In 2013, we provided an overview of the process for registering security interests over railcars or rolling stock in Canada and outlined several considerations to be mindful of when taking railcar security in Canada. Industry Canada has recently launched a new online search tool for railway documents deposited in Canada. This article will outline the relevant updates and discuss additional issues that arise as a result of these changes.

Broadly speaking, the registration of security agreements, leases and other documents relating to railcars is governed in Canada by the Canada Transportation Act1 (the "CTA"). Registration of a document associated with railways or rolling stock under the CTA is intended to provide public notice of the interests contained in the documents deposited. For a fulsome discussion of railcar security interests in Canada, please refer to our previous e-lert here.

Up until recently, all searches for documents filed under the CTA were required to be conducted in person at the offices of Corporations Canada in Ottawa, Ontario. However, the launch of the new railway search tool allows the database of railway documents to be searched online. The online database contains all railway documents that have been deposited under the CTA, with records as far back as 1868. Searches can be conducted based on either (a) text in the documents that have been filed or (b) date (either deposit date or document date).

Generally speaking, the considerations outlined in our previous e-lert continue to apply. However, there are a few additional considerations that warrant discussion.

When conducting a search of the railway document database, it is important to be mindful of the fact that documents are permanently maintained in the database. This is true regardless of whether a document has a fixed term that has expired or has been subsequently amended, otherwise modified or discharged. As a result, searches should be conducted on predecessor companies and former corporate names to ensure that any amalgamations, changes in title and changes in corporate name are accounted for. Individual search results should not be viewed in isolation.

It is also important to note that there is no requirement that documents deposited under the CTA be submitted for deposit in both official languages. As a result, documents are generally unilingual. When searching by type of document, both English and French search terms should be used (e.g. mortgage and hypothec).

Finally, the implementation of the railway search tool has resulted in changes to the deposit procedure, particularly with respect to documents submitted for deposit that contain deficiencies. Previously, if a document filed for deposit was deficient, the filing party would be notified of the deficiency by telephone and, if the deficiency could be explained or remedied, the document would be held for up to five business days while the deficiency was remedied. Upon correction of the deficiency (provided that such correction occurred within the five business day hold period), the document was deemed deposited on the date and time originally deposited.

With the introduction of the new railway search tool, the five day remedy period for deficient documents has been eliminated. If a document submitted for filing is deficient, the document will not be deposited and will be returned to the filing party.

Notwithstanding the additional considerations above, the introduction of the online railway search tool is a considerable improvement in the system governing security over rolling stock in Canada. Corporations Canada is also considering the possibility of allowing railway documents deposited under the CTA to be deposited by email. These changes have made (and will continue to make) the system more efficient and, as a result, less expensive for clients.

Footnote

1. S.C. 1996, c.10.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.