Utilities Commission of the City of St. Catharines (hereinafter the SCPUC) indicating that the licence fee of $60 per year for Licence Agreement No. 63421 expired on March 31, 1992. In that letter, CN proposed that, effective April 1, 1994, the rental payment would continue to be $60 per year payable in advance in a lump sum of $600, plus GST, and that subject to the foregoing rental proposal and absent notification by the licensee of its refusal to accept the terms of the renewal set out in the letter, the document would be renewed for 10 years subject to the same terms and conditions as the original document.

[13] Neither party submitted a copy of Licence Agreement No. 44995. Nonetheless, an agreement between the Hydro-Electric Power Commission of Ontario and the SCPUC and CN, dated August 31 1961, a copy of which was submitted by SCH, refers to Licence Agreement No. 44995 dated July 16, 1952, between the Hydro-Electric Power Commission of Ontario and CN. This agreement indicates that Licence Agreement No. 44995 which relates to an overhead wire crossing at mileage 9.24 of CN's Grimsby Subdivision was assigned to SCH. A letter dated June 30, 1992 from CN indicates that the then current rental payment of $60 per annum for Licence Agreement No. 44995 was subject to an expiry date of July 15, 1992. In that letter, CN proposed that the rental payment would continue to be $60 per year payable in advance in a lump sum of $600, plus GST, and that subject to the foregoing rental proposal and absent notification by the licensee of its refusal to accept the terms of the renewal set out in the letter, the document would be renewed for 10 years subject to the same terms and conditions as the original document.

POSITIONS OF THE PARTIES

[14] SCH indicates that its application is only for the elimination of the annual licence fees required by CN for each of the Licence Agreements and that it wishes to retain all other terms of the original agreements. SCH wishes to cease payment of the annual crossing fees as no real or appreciable damage to or maintenance of the lands has been demonstrated. SCH also maintains that the Agency does have the authority to intervene in this matter as the parties do not agree on the specific matter of the fees at issue that CN continues to charge SCH in respect of the relevant utility crossings.

[15] CN states that CN and SCH have valid and binding agreements that have governed the parties' relationship for over 50 years.

[16] CN submits that the Agency's authority under section 101 of the CTA is limited to exercising its statutory discretion in cases where the parties have been unsuccessful in negotiating an agreement, and cannot exercise its statutory discretion to modify agreements voluntarily and validly entered into by the parties. CN refers to Decision No. 310-R-2003 dated May 30, 2003, wherein the Agency states, in part:

In general, the Agency does not interfere in a contractual agreement entered freely by the parties. The Agency is of the opinion that an agreement binds the parties to the terms of an agreement they freely negotiated and entered into. This would not preclude Agency involvement in any matter that parties could not agree to that would not have been included in the original existing agreement.

[17] CN submits that Licence Agreement Nos. 66104, 44995 and 63421 continue to be in effect in accordance with the terms set out therein, as there are no expiry dates. CN adds that the agreements include the payment of fees by the licensee to CN, that these fees are subject to review, and that they have been periodically reviewed since then.

ANALYSIS AND FINDINGS

[18] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.

[19] Section 101 of the CTA provides, in part, as follows:

(1) An agreement, or an amendment to an agreement, relating to the construction, maintenance or apportionment of the costs (The Agency notes that the parties refer to licence fees throughout the pleadings. These licence fees are costs for the purposes of section 101 of the CTA and section 16 of the Railway Safety Act) of a road crossing or a utility crossing may be filed with the Agency.

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(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.

[20] Section 16 of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.) [hereinafter the RSA] provides, in part, as follows:

(1) 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.

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(4) Where a matter is referred to the Agency under subsection (1), the Agency shall, having regard to any grant made under section 12 or 13 in respect of that matter, the relative benefits that each person who has, or who might have, referred the matter stands to gain from the work, and to any other factor that it considers relevant, determine the proportion of the liability for construction, alteration, operational and maintenance costs to be borne by each person, and that liability shall be apportioned accordingly.

[21] According to CN, there are valid and binding agreements in place that have been voluntarily and validly entered into by the parties for each of the three subject crossings and each provides for an annual payment by the licensee to CN. As such, CN maintained that the Agency cannot exercise its statutory discretion provided by section 101 of the CTA to consider this matter. CN supported its position with reference to Decision No. 310-R-2003.

[22] The Agency acknowledges that, as indicated in Decision No. 310-R-2003, it would not generally interfere in a contractual agreement entered into freely by the parties and that an agreement does bind the parties to the terms of an agreement they freely negotiated and entered into. However, in that same Decision, the Agency stated that this would not preclude Agency involvement in any matter that parties could not agree on that would not have been included in the original existing agreement. Furthermore, the Agency is of the opinion that if it is found that the original agreement or parts thereof are no longer in effect and that the parties cannot agree on their replacement, the Agency may exercise its discretion pursuant to section 101 of the CTA.

[23] The Agency notes that in this case, the only matter on which the parties disagree and the Agency must rule on is the payment of annual licence fees for the utility crossings in question. Therefore, in order to determine if subsection 101(4) of the CTA applies, the Agency must first determine for each of the three utility crossings at issue whether an agreement as to the payment of annual fees currently exists between the parties.

Licence Agreement No. 66104

[24] Licence Agreement No. 66104 dated December 14, 1978 indicates that there is an annual fee of $30 payable by the licensee to CN and although the agreement can be terminated by either party by providing with a 30-day written notice of its intention to terminate the agreement to the other party, it does not specifically provide for an expiry date.

[25] The Agency notes that although a copy of an invoice that CN forwarded to SCH dated December 1, 2003 for an invoice amount of $245 was submitted by SCH as evidence to support its position that the annual fee payable for this utility crossing is currently $245, such a conclusion is not adequately supported by the pleadings. As such, the Agency is of the opinion that based on the information submitted by the parties, there is insufficient evidence to conclude that the terms and conditions of Licence Agreement No. 66104, particularly as they relate to the payment of a licence fee, have been amended, terminated or otherwise altered since its execution to provide for a current annual licence fee of $245 plus GST. Based on the evidence, the annual licence fee of $30 remains in effect in accordance with Licence Agreement No. 66104. In light of the foregoing, the Agency has no authority pursuant to section 101 of the CTA with respect to the payment of a fee as established by Licence Agreement No. 66104.

Licence Agreement No. 63421

[26] In the case of Licence Agreement No. 63421 dated July 13, 1973, the Agency notes CN sent a letter to the SCPUC proposing that, effective April 1, 1994, the rental payment would continue to be $60 per year payable in advance in a lump sum of $600, plus GST, and that subject to the foregoing rental proposal and absent notification by the licensee of its refusal to accept the terms of the renewal set out in the letter, the document would be renewed for 10 years subject to the same terms and conditions as the original document.

[27] In light of the information submitted by the parties with respect to Licence Agreement No. 63421, the Agency is of the opinion that although this licence agreement did not provide for an expiry date, the evidence indicates that the fee payment provision was renegotiated by the parties in 1993 and thereafter renewed for 10 years effective April 1, 1994. Further, as this renewal period has since lapsed and the parties have not since reached an agreement as to the payment of a licence fee for the relevant utility crossing, the Agency may, pursuant to subsection 101(4) of the CTA and section 16 of the RSA, exercise its statutory authority to consider the matter of the fee in question. In light of the foregoing, the Agency finds that as CN has not established that there exists, in relation to Licence Agreement No. 63421, any real or appreciable damage to CN or its property, the annual licence fees with respect to this crossing charged by CN to SCH are not warranted.

Wire Crossing Agreement No. 44995

[28] The parties did not submit a copy of Licence Agreement No. 44995 to the Agency. The parties do agree, however, that this particular licence agreement was dated July 16, 1952 and was assigned, pursuant to an agreement dated August 31, 1961, to SCH. In addition, SCH submitted a copy of a letter from CN dated June 30, 1992, which states that the then current licence fee of $60 for Licence Agreement No. 44995 was set to expire on July 15, 1992 but would be, barring notice from SCH of its unwillingness to accept the proposal, renewed effective July 16, 1993 for another 10 years at the same amount. The parties did not submit any evidence establishing a subsequent renewal of the fee provision or a subsequent agreement by the parties as to the payment of a fee in relation to this particular utility crossing. As there is no longer an agreement currently in effect between and binding on the parties regarding the payment of a fee for the utility crossing and the parties have been unsuccessful in reaching an agreement, the Agency may, pursuant to subsection 101(4) of the CTA and section 16 of the RSA, exercise its statutory authority and consider the matter of the fee in question. In light of the foregoing, the Agency finds that, as CN has not established that there exists, in relation to Licence Agreement No. 44995 dated July 16, 1952, any real or appreciable damage to CN or its property, the annual licence fees with respect to this crossing charged by CN to SCH are not warranted.

CONCLUSION

[29] With respect to Licence Agreement No. 66104, the Agency has determined that, based on the information submitted by the parties, there is insufficient evidence to conclude that the terms and conditions of Licence Agreement No. 66104, particularly as they relate to the payment of a licence fee, have been amended, terminated or otherwise altered since its execution. As such, the Agency has no authority, pursuant to section 101 of the CTA, with respect to the payment of a fee as established by Licence Agreement No. 66104 for the associated utility crossing.

[30] With respect to Licence Agreement Nos. 63421 and 44995, as the provisions for the payment of fees with respect to the utility crossings referenced in Licence Agreement Nos. 63421 and 44995 are no longer in effect and the parties were unable to reach an agreement regarding the payment of such fees, the Agency has determined that it may, pursuant to subsection 101(4) of the CTA and section 16 of the RSA, exercise its authority with respect to the payment of fees for the subject utility crossings. In this regard, the Agency, having determined that there is no real or appreciable damage to CN or its property, concludes that compensation in the form of payment of annual licence fees for the utility crossings referenced in Licence Agreement Nos. 63421 and 44995 is not warranted.