Decision No. 236-R-2015

July 27, 2015

APPLICATION by Logistec Stevedoring (Nova Scotia) Inc. pursuant to section 93 of the Canada Transportation Act, S.C., 1996, c. 10, as amended.

Case number: 
14-01163

INTRODUCTION

[1]   On December 31, 2013, Sydney Coal Railway Inc. (SCR) was liquidated into Logistec Stevedoring (Nova Scotia) Inc. (Logistec). On the same day, Industry Canada issued a Certificate of Dissolution for SCR pursuant to the Canada Business Corporations Act, R.S.C., 1985, c. C‑44. Logistec assumed all of the assets, liabilities and operations of SCR and retained the business name Sydney Coal Railway.

[2]   Logistec filed an application to vary Certificate of Fitness No. 02003-2 held by SCR to allow Logistec to hold the Certificate of Fitness following the dissolution of SCR. According to Logistec, the remaining portions of SCR’s Certificate of Fitness remain the same as they accurately reflect the railway operations to be carried out by Logistec.

[3]   Certificate of Fitness No. 02003-2 permits SCR to operate a railway between the international pier on the waterfront in Sydney and the Lingan power generating plant, the railway lines through the coal storage facility at Victoria Junction, including the railway maintenance centre, and a portion of the Glace Bay railway line between the railway maintenance centre and the end of the Old Tank siding, Cape Breton Island, in the province of Nova Scotia.

ISSUES

  1. Can Certificate of Fitness No. 02003-2 be varied?
  2. If not, can a new certificate of fitness be issued to Logistec?

ANALYSIS AND FINDINGS

Can Certificate of Fitness No. 02003-2 be varied?

[4]   Section 93 of the Canada Transportation Act (CTA) provides that:

(1)   The Agency may, on application, vary a certificate of fitness

  1. to change the termini or route of a line specified in the certificate;
  2. to add a line to the certificate; or
  3. to reflect a change in railway operations or circumstances relating to those operations.

(2)   The Agency may vary a certificate of fitness when it

  1. makes an order under paragraph 116(4)(e) that requires a railway company to grant a right to the holder of the certificate; or
  2. grants a right under section 138 to the holder of the certificate.

[5]   Subsection 94(2) of the CTA provides that the Agency may suspend or cancel the certificate of fitness.

[6]   Logistec states that railway operations will not change as a result of the dissolution of SCR into Logistec. Rather, this corporate structural change will result in Logistec, a different entity, governing railway operations, assuming all associated risks, and it will carry its own third party liability insurance coverage.

[7]   The Agency is of the opinion that the dissolution of SCR into Logistec represents a change beyond the scope of section 93 of the CTA and the Agency therefore dismisses Logistec’s application to vary Certificate of Fitness No. 02003-2.

[8]   Furthermore, as SCR has been dissolved, has ceased all railway operations and no longer holds third party liability insurance, the Agency, pursuant to subsection 94(2) of the CTA, cancels Certificate of Fitness No. 02003-2.

Can a new certificate of fitness be issued to Logistec?

Railway within the legislative authority of Parliament

[9]   Subsection 90(1) of the CTA provides that no person shall construct or operate a railway without a certificate of fitness. “Railway” is defined in section 87 of the CTA as a railway within the legislative authority of Parliament.

[10]   Therefore, to obtain a certificate of fitness, an applicant must first demonstrate that the certificate for which it applies relates to a railway that is within the legislative authority of Parliament.

[11]   The Agency notes that the railway was, by virtue of section 5 of the Cape Breton Development Corporation Divestiture Authorization and Dissolution Act, S.C., 2000, c. 23, declared to be a work for the general advantage of Canada.

[12]   Logistec has acquired the railway and will continue the operations previously carried out by SCR. The railway remains a railway declared for the general advantage of Canada and, as a result, is a railway within the legislative authority of Parliament. The Agency therefore finds that Logistec is eligible to be considered for a certificate of fitness pursuant to subsection 92(1) of the CTA.

Adequacy of the liability insurance coverage

[13]   Subsection 92(1) of the CTA states that the Agency shall issue a certificate of fitness for the proposed construction or operation of a railway if the Agency is satisfied that there will be adequate liability insurance coverage for the proposed construction or operation, as determined in accordance with the Railway Third Party Liability Insurance Coverage Regulations, SOR/96‑337

[14]   The Agency has reviewed all information and documentation filed by Logistec to assess the adequacy of the third party liability insurance coverage. The Agency also reviewed Logistec’s capability to pay the self-insurance amount based on the financial information on file.

[15]   Based on this review, the Agency is satisfied that there is adequate third party liability insurance coverage, including self-insurance, for Logistec’s railway operations.

[16]   Accordingly, the Agency, pursuant to subsection 92(1) of the CTA, will issue a certificate of fitness to Logistec Stevedoring (Nova Scotia) Inc. also carrying on business as Sydney Coal Railway permitting it to operate a railway between the international pier on the waterfront in Sydney and the Lingan power generating plant, the railway lines through the coal storage facility at Victoria Junction, including the railway maintenance centre, and a portion of the Glace Bay railway line between the railway maintenance centre and the end of the Old Tank siding, Cape Breton Island, in the province of Nova Scotia.

[17]   On June 18, 2015, the CTA was amended with respect to the liability and compensation regime for federally-regulated railway companies by establishing minimum insurance levels for railway companies. However, these new CTA provisions are not yet in force. Logistec should be aware that once these provisions are in force, railway companies will need to obtain and maintain these new statutory minimum insurance levels.

Member(s)

P. Paul Fitzgerald
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