Decisions

TATC File No. H-4229-41
MoT File No. RDIMS 11728529

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

Cando Rail Services Ltd. , Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Rules 112(d) and 125 of the Canadian Rail Operating Rules
Section 40.14 of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.)


Review Determination
Gary Drouin


Decision: April 4, 2017

Citation: Cando Rail Services Ltd. v. Canada (Minister of Transport), 2017 TATCE 10 (Review)

Heard in: Winnipeg, Manitoba, on September 27 and 28, 2016

REVIEW DETERMINATION AND REASONS

Held: The Minister of Transport has proven, on a balance of probabilities, that the applicant, Cando Rail Services Ltd., contravened section 17.2 of the Railway Safety Act by failing to operate railway equipment according to rules 112(d) and 125 of the Canadian Rail Operating Rules. However, the penalty amount of $54,666.12 is reduced by $3,999.96 to $50,666.16 for both violations in order to account for an additional mitigating factor.

The total amount of $101,332.32 is payable to the Receiver General for Canada and must be received by the Transportation Appeal Tribunal of Canada within 35 days of service of this determination.

I. BACKGROUND

[1] On March 21, 2016, Transport Canada issued a Notice of Violation (Notice) to the applicant, Cando Rail Services Ltd. (Cando), alleging the following violations:

1) On or about March 1, 2016, at or near Regina, Saskatchewan, Cando Rail Services Ltd. left car GATX 67963 unattended on run around track RA 28 of the CN Quappelle Subdivision, without a sufficient number of hand brakes applied and determined sufficient through an effectiveness test, thereby violating Rule 112(d) of the Canadian Rail Operating Rules and section 17.2 of the Railway Safety Act, by operating railway equipment on a railway otherwise than in accordance with the rules made under sections 19 or 20 that apply to Cando Rail Services Ltd.

2) On or about March 1, 2016, at or near Regina, Saskatchewan, Cando Rail Services Ltd. operated railway equipment on a railway otherwise than in accordance with Rule 125 of the Canadian Rail Operating Rules that apply to Cando Rail Services Ltd., by having its employee failing to transmit the word “EMERGENCY” three times at the beginning of the transmission, to indicate the report of a condition which may constitute a hazard to employees or others, or a condition which may endanger the passage of movements when car GATX 67963 rolled uncontrolled onto CN Main Track, thereby violating section 17.2 of the Railway Safety Act.

[2] The Notice also assessed a monetary penalty of $54,666.12 for each of the two charges, for a total amount of $109,332.24.

[3] On April 12, 2016, Cando requested a review of the Notice by the Transportation Appeal Tribunal of Canada (Tribunal). On May 19, 2016, Transport Canada informed the Tribunal that it had issued an amended Notice of Violation in order to account for a change in the name of the Notice's recipient from Cando Contracting Ltd. to Cando Rail Services Ltd.

II. STATUTES AND REGULATIONS

[4] Section 17.2 of the Railway Safety Act, R.S.C., 1985, c. 32 (4th Supp.), provides:

17.2 No railway company shall operate or maintain a railway, including any railway work or railway equipment, and no local railway company shall operate railway equipment on a railway, otherwise than in accordance with a railway operating certificate and — except to the extent that the company is exempt from their application under section 22 or 22.1 — with the regulations and the rules made under sections 19 and 20 that apply to the company.

[5] Rule 112 of the Canadian Rail Operating Rules (CROR) provides, in part:

112. Leaving Equipment Unattended

In the application of this rule:

(i) Equipment is considered unattended when an employee is not in close enough proximity to take effective action to stop the unintentional moving of equipment.

[…]

(d) When equipment is left unattended on non-main track, at other than a yard, siding, subdivision track, or high risk location, a sufficient number of hand brakes must be applied and determined sufficient through an effectiveness test described in (e). Special instructions must indicate the minimum hand brake requirements for these locations where equipment is left unattended.

[6] Rule 125 of the CROR provides, in part:

(a) An employee will transmit the word “EMERGENCY” three times at the beginning of the transmission to indicate the report of;

[…]

(ii) a condition which may constitute a hazard to employees or others;

(iii) a condition which may endanger the passage of movements;

[…]

III. AGREED STATEMENT OF FACTS

[7] The Minister's representative, Mr. Villemure, presented and read an Agreed Statement of Facts Between the Parties (filed as Exhibit M‑01). This document signed by both parties lists 23 facts agreed on by the parties and also includes a safety data sheet relating to asphalt and petroleum and two maps.

[8] The text of the Agreed Statement of Facts is reproduced here:

  1. Cando Rail Services (“Cando”) operates under both federal and provincial jurisdictions.
  2. For the purposes of these proceedings, it falls under federal jurisdiction because on or about March 1st 2016, it was operating as a “local railway company”, as defined in the Railway Safety Act, R.S.C. 1985, c.32 (4th Supp.) on the CN Quappelle Subdivision in Regina, Saskatchewan.
  3. Mile 88.0 to mile 93.8 of the Quappelle Subdivision is classified as a non-main track, and is identified as a “Subdivision Track” in the Quappelle Subdivision timetable. Cando has a running rights agreement for operation between mile 88.0 (Victoria Plains) and mile 91.9 (CP interlock) on the Quappelle Subdivision.
  4. Cando acknowledges that the Canadian Rail Operating Rules effective October 14, 2015 (the “CROR”) applied to the company on March 1st, 2016.
  5. On March 1st, 2016, at about 23:30 CST, a Cando operating crew consisting of locomotive engineer Douglas Wuschke and conductors Giles Nichol and Steven Peter were switching loaded tank cars at the Co-op Refinery Complex in the city of Regina (the “CRC”).
  6. The switching operation involved movements in and out of the refinery tracks RA26 and RA27 (that were located within a fenced compound) onto the CN Quappelle Subdivision track and track RA28 located at mile 91.10.
  7. Track RA28 at mile 91.10 of the Quappelle Subdivision is a non-main track and not a siding and is considered a run a round track.
  8. In the course of the switching operation, tank car GATX 67963 (the “railcar”) was spotted on track RA28 and was secured by the application of the emergency air brake that occurs when the railcar is cut-off.
  9. Conductor Nichol later left the railcar unattended on track RA28 without applying the hand brake and without testing its effectiveness, as required by the CROR paragraph 112(d) to assist the other conductor on track RA27 (located within the fenced compound).
  10. Cando's instructions at the time of the incident required that unattended railway equipment had to be secured using the hand brake application.
  11. The railcar was loaded with asphalt, which does not have a dangerous goods classification in Canada [attached Co-op safety data sheet bearing letter “A”].
  12. At approximately 23:47 CST, the railcar began to roll uncontrolled southbound out of track RA28 and onto the subdivision track of the Quappelle Subdivision. Locomotive engineer Wuschke noticed the uncontrolled movement and had to initiate an emergency brake application to avoid a collision with the railcar.
  13. Locomotive engineer Wuschke and conductor Nichol, using the locomotive (once it recovered its air from the emergency brake application), followed the railcar in an attempt to capture it. They were unable to do so and stopped the locomotive before passing the signal at mile 91.90 (CP interlock), which consisted of the limit of Cando's operating authority.
  14. The railcar proceeded uncontrolled along the Quappelle Subdivision track and was later located stationary at mile 93.80 which was approximately 2.7 miles (4.3 kilometers) from where it had been spotted on track RA28.
  15. When locomotive engineer Wuschke was unable to capture the car, he radioed conductor Peter who had remained at the CRC and advised him to take a Cando utility truck to try to locate and secure the railcar. Conductor Peter located the railcar stationary at mile 93.80 at approximately 00:13. He secured the railcar by applying the hand brake and waited for CN supervisors to attend the scene.
  16. In the railcar's uncontrolled movement, it passed over 7 public crossings at grade in the city of Regina, one CP railway interlocking (diamond) and 2 private industrial crossings. [The details of the crossings and a reference to the attached maps are omitted.]
  17. The railcar did not derail; there was no collision, no damage or injury and no loss of product.
  18. Prior to the uncontrolled movement, the Cando crew was operating on a Cando radio frequency to communicate. Following the unsuccessful attempt to capture the railcar with the locomotive, locomotive engineer Wuschke switched the radio to a CN frequency and at approximately 23:53, he attempted to contact the CN Yardmaster on the Yardmaster radio channel. There was no response. At 23:55, Wuschke telephoned the Regina Yardmaster, but the call went to voicemail. At 23:58, he then telephoned the CN Melville Yardmaster and receiving an answer, relayed the information. Then at 00:01, he re-called the Regina Yardmaster. This time the call was answered and he advised of the situation, at that time, the Regina Yardmaster advised that there were no conflicting CN movements.
  19. At 00:03, locomotive engineer Wuschke telephoned the Regina police on a number other than the 911 and reported the evolving situation.
  20. At approximately 00:15, locomotive engineer Wuschke telephoned the Regina Yardmaster and advised that the railcar was found stationary and that it had been secured. He then telephoned the Regina police at 00:18 to advise of same.
  21. At no time while the incident occurred did the operating crew transmit a radio communication starting with the word “EMERGENCY” three times to indicate the report of the uncontrolled railcar travelling on the Quappelle Subdivision track.
  22. By 9:15 a.m., between Cando and CN, Transport Canada was advised of the incident.
  23. Transport Canada issued a notice of violation against Cando and assessed a monetary penalty of $54,666.12 for each of the alleged breaches to rules 112(d) and 125 of the CROR.

[9] Mr. Barnsley confirmed that the signature on Exhibit M-01 was his signature.

IV. EVIDENCE

A. Minister

(1) Examination-in-chief of Suzanne Madaire-Poisson

[10] Ms. Madaire-Poisson, the chief of Compliance and Safety with Transport Canada's Railway Safety Directorate in Ottawa, explained that her role is to implement the new administrative monetary penalties (AMP) program.

[11] Ms. Madaire-Poisson explained in detail the program, policies and procedures that guide the process leading to the issuance of an AMP and the calculation of the amounts of the penalty, as well as the respective roles of the inspector, the regional manager and the director.

[12] Ms. Madaire-Poisson introduced two documents: a memorandum she had prepared recommending to issue a Notice of Violation to Cando, containing an account of the events surrounding the violations and detailing the amount of the monetary penalty (Exhibit M-02), and a departmental working document identified as a Decision-Making Checklist (Exhibit M‑03).

[13] Mr. Villemure specified that two other violations (to CROR rules 33 and 106) appeared on the Checklist (Exhibit M‑03) but should not be taken into consideration by the Tribunal member in making his determination as Transport Canada was not pursuing these violations.

[14] Referring to Exhibits M‑03 and M‑04, Ms. Madaire-Poisson explained how the AMP calculation process worked and how she came to the total amount of $109,332.24 for both alleged violations.

[15] Ms. Madaire-Poisson explained the first aggravating factor with regard to the non-compliance with CROR rule 112(d) that was considered in the calculation of the AMP. For Transport Canada, leaving equipment unattended without handbrakes constituted recklessness on the part of the applicant. Also, not complying with CROR rule 125 with respect to emergency broadcast could have potentially endangered the lives of railway employees and members of the public who could have been in the path of the runaway car.

[16] Regarding the second aggravating factor, Ms. Madaire-Poisson explained that this was determined based on the circumstances surrounding the violation. Having a black tank car unattended moving through the city of Regina at night, going through seven public crossings, two private crossings and an interlock (diamond) with CP could have caused a derailment and danger to the environment. People could have been injured, including employees of CN and CP. Ms. Madaire-Poisson added that in Transport Canada's view, these were serious aggravating factors that had to be retained in the calculation of the AMP.

[17] Ms. Madaire-Poisson then explained the mitigating factors that were considered in the calculation of the AMP, such as the fact that even though there was a violation of CROR rule 125, the employees involved in the incident had attempted to call the police and other authorities using their cellular telephones in an attempt to minimize the impact of the incident. Also, Cando had provided assistance to Transport Canada with regard to the rule 125 violation and admitted to the violation. She also went on to explain how the same three mitigating factors were considered in calculating the AMP for the violation of CROR rule 112(d).

[18] Ms. Madaire-Poisson brought to the attention of the Tribunal that several mistakes were identified in Exhibit M‑03, Part 3, section B, where the correct amounts should read $37,500.00 under “Baseline Penalty Amount” for contraventions 1 and 2, and $54,666.12 under “Equals AMP Total”.

[19] Ms. Madaire-Poisson explained that CROR rule 125 places an obligation on the employee of the company. However, Transport Canada considers that the company is ultimately responsible for violations by its employees, especially serious violations such as non-compliance with CROR rules 112(d) and 125. Therefore, Transport Canada had chosen to take action under section 17.2 of the Railway Safety Act, which requires companies to operate in accordance with regulations and rules such as the CROR. According to Ms. Madaire-Poisson, this allows Transport Canada to issue an AMP under paragraph 3(1)(b) of the Railway Safety Administrative Monetary Penalties Regulations, SOR/2014‑233, for a violation of section 17.2 of the Railway Safety Act when there is a breach of a CROR rule.

[20] Ms. Madaire-Poisson added that to be fair, Transport Canada considered that it should base its calculation on the maximum penalty amount of $125,000 applicable to contraventions to rules such as the CROR as per the Railway Safety Administrative Monetary Penalties Regulations instead of the $250,000 maximum that applies to section 17.2 of the Railway Safety Act. The total calculation came to $54,666.12 per violation, for a grand total of $109,332.24 for both counts.

(2) Cross-examination of Ms. Madaire-Poisson

[21] Ms. Madaire-Poisson confirmed that to her best knowledge, there was no record of any previous offenses by Cando. She also stated that she believed the calculation process is fair but did admit that there had not yet been a second AMP issued for a second violation of the same provision at the same location, therefore the AMP calculation methodology had not yet been tested in such a situation.

[22] Ms. Madaire-Poisson confirmed that proportionality for the size of the railway company when making its calculations was not part of the calculation methodology. She did add that she believed the director general had looked at the railway and its other operations across Canada and concluded that Cando could pay the monetary penalty.

[23] Mr. Barnsley, the applicant's representative, reminded Ms. Madaire-Poisson that she had concluded that the crew was reckless and asked whether there was any evidence that the company had been reckless, to which she replied that the company had acted through its employees, adding that aside from the actions of the employees resulting in the violation of rule 112, the aggravating factor was based on what had happened. The company had violated the rule through its employees by leaving a car unattended contrary to CROR rule 112(d). In addition, the fact that Cando had taken many corrective measures following the incident showed that the company was aware that some weaknesses had to be corrected.

[24] Ms. Madaire-Poisson acknowledged that Cando had reported the incident to the Transportation Safety Board (TSB) and that Transport Canada had learned of the incident through CANUTEC. She then explained that CANUTEC is an organization within Transport Canada to which the Transportation Safety Board reports accidents and incidents that occur in various transportation modes, including rail.

[25] When asked if the regional offices of Transport Canada's Railway Safety Directorate have a 24/7 line for reporting rail incidents, Ms. Madaire-Poisson mentioned that she was not aware if telephone calls would be answered 24/7 in the regional offices.

B. Applicant

(1) Examination-in-chief of Sean Michael Crick

[26] Mr.  Crick is the general manager of Terminal and Transload Services for Cando (Exhibit A‑02). He is responsible for three operations within Cando: the refinery in Regina, Saskatchewan, the crude oil by rail loading terminal in Cromer, Manitoba, and a fuel blending and unloading transload operation in Hamilton, Ontario.

[27] Mr. Crick mentioned that since its operations in Regina are regulated by both provincial and federal jurisdictions, Cando complies with the higher of the two standards, i.e. the one under the Railway Safety Act, to avoid confusion and eliminate duplication.

[28] Mr. Crick explained that safety is treated by Cando as a “line responsibility” going from the CEO, who is responsible under the safety management system legislation, down to the supervisors and lead hands.

[29] Mr. Crick explained the essence of the operation in Regina at the refinery, which is a 24‑hour, 5‑days‑a‑week operation with three crews. On Saturday, it operates with one crew for an 8-hour shift.

[30] Mr. Crick acknowledged that conductor Nichol had breached CROR rule 112(d) by not applying and testing the handbrake before leaving the railcar unattended on track RA28, as per the Agreed Statement of Facts (Exhibit M‑01).

[31] Mr. Crick introduced a Cando investigation report for which he had participated in documenting information (Exhibit A‑03). Mr. Crick went over the timeline of events provided in the report, noting that some of the times were approximate as they were taken from cellular telephone records:

  • At 23:47 rail car GATX67693 started rolling.
  • The crew made an effort to reach the rolling car with a locomotive but stopped short of the diamond.
  • Unable to stop the rolling car, the crew radioed the conductor and asked that he pursue the rail car with the truck.
  • At 23:53 the operator attempted to call the CN yardmaster on channel 4 to alert CN of the runaway car, but without success. A subsequent telephone call went to voicemail.
  • The crew then reached the CN Melville yardmaster, who was able to reach the Regina yardmaster, who in turn confirmed there were no movements that could be affected by the runaway car.
  • Cando crew then called the police to report the incident.
  • Shortly after, the crew secured the car and waited for CN supervisors to arrive.

[32] Mr. Crick continued to explain the various radio channel frequencies used by different rail companies and also within the individual rail companies.

[33] Mr. Crick confirmed that to the best of his knowledge, rule 125 requires the person to start the call by saying “emergency, emergency, emergency” prior to communicating the information pertaining to the emergency situation. He also indicated that in the event of an emergency, general rule A(iv) from the CROR applies. This rule reads as follows:

A Every employee in any service connected with movements, handling of main track switches and protection of track work and track units shall;

[…]

(iv) communicate by the quickest available means to the proper authority any condition which may affect the safe operation of a movement and be alert to the company's interest and join forces to protect it;

[34] Regarding the issue of reporting the incident to Transport Canada, Mr. Crick explained that his understanding is that under the Railway Safety Act, there is a specific list of types of incidents that must be reported to the TSB, who uses CANUTEC as its agent. An uncontrolled movement of a railway car is one of those types of incidents. He added that he believed that the report to the TSB through CANUTEC would amount to notifying the Minister of the incident.

(2) Examination-in-chief of Stephen Gallagher

[35] Mr. Gallagher is the manager of Corporate Safety at Cando (Exhibit A‑04). He has been in the position since it was created in 2015. Prior to this, he was employed with CP for 21 years.

[36] The witness confirmed that Cando falls under the federal Railway Safety Management System Regulations. He provided a detailed overview of Cando's safety program, highlighting how it complies with customers' safety requirements, the safety culture within Cando and the fact that they had just completed survey of all their employees pertaining to safety. He also mentioned that the ratio of supervisors to employees within the company was low at approximately one to six.

[37] Mr. Gallagher then spoke to Cando's Operations Weekly Safety Brief of February 15, 2016 (Exhibit A‑05), which dealt with the topics of peer-to-peer communication and securement of equipment, in particular the application of handbrakes. He indicated that the employees involved in the runaway car incident had all signed the document but then had not applied the guidance provided in the Safety Brief.

[38] He explained that following the incident, Cando stood down all its operations to further discuss the requirements of CROR rule 112(d) and issued an updated bulletin with further restrictions going beyond the requirements of rule 112(d), i.e. that no cars can be left without handbrakes even if attended by crew. He also added that Cando was working to improve its emergency response procedures manual for all locations where it operates.

[39] Mr. Gallagher explained a table summarizing the efficiency tests taken by Cando employees (Exhibit A‑06) and a series of crew evaluation sheets (Exhibit A‑07). He went on to explain the results of the successful testing of four employees, including Mr. Nichol and Mr. Peter, who were involved in the incident at issue. They had performed all requirements as per rule 112. It was noted that the crew members were not aware they were being supervised for testing. He also added that a debriefing of the results of the evaluation was done with the employees, which provided a good opportunity to have a discussion with them.

[40] He explained that under the safety management system regime, Cando sets targets and initiatives. One such target was to perform five efficiency tests per month. It was determined in January 2016 that they had not met this target. As a remedial action, Cando increased the number of tests from 5 to 10 per month and did meet that new goal.

[41] The witness expressed his opinion that in a good safety program, all line managers look at incidents and put remedial actions in place in order to limit re-occurrence.

[42] The applicant then introduced a series of documents with regard to the incident at issue: three incidents reporting forms completed by the three employees involved, i.e. Mr. Wuschke (Exhibit A‑08), Mr. Peter (Exhibit A‑09) and Mr. Nichol (Exhibit A‑10), all dated March 2, 2016, and three employee statements completed by Mr. Wuschke (Exhibit A‑11), Mr. Peter (Exhibit A‑12) and Mr. Nichol (Exhibit A‑13). The witness stated that the incident was not an error in judgement but “a violation of applying the proper rules, proper procedures”.

[43] Mr. Gallagher read question 19 and Mr. Nichol's answer from Exhibit A‑13:

Q19. […] Can you explain why you then left the car unattended without properly securing it?

A19. Because I had purposely verified the piston was out, and I had heard the brakes squeal and hold the car, and from personal experience I had never seen an airbrake bleed off in less than two hours. I knew that it would only take 15 or 20 minutes to tie up RA27.

[44] The witness also read question 16 and Mr. Peter's answer from Exhibit A‑12:

Q16. If a car or cut of cars is set in a track and no push test is requested or confirmed via peer to peer communication, how would you know the cars are secure?

A16. I would trust the other conductors judgement that the equipment is secure.

[45] Mr. Gallagher confirmed that all three employees had been terminated from employment with Cando.

(3) Cross-examination of Mr. Gallagher

[46] Mr. Gallagher confirmed that safety supervisors do not report to him directly. They report either to the operations managers, the superintendents or the general manager, depending on their functions. The witness also responded to several questions regarding how training was conducted, and how crews were evaluated. The witness explained that it is expected that every employee will perform their job safely, based on the training and experience they received from their supervisors or managers.

[47] In reply to Mr. Villemure's question pertaining to an incident that occurred at Cando on January 20, 2016, Mr. Gallagher indicated that in that instance, a trainee working with a regular train crew had inadvertently sent a car rolling into a “derail”. The witness went on to explain in general terms how such incidents were addressed via safety briefings, discussions and a two‑way communication process.

[48] Mr. Gallagher explained in general terms how training was performed and how records were kept, adding that not all locations within Cando referred to the training sessions in the same way. He added that records were kept for the initial CROR training but subsequent refresher sessions could be referred to otherwise than as training.

[49] Mr. Gallagher mentioned that all CROR training is provided by CN.

V. ARGUMENTS

A. Minister

[50] Mr. Villemure first addressed section 17.2 of the Railway Safety Act, submitting that this provision creates a vicarious liability regime through which Cando can be held responsible for the actions of its employees, anticipating that the applicant would argue that the employees had committed the violation, not the company.

[51] He then submitted that Cando is a local railway company that is bound by the CROR rules and that Cando had admitted that on March 1, 2016, rules 112(d) and 125 did apply to its operation and that these rules were breached.

[52] Referring to section 12 of the Interpretation Act, R.S.C., 1985, c. I‑21, which requires that the entire statutory scheme be considered, Mr. Villemure argued that the intent of Parliament was for section 17.2 of the Railway Safety Act to encompass corporate liability for breaches to rules by employees of the company. If a company, when its employees breach the rules, could claim that it had not itself breached the rules, then there would be no possible application of section 17.2 of the Act since the rules are necessarily breached by employees and not by the company itself. Mr. Villemure added that it was clear that the Act as a whole and section 17.2 in particular were meant to catch corporate liability for a breach of a rule that was not committed by the company itself but by employees of the company.

[53] In support of the notion of Cando's responsibility for the actions of its employees, Mr. Villemure submitted the Supreme Court of Canada case of R. v. Sault Ste. Marie, [1978] 2 SCR 1299. The Court in that case examined what factors should be considered in assessing a due diligence defence where the offence resulted from the actions of a company hired by the City of Sault Ste. Marie. These factors included “whether the accused exercised all reasonable care by establishing a proper system to prevent commission of the offence and by taking reasonable steps to ensure the effective operation of the system”.

[54] Mr. Villemure concluded this argument by submitting that the evidence showed that there were gaps in the training provided within Cando, acknowledging that Cando had a program in place that included initial training on the rules by CN and safety briefings. However, Cando had failed to take steps to ensure that the system they had in place was an effective one. As a result, the applicant was prevented from benefiting from the defence of due diligence.

[55] Mr. Villemure also added that the Minister had referred to 17.2 of the Railway Safety Act to make it clear it was the company who was responsible. The Minister could have also decided to take enforcement action against the employees; nevertheless, the Minister exercised his discretion and held the company liable for the breaches committed by its employees.

[56] Mr. Villemure then addressed CROR rule 125 by submitting that this rule specifically deals with communications in emergency situations, unlike the general rule A(iv), which only speaks to conditions that “may affect the safe operation of a movement”. Mr. Villemure further argued that the requirement in rule 125 that a transmission reporting an emergency start with the “emergency, emergency, emergency” call is meant to supersede the requirement for positive identification contained in rule 121 in order to ensure that it immediately receives priority treatment.

[57] Mr. Villemure argued that rule 125 is a very specific rule that is used in the case of an emergency. He added that this rule should be read in its context, in accordance with the Interpretation Act. Referring to the general rule A(iv), he submitted that rule 125 supersedes the general rule in the case of an emergency.

[58] Mr. Villemure also submitted that if the crew had made attempts on other channels such as CN's, CP's and others, they may have reached someone by making the repeated “emergency” call instead of trying to establish positive identification.

[59] He also argued that Transport Canada cannot implement AMPs based on the financial sate of the company, its size or how well its business is going. Rather the Minister has to be consistent with all companies.

B. Applicant

[60] Mr. Barnsley started by saying that when it comes to uncontrolled movements, there has to be zero tolerance. He also stated that what happened in Lac-Mégantic was a tragedy but what happened with the Cando incident was not the same. Mr. Barnsley submitted that following the incident, Cando had reacted quickly and decisively, consistent with Transport Canada's safety management system practices.

[61] Mr. Barnsley submitted that when one is penalized for a violation, it needs to be clear what was done wrong. He continued to say that the obligations in rules must be clear and that this is not the case with rule 125. General rule A(iv), on the other hand, requires that a dangerous condition be communicated by the quickest available means to the proper authority. It tells you who to call and what to report.  

[62] Mr. Barnsley read CROR rule 121, which states that the initial call must commence with identity of the person being called, giving the example of a Cando switcher calling the CN yardmaster. In such a case, the initial call must commence with “CN Regina Yardmaster, Cando switcher…over”. Mr. Barnsley highlighted that rule 121 does not say it is subject to rule 125 and added that if positive communication is established, then the switcher can proceed to communicate the dangerous condition.

[63] He submitted that Mr. Wuschke had tried to reach CN in Regina without success, then called CN in Melville, CP and local police, but because rule 125 is not clear, Cando was punished to the amount of $54,000.

[64] The applicant questioned why on the Notice of Violation, the Minister had used section 17.2 of the Railway Safety Act, whereas during the hearing, he was making reference to rule 125. Mr. Barnsley argued that the Minister should AMP under the rule that was violated and not under section 17.2.

[65] He indicated that the Minister did not provide evidence that Cando had instructed the crew to act in breach of the rule or was complicit in the violation, as would be required for vicarious liability to apply as per R. v. Sault Ste. Marie, [1978] 2 SCR 1299, nor did the Minister's witness provide any information to this matter when asked during cross-examination.

[66] The applicant made reference to a number of cases (Air Mikisew Ltd. v. Canada (Minister of Transport), 2009 TATCE 21, Independence Air Ambulance Corporation v. Canada (Minister of Transport), 2013 TATCE 5, R. v. Saskatchewan Wheat Pool, 1999 CanLII 12942 (SK QB), R. v. Procrane (1992), 99 Sask.R. 297) where there was a finding of no vicarious liability or of due diligence to make a parallel with the Cando incident.

[67] He mentioned that the Minister had not presented any evidence that Cando's training and supervision did not meet regulatory standards, or any evidence to prove that this training and supervision were deficient.

[68] He reiterated that the crew did not think the airbrakes would release and had not implemented the required peer-to-peer communication.

[69] The applicant also addressed the AMP process and the level of penalties in comparison with other modes within Transport Canada. Referring to a document printed from the Transport Canada website consisting of a list of AMPs imposed in the aviation mode (Exhibit A‑01), the applicant argued the penalties were harsher in the rail mode.

C. Minister in Reply

[70] Mr. Villemure made reference to a case involving a barman serving liquor to an underage person in order to highlight that training only goes so far. The implementation of the training is more crucial. He added that Cando had failed in the implementation of their training as there was a lack of supervision for the night shift.

[71] Mr. Villemure made reference to a statement made by Mr. Gallagher that when the boss is not around, employees do their job the way they think it should be done. He continued to say that the Supreme Court of Canada had said that a company has to take all reasonable steps to ensure that a system is in place.

VI. ANALYSIS

A. Charge 1 – Violation of Rule 112(d) of the CROR

[72] The elements of the violation are as follows:

  • Rule 112(d) of the CROR applied to Cando.
  • The event occurred on or about March 1, 2016 at or near Regina, Saskatchewan.
  • Cando was responsible for car GATX 67963.
  • Cando left car GATX 67963 unattended without a sufficient number of hand brakes applied.

As a result, an employee was not in close enough proximity to take effective action to stop the unintentional moving of equipment.

[73] The facts of this case are not at issue, the parties having submitted an agreed statement of facts. It is uncontested that Cando violated rule 112(d), leading to a rail car rolling uncontrolled along the Quappelle Subdivision as demonstrated in Exhibit M‑01 and testimony on behalf of the Minister. The elements of the violation have been proven; nevertheless, some questions remain. Is there a due diligence defense for the applicant? The applicant also submits that the Minister was wrong to use section 17.2 of the Railway Safety Act to pursue the violation of a CROR rule and that the Minister was wrong to charge the company for the actions of its employee.

(1) Was the Minister wrong to assess a penalty under section 17.2 of the Act?

[74] The Tribunal finds no anomalies in the way the Minister proceeded to lay the charges. The charge clearly states that the applicant's actions were in violation of rule 112(d) of the CROR. As a railway company, the applicant has the legal obligation under section 17.2 of the Railway Safety Act to operate in accordance with the regulations and the rules made under section 19 of the Act, which include the CROR. The Minister alleged that the applicant was in violation of section 17.2 of the Act and specifies in the same charge that the rule violated was 112(d). The Minister was not wrong to include both provisions in the same charge; by making the charge complete and more detailed, it was the correct way to proceed. The Minister would have been wrong to mention only section 17.2 of the Act and not the rule that was contravened; in such a case the charge would have had to be dismissed. The charge could have been laid by mentioning the rule alone but the Minister was right to specify that by violating rule 112(d) of CROR, the applicant was also in non-compliance with section 17.2 of the Act. Furthermore, the applicant was not penalized by this way of proceeding; if anything, the applicant benefitted by having the lowest of the two possible ranges of maximum penalties applied to the charge.

(2) Was the Minister wrong to charge the company for the actions of its employees?

[75] The Tribunal cannot subscribe to the argument that section 42 of the Railway Safety Act should be interpreted to mean that there is no vicarious liability for violations and that the Minister has the onus of showing non-due diligence on the applicant's part. The applicant is right to say that section 42 is exclusive to offenses but there is a reason for that. Section 42 of the Act is to be interpreted in light of its wording, context and purpose: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 SCR 27; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42. In the case of a contravention to the Act, the regulations or the CROR, the Minister has the choice to proceed with the contravention as a violation or as an offense, and the Act specifies in subsection 40.13(4) that a violation is not an offence. Section 42 of the Act applies in the prosecution of an offense which engages penal liability, and in this context, an element of state of mind or mens rea is required. Section 126 of the Criminal Code specifies this requirement of mens rea when it states that a person who contravenes an Act of Parliament by “wilfully doing anything that it forbids or by wilfully omitting to do anything that it requires to be done” is guilty of an indictable offense. Section 126 of the Criminal Code is referred to in subsection 40.13(4) of the Railway Safety Act as not applying in respect of a violation.

[76] Administrative monetary penalties arise from strict liability violations where the proof of mens rea is not required and the due diligence defense is available to the contravener, the onus of proving that defense resting on the contravener (R. v. Sault Ste. Marie). Because corporations can only act through their employees, agents or officers, where an offence rather than a violation is alleged to have been committed, determining the penal liability of a corporation or proving that such corporation had the state of mind to commit the prohibited act requires provisions such as section 42 of the Act to reflect the complexity of criminal and penal corporate liability. This does not mean, however, that the legislator intended to exclude vicarious liability from violations; in fact, the legislator specified in subsection 3(2) of the Railway Safety Administrative Monetary Penalties Regulations that a corporation can be liable for up to $125,000 in penalties for a violation of a CROR rule. Furthermore, section 17.2 of the Act specifies that a railway company shall operate in accordance with the regulations and rules made under sections 19 and 20.

[77] Rule 112(d) and the other CROR rules were drafted and approved by the rail industry before they were submitted to Transport Canada for final approval in a joint effort to ensure safe railway operations. Section 19 of the Railway Safety Act creates a special regime for the regulation of the rail industry and states that the Minister may require a company by order to formulate rules; the railway companies are therefore responsible for respecting those rules they have themselves formulated and cannot simply exculpate themselves by shifting the responsibility for breaches of those rules onto their employees. Therefore, in light of the scheme outlined above and the wording, context and purpose of the relevant provisions, the Tribunal cannot subscribe to the argument that the company was not responsible for a breach of rule 112(d) by its employees.

(3) Did the applicant demonstrate a defense of due diligence?

[78] The Tribunal heard from the applicant about the initial training provided to its employees, the safety briefings with regard to rule 112(d) and peer-to-peer communications, as well as efficiency tests, but the evidence shows that a whole crew of employees that night was responsible for a serious incident that resulted in violations of rules 112(d) and 125. It wasn't just one employee that made a mistake; it was a series of mistakes by an entire crew. The evidence also shows that not all targeted efficiency tests were done prior to the incident; the evidence also shows that on the day of the incident, peer-to-peer communication failed and the cars were not secured or tested for effectiveness. All of this amounts to a finding that, on the balance of probabilities, the applicant did not take all reasonable measures to ensure the effective operation of a system to prevent such a serious incident from occurring. Therefore, the Tribunal finds that the applicant did not exercise all due diligence in this matter.

B. Charge 2 – Violation of Rule 125 of the CROR

[79] The elements of the violation are:

  1. Rule 125 of the CROR applied to Cando.
  2. The event took place on or about March 1, 2016, at or near Regina, Saskatchewan.
  3. Cando was responsible for car GATX 67963.
  4. Car GATX 67963 rolled uncontrolled onto CN main track.
  5. This was a condition which may have constituted a hazard to employees or others, or a condition which may have endangered the passage of movements.
  6. Cando failed to have its employees transmit a radio communication starting with the word “emergency” three times to indicate the report of an uncontrolled movement.

[80] The first five elements of the violation are not in dispute. What the applicant disputes is the requirement to transmit the word “emergency” three times at the beginning of a radio communication in the case of an emergency. With all due respect, the Tribunal finds thatRule 125 of the CROR is very clear and applies to the applicant. An employee must make the emergency call at the beginning of the transmission to indicate the report of an event like the one in question; this incident required emergency communication. Rule 125(c) mentions an emergency communication has absolute priority over other transmissions. Although the crew took aggressive and positive action to mitigate the situation with CN, CP and local police, general rule A(xii) and rule 118 of the CROR states that cellular telephones must not be used when normal railway radio communications are available and that when cellular telephones are used in lieu of radio, all rules applicable to radio communications must be complied with. Therefore, there is no doubt that the crew that night should have communicated the word “emergency” three times before anything else, regardless of the means of communication used (cell phone as opposed to radio).

[81] The various decisions presented by the applicant during his closing remarks were taken into account in reaching this determination. However, I find that the situation in the present case appears to be substantially different. In Independence Air Ambulance Corporation, a newly formed company was refused an air operator certificate due to the aviation record of another defunct company. In the case of Air Mikisew, the company was found to have exercised its due diligence.

[82] In its determination in the case of Minister of Transport and Skyward Aviation Ltd., CAT file no. C-2224-41 (review), cited by the applicant, the Tribunal found that the interpretation of the provisions at play, which included provisions from the Canadian Aviation Regulations (CARs), the Commercial Air Service Standards and Skywards' operations manual, gave rise to ambiguities and that the applicant had exercised all due diligence.

[83] In the present case, the Tribunal does not consider the language of rule 125 and the other relevant rules to be ambiguous or confusing. In the case of an emergency such as this one that had the potential to constitute a hazard or to endanger the passage of movements, rule 125 should have been deemed as the overriding priority. In conceiving the CROR rules, the industry and Transport Canada clearly considered the requirement of rule 125 as the best and safest means of alerting all concerned parties of an existing danger in such emergency situations.

(1) Vicarious liability and due diligence

[84] The same findings as those for charge 1 regarding vicarious liability and due diligence apply to charge 2.

C. The Amount of the Penalty

[85] Finally, the applicant questioned the amount of the penalty. Although the Minister's witness indicated that Cando had not informed the Minister of the incident, it transpired from the cross-examination of that same witness and from the testimony of the applicant's first witness that Cando had informed the TSB, and therefore CANUTEC through the TSB. While the TSB is an independent investigation organization, CANUTEC reports to the Minister and provides daily reports to all modes of transportation under the Minister's authority. In addition, the Minister's witness was unable to identify who at Transport Canada should have been called and at what number. In light of this, a fourth mitigating factor as per Exhibit M-03 must be taken into account, which results in a reduction of a further 6% or $3,999.96 for each penalty in addition to the 18% reduction already applied for the other three mitigating factors.

VII. DETERMINATION

[86] The Minister of Transport has proven, on a balance of probabilities, that the applicant, Cando Rail Services Ltd., contravened section 17.2 of the Railway Safety Act by failing to operate railway equipment according to rules 112(d) and 125 of the Canadian Rail Operating Rules. However, the penalty amount of $54,666.12 is reduced by $3,999.96 to $50,666.16 for both violations in order to account for an additional mitigating factor.

[87] The total amount of $101,332.32 is payable to the Receiver General for Canada and must be received by the Transportation Appeal Tribunal of Canada within 35 days of service of this determination.

April 4, 2017

(Original signed)

Gary Drouin

Member