Letter Decision No. LET-R-189-2006

This is further to the City of Oshawa's (the City) letter of June 5, 2006 in which the City requested that the Canadian Transportation Agency (the Agency) stay the applications of the Canadian National Railway Company (CN) pending resolution of land title disputes and to the City's request of June 27, 2006 that it be granted leave to file further submissions on the merits of CN's applications.

Issues

The issues to be addressed are whether CN's applications should be stayed pending the resolution of the ownership of the lands where the Farewell Spur is located, ownership of other lands where the proposed spur will be constructed, the right of way to construct the proposed spur across Harbour Road and the potential impact that the proposed spur may have on future planning for the Harbour area and whether leave should be granted to the City to file additional comments on the merits of the applications.

Positions of the Parties

The City submits that CN's applications are premature, and requests that the Agency stay the applications pending resolution of the ownership of the lands where the Farewell Spur is located, ownership of other lands where the proposed spur will be constructed, the right-of-way to construct the proposed spur across Harbour Road and the potential impact that the proposed spur may have on future planning for the Harbour area.

The City states that CN acquired the lands for the construction of the Farewell Spur pursuant to terms set out in a 1972 Agreement with the City in which the City reserves the option to repurchase the Farewell Spur lands in the event that the lands cease to be used for railway purposes. This provision was also included in the 1976 Deed conveying the lands from the City to CN.

The City submits that CN's assertion that the Oshawa Harbour Commission (OHC) owns the majority of the lands on which the proposed spur is to be built is incorrect in that the federal government owns the lands. These lands were conveyed by the City to Her Majesty the Queen in Right of Canada under a 1966 Deed with the caveat that the use would be for harbour purposes by OHC. The City submits that none of the lands where the proposed spur would be located are being used for "harbour purposes".

The City states that CN's application to construct a new at-grade road crossing at Harbour Road is premature because CN does not have the requisite property rights in the form of an easement or right of way over Harbour Road. The City is of the opinion that section 101 is not intended to facilitate the construction of a railway and that a railway must be in existence or otherwise permitted in order for a road crossing to be constructed.

The City states that the Agency does not have jurisdiction to decide property rights.

Furthermore, the City submits that the determination of the environmental and planning merits of CN's applications is premature at this time. The City identified a number of issues and concerns with the proposed spur that may impact long-term planning in the area and have not been adequately addressed by the Environmental Screening Report.

OHC submits that a stay should not be granted as the City's interest in some of the lands is a subject to be established by the courts and a stay of the Agency's proceedings would only affect the interests of third parties using the port. If it is decided in the future that the City has an interest in the lands, the rail spur can be removed.

CN submits that the issues raised by the City are not relevant to the Agency's consideration of CN's application and that there is no merit to the City's argument.

CN states that the Farewell Spur is not a defunct railway line and has not ceased to be used for railway purposes. CN further states that the issue of whether the City's right to the caveated lands pursuant to the 1966 Deed is not a matter over which the Agency can rule, but is a matter that can only be resolved through the courts.

CN submits that for the road crossing at Harbour Road, CN has made an application to the Agency pursuant to section 101 of the Canada Transportation Act (CTA) should the parties fail to reach a negotiated agreement. CN states that it is pursuing good faith negotiations with the City to come to an agreement. CN also states that the purpose of subsection 101(3) of the CTA is specifically to allow for either the railway company or the road authority to seek authority from the Agency to allow for the construction of the crossing in the event the parties fail to agree to the establishment of the crossing.

The City submits in its reply to CN's and OHC's answers that the Agency does not have the jurisdiction to decide on the applications until such time as outstanding legal issues are resolved. The City requests the Agency to stay the proceedings, however, should the Agency assume jurisdiction the City submits that it should be provided with further opportunity to respond to the merits of CN's applications.

The City submits that the provisions of the CTA are not relevant to the City's contractual rights inherent in the 1976 Deed and the 1972 Agreement.

Analysis and Findings

Request for stay

The Agency has ruled in a number of cases that in order to obtain a stay of proceeding or an interim order, a moving party had the burden to demonstrate that there is a serious question to be tried, that it would suffer irreparable harm if the relief sought were not granted and that the balance of convenience favours it.

In the case at hand, the City is requesting, among other things, a stay of CN's application under section 98 of the CTA. The grounds for the City's request are that the City is the beneficial owner of the majority of lands on which the Farewell Spur is located and the beneficial owner of the caveated lands on which the proposed spur is to be built and that until these issues are resolved the Agency has no jurisdiction to "authorize CN to reactivate the Farewell Spur".

The application before the Agency is not an application for the authorization to "reactivate" the Farewell Spur but rather an application for an order approving the construction of a spur line in Oshawa, Ontario extending 660 metres from mileage 0.84 of the Farewell Spur Headblock 299.83 Kingston Subdivision, into the Oshawa Harbour.

Section 98 of the CTA provides, in part :

98. (1) A railway company shall not construct a railway line without the approval of the Agency.

(2) The Agency may, on application by the railway company, grant the approval if it considers that the location of the railway line is reasonable, taking into consideration requirements for railway operations and services and the interests of the localities that will be affected by the line.

The requirement imposed on a railway company to apply to the Agency for the authorization to construct a railway line serves two main purposes. First, it imposes on a railway company the obligation to demonstrate that the location of the railway line is reasonable, taking into consideration requirements for railway operations and services and the interests of the localities that will be affected by the railway line. Second and by virtue of subsection 5(1) of the Canadian Environmental Assessment Act (CEAA), it imposes on a railway company the obligation to demonstrate that the railway work will not cause significant adverse environmental effects.

Of crucial importance here is the fact that section 98 of the CTA is not a procedure in expropriation. That is, an approval under section 98 of the CTA does not grant an applicant railway company ownership or beneficial ownership of the land on which the proposed railway line is to be carried. As mentioned above, the Agency, under section 98 of the CTA, only approves the location of the proposed railway lines and ensures that the requirements of the CEAA are met by the applicant railway company. Should the applicant railway company not be the owner or beneficial owner of the land onto which the proposed railway line is to be carried, it can either acquire such ownership through private agreement or through a request to the Minister of Transport for expropriation by the Crown under section 4.1 of the Expropriation Act.

The question of the ownership or the beneficial ownership of the land on which the proposed railway line is to be constructed is therefore irrelevant to an approval under section 98 of the CTA. In fact, one would expect a railway company to obtain approval from the Agency in respect of the location of the railway line prior to acquiring, either privately or through a request to the Minister of Transport under the Expropriation Act, the land on which the railway line is to be constructed.

As a result, even if the Agency were to approve the construction of the Farewell Spur at the location identified by CN in its application, it would not relieve CN from ensuring that it has all necessary property rights to construct the railway line at that location. Should the City or any interested private owner be of the view that CN does not have all the necessary property rights to construct the railway line at the location mentioned in the Agency's approval, the City or any interested private owner is not prevented from seeking appropriate relief in civil court.

In light of the above and as the issue of the ownership or beneficial ownership in the lands subject to an application to construct is not relevant to an approval under section 98 of the CTA and as the City's rights to the lands subject to CN's application will not be affected by the continuation of the proceeding, the Agency finds the City has failed to meet its burden to obtain a stay of the present proceedings.

The Agency notes that the City also submitted that CN's application under section 101 of the CTA to construct a new at-grade road crossing at Harbour Road is premature because CN does not have the property rights over the road.

The City's contention that CN's application for a road crossing is premature is at odds with the essence of section 101 of the CTA. Indeed, subsection 101(3) of the CTA is specifically designed for situations where the road authority and the railway company cannot agree on the construction of a road crossing across the property of the senior party. Subsection 101(3) therefore allows a railway company or, as the case may be, a road authority to apply to the Agency for the right to construct a road crossing across the railway right of way or across the road right of way. Subsection 101(3) states;

(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.

The Agency notes that CN has indicated that it is pursuing negotiations with the City in good faith to reach an agreement for the Harbour Road crossing, but has applied to the Agency pursuant to subsection 101(3) to authorize CN to construct the crossing should those negotiations fail. While the Agency urges the parties to reach an agreement on the Harbour Road crossing which is satisfactory to both parties, the Agency, absent any notification of an agreement from the parties, will exercise its jurisdiction and issue a decision under subsection 101(3) of the CTA.

The Agency also notes that the City identified a number of issues and concerns with the proposed spur that may impact long term planning in the area and which they indicate have not been adequately addressed by the environmental screening report. The Agency is of the opinion that any issues regarding the environmental screening report will be dealt with by the Agency pursuant to its determination under section 20 of the CEAA .

Request for leave to file additional comments

In its reply to the answers of OHC and CN in response to the City's motion for stay dated June 27, 2006, the City submitted that it should be provided with a further opportunity to respond to the merits of CN's applications.

In its Decision No. LET-R-129-2006 dated May 15, 2006, the Agency allowed the City until June 15, 2006 to file its intervention to CN's application. Upon filing its motion for a stay on June 5, 2006, the City specifically reserved its right to make a further submission to the Agency in respect of the merits of CN's applications on or before June 15, 2006 in accordance with the deadline set out by the Agency in Decision No. LET-R-129-2006.

By letter dated June 12, 2006, procedural directions for the hearing of the City's motion for a stay were established. Parties were also advised of the following in the letter.

The parties are reminded that notwithstanding the City of Oshawa's application for a stay, the City of Oshawa has until June 15, 2006 to file its comments on the applications.

The City failed or chose not to file any comments in respect of CN's applications by June 15, 2006. The City also failed or chose not to file an additional request for an extension of time to file its comments on CN's applications prior to June 15, 2006. On June 27, 2006, CN, in accordance with the deadline afforded it, filed its reply to all of the interventions received on the merits of its applications. Simply put, the receipt of CN's reply of June 27, 2006, closed the pleadings on the merits of CN's applications.

As the City neither provided reasons or justification in support of its request for the pleadings to be reopened nor provided reasons or justification to support its failure or decision not to file its comments by June 15, 2006, the Agency will not grant leave to the City to file any further submissions on the merits of CN's applications.

Conclusion

Based on the above, the Agency hereby dismisses the City's motion for a stay and the City's request for leave to file additional comments on the merits of CN's applications.