BNSF Railway Company v. Teck Metals Ltd.

2020 BCSC 1133 BNSF Railway Company v. Teck Metals Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: BNSF Railway Company v. Teck Metals Ltd., 2020 BCSC 1133 Date: 20200731 Docket: S100978 Registry: Vancouver Between: BNSF Railway Company Plaintiff And Teck Metals Ltd. 6317057 Canada Ltd. and Canadian National Railway Company Defendants And Canadian National Railway Company Third Party Before: The Honourable Mr. Justice McEwan Reasons for Judgment Counsel for Plaintiff: R. DeFilippi S. Driver Counsel for Defendant, Teck Metals Ltd.: L. Zivot R. Nieuwenhuis Counsel for the Defendants, 6317057 Canada Ltd. and Canadian National Railway Company T. Keast Q.C. R. Lee Place and Date of Trial/Hearing: Vancouver, B.C. Jan 15, 16, 17, 18, 19, 22, 23, 24, 25, 26, Feb. 5, 13, 14, 15, 16, 19, 20, 21, Aug. 20, 21, 22, 23, 24, 27, 28, 29, 30, 2018 Place and Date of Judgment: Vancouver, B.C. July 31, 2020 TAble of contents The Claims. 5 Background. 5 July 1, 1990 - December 31, 1999. 9 January 1, 2000 - March 31, 2005. 10 The Restated Transportation Agreement. 11 Pleadings. 15 The Amended Response to the Amended Third Party Notice. 22 Tariff 1131. 23 "Handshake" Agreement. 24 BCOL Acquired. 25 History. 31 Cominco/Vancouver Wharves Contract. 33 Cominco/BNSF Contract. 34 Vancouver Wharves/BCOL Contract. 36 Limited Distribution Tariff. 38 Agreement between Cominco and CN. 38 Red Dog / non-Red Dog Concentrates. 41 Implied Contract. 43 49 USC

11705. 45 AAR Rules. 46 Limitation Act. 47 Trust. 52 Equitable Defences. 64 Laches. 64 Change of Position. 67 The Railway's Errors. 67 BNSF's Errors. 69 CN's Unilateral Changes/Mistakes April 2005. 71 CN Had No Authority to Apply Statutory Interswitching Rates in the Face of Confidential Contracts. 86 TML's Defence and Claims. 89 Unjust Enrichment. 91 TML's Third Party Claims Against CN. 95 CN's Defence to TML's Third Party Claims. 96 Acceptance of Repudiation. 98 Positive Defence of CN to the claim by BNSF. 106 Practical compulsion. 112 Claims of TML against CN (October 1, 2007 to December 31, 2010. 114 Conclusion. 115 Breach of Contract. 117 Summary. 121 Interest. 123 The Claims [1] The plaintiff, BNSF Railway Company ("BNSF"), is a federal railway company, constituted under the laws of the State of Delaware, one of the United States of America, and registered in the Province of British Columbia, with its attorney in British Columbia at Suite 2700, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B8. [2] The defendant, Teck Metals Ltd. ("TML"), is a body corporate, continued under the laws of Canada and registered in the Province of British Columbia, with its head office in British Columbia at Suite 3300, Bentall 5 Tower, 550 Burrard Street, Box 31, Vancouver, British Columbia, V6C 0B3 [3] On or about August 1, 2001, Cominco Ltd. ("Cominco") changed its name to Teck

Cominco Metals Ltd. ("Teck Cominco"). [4] On or about June 12, 2009, Teck Cominco changed its name to Teck Metals Ltd. [5] The defendant, 6317057 Canada Ltd. ("6317057"), a railway company, was a body corporate and was continued under the Canada Business Corporation Act, R.S.C. 1985, c. C-44, on or about November 26, 2004, with its registered office in British Columbia at Suite 1700, 666 Burrard Street, Park Place, Vancouver, British Columbia, V6C 2X8. [6] The defendant, Canadian National Railway Company ("CN"), is a federal railway company, constituted under the laws of Canada and registered in the Province of British Columbia, with its attorney in British Columbia at Suite 1700, 1075 West Georgia Street, Vancouver, British Columbia, V6E 3C9. Background [7] As early as 1984, Cominco Alaska Incorporated ("CAI") and Cominco now known as TML Ltd. ("TML") determined to establish a transportation network for the shipment of Concentrates from the Red Dog Mine, in Alaska, and from other locations, to the Final Destination at Trail, B.C. [8] That transportation network contemplated that the Concentrates would be shipped: (a) By ocean carrier from Alaska and from other locations to the Terminal Facility; (b) By rail carrier from the Terminal Facility to the Transfer Facility at Waneta; and (c) By truck from the Transfer Facility to the Final Destination at Trail, B.C. [9] That part of

the transportation network whereby the Concentrates would be shipped by rail carrier consisted of: (a) The movement of railcars (loaded and empty) between the Terminal Facility and the BCOL/CN Interchange in North Vancouver (the "Leg 1 Movement"); (b) The movement of railcars (loaded and empty) between the BCOL/CN Interchange in North Vancouver and the CN/BNSF Interchange in New Westminster or at Brownsville (the "Leg 2 Movement"); (c) The movement of railcars (loaded and empty) between the CN/BNSF Interchange in New Westminster and the Transfer Facility in Waneta (the "Leg 3 Movement"). [10] In order to establish the transportation network, between March 4, 1988 and November 2, 1990, Cominco entered into a series of separate and distinct transportation agreements with each of Vancouver Wharves, CN and BNSF. [11] With respect to the Leg 1 Movement, by a written agreement dated January 5, 1989, and made between Cominco and Vancouver Wharves, as amended February 6, 1990, April 27, 1990, June 26, 1991 and March 5, 1997 (the "Cominco/Vancouver Wharves Terminal Facility Agreement"), it was agreed, in part, that: (a) Vancouver Wharves would discharge the Concentrates from the ocean carriers and store the Concentrates at the Terminal Facility; (b) Cominco would arrange for the delivery of empty railcars to Vancouver Wharves either at the Terminal Facility or at the BCOL/CN

Interchange; (c) Vancouver Wharves would load the Concentrates into the empty railcars at the Terminal Facility; (d) Vancouver Wharves would arrange with BCOL for the movement of the railcars (loaded and empty) for Cominco between the Terminal Facility and the BCOL/CN Interchange (the "BCOL Switching Services"), being the Leg 1 Movement; (e) In addition to the handling charges for the discharge, storage and loading of the Concentrates, Vancouver Wharves would also charge Cominco the amounts charged by BCOL to Vancouver Wharves for the BCOL Switching Services, being the Leg 1 Movement; (f) The Cominco/Vancouver Wharves Terminal Facility Agreement would be in effect from July 1, 1990, to June 30, 2005, and absent any notice not to renew, would be automatically renewed from the period July 1, 2005 to June 30, 2010, which, in fact, occurred. [12] With respect to the Leg 2 Movement, by a letter agreement dated March 2, 1990, and made between Cominco and CN, as amended May 29, 1990, and November 2, 1990 (the "Cominco/CN Switching Agreement"), it was agreed, in part, that: (a) CN would move the railcars (loaded and empty) for Cominco between the BCOL/CN Interchange and the CN/BNSF Interchange (the "CN Switching Services"), being the Leg 2 Movement; (b) CN would charge Cominco $100.00 per railcar which rate would change annually beginning January 1, 1989, based upon the change in the

Consumer Price Index (the "CPI") during the previous year. By the time the Rail Network got going the rate was $110.00; (c) The Cominco/CN Switching Agreement would remain in effect so long as the Cominco/Vancouver Wharves Terminal Facility Agreement was in effect. [13] With respect to the Leg 3 Movement, by a written agreement dated February 5, 1990, and effective July 1, 1990, and made between Cominco and BNSF, as amended (the "Cominco/BNSF Transportation Agreement"), it was agreed in part, that: (a) BNSF would move the railcars (loaded and empty) for Cominco between CN/BNSF Interchange and the Transfer Facility and BNSF would provide or deliver empty railcars to CN at the CN/BNSF Interchange for furtherance by CN and then by BCOL to Vancouver Wharves at the Terminal Facility (the "BNSF Linehaul Services"); (b) BNSF would charge Cominco certain transportation charges, based on the tonnages moved, but BNSF would not absorb for any charges for: (i) The movement of railcars (loaded or empty) between the Terminal Facility and the BCOL/CN Interchange, being the Leg 1 Movement; (ii) The movement of railcars (loaded or empty) between the BCOL/CN Interchange and the CN/BNSF Interchange, being the Leg 2 Movement; and, (iii) Any other charges for the movement of railcars (loaded or empty) by or on behalf of Cominco, Vancouver Wharves, BCOL or CN in relation to the Red Dog

transportation network; (c) The Cominco/BNSF Transportation Agreement would be in effect from July 1, 1990 to December 31, 2000, subject to extension for an additional ten (10) years, which, in fact, occurred. [14] With respect to the Leg 1 Movement, there was a sub-contract set out in a written agreement dated July 17, 1990, and made between Vancouver Wharves and BCOL, as amended (the "Vancouver Wharves/BCOL Freight Transportation Agreement Contract BP-113), in which it was agreed, in part, that: (a) BCOL would move the railcars (loaded and empty) for Vancouver Wharves between the Terminal Facility and the BCOL/CN Interchange being the BCOL Switching Services or the Leg 1 Movement; (b) BCOL would charge Vancouver Wharves a rate of $48.59 per railcar, which rate would change yearly based upon changes in the CPI; (c) The Vancouver Wharves/BCOL Freight Transportation Agreement was to be in effect from June 1990 to December 31, 2010. [15] At no time material to these proceedings: (a) Was there any arrangement in place, whether by virtue of an agreement, legislation, regulation, tariff, request for services or otherwise, whereby BNSF would pay BCOL or otherwise be responsible for any of the charges of BCOL for the BCOL Switching Services or the Leg 1 Movement in relation to the transportation network; (b) Was there any arrangement in place, whether by virtue of an agreement,

legislation, regulation, tariff, request for services or otherwise, whereby BNSF would pay CN or otherwise be responsible for any of the charges of CN for the BCOL Switching Services, the Leg 1 Movement, the CN Switching Services or the Leg 2 Movement in relation to the transportation network. [16] By a written agreement dated November 25, 2003, and made among BCRC, BCR, CN and CNAL, as amended July 13, 2004 and July 14, 2004 (the "Restated Transaction Agreement") it was agreed, in part, that: (a) CN would purchase or otherwise acquire all of the shares of BCOL and all of the rail operating assets and infrastructure of BCOL, including the BNSF/BCOL funds (defined below); (b) CN would purchase or otherwise acquire all of the right, title and interest of BCOL in and to the Vancouver Wharves/BCOL Freight Transportation Agreement. [17] Effective April 1, 2005, BCOL ceased to perform the BCOL Switching Services for Vancouver Wharves, being the Leg 1 Movement, and thereafter CN performed the BCOL Switching Services for Vancouver Wharves and for Cominco. [18] BCOL was dissolved on July 5, 2005. July 1, 1990 - December 31, 1999 [19] During the period July 1, 1990 to December 31, 1999: (a) BCOL performed the BCOL Switching Services, being the Leg 1 Movement, for Vancouver Wharves and BCOL charged Vancouver Wharves for and Vancouver Wharves paid BCOL for, the BCOL Switching Services

pursuant to the Vancouver Wharves/BCOL Freight Transportation Agreement; (b) Vancouver Wharves charged Cominco for, and Cominco paid Vancouver Wharves for, the BCOL Switching Services pursuant to the Cominco/Vancouver Wharves Terminal Facility Agreement; (c) CN performed the CN Switching Services, being the Leg 2 Movement, for Cominco; (d) CN charged Cominco for and Cominco paid CN for, the CN Switching Services pursuant to the Cominco/CN Switching Agreement; (e) BNSF performed the BNSF Linehaul Services, being the Leg 3 Movement for Cominco; (f) BNSF charged Cominco for, and Cominco paid BNSF for, the BNSF Linehaul Services pursuant to the Cominco/BNSF Transportation Agreement. There is nothing owing on this agreement. [20] However, and also during the period July 1, 1990 to December 31, 1999, BCOL also charged BNSF for the BCOL Switching Services at the rate of $208 per railcar and BNSF paid BCOL the approximate amount of $9,550,880.89. January 1, 2000 - March 31, 2005 [21] During the period January 1, 2000 to March 31, 2005: (a) BCOL performed the BCOL Switching Services, being the Leg 1 Movement, for Vancouver Wharves and BCOL charged Vancouver Wharves for, and Vancouver Wharves paid BCOL for, the BCOL Switching Services pursuant to the Vancouver Wharves/BCOL Freight Transportation Agreement; (b) Vancouver Wharves charged Cominco for, and Cominco paid Vancouver Wharves for,

the BCOL Switching Services pursuant to the Cominco/Vancouver Wharves Terminal Facility Agreement; (c) CN performed the CN Switching Services, being the Leg 2 Movement, for Cominco; (d) CN billed Cominco for, and Cominco paid CN for, the CN Switching Services pursuant to the Cominco/CN Switching Agreement; (e) BNSF performed the BNSF Linehaul Services, being the Leg 3 Movement for Cominco; (f) BNSF charged Cominco for, and Cominco paid BNSF for, the BNSF Linehaul Services pursuant to the Cominco/BNSF Transportation Agreement. [22] However, and also during the period January 1, 2000 to March 31, 2005, BCOL also charged BNSF for the BCOL Switching Services at a rate of $208 per railcar and BNSF paid BCOL the approximate amount of $4,485,231.68. [23] By February 22, 2005, if not earlier, CN knew that BCOL had been charging both Vancouver Wharves, pursuant to the Vancouver Wharves/BCOL Freight Transportation Agreement, and BNSF for the BCOL Switching Services, being the Leg 1 Movement. The Restated Transportation Agreement [24] CN, up and until April 1, 2005, sent accounts to TML for the Leg 2 switching pursuant to the TML/CN Switching Agreement and TML paid those accounts. [25] The Restated Transaction Agreement between CN, CN Acquisition Limited, ("CNAL"), British Columbia Railway Company ("BCRC") and BCR Properties Ltd. whereby CN purchased the shares of BCRC concluded in or

about July 2004, ("transaction"). [26] Once the transaction completed, BCOL became part of CN's federal undertaking and subject to Federal legislation. [27] On March 15, 2004, the Agency issued a Certificate of Fitness to reflect the acquisition by CN of the share interests in BCOL and the partnership interests of BC Rail Partnership from BCRC and BCR Properties Ltd. Further on July 15, 2004, the Agency in Decision No. 387-R-2004 varied that Certificate of Fitness to reflect the addition of BC Rail Partnership. [28] There was nothing in the transaction suggesting that BP-113 was terminated. Amendment 9 to BP-113, which records the escalation of the per car switching charge for 2004 continued to recognize that the agreement was in force until December 31, 2010. [29] Vancouver Wharves continued to bill TML for the Leg 1 switching charges until February 2006. It has been determined during the break in this trial that there was an overpayment and in March 2006, Vancouver Wharves reimbursed TML for those overpayments. [30] The transaction had no impact on the contractual relationship that CN had with TML or others and in particular, it had no impact on the TML/CN Switching Agreement that was in place for the duration of TML's contract with the BNSF until December 31, 2010. [31] From the time the transaction closed in July 2004 until November 2005, CN did not notify TML or BNSF that

it intended to make unilateral changes to the arrangements in place for the Leg 1 and Leg 2 movements. These were changes that directly impacted TML and BNSF. [32] There was no provision in the Cominco/CN Switching Agreement for unilateral termination or amendment. Further, at no time did CN approach TML to discuss termination or amendment. [33] It is absolutely clear that CN proceeded in haste, with wrong, missing and incomplete information and without contacting any of the affected parties; TML, Vancouver Wharves and BNSF. [34] CN tasked Mr. Iain Grunwell with this part of the integration project. Mr. Grunwell was a CN employee based out of Montreal. He had been involved in previous CN railway acquisitions. [35] Mr. Grunwell had no prior knowledge of the transportation network put in place by TML, CAI and the other parties: Vancouver Wharves, CN and BNSF. Further, on account of an apparent downsizing of the BCOL workforce arising out of the CN purchase, there were holes in the institutional knowledge and lost files, as it pertained to the transportation network for the movement of TML's Concentrates. [36] There were also significant gaps in CN's knowledge. This was confirmed by Mr. Harrington of CN in his testimony. [37] Effective April 1, 2005: (a) As a result of the Restated Transaction Agreement, BCOL ceased to provide Vancouver Wharves with the BCOL Switching Services

pursuant to the Vancouver Wharves/BCOL Freight Transportation Agreement; (b) As a result of the Restated Transaction Agreement, CN began to provide the BCOL Switching Services to Vancouver Wharves and to Cominco; (c) CN ceased charging either Cominco or Vancouver Wharves for the BCOL Switching Services; (d) CN ceased charging Cominco for the CN Switching Services. [38] For the period April 1, 2005 to September 30, 2007, CN performed both the BCOL Switching Services, being the Leg 1 Movement, for Vancouver Wharves and Cominco and the CN Switching Services, being the Leg 2 Movement for Cominco. [39] On or about November 25, 2005, CN notified Cominco, but not BNSF, that: (a) Effective April 1, 2005, CN would not be charging Vancouver Wharves or Cominco for either the BCOL Switching Services or the CN Switching Services; (b) Effective April 1, 2005, CN would be charging BNSF for both the BCOL Switching Services and the CN Switching Services. [40] After a reminder from Ms. Low and after Ms. Sinclair inquired of Mr. Grunwell, Ms. Low received a response from Ms. Sinclair on November 25, 2005, that advised in somewhat cryptic language, that as a result of the merger of BCOL and CN a new switching platform was put into place and that the notification to the customer appeared to have been missed. [41] Ms. Sinclair advised: Please accept this notification that effective April 1, 2005

Teck Cominco is no longer responsible for the switch charge on the Red Dog Concentrate cars that was previously billed under CN 1131. All charges incurred for the switching of these cars by the CNR's invoice to the linehaul carrier per CTA specified rates. (the "November 25 e-mail") [42] As above, Ms. Sinclair did not advise that BNSF would, according to CN's plan, be billing TML for the new charges. [43] TML personnel, as Ms. Low testified, thought that this had something to do with a haulage agreement (a special arrangement between BNSF and CN for switching cars on the North Shore) between BNSF and CN. In fact, this is the same haulage agreement that Mr. Grunwell referenced in his examination of the possibilities for streamlining the CN/BCOL rates. [44] While perhaps closer attention to the language of Ms. Sinclair's email should have caused further inquiry by TML, TML certainly did not know that CN had been and was apparently continuing to bill BNSF the $315/car Interswitching charge and that BNSF was paying for that switching. That was not what was contemplated even by CN, which expected that the switching charges would be passed on to TML (as CN thought was already the case with respect to the BCOL switching charges of $208/car). [45] TML accounting certainly continued to receive invoices from BNSF for the linehaul portion of the movement and continued to pay them. This

was a much larger sum of money, than the cost of the switching charges, and was based on the tonnages moved. [46] Clearly, none of the BNSF invoices to TML during Period 2 contained the CN switching charges, as contemplated by CN, and therefore there was no ongoing information or reminder that would have indicated that BNSF was paying for something it should not have. While CN stopped sending accounts to TML the situation on account of both railways' errors was not at all clear. TML by the terms of the agreements it had worked out in 1990 did not expect ever to be billed by another railway for CN's services. [47] During the period April 1, 2005 to September 30, 2007, CN charged BNSF for both the BCOL Switching Services and the CN Switching Services at the rate of $315 per railcar and BNSF paid CN the approximate amount of $2,866,815.00 [48] At all times material to this proceeding, BNSF was and remains the beneficial owner of: (a) The funds paid by BNSF to BCOL for or in respect of the period July 1, 1990 to March 31, 2005, in the amount of approximately $14,036,112.57 (the "BNSF/BCOL Funds"); (b) The funds paid by BNSF to CN for or in respect of the period April 1, 2005 to September 30, 2007, in the amount of approximately $2,866,815.00 (the BNSF/CN Funds"). [49] BNSF and CN have reached an agreement, in part, that any obligations accruing to BCOL for any judgment arising from

this action will be met and paid by CN. Pleadings [50] The claim of BNSF against Cominco is for: (a) An order directing Cominco to pay BNSF the amount of $2,866,815.00, being the amount paid by BNSF to CN for or in respect of the period April 1, 2005 to September 30, 2007; (b) Further, or in the alternative, an order directing an accounting of, for or in respect of the period July 1, 1990 to September 30, 2007: i. The amount charged by Vancouver Wharves to Cominco for the BCOL Switching Services; ii. The amount paid by Cominco to Vancouver Wharves for the BCOL Switching Services; iii. The amount charged by BCOL to BNSF for the BCOL Switching Services; iv. The amount paid by BNSF to BCOL for the BCOL Switching Services; v. The amount charged by CN to BNSF for the BCOL Switching Services and the CN Switching Services; vi. The amount paid by BNSF to CN for the BCOL Switching Services and the CN Switching Service; (c) An order for the payment by Cominco to BNSF of the amount found to be due to BNSF on the taking of such accounts; (d) Further, or in the alternative or in addition, damages; (e) A declaration that the amounts paid by BNSF to BCOL and to CN unjustly enriched Cominco; (f) Interest at such rate and for such period as this Honourable Court shall think fit; (g) Further, or in the alternative, interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79; (h)

Costs; (i) Such further and other relief as this Honourable Court may deem appropriate. [51] The claim of BNSF against BCOL is for: (a) An order directing BCOL to pay the amount of $14,036,112.57 to BNSF, being money payable by BCOL to BNSF for money had and received by BCOL for the use of BNSF; (b) An order declaring that BNSF was and remains the beneficial owner of the BNSF/BCOL funds; (c) A declaration that BCOL held and holds the BNSF/BCOL funds on constructive trust for BNSF or is liable to account for all assets now or previously in its possession acquired directly or indirectly with the BNSF/BCOL funds; (d) All necessary accounts and enquiries to enable BNSF to trace and recover the BNSF/BCOL funds; (e) An order for the delivery up or transfer of BNSF of the assets now or previously in BCOL's possession acquired directly or indirectly with the BNSF/BCOL funds; (f) Further, or in the alternative, an order directing an accounting of, for or in respect of the period July 1, 1990 to March 31, 2005; (i) The amount charged by BCOL to Vancouver Wharves for the BCOL Switching Services; (ii) The amount paid by Vancouver Wharves to BCOL for the BCOL Switching Services; (iii) The amount charged by BCOL to BNSF for the BCOL Switching Services (iv) The amount paid by BNSF to BCOL for the BCOL Switching Services; (g) An order for the payment by BCOL to BNSF of an amount found to be

due to BNSF on the taking of such accounts; (h) Further, or in the alternative, or in addition, damages; (i) A declaration that the amounts paid by BNSF to BCOL unjustly enriched BCOL; (j) Interest at such rate and for such period as this Honourable Court shall think fit; (k) Further, or in the alternative, interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79; (l) Costs; (m) Such further and other relief as this Honourable Court may deem appropriate. [52] The claim of BNSF against CN is for: (a) An order directing CN to pay the amount of $16,902,927.57 to BNSF, being money payable by CN to BNSF for money had and received by BCOL and by CN for the use of BNSF; (b) An order declaring that BNSF was and remains the beneficial owner of the BNSF/BCOL funds and the BNSF/CN funds; (c) A declaration that CN held and holds the BNSF/BCOL funds and the BNSF/CN funds on constructive trust for BNSF or is liable to account for all assets now or previously in its possession acquired directly or indirectly with the BNSF/BCOL funds and the BNSF/CN funds; (d) All necessary accounts and enquiries to enable BNSF to trace and recover the assets now or previously in the possession of CN acquired directly or indirectly with the BNSF/BCOL funds and the BNSF/CN funds; (e) An order for the delivery up or transfer to BNSF of all assets now or previously in the possession of CN acquired

directly or indirectly with the BNSF/BCOL funds and the BNSF/CN funds; (f) Further, or in the alternative, an order directing an accounting of, for or in respect of the period July 1, 1990 to September 30, 2007; (i) The amount charged by BCOL to Vancouver Wharves for the BCOL Switching Services; (ii) The amount paid by Vancouver Wharves to BCOL for the BCOL Switching Services; (iii) The amount charged by BCOL to BNSF for the BCOL Switching Services; (iv) The amount paid by BNSF to BCOL for the BCOL Switching Services; (v) The amount charged by CN to BNSF for the BCOL Switching Services; (vi) The amount paid by BNSF to CN for the BCOL Switching Service and the CN Switching Services; (g) An order for the payment by CN to BNSF of the amount found to be due to BNSF on the taking of such accounts; (h) Further, or in the alternative, or in addition, damages; (i) A declaration that the amounts paid by BNSF to CN unjustly enriched CN; (j) Interest at such rate and for such period as this Honourable Court shall think fit; (k) Further, or in the alternative, interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79; (l) Costs; (m) Such further and other relief as this Honourable Court may deem appropriate. [53] There were consequential third party notices issued as well. The TML Amended Third party notice read: (i) This action has been brought by the plaintiff BNSF Railway

Company "BNSF" against the defendant TML Ltd. "TML". The plaintiff's claim against the defendant TML is set out in the Amended Notice of Civil Claim; (ii) The defence of TML to the claim of BNSF is as set out in the Amended Response to Civil Claim. The terms and definitions set out in the Amended Notice of Civil Claim are used where appropriate in this Third Party Claim. The facts on which the defendant relies are: [54] That in or about 1990 TML and CN entered into the Cominco/CN Switching Agreement for the switching or movement of the railcars and Concentrates received from BCOL at the BCOL/CN interchange to and from the CN/BNSF Interchange. [55] The Cominco/CN Switching Agreement would remain in full force and effect so long as TML had a transportation contract with BNSF for the movement of its Concentrates and railcars to the Final Destination at Trail, British Columbia. [56] At all material times TML had a transportation contract with BNSF, referred to as the Cominco/BNSF Transportation Agreement, for the movement of its Concentrates and railcars to the Final Destination at Trail. British Columbia. [57] The rate for the switching charges under the Cominco/CN Switching Agreement was set at $110 per car commencing in 1990 and provided for an annual increase based on the Consumer Price Index "the Contractual Rate". [58] These rates were subsequently published by CN in a

document, Tariff 1131, that, like the Cominco/CN Switching Agreement, has never been terminated or revoked and continues, although it is flawed, in full force and effect. [59] CN would invoice TML for the switching services provided under the Cominco/CN Switching Agreement and TML paid them. [60] In or about 2004, CN, inter alia, acquired the property and assets of BCOL and CN undertook the switching of railcars and the Concentrates from the Terminal Facility to the CN/BNSF Interchange. [61] From and after April 1, 2005 and until November 1, 2007, CN ceased billing TML for any switching charges related to the switching of railcars and Concentrates to and from the Terminal Facility and the CN/BNSF Interchange and without the knowledge or consent of TML began billing BNSF for these switching services at a rate that was based on the per railcar rates prescribed by the Railway Interswitching Regulations the "Interswitching Rate" ($315) and not the Contractual Rate (approximately $169 plus Consumer Price increases). [62] BNSF was unaware that the switching services that CN was billing for were subject of the Contractual Rate under the Cominco/CN Switching Agreement, and BNSF, without the knowledge or consent of TML, paid the CN invoices at the higher rate. [63] For the period April 1, 2005 until November 1, 2007, TML was unaware that CN was invoicing BNSF for switching services

related to the movement of railcars and Concentrates between the Terminal Facility and the CN/BNSF Interchange and that BNSF was paying CN for these switching services at all and at the Interswitching Rate of $315. [64] CN had no authority to, and it was contrary to and in breach of the provisions of the Cominco/CN Switching Agreement, for CN to invoice BNSF for switching services related to the movement of railcars and Concentrates between the Terminal Facility and the CN/BNSF Interchange. [65] TML, if liable for any of the amounts billed by CN to BNSF and paid to CN by BNSF, which is not admitted but denied, is only liable for amounts that are calculated in accordance with the Cominco/CN Switching Agreement and is entitled to be indemnified by CN and to a judgment against CN for any amount in excess of the Contractual Rate. [66] From November 1, 2007 onwards, CN continued to bill BNSF for switching services between the Terminal Facility and the CN/BNSF Interchange at the Interswitching Rate and not the Contractual Rate and BNSF has, since November 1, 2007, provided invoices to TML for these CN Switching Services at the Interswitching Rate. [67] TML has paid the CN charges, under protest, and/or without accepting the Interswitching Rate as the correct rate, and advised CN and BNSF that it is only liable, to pay for the CN Switching Services at the Contractual Rate. [68] TML

did so, so as to ensure that its rail traffic continues to move to the Final Destination without interruption, however TML has overpaid for the CN switching charges and seeks an accounting from CN for the difference between the Interswitching Rate and the Contractual Rate, and further seeks a declaration that it is only required to pay the Contractual Rate to the end of 2010. [69] CN has, by billing and accepting payment at a rate that is inconsistent with the Contractual Rate and that is in breach of the Cominco/CN Switching Agreement, been unjustly enriched and has received the overage in trust for TML and is liable to account to and pay over the additional funds to TML. [70] In the event of a finding of liability against TML with respect to any switching services as described in the Amended Notice of Civil Claim and as provided by CN and billed to BNSF between April 1, 2005 and September 30, 2007, the defendant TML seeks the following relief against the Third Party, CN: (a) A declaration that the Cominco/CN Switching Agreement, as it is referred to in the Notice of Civil Claim and TML's Response to Civil Claim, is the contract that governs the rates for switching services that are payable as between TML and the Third Party, CN; (b) A declaration that TML is entitled to contribution and indemnity from the Third Party, CN, for any amount that it may be found liable to BNSF on

account of any CN Switching Services that exceeds the amount governed by the contractual switching rates provided for in the Cominco/CN Switching Agreement; (c) Judgment against the Third Party, CN for the amount that exceeds the amount governed by the contractual switching rates provided for in the Cominco/CN Switching Agreement; (d) Court ordered interest; (e) Costs; (f) Such other and further relief as this Court deems just. [71] With respect to any switching services as provided by CN and billed to BNSF after September 30, 2007 and paid by TML, the defendant TML seeks the following relief against the Third Party, CN: (a) A declaration that the Cominco/CN Switching Agreement, as it is referred to in the Notice of Civil Claim and TML's Response to Civil Claim, is the contract that governs the rates for switching services that are payable as between TML and the Third Party, CN. (b) A declaration that TML is entitled to receive from the Third Party, CN an accounting for any amounts that it has received from BNSF on account of any CN Switching Services that exceeds the amount governed by the contractual switching rates provided for in the Cominco/CN Switching Agreement; and (c) Judgment against the Third Party, CN, for the amount that exceeds the amount governed by the contractual switching rates provided for in the Cominco/CN Switching Agreement; (d) Court ordered interest; (e)

Costs; (f) Such other and further relief as this Court deems just. The Amended Response to the Amended Third Party Notice [72] The 1990 Agreement between CN and TML as described in para. 3 of the Amended Third Party Notice (the "Cominco/CN Switching Agreement") specifically covered only the movement of lead and zinc Concentrates originating at TML's Red Dog Mine in Alaska and moving through Vancouver Wharves in North Vancouver. [73] The Cominco/CN Switching Agreement was, for CN, an unusual arrangement in that it required CN to bill the shipper, TML, directly for the Leg 2 movement whereas CN would typically bill the linehaul carrier, in this case, BNSF for such a switch. This relates to the particular characteristics of the Network introduced by TML which required every participant to deal with TML directly. [74] Not long after the inception of the Network, in February 1992, CN and TML agreed that the Cominco/CN Switching Agreement would be amended such that the non-Red Dog Concentrates originating at Vancouver Wharves would be handled under the same terms and conditions as the Red Dog Concentrates. It is not clear how many, if any, non-Red Dog cars were shipped prior to these amendments. Thereafter, through to the end of 2010, TML caused to be shipped from Vancouver Wharves thousands of railcars of non-Red Dog Concentrates, in addition to the Red Dog Concentrates. At all

material times Vancouver Wharves, in its shipping or loadout reports (the "Shipping Reports"), distinguished between railcars loaded with Red Dog Concentrates and those loaded with non-Red Dog Concentrates. [75] On March 4, 1992, effective June 4, 1992, a similar arrangement was made with BNSF. The Agreement, Cominco/BNSF was amended in a similar fashion. Tariff 1131 [76] In answer to para. 7 of Part 1 of the Amended Third Party Notice, CN says that the tariff which published the rate for the Leg 2 movement, CN Tariff 1131, was published effective January 13, 1993 or earlier. It was initially created by CN to be an internal CN document to correspond with the terms of the Cominco/CN Switching Agreement and to facilitate CN's billing to TML of the Red Dog and non- Red Dog railcars. [77] CN Tariff 1131 contained the following terms: (a) it applied to traffic exchanged between CN and BNSF on Brownsville exchange track; (b) it was applicable only on BNSF supplied railcars; (c) it was applicable only on traffic originating at the Red Dog Mine; (d) it applied only for the account of TML when freight charges were billed directly for their account; (e) the rate was $123 per car from North Vancouver B.C. to New Westminster, B.C. [78] CN Tariff 1131 did not accurately record the terms of the Cominco/CN Switching Agreement with respect to: (a) the annual escalation of the rate for per-car

charges; and (b) the inclusion of non-Red Dog Concentrates. [79] At all material times after January 13, 1993, CN treated CN Tariff 1131 as the manifestation of the Cominco/CN Switching Agreement with respect to the Concentrates. [80] After the Cominco/CN Switching Agreement was entered into, CN and TML agreed on price escalations such that the price per car reached $125 in 1994. Thereafter, and until March 31, 2005, the price per car was not escalated notwithstanding the terms of the Cominco/CN Switching Agreement. [81] Sometime in the 1990s, and by May 19, 1999, at the latest, CN provided TML with a copy of CN Tariff 1131. Thereafter, TML understood CN Tariff 1131 to be CN's manifestation of the Cominco/CN Switching Agreement. This may be the source of CN's error in failing to raise the rate annually in line with the CPI. [82] At all material times CN and the other carriers in the network which made up TML's transportation route for Concentrates from Vancouver Wharves to Trail, B.C. relied on the Shipping Reports provided to all of the parties and carriers by Vancouver Wharves. Those reports provided the number and identity of the loaded railcars moving from Vancouver Wharves to BCOL, then CN and then BNSF for movement to Trail, B.C. "Handshake" Agreement [83] There was considerable evidence on the subject of a "handshake" agreement. Despite some proof from some people, the

whole thing went nowhere. Mr. Murphy of TML, thought he had dealt with Mr. Wyckoff of BNSF, but when pressed he denied that there was ever a handshake agreement. He said that was not the way Cominco did business. Mr. Wyckoff denies having anything to do with such an agreement and said he never had the authority to make such a deal. There are loose ends in the proof - "Copper Matte" gets in to the contract somehow - but the upshot of the whole "handshake" agreement is that there may have been a discussion about the arrangement but that the only reliable evidence is that which can be inferred from the February/March 1992 amendments that the Red Dog and non-Red Dog Concentrates would be dealt with the same way. That should have put the end of the Red Dog/non-Red Dog issue, although it crops up time and again in the submissions. [84] Through the 90s to November 29, 1999, the situation was that CN (which had to be constantly reminded to render its bills) was delinquent again and again, leading to a letter from Rose Katnich of Cominco. [85] Sometime in the 1990s, on a date unknown to CN, it is alleged that TML instructed Vancouver Wharves to no longer send the Shipping Reports for non-Red Dog Concentrates to CN. In doing so, TML, according to CN, eliminated the input that CN needed to allow it to invoice TML pursuant to the Cominco/CN Switching Agreement, as amended, for those

railcars carrying non-Red Dog Concentrates. [86] As a result of TML's alleged concealment of the Shipping Reports for non-Red Dog Concentrates, which is not admitted, CN did not receive any switch revenue for the Leg 2 movement of non-Red Dog Concentrates from TML from sometime in the 1990s to March 31, 2005. During that period of time TML was aware that CN was not receiving any revenue for the Leg 2 movement of its non-Red Dog Concentrates but made no effort to notify CN of same. This was the subject of a counter-claim that has been settled. BCOL Acquired [87] In answer to para. 9 of Part 1 of the Amended Third Party Notice, CN says that it acquired the property and assets of BCOL effective April 1, 2005. From and after "that date it performed both the Leg 1 and Leg 2 movements". [88] In answer to para. 10 of Part 1 of the Amended Third Party Notice, CN says that, at all material times, TML was aware that, after April 1, 2005, TML was no longer paying switch charges' monies to CN for the Leg 2 Movement and that the plaintiff was paying CN for the Leg 2 movement. TML denies knowing this. [89] In further answer to para. 10 of the Amended Third Party Notice, CN gave notice to TML on November 25, 2005, that as of April 1, 2005, TML was no longer responsible for CN's switch charges on Red Dog concentrate cars that were previously billed under CN Tariff 1131. CN, acting

unilaterally, set up a system as follows: (a) from that point forward CN would no longer issue invoices to TML for the Leg 2 movement of Red Dog concentrate cars pursuant to the Cominco/CN Switching Agreement, as amended, or CN Tariff 1131; (b) from that point forward CN would instead issue invoices to BNSF for the combined Leg 1 and Leg 2 movement of Red Dog concentrate cars; pursuant to the Canada Transportation Act and the Railway Interswitching Regulations, and (c) CN's obligations, as far as CN was concerned, to TML under the Cominco/CN Switching Agreement, as amended, and/or CN Tariff 1131, were at an end. [90] TML received CN's notice. It did not accept it as notice of the termination of the Cominco/CN Switching Agreement, as amended, or CN Tariff 1131. [91] At no material time following CN's notice to TML did TML raise the subject with CN of CN's switch charges for Leg 2 Movements for non-Red Dog Concentrates or the Handshake Agreement. [92] In answer to para. 11 of Part 1 of the Amended Third Party Notice, CN says that at all material times, the plaintiff was aware that, after April 1, 2005, TML was no longer paying monies to CN for the Leg 2 movement of Red Dog Concentrates and that the plaintiff was paying CN for the combined Leg 1 and Leg 2 movements of Red Dog Concentrates. [93] In answer to para. 12 of Part 1 of the Amended Third Party Notice, CN says that, at all

material times, TML was aware that, after April 1, 2005, the plaintiff was being invoiced by CN for the combined Leg 1 and Leg 2 Red Dog Concentrates movements. [94] In answer to para. 13 of Part 1 of the Amended Third Party Notice, CN says that it was consistent with the terms of the Cominco/CN Switching Agreement, and in particular the provision that CN comply with the provisions of the National Transportation Act of 1987 and its successor statutory provisions, for CN to invoice the plaintiff for the combined Leg 1 and Leg 2 movement of Red Dog Concentrates after April 1, 2005. [95] CN further answers to the whole of the Amended Third Party Notice, that TML was, at all material times, aware that as of April 1, 2005, the combined Leg 1 and Leg 2 movements of Red Dog Concentrates fell under the jurisdiction of the Canada Transportation Act and the Railway Interswitching Regulations made thereunder. TML denies this. [96] The Canada Transportation Act, as successor legislation to the National Transportation Act of 1987, provides, at s. 127(3), that a railway company shall not transfer traffic at an interchange except in accordance with the regulations. The Railway Interswitching Regulations SOR/88-41 prescribe the rates that a railway company must charge for performing interswitching services. TML denies this and says that s. 126(1) governs this relationship. [97] At all material

times with respect to Red Dog concentrate cars CN says it has invoiced the proper party for the appropriate transportation and related services in the prescribed amount and, in doing so, acted within its contractual rights and statutory obligations. With respect to non-Red Dog concentrate cars, from sometime in the 1990s, on a date unknown to CN but known to TML, to March 31, 2005, CN did not invoice any party, and correspondingly did not receive any payment, for that traffic, but at all other times invoiced the proper party for the appropriate transportation and related services in the prescribed amount and, in doing so, acted within its contractual rights and statutory obligations. [98] If the notice given by CN to TML on November 25, 2005 constituted repudiation by CN of the Cominco/CN Switching Agreement, as amended, or CN Tariff 1131, CN says that repudiation was accepted by TML as part of: (a) Its undisclosed agreement with BNSF regarding the payment for switch services for non-Red Dog Concentrates on Leg 2; (b) Alternatively, as part of TML's desire to avoid payment to CN of switch charges for non-Red Dog Concentrates on Leg 2; (c) Alternatively, as part of TML's desire to avoid payment to CN of switch charges for Red Dog Concentrates for the combined Leg 1 Leg 2 movements; and (d) A conscious strategy to do nothing. [99] By virtue of the Cominco/CN Switching Agreement,

as amended, or CN Tariff 1131, TML owed a duty of good faith to CN in the performance of the terms of the Cominco/CN Switching Agreement, as amended, or CN Tariff 1131. CN says TML was in breach of that duty as a result of which CN lost the opportunity to invoice TML for switch charges for non-Red Dog Concentrates on Leg 2. [100] CN seeks a set-off of the amount of lost revenue arising from the breach of duty by TML against any amount that may be found owing by CN to TML pursuant to the Amended Third Party Notice. [101] In the event that TML is entitled to any payment to it by CN pursuant to the Amended Third Party Notice, that amount must take into account the per/car payments which TML avoided having to pay to Vancouver Wharves, as escalated, pursuant to its contract with Vancouver Wharves, and the per/car payments that it would have had to pay CN, as escalated pursuant to the Cominco/CN Switching Agreement. [102] TML replies to all of this, that any of the parties to the transportation network had the ability to request or instruct Vancouver Wharves as to whom it wanted load out notices sent to, and CN and its representatives from time to time between 1990 and 2005 requested and instructed Vancouver Wharves to make changes to the CN personnel recipients based on their internal requirements. TML took no role in those instructions. [103] TML did not instruct Vancouver Wharves

to not send or cease sending load out notices to CN with respect to the movement of Specialty Concentrates. At all material times CN knew that it was moving and switching railcars with Specialty Concentrates and it could have requested of Vancouver Wharves that it be added to the direct load out notice list. [104] TML did not conceal any shipping information from CN nor was it aware that CN was not receiving any revenue for the Leg 2 Movement, if that was in fact the case. [105] At all material times, CN had or had the ability to access sufficient information to generate accounts for the movement and switching of railcars with Specialty Concentrates, and may have done so for all or some of the period between 1990 and 2005. TML denies that CN did not receive any switch revenue between sometime in 1990 and March 31, 2005 and puts CN to the strict proof thereof. [106] After April 1, 2005, CN continued to receive the same information with respect to the loading out of both Concentrates and Specialty Concentrates and began billing BNSF for the Leg 2 Switching services. [107] As of April 1, 2005, CN wrongfully and in breach of the Cominco/CN Switching Agreement, unilaterally implemented a new switching regime, and without notice to either TML or BNSF, and started charging BNSF as linehaul carrier a $315 per car switch charge under the purported authority of the Canada Transportation

Act and Railway Interswitching Regulations. [108] CN's unilateral changes and the billing of switching charges to BNSF as linehaul carrier were also not in accord with the contractual terms contained in the Cominco/BNSF Transportation Agreement. [109] CN did not advise TML or BNSF of CN's changes. [110] CN ceased providing accounts to TML for the Leg 2 switching and TML in or about October 2005. TML inquired of CN and requested CN accounts for what TML understood were due and in November 2005, CN notified TML that it had implemented changes. [111] TML did not fully appreciate the impact of what CN had unilaterally and wrongfully done, including the fact that TML was responsible for the unauthorized $315 per car charges which were far in excess of the Contractual Rate in place with CN. [112] The Canada Transportation Act and Railway Interswitching Regulations did not and do not provide any authority for a railway to alter the terms of a confidential contract. [113] TML denies that it owed a duty of good faith to CN with respect to the Cominco/CN Switching Agreement or any other agreement respecting the movement of Concentrates or Specialty Concentrates over Legs 1-3. [114] In the alternative, if TML owed a duty of good faith to CN with respect to the Cominco/CN Switching Agreement and the movement of Concentrates or Specialty Concentrates over Legs 1-3, then it discharged that

duty. [115] At all material times CN had the obligation to monitor its own contracts and cannot rely on its failures, particularly after the passage of a significant amount of time, to now seek payment, if any is actually due. [116] If CN did not receive any revenue for the movement or switching of Specialty Concentrates, which is not admitted but denied, then it was on account of CN's failure to collect, input and bill for these services and was not caused by any fault of TML. [117] It was the responsibility of each party to the transportation network that they obtain whatever information it required and by whatever means each party determined so as to bill for their respective services. [118] Further, TML says that CN, for reasons unknown to TML, decided to base its billings for the CN switching services on CN Tariff 1131 rather than the Cominco/CN Switching Agreement. [119] Any failure to augment the CN Tariff 1131 was on account of CN's fault or neglect. [120] In the event that CN was not paid for any of the switching services it provided then it is not pursuant to any obligation owed by TML to CN or any fault on the part of TML and TML relies on the provisions of the Negligence Act, RSBC 1996 c. 333. [121] If CN's notice to TML on November 25, 2005 constitutes a repudiation by CN then at no time did TML accept such repudiation. [122] At no time did TML communicate to CN or

any other party to the transportation agreements in place that it was accepting any of the unilateral changes made by CN. Nor did BNSF accept the unilateral changes. [123] Further, TML was not in a positon to accept the imposed CN terms as they also violated the provisions of the Cominco/BNSF Transportation Agreement and were significantly more onerous than the terms of the Cominco/CN Switching Agreement. [124] In particular, none of what TML did or failed to do amounts to TML disaffirming the Cominco/CN Switching Agreement or any other agreement pertinent to any Leg 1 or Leg 2 switching by CN. History [125] The controversies involved in this action originated some thirty years ago. The Writ was filed February 6, 2010. There have been a number of amendments to the original pleadings. There is, nevertheless, a seriously incomplete documentary record. Some of the parties to this lawsuit have attempted to weave stories out of the facts in this case that reflect badly on some of the persons or entities involved. It is clear that none of those stories assist in getting to the bottom of things. It is, as I have said, a case about mistakes and about what can be done about them. [126] Coincident with the development of the Red Dog Mine by Cominco Alaska Incorporated ("CAI") a related company to TML, CAI and TML sought to establish a relationship with a bulk terminal in the vicinity of

Vancouver, British Columbia that could receive and handle its lead and zinc Concentrates from Alaska (the "Concentrates") and from there, TML sought to establish a transportation system to move the Concentrates to the Final Destination, TML's smelting facilities at Trail, British Columbia. [127] The transfer involved the movement of lead and zinc Concentrates from central Alaska, initially the Red Dog Mine, to Trail, British Columbia where Cominco Ltd., (referred to as TML), maintained a smelter. The network involved moving lead and zinc Concentrates by truck to the coast of Alaska, where they were loaded onto ships or barges to be transported to Vancouver. The port in Alaska was only open for about 100 days a year, which meant that the amount of material that had to be moved, in the time available, would be enough to ensure a good supply throughout the year. The material was stockpiled in North Vancouver and then moved by train, at intervals, to Trail, where it was processed into finished metal. [128] The transportation network came about when Cominco Alaska Inc., a company related to what was then called "Cominco" but which is now known as TML, and which will be referred to in that way, in these reasons. TML sought to establish a relationship with a bulk terminal in or near Vancouver, B.C., an essential link in a planned network to move lead and zinc Concentrates from the

mine in Alaska to the smelter in Trail, B.C. The planning for this network took some years. As early as September 5, 1984, TML by its manager of transportation, John Murphy, communicated with Vancouver Wharves: to submit a proposal outlining the cost and conditions to trans-ship zinc and lead concentrates from the Red Dog Mine in Alaska. Those concentrates were to be unladed and stored at the Vancouver Wharves terminal and shipped, on a regular delivery basis, to the Cominco plant in Trail, British Columbia [129] In February 1987, TML communicated with the Burlington Northern Railway, which merged, subsequently with the Atchison Topeka and Santa Fe Railroad, and will hereinafter be known as "BNSF" to explore a transportation agreement to move the lead and zinc Concentrates from New Westminster to Waneta, British Columbia. BNSF was not the only railway TML contacted. It also considered the Canadian Pacific Railway "the CPR" which actually had track directly into the Trail smelter. For a combination of reasons, largely related to distance and weather, and to the availability of land sufficient to build a transfer facility, TML, ultimately selected BNSF for the long haul part of this transportation network. [130] The transportation network from Vancouver Wharves to Waneta was initially established to take lead and zinc Concentrates from TML's Red Dog Mine in Alaska. The company

owning the mine, and therefore the shipper of the Red Dog Concentrates, was Cominco Alaska Inc. The shipments were transferred to TML, its companion company, at the point when the railcars were transferred from BCOL to CN. It then went on to the smelter in Trail. [131] The Red Dog Concentrates were intended to provide a relatively steady supply to the Trail smelter, whereas in the early days of their movement the non-Red Dog Concentrates were typically smaller packages and less frequent in origination. For various reasons, such as avoiding cross-contamination, TML required that the Red Dog and non-Red Dog Concentrates be segregated and never combined for purposes of moving by rail from Vancouver Wharves to Trail. Thus, there were separate load-out reports issued by Vancouver Wharves with separate numbering sequences for the two streams of Concentrates. TML was contractually bound to deliver the Red Dog Concentrates to BNSF. The non-Red Dog Concentrates could move by other means. Every car of non-Red Dog materials was a bonus to BNSF. Cominco/Vancouver Wharves Contract [132] CAI and TML concluded a contract with Vancouver Wharves in or about January 5, 1989, referred to as the Cominco/Vancouver Wharves Terminal Facility Agreement. That agreement was to commence July 1, 1990, and was for a period of 20 years, expiring June 30, 2010. [133] In or about July 1990, TML entered into a

conditional transportation agreement with the BNSF Railway Company ("BNSF") to move the Concentrates to the Final Destination, the contract being Transportation Contract ICC-BN-C-36584, as amended from time to time (the "Cominco/BNSF Transportation Agreement"). [134] The Cominco/Vancouver Wharves Agreement, (CB-1-20) was a contract among three parties: Vancouver Wharves, Cominco Alaska Inc. and TML. The agreement does not specify the origin of the Concentrates that fell under the agreement, that is, it does not refer specifically to Red Dog and non-Red Dog Concentrates. An examination of the parties to the agreement, however, does suggest that Cominco Alaska was the developer and operator of the "Red Dog project" specifically, and the reference to tender under s. 5.1 makes it clear, by inference, that the responsible party is Cominco Alaska - the owner of the Red Dog Concentrates. This was made in 1990. Circumstances changed shortly, in 1992 as will be shown. Vancouver Wharves was to provide railway switching. The arrangement sets out the fee for "railway switching" and sets out the increase annually per the CPI. Cominco/BNSF Contract [135] The next contract was between Cominco and BNSF. It defines "Concentrates" as "lead and zinc Concentrates". It separately defines "Red Dog Concentrates as "Concentrates" from the Red Dog Mine." The agreement provides that BNSF "will not

absorb charges of connecting lines at origin. [136] BCOL/CN, which were jointly represented in this proceeding as a result of the merger of CN and BCOL in 2004, says that this meant that if BNSF was charged and paid for switching services, it would pass those charges on to Cominco, and thereby not "absorb" the charge. TML says the clause was to preclude the rendering of any bills to BNSF. Because of the way the contracts were drawn, BNSF was not to receive any bills from any connecting carriers, including BCOL. If BNSF was charged and paid for such charges it would pass them on to TML. Mr. Wyckoff said this was the way railways often dealt with through movements involving other railways. But this was not a through network and it is not helpful to revert to the way things are done in other circumstances. There was nothing to "absorb" or pass on. Had BNSF attempted to pass on the BCOL bills to TML they would have been immediately protested, and the issue would have been squarely addressed. Unfortunately the bills by BCOL went to BNSF and were simply paid. No other party had any idea about this. [137] The Concentrates arrived by vessel at the Terminal Facility of Vancouver Wharves in North Vancouver, British Columbia, where the Concentrates were discharged, stored and subsequently reloaded into railcars, which were then moved from the Terminal Facility that was served by BCOL

(B.C. Rail Ltd.). They then went to the BCOL/CN Interchange, a point of interchange with the CN for furtherance by CN to the CN/BNSF Interchange, or the Brownsville interchange which was only an operational distinction. These were located at New Westminster, British Columbia, and it was the point of origin of BNSF's movement (The "BNSF Movement") under the Cominco/BNSF Transportation Agreement. [138] BNSF as linehaul carrier provided in the Cominco/BNSF Transportation Agreement that the only charges payable by TML and applicable to the BNSF Movement would be the specified transportation rate from New Westminster to the Final Destination and a transportation surcharge. [139] The Cominco/BNSF Transportation Agreement specifically provided that BNSF would not absorb charges of connecting lines at origin, that is, BCOL and CN. [140] As BNSF was not absorbing the charges of the connecting lines at origin, TML and CAI arranged for transportation of the Concentrates by the connecting line carriers by: (a) Contracting with Vancouver Wharves through the Cominco/Vancouver Wharves Terminal Facility Agreement which engaged and arrange with BCOL for the movement of the railcars and Concentrates to and from the Terminal Facility and the BCOL/CN Interchange, and (b) Contracting with CN for the movement of the railcars and Concentrates to and from the BCOL/CN Interchange and the CN/BNSF

Interchange at New Westminster, British Columbia. [141] Neither TML nor CAI had any direct contractual relationship with BCOL for the movement of railcars or Concentrates. [142] TML or CAI did not at any time provide BNSF with any authority to accept, pay or administer any charges from either of the connecting lines at origin, being BCOL and CN. [143] At the time that CAI and TML entered into the Cominco/Vancouver Wharves Terminal Facility Agreement in 1989, Vancouver Wharves and BCOL were unrelated arms length companies. In or about 1993, Vancouver Wharves and BCOL became related companies. [144] At all material times, and pursuant to the Cominco/Vancouver Wharves Terminal Facility Agreement, it was the obligation of Vancouver Wharves to make arrangements with and pay BCOL for the switching and movement of railcars and Concentrates to and from the Terminal Facility to the BCOL/CN Interchange, all of which it did. [145] Vancouver Wharves and BCOL entered into a contract ("Contract BP-113") for the movement or switching of TML's Concentrates between Vancouver Wharves and the BCOL/CN Interchange and the return of empty cars. TML was not privy to this contract and did not know the terms of Contract BP-113 until after the commencement of this litigation. Vancouver Wharves/BCOL Contract [146] The Vancouver Wharves/BCOL contract was a contract made July 17, 1990, after the

Concentrates began moving. TML was not a party to this agreement which was, actually, a sub-contract. It is notable that this contract was not specific as to Red Dog or non Red-Dog Concentrates. There may be an inference to be drawn from the fact that the Agreement speaks of Concentrates received by bulk barge from Alaska, but the Agreement is otherwise not specific to the Red Dog Mine. This "oversight" if such it was, was remedied on February 20, 1992, by letter to CN and on March 4, 1992, by amendment of the BNSF contract. There is no evidence that this made the slightest difference in the way in which the Concentrates were treated. [147] BCOL pleads, in its second amended Response to Civil Claim that to the extent that the number of railcars deviated from "10 car blocks" (Vancouver Wharves/BCOL Agreement) it put BCOL to additional work from that set out in the Agreement. The pleading is to the effect that in addition to the transportation services provided by it in moving railcars to and from the BCOL/CN interchange, it performed services between its yard adjacent to the Vancouver Wharves property and the Vancouver Wharves interchange. It says these additional services were put upon BCOL by the failure of Cominco and/or Vancouver Wharves to adhere to the terms of the Vancouver Wharves/BCOL Agreement, in terms of the delivery of car blocks. This is raised long after the

facts, and is not pled in a fashion that gives rise to a claim. [148] The terms of BP-113 was, like the Cominco/Vancouver Wharves Terminal Facility Agreement, for a term of 20 years. The initial rate was specified as C$41.50 per railcar increasing annually based on the CPI. [149] The Cominco/Vancouver Wharves Terminal Facility Agreement provided that the charges for railway switching were to begin at a base rate of C$45.00 per railcar as of 1988 and to be subject in each year to adjustment in accordance with the CPI. This is the only arrangement TML had for the movement of the Concentrates by rail and the return of empty cars from Vancouver Wharves to the BCOL/CN Interchange. [150] Vancouver Wharves invoiced TML and TML paid Vancouver Wharves for the movement or switching of railcars to and from Vancouver Wharves via BCOL and the BCOL/CN Interchange. [151] TML was unaware of the difference in the rate in Contract BP-113 and those in the Cominco/Vancouver Wharves Terminal Facility Agreement (C$45-C$41.50) and that Vancouver Wharves was apparently charging a few dollar premium for the switching. [152] TML or CAI did not at any time ever provide any authority to BCOL to charge them either directly or indirectly by invoicing or charging BNSF, for any switching or other fees or to render any charges with respect to the movement of the Concentrates and railcars. [153] BCOL did not

publish any toll or tariff applicable to the movement of the railcars and Concentrates that are the subject of this action. Limited Distribution Tariff [154] A railway can only charge a shipper by way of a public tariff or a confidential contract. A limited distribution tariff has been found to be more akin to a confidential contract than a public tariff. In Maville Associates Inc. an application was made to the agency requesting copies of CN's limited distribution tariff. CN refused. The agency held: As a result the Agency finds that although LDTs contain the word tariff in name, LDTs in fact have the attributes of confidential contracts and therefore, LDTs are not subject to subsection 117(4) of the CTA [Decision No. 9-R-2009 Canadian Transportation Agency, TML Books of Authorities ("TML BOA"), Tab 40] Asarco had neither a public tariff nor a confidential contract. BP1131 was a kind of example of a limited distribution tariff. Neither can take the place of a confidential contract. Agreement between Cominco and CN [155] The "Cominco/CN Agreement" was set out in a series of letters. CN's letter of May 29, 1990 set out the terms. It specifically referred to Red Dog traffic, and set out where the services were to be provided " originating at Vancouver Wharves [and] delivered to the BN Railroad at New Westminster, B.C. The charge was set out at $110 per car. There was an

escalation clause in line with the CPI. The term of the agreement was for "as long as" Cominco has a contract arrangement with BNSF". [156] TML entered into the Cominco/CN Switching Agreement with CN for the switching or movement of the railcars and Concentrates received from BCOL at the BCOL/CN Interchange to the CN/BNSF Interchange and the movement of empty railcars from the CN/BNSF Interchange to the BCOL/CN Interchange. [157] The rates provided for in the Cominco/CN Switching Agreement were subsequently published by CN in a form of tariff, that, like the Cominco/CN Switching Agreement, has never been terminated or revoked and continues such as it is, in full force and effect. [158] CN provided the CN Switching Services and moved the Concentrates and railcars as set out in para. 11(a) of the Third Amended Notice of Civil Claim. [159] TML or CAI did not at any time provide any authority to CN to charge or invoice BNSF for any switching or other fees with respect to the movement of the Concentrates and railcars covered under the Cominco/CN Switching Agreement. [160] Following the Restated Transaction Agreement between CN, CNAL, BCRC and BCR Properties as set out in para. 15 of the Third Amended Notice of Civil Claim, CN undertook the movement of the Concentrates and railcars from the Terminal Facility to the CN/BNSF Interchange in New Westminster, British Columbia under the

terms of the Cominco/CN Switching Agreement. [161] By early 2005, CN stopped sending invoices to TML with respect to the Cominco/CN Switching Agreement, and, upon inquiry by TML, CN, in or about November of 2005, advised TML that TML was no longer responsible for the switch charge on the railcars previously billed under CN Tariff 1131 and that all charges incurred for the switching of these cars by CN were to be invoiced to BNSF as linehaul carrier per Canada Transportation Agency specified rates. [162] At no time did CN advise TML that it had unilaterally decided to bill TML, indirectly through invoices rendered to BNSF, for the switching services formerly provided by BCOL to Vancouver Wharves under Contract BP-113 to and from the Terminal Facility and the BCOL/CN Interchange and the switching services CN provided to and from the CN/BNSF Interchange, at a rate higher than, and that did not accord with, the Contractual Rate and related lawful tariffs. [163] TML says that it did not, nor to its knowledge did Vancouver Wharves, disclose to BNSF and nor did BNSF inquire as to: (a) The terms of the Cominco/Vancouver Wharves Terminal Facility Agreement; (b) That Vancouver Wharves was paying BCOL for the BCOL Switching Services; (c) The existence of the arrangements between Vancouver Wharves and BCOL for provision of the BCOL Switching Services; (d) The payments received by BCOL from

Vancouver Wharves on account of the BCOL Switching Services; (e) The terms of the Cominco/CN Switching Agreement. [164] BNSF did know or ought to have known that: (a) It was TML and/or CAI's responsibility to arrange and pay for the movement of the Concentrates and railcars to and from the Terminal Facility and the CN/BNSF Interchange; (b) BCOL and CN were the carriers at origin delivering the Concentrates and railcars from the Terminal Facility to the CN/BNSF Interchange; (c) It had agreed not to be responsible for any charges relating to the movement by BCOL and CN as origin carriers; (d) It had no authority to accept any charges on behalf of TML or CAI from BCOL or CN as origin carriers. [165] In answer to paras. 18 and 20 of the Third Amended Notice of Civil Claim TML had no knowledge that BCOL billed and BNSF paid BCOL for any switching charges in relation to the BCOL Switching Services and further that, between 1990 and until July 22, 2009, BNSF: (a) Never advised TML or CAI that it had been receiving and paying bills or invoices from BCOL with respect to the BCOL Switching Services or any services; and (b) Never provided TML or CAI with any invoice with respect to services and invoices alleged to have been rendered by BCOL to BNSF with respect to the BCOL Switching Services. [166] As TML and/or CAI were already paying for the BCOL Switching Services by virtue of its

arrangements with Vancouver Wharves under the Cominco/Vancouver Wharves Terminal Facility Agreement, TML and/or CAI were never alerted to the possibility that BCOL was invoicing BNSF and that BNSF was paying BCOL also with respect to the BCOL Switching Services. [167] TML says that at all times it paid for all services that it was required to pay for with respect to the BCOL Switching Services and that it has no obligation to the plaintiff or any party with respect to charges allegedly billed by BCOL and paid for by BNSF allegedly on account of the same BCOL Switching Services. [168] After April 1, 2005, there was effectively a single railway company moving TML's Concentrates from Vancouver Wharves to the CN/BNSF Interchange. [169] In answer to para. 26 of the Third Amended Notice of Civil Claim, TML was unaware that for the period April 1, 2005 to September 30, 2007 that CN billed and BNSF paid CN for switching charges covered by the Cominco/CN Switching Agreement. Red Dog / non-Red Dog Concentrates [170] The argument related to Red Dog and non-Red Dog Concentrates turns on the proposition that the purpose of the Cominco/Vancouver Wharves agreement was to move Red Dog Concentrates. Its definition section is not so narrow, however, and the definition is "Concentrates means lead and zinc Concentrates including middlings, which are delivered in pursuance of Section 5.1 hereof."

Section 5.1 is specific to Red Dog materials. They were, however, the only Concentrates in the contemplation at the time. Cominco began moving non-Red Dog Specialty Concentrates by early 1992. A letter agreement was made at the time between Cominco and CN and Cominco and BNSF to move these specialty Concentrates once they began going through the system, on the same terms as the Red Dog Concentrates. [171] There is no evidence that the rates in the "gap" between the execution of the contracts and the amendments, about a year and a half, made any difference. [172] The BCOL contract was a sub-contract to Vancouver Wharves. It took Concentrates subject to that contract. It had no relationship with TML which was entitled to expect that the rates it paid for traffic were to be those set out in the subcontract. The rates for non-Red Dog have not in any way been shown to be different from those for Red Dog. BCOL was in no position to bill any amount it chose to BNSF in the circumstances. It was not entitled to bill $208 on an analogy to Asarco's tariff. [173] The effort that went into the arrangement of the separate rail agreements should have made it clear that the one thing to be avoided was the charging of one railway by another for anything. This was explicit on the face of the contract, which was always in BNSF's hands. That $208 was paid for every car was a surprise. This did not come to the attention of BNSF for reasons that are inexplicable, but must be accepted given that no party is in a position to disprove it. [174] BNSF pleads that there is no contract, no tariff, and no request for services by it of BCOL in relation to non-Red Dog Concentrates. BCOL says this makes it free to unilaterally, establish a contract rate different from that found in contract No.

113. The tariffs in play have been described as Tariff 725 and 725A. These are Asarco tariffs of no pertinence to the BCOL arrangement. [175] This allusion to BCOL Tariff 725 requires some explanation. There was another shipper on this network, Asarco Inc. It operated a smelter in East Helena, Montana. From August 1992 until sometime in 1999 it took some of the Concentrates that were loaded in Vancouver, and had a transportation agreement similar in nature to the Cominco agreements. There is no evidence as to what the arrangements with Cominco were, but it stands to reason that the Concentrates were purchased from TML, at least in part, if not altogether. These Concentrates would be moved by BCOL from the terminal facility to the BCOL/CN interchange, then by way of CN to the CN/BNSF interchange and from that point would move along the same track as the TML's shipments to Kettle Falls, where the Concentrates would go east and south to East Helena, Montana. On June 30 of 1995 BCOL published (an amended Tariff 725. Item 230(l), provided: "3. Concentrates, viz: Lead and/or Zinc in gondola railcars, originating at Industry served by BCOL, North Vancouver, B.C. and interchanged to CN, North Vancouver, B.C. for furtherance via BNSF to East Helena, Montana utilizing rates and conditions published in tariff BNSF No. 3558 series. BCOL switching charge at North Vancouver, B.C. will be

$208 per carload which includes inbound empty movement of railcars for loading." [176] The networks were identical until they reached Kettle Falls, when Asarco's Concentrates went east and south, while those destined for Trail went north to Waneta. [177] The material difference in the contracts is that the freight rate charged to Cominco was not to include the transportation charges of BCOL and CN. [178] BCOL raised essentially four bases on which its claims to the $208 per car rests. These arise against BNSF's admission that it made a "mistake". Implied Contract [179] The pleading is based on an implied contract between BNSF and BCOL. The submission goes as follows: a) There was an implied request for services of BCOL by BNSF. Mr. Jacobowski of BNSF confirmed that empty concentrate gondola cars were delivered to CN by BNSF in New Westminster in the expectation that CN would deliver them to BCOL in North Vancouver who would, in turn, deliver them to Vancouver Wharves. That expectation by BNSF also included the return of loaded cars by BCOL to CN for delivery to BNSF who would then earn its linehaul revenue. Indeed, the services of BCOL and CN were necessary in order for BNSF to earn its linehaul revenue. It was, therefore, in the business interests of BNSF to see that this was all carried out. The payment of the BCOL invoices is testament to the desire of BNSF to have BCOL's

services. b) Moreover, both Mr. Jacobowski and Mr. Wyckoff confirmed that rail carriers have common carrier obligations to receive connecting rail lines' traffic and to deal with it as instructed. c) Mr. Jacobowski also acknowledged that each carrier participant in the network was entitled to be compensated for its services. d) The above circumstances give rise to an implied contract as between BCOL and BNSF. [180] There was no tariff and particularly Tariff 725 had no application. [181] BCOL did not bill any carriers for the inbound movement of empty BNSF railcars. [182] The bills from BCOL to Vancouver Wharves and to BNSF showed on their face that they were for the movement of loaded BNSF railcars from the terminal facility to the BCOL/CN interchange. [183] The BCOL/CN theory depends on a "gap" in the Cominco/Vancouver Wharves Terminal Facility Agreement and the Vancouver Wharves/BCOL Freight Transportation Agreement. This "gap" never existed. It was an attempt to distinguish the bills by BCOL to Vancouver Wharves, on one hand, and to explain the bills by BCOL to BNSF, on the other. [184] In the result this theory has no evidentiary basis in light of the express terms of the transportation agreements between and among the parties and the lack of evidence proffered at trial by the very Cominco, Vancouver Wharves and BCOL representatives who would be expected to know. [185] The

notion of an implied contract turns on the rendering of services by one person who has requested the services to be rendered or has fully accepted them knowing they were not rendered gratuitously. There is no allegation of a request by BNSF to BCOL to perform the Leg 1 movement. [186] Insofar as BCOL is concerned, at the highest, BNSF knew only that Cominco (John Murphy) had made some type of arrangement concerning the movement of the railcars between the Terminal Facility and the CN/BNSF Interchange. But that limited knowledge does not equate to a "free acceptance" of anything by BNSF. There was no "implied contract". These were no gaps in the arrangement put in place by TML. There was nothing that could be levied by BCOL in the circumstances. It was not free to choose its own tariff or arrangement with BNSF, or any one else, it was a subcontractor to Vancouver Wharves. I had no business negotiating a rate outside the Cominco contracts with anyone. 49 USC 11705 [187] Both BCOL and CN plead " the applicable limitation period as set out in United States Code 49 USC 11705 ("Code") and submit that all or part of BNSF's claim is time barred. BCOL and CN say that the applicable limitation period pursuant to the Code is 3 years ". [188] However, by its express terms, the Cominco/BNSF Transportation Agreement was subject to the law of Canada, as were the agreements between Cominco, on

one hand, and Vancouver Wharves and CN, on the other, which included the Vancouver Wharves/BCOL Freight Transportation Agreement. [189] In the circumstances, the laws of the United States, statutory or otherwise, have no application to the Red Dog Transportation Network or to the parties to it. [190] Moreover, 49 USC 11705(a) provides, in part: "A rail carrier providing transportation or service subject to the jurisdiction of the Board under this part must begin a civil action to recover charges for transportation or service provided by the carrier within 3 years after the claim accrues ". [191] In theory, this provision might have had application to the relationship between Cominco and BNSF if, for whatever reason, the services provided by BNSF to Cominco took place in the United States under an agreement governed by the laws of the United States, and Cominco, for whatever reason, had failed to pay BNSF. However, those are not these circumstances. BNSF's claim, whether for mistaken payments or the more generic unjust enrichment, is not for " transportation or service provided by BNSF." AAR Rules [192] The issue that arises next in time is whether the claims made by BNSF are statute barred in whole or in part. There are three limitations possible. 49 USC 11705 is the first. The second of these the AAR rules. This is a system of rules to which the BNSF and CN are both members.

BCOL was not, but there is one account which shows it submitting to the jurisdiction of the AAR. In that particular circumstance, an account for $4,560 for switch charges from BCOL to BNSF was a duplicate for one of the cars, and as for the rest of them, it was out of time, that is, past the six months provided in the rules. BCOL submits that if BNSF could take exception to some of BCOL's switching charges, BCOL would have the benefit of that limitation as well. This appears to be the only example of the AAR applying its rules. BNSF took no exception to any other accounts on post audit. BCOL's submission indicates without explanation that the AAR rules were not apparently followed in the period 2000-2005. This one example of apparent submission to the AAR Rules does not change the fact that the Rules do not apply. It is anomalous and not reliable as a basis for an inference that it represents the true state of affairs. [193] The submission of BNSF is that the AAR rules had no application to the parties to the transportation system set up by TML. Each of the parties, Vancouver Wharves, CN and BNSF had separate individual contracts with TML. It was an express term of the TML/BNSF contract that it "will not absorb charges of connecting lines at origin". Each party was under separate obligations to TML. None of the agreements provided for joint performance of the transportation

obligations. None of the agreements contemplated or provided for any of Vancouver Wharves or BCOL, CN or BNSF to be responsible for or collect from or pay the transportation charges of any of the other of them. [194] The AAR Rules created a "clearinghouse" that involved reciprocal financial obligations and set these off against each other. [195] The three independent transportation agreements put in place by TML did not create reciprocal obligations among any of the parties involved. [196] For these reasons reference to the AAR Rule and common industry terms such as "linehaul carrier" "interline freight", "switching" and "switch carriers" have no application to the network put in place by TML. [197] The current version of the Rules indicates at Part 1 Rule 1 the right to offset which provides in part: "If all attempts fail, carriers have the right to offset any monies owed to them by carriers refusing to pay any interline freight, switching, overcharge claims, car service billing and car hire, car repair bills and freight loss and damage claims upon presentation of draft or bill for undisputed items if the items are presented in accordance with existing rules and procedures as provided for in the AAR Accounting Rules. [198] This right to offset contemplates mutual corresponding financial obligations between carriers. There would be no need for offset in the TML

agreements. [199] Under the terms of the separate independent transportation agreements no mutual or corresponding obligations arose between Vancouver Wharves and BCOL, CN and BNSF. There were no interline freight bills or switching bills contemplated between the parties to the TML transportation network. [200] There were no interline bills in the operation on the network. All the bills passing between BCOL and BNSF were settled between them directly, and not through the AAR clearinghouse. The six months limitation that applied under the AAR Rules had no application to the TML network. Limitation Act [201] The last of the objections is the Limitation Act. [202] The purpose of limitation periods is discussed in Canadian Imperial Bank of Commerce v. Green, 2005 SCC 60, [2015] 3 SCR 801: 57 This Court has generally recognized that limitation periods have three purposes known as the certainty, evidentiary and diligence rationales: Novak v. Bond, [1999] 1 S.C.R. 808, at paras. 64-67, per McLachlin J.; M. (K.) v. M. (H.), [1992] 3 S.C.R. 6, at pp. 29-31, per La Forest J. Limitation periods serve "(1) to promote accuracy and certainty in the adjudication of claims; (2) to provide fairness to persons who might be required to defend against claims based on stale evidence; and (3) to prompt persons who might wish to commence claims to be diligent in pursuing them in a timely fashion": P.

M. Perell and J. W. Morden, The Law of Civil Procedure in Ontario (2nd ed. 2014), at p. 123. 58 Clearly, it is desirable that litigation be accurate and certain, given that the passage of time dims memories and erodes evidence, and also that the risk of error grows as an adjudicator is further removed from the cause of action. Furthermore, after a certain time, possible defendants may be unaware of the need to preserve potentially enlightening or even exonerating pieces of evidence. Finally, it is appropriate to expect plaintiffs to assert their claims diligently and to be cognizant of their circumstances and of the extent of their control over them. Modern limitations legislation is therefore based on a recognition that limitation periods, in order to be effective, need to be final. This is the other side of the coin, the practical consequence of limitation periods that can make the application of a limitations statute seem harsh: Novak, at para. 8, per Iacobucci and Major JJ., dissenting. [203] The appropriate Limitation Act issue came into force on June 1, 2013. All of the allegations occurred before June 1, 2013, and this action was commenced before June 1, 2013, on February 10, 2010. Therefore the Limitation Act, RSBC 1996 c. 266, is applicable. This is agreed to by BNSF. [204] BNSF acknowledges that subject to the discussion on trusts, a 6 year limitation provided in s.

3(5) of the Limitation Act would apply generally. BCOL submits that a 6 year period applies. [205] BNSF argues, however, that a 10 year period applies, based on s. 3(3)(c) and (d) of the Limitation Act, predicated on the court declaring a substantive constructive trust over payments by BNSF, the precise amount and timing of which is unknown. [206] The postponement argument is a reason for the side-stepping argument that was made in Sun-Rype, 2008 BCCA 278, but without apparent success. Under the heading "Side-Stepping of the Limitation Period", the court wrote: The defendants also submit that the plaintiffs' claim for a constructive trust is simply an attempt to "piggy-back" a claim in equity (for a remedial constructive trust) on common law claims based on the same underlying facts for the sole purpose of taking the benefit of the extended limitation period that applies to breaches of trust under s. 3(3) of the Act. The defendants submit that the court should not countenance this thinly disguised attempt to "side-step" the limitation periods in the Act. They say that, historically, such side-stepping was not permitted and they refer to an article by S.J. Swadling, "Limitation", in Birks and Pretto, eds., Breach of Trust (oxford: Hart Publishing, 2002), at 323-34 in that regard. It does not appear that the side-stepping argument was raised before the trial judge. In our view,

it is simply a reformulation of the defendants' argument that the plaintiffs' claim in this case does not sound in trust and, thus, does not fall under s. 1 and 2. 3(3) of the Act. We have already dealt with that submission at length. To the extent that the side-stepping argument is directed at the potential for plaintiffs to make a claim for a remedial constructive trust as a ruse to avoid a limitation period which would otherwise be applicable under the Act, it is open to defendants to apply to strike the action under Rule 18A on that basis, to strike the pleadings under Rule 19(24) or to request the trial judge to deny a remedial constructive trust at the conclusion of the trial on the basis that it is not the appropriate remedy. [207] The basis on which a constructive trust can't be granted is that a monetary award would be inadequate or inappropriate. In BNSF Railway v. TML Ltd., 2016 BCCA 350, the court said the following: 6. Contrary to the plaintiff's submission, all constructive trusts (whether remedial or institutional) require that the plaintiff show a monetary award would be inadequate or inappropriate, and identify property or proceeds thereof to which the plaintiff's labour or money contributed. The 'process' of tracing is available to enable a plaintiff to determine whether the second condition can be met. There is no evidence to which we have been referred to indicates the funds are or are not traceable in this case, but a court does not refer to evidence in deciding an application under Rule 9-5.

7. There is clear authority for the proposition that the availability of a constructive trust need not be decided on the basis of pleadings. Being dependent on facts found at trial, the issue can be resolved once the plaintiff is able to make an "informed choice" prior to final judgment being pronounced: Tracy; Waxman; Lac Minerals. [208] I decline to grant a remedial constructive trust in this case. The precondition for the remedy has not been met. It is not the appropriate remedy because it has not been shown that a monetary award would be inadequate or inappropriate. The case falls under the limitation act provisions providing a 6 year limitation. [209] The argument turns primarily on the question of postponement of the Limitation Act. BNSF maintains that postponement is based generally on lack of knowledge on the part of the claimant. [210] Section 6(3)(f) provides that the " running of time with respect to the limitation periods [for relief from the consequences of a mistake] is postponed as provided in subsection (4) ". [211] Section 6(4) provides that the "... action and those facts within the plaintiff's means of knowledge are such that a reasonable person, knowing those facts and having taken the appropriate advice a reasonable person would seek on those facts, would regard those facts as showing that " an action on the cause of action would, apart from the effect of

the expiration of a limitation period, have a reasonable prospect of success, and the person whose means of knowledge is in question ought, in the person's own interest and taking the person's circumstances into account, to be able to bring an action ". [212] Section 6(5)(a) provides "appropriate advice" as meaning " in relation to facts, means the advice of competent persons, qualified in their respective fields, to advise on the medical, legal and other aspects of the facts, as the case may require ". [213] Section 6(5)(b) provides that with respect to the definition of "facts" states the term includes " the existence of a duty owed to the plaintiff by the defendant, and that a breach of duty caused injury, damage or loss to the plaintiff ". [214] Section 6(6) provides that the burden " of proving that the running of time has been postponed is on the person claiming the benefits of the postponement ". [215] In connection with postponement, the operative principles are: (a) A cause of action " arises for purposes on a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence ". Central & Eastern Trust Co. v. Rafuse, 1986 CarswellNS 40, para. 89 (b) The plaintiff's individual circumstances and interests must be assessed in each individual case when the court is

tasked to determine the point of which the plaintiff reasonably could bring an action, taking into account the circumstances and those interests: Novak v. Bond, 1999 CarswellBC 1027 (S.C.C.) paras. 86-90; (c) However, there needs to be a "triggering event" such as to cause the plaintiff to undertake a form of investigation: I.W.A. Forestry Industry Pension Plan v. Don Hull & Sons Contracting Ltd., 1998 CarswellBC 2551 at paras. 47-50; II Caminetto di Umberto Restaurant (1982) Ltd. v. Mountainside Lodge Ltd., 2005 BCSC 876, paras. 61-72, in particular para. 69; (d) The " key issue is at what point were there facts within the plaintiff's means of knowledge (not the actual knowledge of the plaintiff) such that a reasonable person knowing those facts etc. would have brought an action ". Andersen Enterprises Ltd. v. Kerrisdale Plaza Projects Ltd. 2010 BCSC 624 paras 9-13. [216] Section 6(4) identifies four components in relation to postponement. The case quoted is Ounjian v. St. Paul's Hospital, 2002 BCSC 104, citing Vance v. Peglar: 1. The identity of the defendant is known to the plaintiff.

2. The plaintiff has certain facts (including the facts set out in s. 6(5)(b)) within her means of knowledge.

3. A reasonable person, knowing those facts and having taken the appropriate advice a reasonable person would seek on those facts, would regard the facts as showing that an action would have a reasonable prospect of success.

4. A reasonable person, knowing those facts and having taken the appropriate advice a reasonable person would seek on those facts, would regard the facts as showing that the plaintiff ought, in her own interests and taking her circumstances into account, to be able to bring an action. [217] BCOL says that to hold otherwise, to hold that the limitation period commences so soon as the fact of injury could have been discovered even though the victim had no reason to discover it, would be to defeat what is recognized as one of the principle purposes of the legislation, to ensure the time does not start to run until the prospective plaintiff could reasonably be aware that he might have a claim: Karsanjii Estate v. Roque, 1990 CarswellBC 33 (C.A.). [218] The test under s. 6(4) of the legislation is neither entirely "objective" nor entirely "subjective" even where there was information available to the injured party, it " must have been information which a reasonable person in his position had reason to seek, whether or not such a person would have done so " Karsanjii Estate v. Roque, 1990 CarswellBC 33 (C.A.), at para. 110. [219] Here according to BNSF: (a) Based upon the terms of the various transportation agreements, on one hand, and all of the evidence on the other, there was no reason for any of the parties to the Network to seek out and determine whether they were

paying/collecting/absorbing the transportation charges of any of the other parties to the Network, as that would have been contrary to the overall purpose of the separate, independent transportation agreements put into place by Cominco (John Murphy); (b) With respect to the Cost Report, the unchallenged evidence of BNSF (Bradley Wyckoff) is that this was a unique situation and that he did not, as part and parcel of his management and administration of the operational aspects of the Cominco/BNSF Transportation Agreement, direct and preparation of such reports; (c) For the reasons discussed above, the fact that information was in the records of BNSF, on one hand, or might have come to light through an investigation by an employee of BNSF, on the other, is not sufficient to bar the postponement of the limitation period. [220] According to BNSF it was not until May 2009, when the " identity of the defendant, BCOL was known to the plaintiff BNSF ", and it was not until on or immediately after February 15, 2010, when BNSF received a copy of the Vancouver Wharves/BCOL Freight Transportation Agreement, that BNSF had the requisite knowledge of the facts. Trust [221] It is important to clarify BCOL's status the moment it received a payment from BNSF. From the moment BCOL received the first and subsequent payments from BNSF, BCOL, according to BNSF, held and continues to hold the monies

for the true beneficial owner, BNSF. From that point on and to the present time, BCOL became and is a trustee for those monies. [222] Turning to the legislation, the term "trust" is given an expansive definition in s. 1 which " includes a constructive trust whether or not the trust arises only because of a transaction impeached ". [223] The term "trust" in s. 1 of the Limitation Act (B.C.) in particular the term "constructive", applies to both a remedial constructive trusts as well as a substantive constructive trusts and in the result, the ten (10) year limitation period under s. 3(3) of the legislation applies to those claims: Kreeft v. Kreeft, 2001 BCSC 893, para. 88; Sun-Rype Products Ltd. v. Archer Daniels Midland Co., 2007 BCSC 640, para. 77; Smith v. Vancouver City Savings Credit Union, 2007 BCSC 771, para 33; Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2008 BCCA 278, para. 91. [224] Pursuant to ss. 3(3)(c) and (d), the legislation provides: "(3) After the expiration of 10 years after the date on which the right to do so arose a person may not bring any of the following actions: (c) against a trustee for the conversion of trust property to the trustee's own use; (d) to recover trust property or property into which trust property can be traced against a trustee or any other person " [225] The ten (10) year limitation period in s. 3(3) of the legislation may

itself be postponed, but the applicable postponement provisions are not those referred to by BCOL in s. 6(3) of the legislation. [226] It is s. 6(1) and (2) of the legislation that have application. They provide: "6(1) The running of time with respect to the limitation period set by this Act for an action (b) to recover from a trustee trust property, or the proceeds from it, in the possession of the trustee or previously received by the trustee and converted to the trustee's own use, Is postponed and does not begin to run against a beneficiary until that beneficiary becomes fully aware of the conversion or other act of the trustee on which the action is based. (2) For the purposes of subsection (1), the burden of proving that time has begun to run so as to bar an action rests on the trustee. [227] The running of the limitation period is postponed until the beneficiary becomes fully aware of the " conversion or other act of the trustee on which the action is based " even where the action is based on unjust enrichment and the relief sought is a constructive trust: Kreeft v. Kreeft, 2001 BCSC 893, paras. 88-94. In the circumstances, it is according to BNSF impossible for BCOL to discharge that burden. [228] The burden will be on BCOL to prove that the time had begun to run long before May 2009 when the initial mistake was discovered, being an earlier point in time when BNSF was

fully aware of BCOL's billing practices and that BNSF was paying the BCOL bills. [229] CN submits that it is not in dispute that the burden in establishing an entitlement to postponement pursuant to ss. 6(3) and (4) of the Limitation Act rests on BNSF s. 6(6). On the available evidence, BNSF says that is only "discovered" its mistake with respect to CN's interswitching charges in 2007 and with respect to BCOL's charges in 2009. However, at all material times, BCOL alleges, it had all of the facts it needed to access both of those charges. Not only were those facts "within its means" it actually had all of the facts from the outset. BNSF did not have to "discover" any facts; it had all of the facts. [230] I summarize the relevant principals for ss. 6(3)(b) of the Act discussed in the above authorities, bearing in mind that ss. 6(1) and (2) set up a different regime for serious breaches of trust: (a) The plaintiff has the burden of proving that the running of time has been postponed; (b) The discoverability principle is concerned with the discovery of facts, not the plaintiff's failure to appreciate its legal rights and obligations; (c) The plaintiff must satisfy a four part test to be granted postponement, with the key requirement, in this case, being whether it "did not have sufficient facts within its means of knowledge" to commence an action at an earlier time; (d) The test

for determining whether a plaintiff has "facts within his or her means of knowledge" is neither entirely "objective" nor entirely "Subjective". But it is subjective at least to this extent: (i) the information must have been available to the plaintiff; and (ii) it must have been information which a reasonable corporation in the plaintiff's position had reason to seek, whether or not such a corporation would have done so. (e) The test for determining both the identity of the defendant and when the facts from which it could be concluded that a successful action could be brought were first within the plaintiff's means of knowledge includes a "due diligence" requirement; and (f) A large corporation is not afforded special treatment. In fact the relative sophistication of a plaintiff would tend to increase the standard of due diligence expected. [231] BNSF submits that there needs to be a "triggering event" to cause the plaintiff to undertake a form of investigation. In this case, however, the presence or absence of a triggering event is not relevant. In 2007 BNSF's staff simply mined its data warehouse for the same kind of information that was at all times available to it from 1990-2005 had it exercised due diligence. [232] BNSF argues that there was no reason for it to "seek out and determine" whether it was paying BCOL because that would have been "contrary to the overall purpose

of the separate agreements put into place by Cominco ". This is inscrutable. How such an inquiry would be at odds with the purpose of the agreements put in place by Cominco, is not explained. There was in any case no evidence of any over-arching agreement amongst all the parties to the network about anything or that BNSF even knew there were other agreements. Rather, BNSF's reasons to inquire arise form its own management of its own business as will be described in further detail below. [233] The following is the combined trial evidence of Messrs. Wyckoff and Jacobowski as to the internal workings and knowledge of BNSF: (i) Access to the Cominco/BNSF agreement [234] The Cominco/BNSF contract was always in paper form. It was available to Mr. Wyckoff from the outset and throughout its existence. Also he could go on to the BNSF system anytime to obtain information about the Red Dog network that would use in presentations. (ii) BNSF internal communications [235] Even though BNSF had offices in at least 8 cities there was easy communication by email between the various places. By copying people on email Mr. Wyckoff did what he had to do to make sure that the right people were included. The single most important function he did at BNSF was facilitate communication amongst all the necessary parties to come to a solid conclusion about what they were doing. (iii) Data warehouse [236]

From 1990 onwards BNSF's computer systems became increasingly sophisticated and better. More data was being collected and available to Mr. Wyckoff on an ongoing basis. (iv) Profitability/Contribution [237] In order to develop a freight rate for a contract one has to look at the costs to ensure that the rate was profitable. This would apply throughout the BNSF rate changes and amendments to the Cominco/BNSF agreement as well as to the various changes in switch charges in the 1990s. [238] The first 10 years of the Cominco/BNSF contract was the amortization period of the $12 million for the Kettle Falls upgrade. Over the first 10years of the contract it was important that BNSF to monitor the profitability of the network to ensure that the $12 million was recovered. BNSF people inspected the profitability of the network "all of the time". [239] In 2005 the Cominco/BNSF agreement was amended by letter from the BNSF Price Management Team to Cominco (Murphy) to exempt demurrage charges from being accrued and collected. Specific detailed instructions were given by BNSF to Cominco on what to enter into their computer systems to correctly reflect the intentions of the amendment. [240] In 2007, if not before Mr. Wyckoff had access to contribution analyses. He would look at contribution monthly. The spreadsheet attached to Mr. Wyckoff's email at to Laura Vu (BNSF) of August 10, 2007,

(CB-7-217) 'net revenue' i.e. gross revenue less costs. It shows 'contribution' for the Red Dog 'move' for all of 2006 and 2007 to date. Contribution is net revenue less cost then expressed as a % of revenue. For this network the contribution varied from 17% to 52% (CB-7-217). Between 2006 and 2007 the contribution for the network dropped considerably which should have caused concern for BNSF. [241] Internally, Mr. Wyckoff took issue with the manner in which backhauls were recorded at BNSF in terms of negatively affecting the profitability of the overall movements. (v) 2007 Laura Vu spreadsheet (CB-7-222) [242] In 2007 Mr. Wyckoff was considering an extension the agreement beyond the end of 2010. In his August 2, 2007 email (CB-7-216) Mr. Wyckoff was recommending an extension. He wanted input from his immediate team which included the market manager, Bonnie VanSickle and the analysts who would look at the zinc and the chemicals. He would also consult the chemicals guys so that he could look at the customer as a whole. BNSF weighed all the aspects along with the Concentrates contract. [243] Any deal after 2010 would be on new terms because the contract would have expired. New rates would be developed. In order to develop the new terms Mr. Wyckoff's team had available to it a detailed cost analysis such as that which came from Ms. Vu so that the price management people at BNSF

could figure out what the rates could be. [244] On August 10, 2007, Mr. Wyckoff emailed Ms. Vu and asked her to run the Red Dog move through BNSF's cost group to "get a feel for what this move does for us". (CB-7-217) The marketing and sales group are trying to create profitable networks for BNSF. Mr. Wyckoff is trying to get an analysis based on the most effective and efficient means to serve the customer. [245] It took one day for Steve Bryant to get back to Ms. Vu with his analysis after she asked him for it. (CB-7-218) [246] The BNSF costing system, the Vu spreadsheet showed $72-$84/car for average reciprocal switch charge. "Average reciprocal switch amount" represents a switch charge. There should have been no amount in this column. The following exchange took place between counsel for CN and Mr. Wyckoff: Q But you didn't care whether it was $74 or $208, when you made your observation, because any amount in that column would have caught your attention because you didn't think it belonged there? A Correct Q So if it was a dollar, that would have - or may have - twigged you to why is there a dollar there; right? A Correct, yes. [247] Because it was a BNSF supplied cars network, BNSF was concerned to minimize the car turnaround time. BNSF wanted to maximize the contribution. [248] Costs are dealt with in details: fuel, haulage, crew, car cost, locomotive cost and maintenance

of way. Whether they be variable or fixed costs BNSF has tried to allocate as many costs as they can to the movement. (vi) BNSF internal analysis of Red Dog contribution (CB-7-236) [249] This was a thorough analysis done in November 2007, of the entire Cominco-BNSF relationship. BNSF had an ongoing interest throughout the Red Dog relationship in monitoring costs and profitability. (vii) Red Dog Contract renewals [250] The contract was set to expire on December 31, 2000, but there were two 5-year options to renew, both of which BNSF chose to take advantage of. Mr. Wyckoff was involved in both decisions on the part of BNSF. [251] In considering whether to renew, BNSF would do the kind of analysis that Ms. Vu did in 2007. In 2000 Mr. Wyckoff had access to data for contribution purposes, from a customer overview standpoint. He could have looked at the contribution and asked analysts in his own group any questions that he had about contribution and costs. [252] In other words, BNSF had a choice to renew based on whether the movement was profitable and attractive to it. [253] In 2005 BNSF again chose to extend the contract for a further 5 years. (viii) Billing by BNSF to Cominco [254] BNSF billed Cominco which is the normal way that a carrier recovers unabsorbed switch charges. This is expressed by Ms. Vu in her email of August 22, 2007. Mr. Wyckoff confirmed the intention to bill

Cominco as part of BNSF's action plan. This is also confirmed: "the bottom line was [BNSF pays] it and then [BNSF] recoups it that way". This was only after BNSF had paid in error for the period between 2005 and 2007. Before that and after it was bound by its contract with Cominco. This "bottom line" is applicable only to transactions outside the contracts. The CN contract still obtained. (ix) Price change publications [255] From 1997-2010 the price change publication documents furnished show how the agreement was captured in the BNSF system. For each of the internal price change made BNSF would product a "publication document" that showed how BNSF had captured all of the conditions that go with the price in their system including the non-absorption clause. BNSF internal amendment #28 dated October 30, 2007 captured the non-absorption but prior price change publications from 1990 to 2007 did not. Every price change amendment before 2007 that BNSF made internally were all silent on the issue and showed nothing for it. If there was any kind of absorption provision it would have shown on those documents. (x) General parameters [256] The historic relationship between BNSF and Cominco was worth $300 million in revenue to BNSF since 1990. [257] At all times BNSF had available to it throughout the company the Cominco/BNSF agreement (CB-1-23), which contained the non-absorption

provision in relation to the charges of connecting lines at origin (BCOL and CN) at clause 14.2. At all times BNSF had available to it the revenue and costs in sufficient detail to show that there was an "average reciprocal switch charge" assigned to the network when, it is BNSF's contention, no charge of a connecting line at origin should have been paid by it. [258] The fact that BNSF's accounting system did not assign an actual switch charge, as opposed to a system-wide average switch charge, to the network is not relevant. According to Mr. Wyckoff, there should have been no charge assigned to the network and it was the presence of any charge in the Vu spreadsheet (CB-7-222) that drew his attention. [259] There was no external influence prompting the inquiry by Mr. Wyckoff, as assisted by Ms. Vu in 2007 in the sense that it was not prompted by a party outside BNSF. It was an inquiry that could be done in a day or two from information readily available in the data warehouse. It was an inquiry that could have been done at any time. It was an inquiry that it was in BNSF's interests to do on an ongoing basis in the management of its business. [260] Effectively, Mr. Wyckoff and Mr. Jacobowski were the only two BNSF witnesses that could have had anything to say in support of BNSF's burden to prove an entitlement to postponement. It should be noted that there are 8 BNSF individuals

identified in BNSF's submissions (para. 117) who had contact with the events set out in this action. It is a fair question to ask why Mr. Simek, Mr. Murphy's counterpart and market manager at BNSF who negotiated and signed the Cominco/BNSF agreement which included the non­-absorption clause or Mr. Evans, in BNSF's accounting department in St. Paul or Mr. Moody, also in St. Paul who was a switch tariff person who did some of the actual placement of quotes and stuff into the system, were not called to give evidence on the "means of knowledge" of their areas or on the reasons why one might want to ensure that every contract, particularly ones of the magnitude of the Cominco contract, were entered properly into their system at all times. [261] Mr. Wyckoff had very little to say in terms of BNSF's burden of proof on the subject of postponement. At no time did he have any contact with anyone at BCOL. As he put it, he had "no responsibility for anything that happened north of New Westminster". [262] While he was administering the Red Dog network he never had occasion to contact anyone at BNSF to get a report like the Vu report. When asked why not by BNSF's counsel he did not answer the question but instead stated that the only reason he got the Vu report was because of the significance of the contract itself and the fact that it was going to expire in two or three years and BNSF

really needed to have a good hard look at it before BNSF went forward with it for another 10 years or 20 years, He wanted to make sure BNSF understood where they were at and what they were doing. He was looking at everything that there was to look at so BNSF knew what to offer going forward. He never did say nor was he asked again why he had never ordered a Vu-like report before 2007. [263] Mr. Jacobowski was, for the most part but not entirely a "process" witness. He identified the processes that BNSF used in their various systems that would bear on the rail movements throughout the railway. He identified a multitude of mistakes made by BNSF personnel: not properly recording the non-absorption provision in their systems both at the outset of the network and again in 1997 when the railroads merged; post-auditing switch charges against tariffs which must have been wrongly entered. But he was not asked any questions that would go to BNSF's reasonable due diligence over the years in ensuring that mistakes were found and corrected. In submissions BNSF simply says "there was no reason to look" but, in order to meet the burden of proof, BNSF must call evidence that the absence of any reason to look pervaded the entire organization, through marketing and sale, accounting, price management, switch audit team and so on. [264] On the available evidence, BNSF says that it only

"discovered" its "mistake" in September, 2007. There is an abundance of evidence that BNSF could have and should have known of its mistake as far back as 1990. There is an abundance of evidence that it was in BNSF's interest to monitor and audit its systems to in the pursuit of profitability. [265] In the context of unique contractual arrangements, the overall value to BNSF of the Cominco relationship and the obligation of BNSF as a public company to provide audited financial statements to its shareholders and the investing public, reasonable due diligence would have revealed to BNSF the errors that it complains of in this action. [266] In its annual report for 2006 (CB-6-210) BNSF management advised its shareholders that it was "responsible for establishing and maintaining adequate internal control over financial reporting ...". Presumably the post-audit function was a part of those controls. [267] When BNSF received the first invoice from BCOL - be that in 1990 or later - the "facts required to commence an action", or, at the least, to raise the issue with the other parties, were "within its means of knowledge". Whether those facts were spread among different departments is of no consequence. [268] With respect to the question of whether it would have been "information which a reasonable corporation in the plaintiff's position had reason to seek, whether or not such a

corporation would have done so", the answer is obvious. Any "reasonable corporation", not the least a corporation engaged in rail operations, would, or should have, safeguards in place to ensure that it is not paying twice for what it claims is the same rail service. [269] In the unique circumstances of this claim, it is not possible to identify a point at which the plaintiff "should have known" that it was being expected to pay too much for the services it was rendering. The test cited in Vance v. Peglar is only roughly analogous. It deals with a personal injury which required exploration by any person given reasonable advice. [270] The situation to this case is that the identity of the defendant was at all times known to the plaintiff. It had all the facts within its means of knowledge. The fact that what the BCOL did was impermissible, was always available to the plaintiff. They had the contract and it provided right on its face that BNSF was not to be responsible for absorbing the charges of connecting lines at origin. [271] There is another factor. When Iain Grunwell considered the changes he was about to propose he knew BNSF was being charged $208 on an inapplicable tariff and that Vancouver Wharves was charging $60 a car for the same switch. Mr. Grunwell asked if this wasn't double billing. No one answered. This happened after Mr. Grunwell had considered the matter for

only a few days. The fact that this did not come to the attention of anyone at BNSF may be the truth. But it depends on a series of coincidences that are difficult to credit. Mr. Grunwell's reaction signals the sort of observation that might have occurred at any time. Accordingly, the 6 year limitation applies. [272] BNSF filed its Writ of Summons and Statement of Claim on February 10, 2010. The limitation period for a mistaken payment starts to run from the date of the payment. On that basis, the vast majority of BNSF's mistake claim against BCOL is time-barred. There are, however, 16 payments that fall within the 6 year limitation period. Invoice Date Invoice # Service Month From To Invoice amount (incl. GST) Check date

SETL TNSF AMT Canadian Dollars From BNSF Doc # 29941-29943 U.S. Dollars December 31, 2003 300206254 December, 2003

BCOL

BNSF $77,228.32 10/02/2004 $57,975.30 January 30, 2004 300207237 January, 2004

BCOL

BNSF $89,246.56 29/02/2004 $66,729.65 February 27, 2004 300208216 February, 2004

BCOL

BNSF $65,877.76 29/03/2004 $50,304.26 March 31, 2004 300208876 March, 2004

BCOL

BNSF $72,554.56 30/04/2004 $52,826.98 April 30, 2004 300209574 April, 2004

BCOL

BNSF $56,752.80 1/06/2004 $38,825.28 May 31, 2004 300210151 May, 2004

BCOL

BNSF $78,563.68 30/06/2004 $55,273.59 June 30, 2004 300210928 June, 2004

BCOL

BNSF $73,667.36 2/08/2004 $51,863.20 July 31, 2004 300211453 July, 2004

BCOL

BNSF $76,560.64 07/09/2004 $54,343.74 September 3, 2004 300212082 August, 2004

BCOL

BNSF $87,243.52 n/a $64,511.28 October 5, 2004 300213169 September, 2004

BCOL

BNSF $88,801.44 04/11/2004 $67,987.05 November 4, 2004 3002134974 October, 2004

BCOL

BNSF $76,338.08 n/a $59,936.09 December 3, 2004 300215705 November, 2004

BCOL

BNSF $85,908.16 31/12/2004 $66,558.75 January 5, 2005 300216298 December, 2004

BCOL

BNSF $83,460.00 03/02/2005 $63,008.40 February 3, 2005 300217026 January, 2005

BCOL

BNSF $91,472.16 03/05/2005 $69,424.80 March 3, 2015 300217595 February, 2005

BCOL

BNSF $54,082.08 31/03/2005 $41,784.72 April 7, 2005 300218158 March, 2005

BCOL

BNSF $67,435.68 07/05/2005 $50,141.89 $1,225,192.80 $911,494.98 These are the amounts that must be added to make the 6 years before February 14, 2010. Equitable Defences Laches [273] BCOL, in defending the claim in mistake and unjust enrichment, is entitled to raise any equitable defence. BCOL's primary equitable defence is based on the doctrine of laches. [274] As noted by Justice Fenlon, BNSF Railway Company v. TML Ltd., 2015 BCSC 536, para. 9, the negligence of BNSF may be relevant to the defence of laches. [275] The doctrine of laches is an equitable doctrine that requires a claimant in equity to prosecute its claim without undue delay. In Canada the two leading cases are M.(K.) v. M.(H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6 ("M.(X)") and Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14 ("Manitoba Metis"). The doctrine was outlined in Manitoba Metis as follows: [145] The equitable doctrine of laches requires a claimant in equity to prosecute his claim without undue delay. It does not fix a specific limit, but considers the circumstances of each case. In determining whether there has been delay amounting to laches, the main considerations are (1) acquiescence on the claimant's part; and (2) any change of position that has occurred on the defendant's part that arose from reasonable reliance on the claimant's acceptance of the status quo: M. (K.) at

pp. 76-80. [146] As La Forest J. put it in M. (K.), at pp. 76-77, citing Lindsay Petroleum Co. v. Hurd (1874), L.R. 5 P.C. 221, at pp. 239-40: Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy. La Forest J. concluded as follows: What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine. [Emphasis added; pp. 77-78.] [147] Acquiescence depends on knowledge, capacity and freedom: Halsbury's Laws of England (4th ed. 2003), vol. 16(2), at para. 912 [276] There are two recognized branches to the doctrine of laches: delays that result from acquiescence or delays that result in circumstances that make prosecution of the action unreasonable. Manitoba Metis at para 272 citing M.(K.) at pp. 76-77. [277] In M.(K.) at para. 18 it was emphasized by La Forest J. that: a) there are two

distinct branches to the doctrine of laches; and b) either branch is sufficient as a defence to a claim in equity. Addressing the two branches, he said: What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine. [278] The first branch, delays that result from acquiescence, is a stand-alone branch of laches that does not require a finding of prejudice for laches to apply. In M.(K.)the consideration to be given to the plaintiffs state of knowledge is described as follows: As the primary and secondary definitions of acquiescence suggest, an important aspect of the concept is the plaintiff's knowledge of her rights. It is not enough that the plaintiff knows of the facts that support a claim in equity; she must also know that the facts give rise to that claim: Re Howlett, [1949] Ch.

767. However, this Court has held that knowledge of one's claim is to be measured by an objective standard: see Taylor v. Wallbridge (1879), 1879 CanLII 1 (SCC), 2 S.C.R. 616, at p.

670. In other words, the question is whether it is reasonable for a plaintiff to be ignorant of her legal rights given her knowledge of the underlying facts relevant to a possible legal claim. [279] The fact of BCOL's payments escaped the attention of BNSF. The question of whether this is reasonable, applying an objective standard, must be considered. [280] As discussed above, at all times BNSF had all of the facts it needed to assess BCOL's charges: a. it knew the terms of its contract with Cominco; b. it knew that by that terms of that contract it was not to "absorb" BCOL charges; c. it was a far more significant player in this particular rail network than BCOL. It was the main carrier earning significant revenue from the movement. It had been in negotiations with Cominco for years. If the network, to BNSF, was "unique" then it had every reason to ensure all aspects were operating properly; and d. it knew BCOL was performing transportation services; it received BCOL's charges; and it paid for those charges. [281] The standard of a reasonable person applied to the case leads to the conclusion that laches also applies beyond the six years otherwise allowed by the Limitation Act. [282] The standard is one of a "reasonable person". Large corporations do not get special treatment, in fact they are arguably put to a higher standard. [283] In the event that the Limitation Act is not

a bar to BNSF's claim then the doctrine of laches provides that bar. Change of Position [284] The notion of change of position must be considered. BCOL acknowledges that the present case does not fit perfectly with some of the case law. In particular, there is no evidence of BCOL undertaking any special projects or financial commitments. However, there can be no question that BCOL's status has "materially changed" in the years following the payments from BNSF. Due to the antiquity of this claim it is not reasonable to expect BCOL to prove any specific material change based on any particular payments. BCOL submits that the present case must be considered on its facts. It is simply inevitable that the monies paid by BNSF to BCOL over 15 years would be used in the ordinary course of the business of BCOL such as to effect an inevitable and irreversible change of position. The case brought by BNSF is not a case of a single payment in recent history. It is an allegation of monthly payments for 15 years. In this context, change of position is not a given. There is no evidence of change of position. The defence rests on the Limitation Act. The Railway's Errors [285] This lawsuit is the result of mistakes made by three railways. [286] BCOL's errors are described in BNSF's submissions at paras. 71-75. These errors are described as follows: (a) BCOL stored its rates in the BCOL computer

accounting system, both for Vancouver Wharves under the Vancouver Wharves/BCOL Freight Transportation Agreement and for BNSF under, at least, BCOL Limited Freight Tariff N. 1528 and, later, BCOL Tariff No. 725A. (b) Unless a BCOL representative went into the BCOL computer accounting system and physically changed the tariff or, removed it altogether, that tariff rate was perpetual. As later confirmed by BCOL (Sandra Sinclair) those steps were not taken by BCOL. (c) Correspondingly, and as confirmed by BCOL (Sandra Sinclair) there was no system in place where BCOL could distinguish between Red Dog Cars being moved by BCOL from the Terminal Facility to the BCOL/CN interchange pursuant to the Vancouver Wharves/BCOL Freight Transportation Agreement, on one hand, and the loaded BNSF railcars being moved by BCOL from the Terminal Facility to the BCOL/CN interchange, on the other. All of the loaded BNSF railcars passed by the Tag Reader. In the result, the Leg 1 movement of the loaded BNSF railcars, the Red Dog Cars was billed twice by BCOL: once to Vancouver Wharves and then to BSNF. (d) Later, BCOL Limited Freight Tariff No. 1598 was replaced with BCOL Tariff No. 725, item 230(l), in June 1995, if not earlier, and it continued in effect until November 2000. (e) Again, this tariff applied only to Asarco; it had no application to the movement of the Red Dog Cars, whether they were

being moved under the Vancouver Wharves/BCOL Freight Transportation Agreement or under the Cominco/BNSF Transportation Agreement. Yet, BCOL continued to bill BNSF for the Leg 2 Movement of the Red Dog Cars, all the while continuing to bill Vancouver Wharves for that same movement. (f) Even after BCOL Tariff No. 725, 230(l) expired in November 2000, BCOL continued to bill both Vancouver Wharves and BNSF for the Leg 2 Movement, to March 31, 2005. [287] BCOL should not have billed BNSF the $208/car switching charge for Leg 1. This was double billing, it was not caught by BCOL personnel. For every Cominco car that passed the recorder a bill went out to BNSF as well as Cominco. It would not have been noticed but for CN subsequently, in 2009, relying on this charge in its discussions with TML and BNSF to justify its $315/car switching rate that it unilaterally and wrongfully imposed as of April 1, 2005. Therefore, this error is relevant to TML's position in this lawsuit, including its Third Party Claim, even though it is not the basis of any claims made by or against TML. [288] BCOL's $208/car charge to BNSF was purportedly made pursuant to BCOL Tariff 725, item 230. This tariff was not applicable to TML's traffic. It was applicable to Asarco that had operations in East Helena, Montana, the destination described in that tariff. [289] BCOL's failure to distinguish between Asarco

traffic with East Helena, Montana destination and TML's traffic with Waneta as a destination not only led to the wrongful billing of BNSF but also to CN's wrongful and unilateral change to the switching rates in 2005. BNSF's Errors [290] BNSF's mistakes were causative of both its claim against CN/BCOL for the wrongfully charged $208/car for Period 1 (the period July 1, 1990 until April 1, 2005) and for BNSF's claim against TML and CN for the recovery of the $315/car switching charges it paid during Period 2 (the period April 1, 2005 until September 30, 2007). Further, BNSF's errors caused the resulting loss and damage to TML for Period 3 (the period October 1, 2007 until December 31, 2010) that TML seeks from CN. [291] BNSF's error was in not properly recording in its computer systems a rate qualifier that was reflected in the TML/BNSF Transportation Agreement non-absorption provision. That is, that BNSF should not have paid anything to either BCOL or CN. [292] While BNSF should never have received billings or invoices from either BCOL or CN for any switching, when it did, its systems did not pick up as they should have, that those charges were, under the contracts in place, improper charges. [293] Further, it appears as though BNSF's systems validated the BCOL $208/car charge because its tariff library would have contained BCOL Tariff 725 item 230 (Asarco) signalling that for

a similar movement out of North Vancouver there was an applicable tariff. [294] Had someone from BNSF, with knowledge of the movement and specifically the origin and destination in the TML/BNSF Transportation Agreement, examined that BCOL tariff, they would also have recognized that it did not apply to TML's traffic and that BCOL's charges of $208/car was invalid. [295] The same error was responsible for BNSF paying switching charges unilaterally imposed by CN commencing on April 1, 2005. The fact that the same rate qualifier concerning non-absorption of switching charges was not in place meant that CN's improper charges to BNSF went unnoticed and the accounts paid. BNSF now seeks to blame TML for this error. [296] This situation and the improper charges of BCOL and CN only came to BNSF's notice by happenstance. [297] The financial analysis, largely prepared by BNSF employee Ms. Vu, indicated that BNSF had been paying a switching charge to CN. The financial report, which apparently provided only a system's average of switching costs eventually revealed the fact that CN was charging BNSF $315/car for the Leg 2 switch. [298] Surprisingly, this 2007 investigation and financial analysis did not reveal the $208/car switch charge levied by BCOL for some 17 years. This would not be discovered until 2009. Because BNSF's systems failed to recognize the impropriety of the $315/car CN

charge right away, no one from BNSF had, prior to August 2007, raised the improper charge with TML. Had BNSF had the proper qualifiers in its system, this situation would never have happened. [299] When BNSF discovered that it had been absorbing the CN switch it provided amendment 28 to the TML/BNSF Transportation Agreement essentially reiterating that BNSF was not to absorb switching charges at origin and that those were for the account of TML. [300] Vancouver Wharves continued to bill TML for the Leg 1 switching charges until February 2006. It has been determined during the break in this trial that in March 2006 Vancouver Wharves reimbursed TML for those overpayments. [301] As both Mr. Wyckoff and Ms. Low testified, neither thought Amendment 28 was necessary as the TML/BNSF Transportation Agreement already provided that BNSF was not absorbing switching charges at origin. CN's Unilateral Changes/Mistakes April 2005 [302] From the time the Transaction by which BCOL's undertaking was taken closed in July 2004 until November 2005, CN did not notify TML or BNSF that it intended to make unilateral changes to the arrangements in place for the Leg 1 and Leg 2 movements. This directly impacted TML and BNSF. [303] There was no provision in the TML/CN Switching Agreement for unilateral termination or amendment. Further, at no time did CN approach TML to discuss termination or

amendment. [304] It is absolutely clear that CN proceeded in haste, with wrong, missing and incomplete information and without contacting any of the affected parties: TML, Vancouver Wharves and BNSF. This caused the problems for Period 2 and Period 3 (April 1, 2005 through to December 31, 2010) that are at issue in this lawsuit. [305] CN, as part of its takeover of BCOL, set out to "streamline" and integrate the switching rates in view of the fact there was now a single federal railway operating over BCOL's former lines. [306] Mr. Grunwell had no prior knowledge of the transportation network put in place by TML, CAI and the parties to the network: Vancouver Wharves, CN and BNSF. Further, on account of an apparent downsizing of the BCOL workforce arising out of the CN purchase, there were holes in the institutional knowledge, and lost files, as it pertained to the transportation network for the movement of TML's Concentrates. [307] There were also significant gaps in CN's knowledge. This has been confirmed by Mr. Harrington in his testimony. [308] In August 2004, Mr. Grunwell sent an email to Mr. Lemieux and Mr. Cvar, both CN employees also located in Montreal, asking about the application of Interswitching Rates and BCOL's status as a federal railway (such that the federal regulations applied). He was told generally that Interswitching Rates would only apply if the sum of

existing charges exceeded the Interswitching Rate. The problem was Mr. Grunwell's determination of what those "existing charges" were. [309] This is how Mr. Grunwell's analysis eventually proceeded, that is, he examined various options for switching charges for the TML network as they compared to the Interswitching Rate. [310] Mr. Grunwell sought information from both former BCOL employees who had come over to CN, including Ms. Sinclair, Mr. Wells, and Mr. Thorne. He also sought information from then current CN employees who should have had knowledge about TML and the switching arrangements. This included Mr. Cater, Teck's CN customer representative, and Ms. Filiatrault, the marketing manager. [311] At some point likely in December 2004, Mr. Grunwell asked Ms. Sinclair to put some information about CN's north shore switching arrangements together in a spreadsheet. Ms. Sinclair testified that she put in the rates for the BCOL side of things. This included the $208/car rate, what is described in the comments as "Cominco outbound Concentrates from Vancouver Wharves, item 230 T725 (old version-no longer published although being applied)". This was absolutely incorrect. [312] This description may not have come from Ms. Sinclair. Mr. Grunwell also requested that Mr. Phaneuf, a CN employee, add the CN numbers to the spreadsheet. [313] The string of emails initiated by Mr. Grunwell

that began on February 21, 2005 and concluded on February 26, 2005, indicate that whatever new switching arrangement they came up with it had to be ready to proceed to implement by March 1, 2005 so that it could go live on the computer systems integration date of April 1, 2005. It is clear that a few days was insufficient time to properly investigate what was in place. [314] Mr. Grunwell testified that he was relying on the BCOL and CN people to provide him with accurate information. This was unfortunately a guarantee that nothing was right. [315] Ms. Sinclair provided the information about BCOL Tariff 725, item 230 (the purported authority for the $208/car switching charge to BNSF) however, she did not know at the time that this tariff did not apply to TML's traffic. She acknowledged in her testimony that this BCOL tariff never applied to TML's traffic and therefore this important piece of information provided to Mr. Grunwell was wrong. [316] Neither Ms. Sinclair nor Mr. Grunwell ever saw a copy of Tariff 725, item 230. Mr. Grunwell testified that they could not find it and that the only thing they could find was a subsequent tariff that cancelled item 230. [317] Mr. Grunwell acknowledged that CN continued to rely on not only a tariff that didn't apply to the subject traffic but on a tariff that had been cancelled. His explanation was that BNSF was, and had in any event been

paying the accounts rendered by BCOL. [318] Ms. Sinclair's spreadsheet also referred to BP-113, the contract made between BCOL and Vancouver Wharves for switching TML's traffic over Leg 1, which was the result of the Terminal Facility Agreement between CAI, TML and Vancouver Wharves. [319] Ms. Sinclair did not see a copy of BP-113 so she did not know what the services were that were covered by that agreement. She only ever saw a rate sheet and the escalators of the rate. [320] Mr. Grunwell, in his email of February 21, 2005, asked for a copy of BP-113. Jason Thorne, another BCOL employee, advised him that he knew nothing about TML's concentrate movements and suggested that Mr. Grunwell ask Mr. Wells, another BCOL employee. No-one, apparently thought to ask TML. [321] Mr. Wells responded but he could not locate a copy of BP-113, indicating that the file appeared to have been lost. He did advise Mr. Grunwell that BP-113 was a 20 year agreement and was in force until December 31, 2010. [322] Mr. Grunwell now had information that BNSF was being billed $208/car on an expired, and unbeknownst to him, inapplicable tariff, for the Leg 1 switch and that BCOL was billing Vancouver Wharves for the same switch at which was then approximately $60/car. Mr. Grunwell asked Mr. Wells, Mr. Duncan, Mr. Christee (BCOL's tariff person) "isn't this double billing?" According to Mr. Grunwell, he

received no answer. This was a question that had it come to the attention of TML, might well have resulted in an answer. [323] The third component of the existing charges was the CN charge of $125/car for the Leg 2 switch based on the TML/CN Switching Agreement. This information was entered into the spreadsheet prepared by Ms. Sinclair but no one produced that agreement or a copy of CN Tariff 1131 for examination. More importantly, no one advised Mr. Grunwell that the tariff was only a memorial for the TML/CN Switching Agreement documented by the letter agreements entered into between TML and CN in 1990 and that were in effect as long as TML had a linehaul contract with BNSF. [324] Neither Mr. Cater of CN, TML's customer representative, nor Ms. Filatreault, the marketing manager, apprised any of this transition group of that critical fact. As the CN tariff was not produced, no one recognized it as being a Limited Distribution Tariff, and that it was not subject to unilateral alteration or elimination. [325] CN simply assumed that it had the authority and right to proceed to cancel what was in place and impose the Interswitching Rate. This was wrong. [326] CN still cannot locate a copy of CN Tariff 1131, all it has is a notation in its system. [327] On account of the charges listed by Ms. Sinclair and what Mr. Grunwell was advised of, including the $61.60 (then) charged by BCOL

to Vancouver Wharves under BP-113, the $208 BCOL charge to BNSF, which was a mistake, and the $125 charge from CN to TML, he wrongly concluded that TML was paying all of these charges totalling $394. [328] He went on to consider that TML could, if using the North Shore Haulage Agreement, be paying the $208 BCOL charge plus the $116 North Shore haulage rate or $324/car, which was higher than the $315 Interswitching Rate he was contemplating in his attempt to "streamline". [329] These option are all set out in Ms. Sinclair's revised spreadsheet. [330] Based on the erroneous conclusion that TML was paying the $208 charge assumed to have been passed through by BNSF and no one advising him that there was a contract in place representing the CN charges, Mr. Grunwell recommended streamlining all of these charges by the imposition of the zone 4 Interswitching Rate of $315. [331] He states: As noted below my proposal would be to drop the $61.60 under BP 113, drop the $208 to BN, drop the $125 to Cominco, don't apply the $116 under the North Shore Haulage and simplify as a CTA interswitch $240). Switch revenue drops for CN, BN would need to increase their linehaul by $32 to cover increased interswitch costs, customer switch bills drop, but this simplifies the process and I believe is the right way to handle this unless there is other background/rationale to the contrary. [332] Mr.

Grunwell wrongly concluded that BNSF actually knew that it was being charged $208 for the Leg 1 movement and that BNSF was passing it along to TML and that since BNSF would now, accordingly to CN's misguided logic, be absorbing a $240 interswitch charge at this time they thought it was only a zone 3 switch, BNSF only had to increase its rate to TML by $32 from $208 to $240. CN did not tell BNSF that this is what it should do. [333] Had someone from CN contacted BNSF they would have been advised firstly, that BNSF had no knowledge of the $208 charge and secondly, that BNSF was not passing on any switching charges to TML. [334] CN personnel did not contact any of the parties to the arrangements they were unilaterally altering. As the Court noted during the trial, no one picked up a phone to speak to any of TML, Vancouver Wharves or BNSF to tell them of their plan or to seek out information and copies of documents. Had CN done this, the issues for Periods 2 and 3 would have been avoided. [335] This new switching arrangement totally ignored all of what was in place and had been in place since 1990 and is the cause of the Period 2 and Period 3 issues. [336] In Mr. Grunwell's email of February 26, 2004, he asks Mr. Cater, TML's CN representative, and Ms. Filiatrault to advise BNSF that the switching from Vancouver Wharves through to the BNSF would be handled as an interswitch and

that it should raise its rate with TML. He also instructs them to advise Vancouver Wharves and TML that CN would no longer be billing them for these moves and that BNSF would be adjusting rates to cover those charges. CN was to provide the customer with letters cancelling the agreements in place. In the case of Vancouver Wharves, it would be BP-113, and CN 1131 in the case of TML. [337] While Mr. Grunwell may have expected Mr. Cater and Ms. Filiatrault to do what he requested, they did none of it. [338] Had any of the CN employees followed that action plan and contacted TML, Vancouver Wharves and BNSF between March and April 1, 2005, there would be no lawsuit concerning the Period 2 and Period 3 issues. [339] In accordance with Mr. Grunwell's implementation of his plan, in early 2005, CN stopped sending invoices to TML with respect to the TML/CN Switching Agreement. [340] It is clear that CN failed to notify any of the involved parties because it wasn't until November 2005 that Ms. Sinclair advised Ms. Low to TML that a change had been implemented. [341] Further, when Ms. Low made her inquiry in October 2005 on account of not receiving invoices from CN, the inquiry got back to Mr. Grunwell and Mr. Phaneuf. [342] Mr. Grunwell responded by advising Mr. Phaneuf, Mr. Cater, Ms. Sinclair and others that "the simplified process is working and BN is paying under interswitch." He goes

on to say that he had discussed the matter with Ms. Filiatrault and that CN now suspects that BNSF may not have noticed the increase from $208 to $315, "but likely we will only find out at contact renewal." This appears to be a comment in line with CN's general lack of concern for the other parties to the agreements. Finding out at contract renewal was not the most honest way to approach the issue. It also mistakes the way the arrangement was supposed to work which was that BNSF was to "pass on" the $315 charge. [343] This email indicates that BNSF had not been advised of the change and did not realize it was now being billed $315/car. [344] A few days earlier on November 25, 2005, Ms. Sinclair had responded to Ms. Low's inquiry about CN billing, which had again fallen behind. Ms. Sinclair testified that she was only advising TML about the CN switch and therefore she did not provide the further important piece of information that TML should expect to be invoiced for that $315/car by BNSF. [345] Mr. Cater on November 29, 2005, asked Mr. Grunwell and others at CN whether he should "tell Cominco that they should be getting invoiced by BNSF as of April 1st. Whatever the intention was, this again did not happen. [346] Unfortunately, on account of BNSF's error (its systems not catching this billing), this billing of the $315 went undetected until August 2007. [347] Mr. Grunwell and

CN's faulty analysis continued to be used by CN to justify the unilateral imposition of the $315/car Interswitching Rate and its refusal to abide by the terms of the TML/CN Switching Agreement. [348] It is to be noted that Ms. Low, Mr. Smith and Mr. Murphy worked out of TML's offices in Vancouver. They did not work in TML's accounting department located in Trail. It was not part of their regular duties to monitor accounts payable or receivable. Ms. Low would get involved if there was a problem that had escalated. This is why Ms. Low got involved in October 2005 after Trail had not received invoices from CN for a considerable period of time. [349] On October 31, 2005, Ms. Low, TML's manager of Transportation, sent an email to Mr. Cater, TML's CN account manager, advising that TML's Trail accounting office had not received any invoices from CN for switching charges since April of 2005. This was not an unusual circumstance. [350] Mr. Cater, despite being the account manager for TML, obviously did not know why TML was not being billed. [351] After a reminder from Ms. Low, and after Ms. Sinclair inquired of Mr. Grunwell, Ms. Low received a response from Ms. Sinclair on November 25, 2005, that advised in somewhat cryptic language, that as a result of the merger of BCOL and CN a new switching platform was put into place and that the notification to the customer appeared to have been

missed. [352] Ms. Sinclair advises, as of November 25, 2005: Please accept this notification that effective April 1, 2005 Teck Cominco is no longer responsible for the switch charge on the Red Dog Concentrate cars that was previously billed under CN 1131. All charges incurred for the switching of these cars by the CNR's invoice to the linehaul carrier per CTA specified rates. [353] As above, what Ms. Sinclair did not advise is that BNSF would, according to CN's plan, be billing TML for the new charges. [354] TML personnel, as Ms. Low testified, thought that this had something to do with the haulage agreement, the special arrangement between BNSF and CN for switching cars on the North Shore between them. In fact, this is the same haulage agreement that Mr. Grunwell referenced in his examination of the possibilities for streamlining the CN/BCOL rates. [355] While perhaps closer attention to the language of Ms. Sinclair's email should have caused further inquiry by TML, TML certainly did not know that CN had been and was apparently continuing to bill BNSF the $315/car interswitching charge and that BNSF was paying for that switching. That was not what was contemplated even by CN, which expected that the switching charges would be passed on to TML, as CN thought was already the case with respect to the BCOL switching charges of $208/car. [356] TML accounting continued to receive

invoices from BNSF for the linehaul portion of the movement, and paid them. [357] Clearly, none of the BNSF invoices to TML during Period 2 contained the CN switching charges, as contemplated by CN, and therefore there was no ongoing information or reminder that would have indicated that BNSF was paying for something it should not have. While CN stopped sending accounts to TML the situation on account of both railways' errors was murky. [358] TML continued to pay the BNSF accounts as rendered. It was not hiding anything with respect to the lack of billing from CN. [359] One might reasonably expect that the party being wrongfully charged, in this case BNSF, would quickly bring this error to its customer's attention. BNSF of course, in not recognizing that it was being wrongfully billed, had not been passing that charge on to TML in its billings. It went undetected and was not protested until all of the facts came to light in August of 2007. [360] In the ordinary and usual course, BNSF's inclusion of the $315/car charge on its accounts to TML would have brought CN's error to light right away. [361] BNSF did not discover that CN had since April 1, 2005, been billing BNSF $315/car and that BNSF had been paying it, until August 2007. [362] This was the subject of a number of calls and emails between Ms. Low and Mr. Wyckoff of BNSF. [363] Although it is the errors of CN and BNSF that

caused this situation, TML, as Ms. Low testified, could have, in retrospect, made further inquiries to clarify the message from Ms. Sinclair in the fall of 2005. At most this was an oversight - it was certainly not bad faith. [364] BNSF again chooses to characterize Ms. Low's and Mr. Murphy's actions as a plot to cheat BNSF. BNSF further argues that this was the opportune time for Ms. Low to play the Tariff 1131 card. With respect, BNSF's characterization of the facts is baseless. The amounts were de minimus in terms of the overall transportation spend. [365] TML's lack of response was not an acceptance of the situation or CN's new billing platform. Moreover, TML was not in any position to accept a new situation whereby BNSF would, contrary to the contract it had with TML, be absorbing the new charge, paying approximately $100 more per car, and passing that charge on to TML. [366] CN proceeded to breach the contractual arrangements in place, invoice BNSF an unwarranted charge that BNSF is now suing TML for, and now argues that its unilateral action was accepted by TML. [367] Ms. Low testified that when she received Ms. Sinclair's advice in November 2005, it was TML's busiest time of year as the window for Red Dog Shipments would have recently closed and year end was approaching. The message from Ms. Sinclair was not on the top of her mind, although knowing the full situation

now, Ms. Low testified that they should have paid more attention to it. [368] If TML was seeking to avoid payment of its obligations it would not have, on a consistent basis, gone to CN requesting billing. As Ms. Low said in her inquiry "we actually do like to pay our bills." The last of these enquires was October 3, 2005, after the new billing regime was in place. [369] Both Ms. Low and Mr. Murphy expressed their confusion concerning this situation. [370] Mr. Murphy wrote to Mr. Demers of CN on December 1, 2008. He provided CN with copies of the TML/CN Switching Agreement, his calculations of what was owing contractually and the email exchange with CN in October and November 2005. Mr. Murphy told Mr. Demers that the contracts with both the BNSF and the CN were still in place. [371] Mr. Murphy also admitted that TML: should have pursued this matter on receipt of the correspondence from CN advising the switch charge was no longer in effect as it would now be collected from the linehaul carrier, namely BNSF. I know at the time there was some kind of North Shore agreement that had been put into effect between CN and BNSF to cover an overall switching arrangement between the companies (which I believe is confidential) and I can only conclude we ended up being fooled by implications of the combination of the new switching arrangement and the cancellation of ours. In any event, BNSF

was also late in picking up the fact that they were now absorbing the switch charge and have billed us at the rate of $315/railcar for the period April 1, 2005 and September 2007. [372] TML had never authorized CN to bill BNSF for anything or authorized BNSF to accept or pay any switching charges for its benefit. [373] Once it came to light in August 2007 that BNSF was being charged the $315/car fee, TML began discussions with BNSF and CN concerning these wrongful charges. [374] Shortly thereafter, Mr. Murphy exchanged communications with Mr. Wyckoff informing him that the proper charges were approximately $150/car and not the $315/car. [375] The fall of 2007 saw negotiations commence between BNSF and TML with respect to a possible extension of the confidential TML/BNSF Transportation Agreement. One of the scenarios discussed, as a prelude to that meeting, included BNSF forgiving the approximately $2.4 million switching account. No agreement was reached. [376] In or about September 2008, after some further discussion of the switching charges, Mr. Evans of BNSF sent an invoice for the CN switching charges that CN had wrongfully billed and BNSF had mistakenly paid to Ms. Low's attention. [377] On December 1, 2008, Mr. Wyckoff recorded that he had spoken with Mr. Murphy of TML and that Mr. Murphy was sending a letter to CN stating that TML has a deal with them until December 31,

2010, that CN owed BNSF a refund, that CN needed to start charging the correct rate for TML's traffic, and that CN owed TML a refund. Mr. Wyckoff as well questions whether "our haulage agreement is still in effect". [378] That same day, December 1, 2008, Mr. Murphy sent the letter to Mr. Demers at CN and communicated TML's position. [379] Mr. Murphy continued the dialogue with BNSF and CN. The issue was picked up by Mr. Smith for TML, as well, when he returned to TML in March of 2008. [380] As Mr. Smith recorded and testified, he attempted to bring CN back to honouring the TML/CN Switching Agreement. However, in order to ensure that there was no disruption to the movement of Concentrates to Trail, TML as of October 1, 2007, began to pay the $315/car switching charged that was passed through by BNSF. [381] At all times Mr. Smith kept Mr. Hawken at BNSF informed of his discussions with CN. [382] Mr. Smith met with Mr. Pulak and Mr. Cater of CN on February 5, 2009 and again presented TML's position that the TML/CN Switching Agreement was still in effect and that CN needed to honour that agreement. [383] CN did not refute that the Cominco/CN Switching agreement governed and continued in effect. CN told Mr. Smith that the Interswitching Rate of $315/car was cheaper than TML had formerly been paying. This was based on CN's erroneous information that TML was formerly paying the

$208/car charge to BCOL plus the $125/car to CN. As had been explained previously, this was a false but persistent premise. [384] Despite it being obvious that the $208/car charge was wrong and CN being advised that TML was not in any event paying that charge, CN maintained its position throughout discussions with TML. [385] Shortly thereafter on February 24, 2009, Mr. Smith wrote to Mr. Pulak of CN telling him that TML did not agree with CN's position. Mr. Smith noted TML's obligations pursuant to the TML/CN Switching Agreement and referenced what the current rate would be, $169/car. Mr. Smith says: At your direction, we have been paying BNSF, but given BNSF's position we are now turning to you to resolve this matter since our contract is with you. We do not accept CN's position that interswitching rates apply as our switching contract remains in full effect. [386] That same day Mr. Smith wrote to Mr. Wyckoff advising him as well that TML had contracts in place until December 31, 2010 and is prepared to pay the amount under that contract. [387] Mr. Pulak responded to Mr. Smith on February 26, 2009. He begins: Based on our understanding of the billing arrangements Teck is currently in receipt of a better charge under the interswitching calculation that the combined charges of the pre-merger structure. [388] Mr. Pulak again sets out his understanding of those charges: the

$208/car pursuant to BCOL 725 Item 230, based on TML's calculation of the CN rate, $169/car, for a total of $377 so $62/car less than the combined totals. He ends: CN cannot comment on whether BNSF has chosen to pass on the reduction in the overall switch charge to Teck; that would be a matter for Teck to pursue with the BNSF. [389] CN's understanding was substantially wrong, yet it continued after a further explanation from TML and BNSF to maintain this position. TML was being bounced back and forth between the two railways over this issue. CN was taking the position TML had a better deal, and BNSF is wanting full reimbursement of what they had paid to CN by virtue of their, and CN's, mistakes. [390] Mr. Smith sent an email to Mr. Hawken of BNSF on March 13, 2009. Mr. Smith again makes the following points: a) TML has a contract with CN effective till December 31, 2010; b) April 2005-September 30, 2007, TML didn't pay for switching but acknowledge this debt as pat of an overall resolution; c) BNSF is seeking $2.47 million from TML; d) Since October 2007 TML has been paying the Zone 4 Interswitching Rate and not the negotiated rate and that constitutes an overpayment; e) From January 1, 2009 to December 31, 2010 TML proposes to pay the negotiated rate, then $169/car. f) That TML needs to first address this issue with CN and that discussions have started. [391] A few minutes

later on March 13, 2009, Mr. Smith sent a further email to Mr. Pulak of CN. Mr. Smith again makes the following points: a) TML owes CN under the contract at the $169/car rate; b) TML never paid the sums he referred to (i.e. the $208/car); c) TML had a charge from Vancouver Wharves; d) Even though TML started paying BNSF at CN's direction BNSF is seeking the Zone 4 Interswitching Rate and so the matter is between CN and BNSF; e) That for the April 2005-September 30, 2007, period TML owes approximately $1.254 million; f) That for the period October 1, 2007 to December 2008 TML started paying the Interswitching rate to prevent imperiling the switching service but CN owes TML the difference between the CN Contractual Rate and the Interswitching rate; g) That for the period beginning January 1, 2009 to December 31, 2010 TML proposes to pay the negotiated rate, then $169/car and CN will deal with BNSF for any amounts owing between them. [392] Mr. Smith and Ms. Low met with CN again in early May 2009. Mr. Pulak, Mr. Cater and Ms. Sinclair attended on behalf of CN. [393] By this time Mr. Hawken had also spoken with CN. Mr. Smith conveyed that resolution required CN to reimburse BNSF. CN refused. [394] There was a further discussion between Mr. Smith and CN in July 2009. CN maintained the same position as indicated in Mr. Smith's notes and his follow up email of July 20, 2009 where he

reiterated CN's position. [395] Mr. Smith notes that CN referenced: a) The BCOL charge of $208/car for the few hundred yard switch to the CN; b) BCR through Vancouver Wharves charge to TML of $75/car "essentially double dipping"; c) CN charge to TML of $110/car escalated over time for Leg 2; d) Total charges of $393; e) That CN will not take responsibility for the BCR double dipping and advises that it intends to hold BNSF to the BCR tariff of $208/car as well as TML for the $169/car or $377 until December 31, 2010; f) After CN's acquisition of BCR, CN started charging the zone 4 Interswitching Rate of $315/car; g) CN will honour the letter/tariff with TML for switching between Vancouver Wharves and BNSF until December 31, 2010 but will not take responsibility for any shortfalls the BNSF may have. Those would be for BNSF to seek from TML. [396] CN's position was essentially the same as wrongly determined by Mr. Grunwell. Mr. Smith this time raised the double-dipping question. [397] In that same correspondence, Mr. Smith offered some questions and comments. In particular, Mr. Smith questioned CN's intention to continue to charge BNSF the $208/car switch charge in addition to what it was going to charge TML. Mr. Smith reiterated that CN owed TML a refund for the periods since October 2007. Mr. Smith says: "I do not understand how CN can justify charging both Teck and BNSF for the

same service. Is that what CN is proposing?" [398] It was during these discussions in 2009, whereby CN raised the $208/car BCOL switch that BNSF discovered that it had been paying since 1990, which is the basis of its claim against BCOL/CN for Period 1 (1990 to April 1, 2005). [399] It appears that but for the above-referenced discussions, the BCOL charges to BNSF would have remained undetected. [400] This brings these parties to this Court. [401] There are certain propositions which govern this matter. CN Had No Authority to Apply Statutory Interswitching Rates in the Face of Confidential Contracts [402] A railway can charge a shipper rates for moving a shipper's goods in one of two ways: a public tariff or by way of a confidential contract. This is described in the Canada Transportation Act, (the "CTA"). [403] Historically, railways' rates were regulated by the Board of Transport Commissioners or a predecessor body. In 1987, significant changes were made to the National Transportation Act, 1987 (the "NTA") which resulted in substantial de-regulation of railways. Tariffs, although no longer regulated, had to be filed with the Agency. [404] Section 114 of the NTA provided: Except as otherwise provided by this Act or the Railway Act, a railway company shall not charge a rate in respect of the transportation of traffic on any railway operated by it, unless it is a rate set out in

a tariff that has been issued and published in accordance with this Division and is in effect. [405] Pursuant to s. 117 of the NTA, tariffs could be amended, including increasing rates, by publishing the amendment 30 days prior to it becoming effective. [406] The "except as otherwise provided" in s. 114, referred to rates being established by way of a confidential contract between a railway and a shipper. The rates, unlike a tariff, were not public, although the confidential contract had to be filed with the Agency, as required under ss. 120(2) of the NTA. [407] Section 120 of the NTA also provides that a confidential contract allowed a railway and a shipper to agree on rates and other conditions relating to the traffic being moved. [408] CN, as discussed above, also issued what it referred to as Limited Distribution Tariffs. These are not really tariffs in that they represent negotiated rates with the shipper, are confidential, and are not available to the public. Their legal status has not been finally determined by the Agency. Further legislative changes came with the enactment of the CTA. In 1996, under the new Act there was no longer a requirement to file a confidential contract with the Agency. [409] The CTA provisions respecting tariffs and confidential contracts were not changed significantly from the NTA. Section 117 of the CTA provides in part: Rates to be charged 117

(1) Subject to section 126, a railway company shall not charge a rate in respect of the movement of traffic or passengers unless the rate is set out in a tariff that has been issued and published in accordance with this Division and is in effect. Tariff to include prescribed information (2) The tariff must include any information that the Agency may prescribe by regulation Publication of tariff (3) The railway company shall publish and either publicly display the tariff or make it available for public inspection at its offices. Copy of tariff on payment of fee (4) The railway company shall provide a copy of the tariff, or any portion of it, to any person who requests it and pays a fee not exceeding the cost of making the copy. [410] A railway can increase a tariff by publishing a notice of at least 30 days prior to the effective date. That tariff then supersedes any preceding tariff. [411] A tariff does not supersede a contract. In fact, most tariffs specifically state that fact. [412] Section 126 of the CTA deals with the other method by which a railway can charge - a confidential contract. [413] Section 126(1) provides: Confidential contracts 126(1) A railway company may enter into a contract with a shipper that the parties agree to keep confidential respecting (a) The rates to be charged by the company to the shipper; (b) Reductions or allowances pertaining to rates in

tariffs that have been issued and published in accordance with this Division; (c) Rebates or allowances pertaining to rates in tariffs or confidential contracts that have previously been lawfully charged; (d) Any conditions relating to the traffic to be moved by the company; and (e) The manner in which the company shall fulfil its service obligations under section 113. [414] A confidential contract can modify a tariff, can provide for the rates to be charged, and any conditions specifying how that the shipper's traffic is to be shipped. [415] TML entered into confidential contracts with both CN and BNSF. They provided for the rates to be charged, for the services provided, other terms relating to conditions, and the manner in which those railways would fulfill their service obligations. [416] The CTA provides for some shipper remedies if the shipper does not like the rate published in a tariff. One of those remedies is final offer arbitration. Final offer arbitration is not available to a party that is bound to a confidential contract. [417] This inability to access final offer arbitration further establishes the unalterability of a confidential contract short of re-negotiation. [418] There is no provision in the CTA that would permit a railway to unilaterally alter the terms of a confidential contract. This includes any application of interswitching Rates. [419] Therefore, it

is submitted that the actions by CN leading up to the imposition of the Interswitching Rate, in lieu of the rates provided for in the TML/CN Switching Agreement, were invalid and a breach of contract. TML's Defence and Claims [420] TML or CAI, consistent with its contractual arrangements with BNSF, did not at, any time provide BNSF with any authority to accept, pay, or administer any charges from either of the connecting lines at origin, being BCOL and CN. [421] At no time did TML accept that the $315/car rate unilaterally charged by CN commencing April 1, 2005 was a valid or correct rate. TML did not accept, not could it, that BNF be billed for CN switching. TML was entitled to be charged only those rates set out in the various contracts it had with the parties to this transportation network. [422] The unilateral imposition by CN of the $315/car rate was a breach of the TML/CN Switching Agreement. [423] BNSF passing on the CN switching charges at origin to TML was also contrary to the TML/BNSF Transportation Agreement and the entire structure that TML had negotiated for the shipment of its Concentrates. [424] BNSF's claim against TML is solely with respect to Period 2, the period April 1, 2005 to September 30, 2007. Based on TML's records a total of 9028 cars (which BNSF accepts) were loaded with Concentrates of any kind and moved from North Vancouver to Waneta. BNSF's claim

is $2,843,820 ($315 x 9028). [425] TML, is not seeking for these periods of time to distinguish between Red Dog and non-Red Dog Concentrates. TML is not relying on there having been a through rate negotiated with BNSF for non-Red Dog Concentrates for this period as it concedes that it cannot produce documentary proof of that arrangement. TML is not submitting in this case that TML should not pay anything for the non-Red Dog Concentrates because they moved under a through rate. This is not an issue that the Court need decide. [426] The derivation of the numbers is explained further below. The $1,703,166.75 is based on the BP-113 charges accelerated plus the rate that CN was actually charging TML as at April 1, 2005 which was $125. It was CN's responsibility to address any changes in the rate. It never did most likely because it lost any record of the underlying agreement and its marketing or account managers failed to follow up on this issue. It is submitted that the $125/car rate is the rate that should be applied. It was the rate charged by CN up until April 1, 2005 when CN made the unilateral change. [427] The $1,993,759.65 is derived in the same manner, but using the escalated CN charges, had they actually been escalated. [428] Even though the Leg 1 switch physically disappeared after the operations of BCOL and CN merged, it is submitted that the actual expense of CN going

the additional 500 meters to pick up the cars plus the avoidance of the additional switch actually made the process less expensive for CN. Although there is no evidence to substantiate any increased or decreased costs associated with this distance, TML's calculation of what it owes includes paying for the initial switch at the rate under BP-113, as that represents what BCOL would have received prior to the operations merging with CN. [429] There is no GST included in these calculations and none is payable. The evidence, including that of BNSF's witness, Mr. Jakobowski, was that no GST was payable on the BNSF accounts because of its international character. [430] If BNSF has any claim in unjust enrichment against TML, the maximum amount of BNSF's claim is limited to either $1,703,166.75 or $1,993,759.65, the amount that TML was legally obligated to pay to CN, the party that BNSF paid by mistake. To the extent BNSF paid a sum over TML's legal obligations to CN, TML was not enriched and therefore BNSF has no claim against TML for the $2.8 million. Unjust Enrichment [431] The language of unjust enrichment applies to this case but I fell certain that the best approach is to rectify the issues by way of an accounting. [432] Accordingly I, for Period 2, order that CN pay to BNSF 2.8 million, paid by BNSF by mistake and directing TML to pay CN the $1,993,759.65 it would have paid under

the TML/CN Switching Agreement; and for period 3 that CN refund it the sum of $1,640,368.63. [433] The Supreme Court of Canada has established three essential elements necessary to establish unjust enrichment: (a) Benefit to the defendant, in this case TML; (b) Corresponding detriment to the plaintiff BNSF; and (c) The absence of any juristic reason for the defendant's retention of the benefit. [434] Although a benefit in the unjust enrichment context commonly involves a positive conferral of a benefit upon a defendant, such as the payment of money, the Supreme Court of Canada in Regional Municipality of Peel v. R. in Right of Canada, [1992] SCJ No. 101, noted that a benefit can also be negative in nature, if the defendant was "spared an expense which he or she would have been required to undertake, i.e. the discharge of a legal liability. [435] Madam Justice McLachlin for the majority in Peel citing Goff and Jones in The Law of Restitution, 3d ed. stated: If no liability has been discharged, it is irrelevant that the plaintiff, in the performance of a duty or otherwise, has incidentally conferred some benefit on the defendant by his payment. For it is a limiting principle of restitution that the mere conferring of some incidental benefit, while discharging an obligation to another, does not in itself give rise to any right to be recouped. [436] For the benefit to be

established in these circumstances, BNSF must therefore establish that the payments it made to CN discharged TML's legal liability, that is what TML was obligated to pay by its contract with CN. [437] Any benefit TML received is limited to the amount that it was otherwise contractually obligated to pay BNSF. It is only by mistakenly paying the contractual amount that BNSF effectively discharged TML's legal liability. [438] The recovery of any other monies paid by BNSF to CN on account of BNSF's mistake is for BNSF to seek from CN. Although CN may have received an indirect benefit by BNSF paying the switching fee, it was not an "incontrovertible benefit". The Supreme Court of Canada in Peel (para. 500) described the concept of an "incontrovertible benefit" as follows: An "incontrovertible benefit" is an unquestionable benefit, a benefit which is demonstrably apparent and not subject to debate and conjecture. There the benefit is not clear and manifest, it would be wrong to make the defendant pay, since he or she might well have preferred to decline the benefit if given the choice. [439] TML had agreed to pay for the shipping services at a specified contractual amount. It did not request, authorize or agree, contractually or otherwise, that BNSF could act on its behalf and pay the additional charge. TML cannot be obligated to pay BNSF an amount that it did not agree to and that

it may have preferred to decline had it been given the choice. The fact that TML did not pay the amount of the additional charge was at most an indirect benefit. It was not an incontrovertible benefit. [440] BNSF's payment of the additional charge therefore does not constitute a "benefit" under the law of unjust enrichment. A plaintiff is precluded from recover more than what the defendant actually gained. To require TML pay BNSF over the above the amount it contractually agreed to pay for the services wold be inconsistent with the concept of restoration. [441] The BC Court of Appeal in Stevested Machinery and Engineering Ltd. v Metso Paper Ltd., 2014 BCCA 91, citing Justice McLachlin in Peel stated "the concept of restoration of a benefit retained without juristic reason lies at the heart of the doctrine of unjust enrichment" and "it is not material that the plaintiff has suffered a loss if the defendant has gained no benefit". According to the BC Court of Appeal, it would be "inconsistent with the concept of restoration for a defendant to be required to give more than the benefit that has actually been received ..." [442] Notwithstanding the fact that CN has not made this claim, it is submitted that the Court can rectify that by way of an accounting that would see CN retain or receive the amount it was entitled to and see BNSF reimbursed. [443] The connection that BNSF seeks

to make is that because TML did not after November 2005 alert BNSF to the fact that CN had erroneously started billing BNSF for CN switching, and that on account of BNSF's own error in paying those accounts, that somehow constitutes a breach of a duty of honesty in contract performance by TML. In other words, BNSF asserts that TML had a duty to advise BNSF of its own mistakes even though it had insufficient information to know of that mistake. [444] It is possible, as BNSF submits, that had TML more fully appreciated CN's untimely and incomplete advice in November 2005 following upon the BC Rail purchase, after billing BNSF for switching since April 2005 that it could have led to CN reversing course. [445] However, this is pure speculation. It is most likely that the parties would have been in the same position that they are in now. CN, when alerted after the fall of 2007 about its errors and lack of authority to impose the Interswitching Rate, continued to refuse to revert to the contractual provisions in place. On account of economic necessity, TML was forced to continue to pay the imposed $315/car rate for another 3 years and has had to bring suit to recover this overpayment. [446] As submitted, the cause of the Period 2 issues is CN's unilateral action in ignoring the contractual provisions in place and BNSF's system's errors that failed to recognize the inapplicable

charges. BNSF is relying on its own mistake to seek recovery. This has nothing to do with an alleged absence of good faith on the part of TML. [447] The Court also referred to the following comments of the BC Court of Appeal in Moulton Contracting Ltd. v. British Columbia, [2015] B.C.J. No. 331, para. 76: Bhasin provides a new approach to the role of good faith in contract interpretation in Canadian law, but Moulton reads it too broadly in application to this case. There is no basis to say that the Province acted dishonestly, unreasonably, capriciously or arbitrarily in failing to disclose to Moulton that Mr. Behn had threatened to disrupt the logging when the threats were made. The question in this case is whether it had any obligation to disclose that information within the relationship created by Moulton entering into the TSLs, given their terms, and, if the Province was so obliged, whether it is liable for failing to do so. No issues of honest contractual performance, as discussed in Bhasin, arise in this appeal. [448] Similarly, there are no issues of honest contractual performance in this case. BNSF and TML contractually agreed that BNSF would not absorb the charges of other railways such as those levied by CN starting April 2005. TML did nothing that either initiated those CN charges or that caused BNSF to pay them. TML's Third Party Claims Against CN [449] Just prior to

CN's unilateral change on April 1, 2005, CN was receiving $125/car for its switch and BCOL was receiving the amounts set out in Table 1 below. [450] It is submitted that this is generous, in that by CN eliminating the BCOL switch it was only moving an additional very short distance and likely incurred savings by elimination of the extra work. [451] TML claims against CN for both Period 2 (April 1, 2005-September 30, 2007) and Period 3 (October 1, 2007-December 31, 2010). [452] TML is owed a credit for Period 2 and a refund for Period 3 from CN. [453] With respect to Period 2 this can be achieved by one of the two methods described herein and in conjunction with BNSF's claims against TML. [454] One of those methods would result in an order that CN retain such funds as determined by the contractual rates in place, that CN pay BNSF the balance, and that TML pay BNSF the same amount retained by CN on account of the contractual rates, that is, the sum that TML submits is $1,703,166.75 or alternatively $1,993,759.65. [455] With respect to Period 3, TML seeks an order that CN refund it a sum of $1,640,368.63 or alternatively $1,099,243.13. Table 1 Switching Rates BC Rail and CN Contractual Rates Period BCOL Charge/car CN Charge Escalated and Not Escalated/car Total Charges/Car April 2005-December 31, 2005 $63.50 $153/$125 $216/$188.50 January 2006-February 28,

2006 $63.50 $158/$125 $216/$188.50 March 1, 2006-December 31, 2006 $63.50 $158/$125 $221/$188.50 January 1, 2007 - September 30, 2007 $63.95 $159/$125 $222.95/$188.95 October 1, 2007 - December 31, 2007 $63.95 $159/$125 $222.95/$188.95 January 1, 2008 - December 31, 2008 $65.55 $163/$125 $228.55/$190.55 January 1, 2009 - December 31, 2009 $67.78 $169/$125 $236.78/$192/78 January 1, 2010 - December 31, 2010 $67.17 $167/$125 $234.17/$192.17 The rate of $125 was the CN rate being charged to TML as of March 31, 2005 as CN did not escalate the contractual rate after it reached that level CN's Defence to TML's Third Party Claims [456] During the trial, CN successfully applied to the Court to amend its Response to TML's Third Party claim and to file a counterclaim. This was opposed by TML, and the Counterclaim has in any event the counterclaim has been settled, and does not require further attention. [457] After over 7 years of litigation, CN now pleads that on November 25, 2005 when it advised TML that it had changed the switching regime, TML accepted this notice as terminating the TML/CN Switching Agreement in place since 1990. [458] CN pleads in the alternative that if its notice of November 25, 2005 was a repudiation of the TML/CN Switching Agreement that TML by its inaction accepted that repudiation and did so as part of conscious strategy. [459] As stated above, CN seeks to have

this Court find that its uninformed, unilateral and wrongful act with respect to its changing of the contractual switching regime was accepted by TML or that TML waived its right to rely on the contracts in place. [460] CN's repudiation was not solely a repudiation of the TML/CN Switching Agreement. It was also effectively a repudiation of TML's agreement with BNSF and TML's agreement with Vancouver Wharves. [461] The Cominco/BNSF Transportation Agreement provided that TML pay BNSF a rate per tonne of concentrate moved from the origin of that linehaul, New Westminster, to Waneta and on to Trail. That agreement did not contemplate that BNSF would be receiving and/or paying invoices from another carrier such as CN for switching or any service and di not contemplate any such switching charge being passed on by BNSF to TML. [462] While BNSF did not know the express terms of the TML/CN Switching Agreement, it knew that TML had looked after that separately and that TML had looked after the BCOL switching for Leg 1 separately. [463] TML could not accept a repudiation whereby BNSF would be charged CN's and BCOL's switching charges. Only BNSF could accept that and it did not. [464] TML certainly did not accept CN's breach, or the consequence of that breach, that is, that TML pay more money for switching charges than it was obliged to pay. [465] Not only was CN's notice to TML in

November 2005 wrongful but it was cryptic and incomplete. It did not state, as Mr. Cater suggested it should, that TML was going to be billed these extra charges (the $315/car) by BNSF. This situation was never accepted, nor could it be. CN takes the position that TML accepted a notice that made no reference to the contract that was being charged. They could hardly establish that the contract was at an end without referring to it. [466] CN, in its subsequent discussions with TML acknowledged the Cominco/CN Switching Agreement, it simply wrongfully held on to the incorrect notion that under CN's new regime TML was paying less. This was explained numerous times but CN absolutely refused to consider it. Acceptance of Repudiation [467] A repudiation breach or an anticipatory repudiation of contract does not, in itself, terminate or discharge a contract. According to the BC Court of Appeal in Dosanjh v. Liang, 2015 BCCA 18: A party to a contract has two alternatives if the other party repudiates the contract: the innocent part may accept the repudiation or affirm the contract. If the innocent party accepts the repudiation, the contract is at an end, both parties are relieved of their obligations under it, and the innocent party may sue for damages immediately without waiting for the time that the contract should have been performed. If the innocent party affirms the contract, the

contract remains alive in all respects for both parties, and the risk exists that the party beginning as the innocent party will subsequently commit a breach of its own. If the innocent party wishes to accept the repudiation, he or she must make his or her election known. [468] Thus, if one party repudiates the contract, the innocent party must disaffirm the contract and "accept" the repudiation in order for the contract to be terminated. According to the BC Court of Appeal in Ginter v. Chapman, [1967] BCJ 27, para. 11, a repudiation of a contract by one party will be of no consequence in law "unless the other party accepts it as such and communicate the acceptance to the repudiator within a reasonable time. Further, the Supreme Court of Canada in Dawson v. Helicopter Exploration Co. [1955] SCR 868 held that an innocent party's acceptance of repudiation "must be absolute and unequivocal". [469] The BC Court of Appeal in Elderfield v. Aetna Life Insurance Co. of Canada, [1996] B.C.J. No. 1817, confirmed that if the innocent party fails to unequivocally accept the repudiation, the repudiation will be of "no effect". [470] Communicating acceptance of repudiation may be accomplished directly, by oral or written words, or may be inferred from the conduct of the innocent party in certain circumstances. [471] Actual notice of acceptance of repudiation is not required, and may be

"reasonably inferred from all the circumstances as proved." However, acceptance of a repudiation will generally not be inferred from silence alone. [472] According to the Supreme Court of Canada in Dawson although silence may be evidence of a repudiation, "its weight must depend upon the circumstances." In Dawson, the Court stated that in determining whether silence constitutes acceptance of repudiation, it is important to look at the correspondence between the parties as a whole, and interpret the correspondence by "looking to the state of the facts and circumstances as known to and affecting the parties at the time." [473] In Dawson, the respondent sent the appellant a letter in which it repudiated a contract. The appellant made no reply to the letter and nothing passed between the appellant and the respondent until a year and a half later. The Supreme Court of Canada found that the appellant's silence after receipt of the letter did not constitute an acceptance of the repudiation of the contract. According to the Court, a conclusion adverse to the appellant could not be drawn from his failure at time to press the respondent about the contents of the letter. The Court stated that upon receipt of the letter of repudiation, the appellant "might have accepted it and forthwith claimed damages however, he did not accept it, and the contract remained in force and binding upon both

parties." [474] The Ontario Court of Appeal in Brown v. Belleville (City), 2013 ONCA 148, confirmed that the election to disaffirm a contract may be inferred from the conduct of the innocent party in the particular circumstances of the case. However, as was the case in Dawson, the appellant's silence in Brown did not constitute clear and unequivocal acceptance of the repudiation. [475] In Brown, the respondent notified the appellant via letter that it was no longer bound by the contract. The respondent argued that its repudiation of the contract was accepted by the appellant when it "failed to take any steps to enforce the Agreement from the date of repudiation (1980) to the date of the property was sold to the new owners (2003)." The respondent further argued that "both the passage of time and the sale transaction are inconsistent with the notion that the respondent continued to be bound to perform the Agreement." [476] The Court of Appeal rejected the respondent's argument and found that the appellant's silence and inaction in the face of the City's repudiation "falls short of satisfying the requirement of clear and unequivocal communication to the repudiating party of the adoption of a repudiating breach." The Court confirmed that "mere inactivity or acquiescence will generally not be regarded as acceptance" of a repudiation. [477] The Court in Brown acknowledged that there

are circumstances where some overt act by an innocent party, viewed in the context of all the parties' dealings, may constitute an affirmation that the repudiated contract has been terminated. However, it found that there was "simply no evidence in this case of such an overt act." For this reason, the Court held that the respondent was bound by the contract notwithstanding the appellant's silence and inaction from 1980-2003 and that there was "no dispositive effect of delay on the liability of the [the respondent] in these circumstances." In reaching this conclusion, the Court stated that its primary concern was not delay, but the respondent's continuing breach of its obligations under the Agreement following its unilateral repudiations of the Agreement. [478] The circumstances in this case at bar are not only similar to those in Brown, but are also less extreme. Similar to the respondent in Brown, TML did not take immediate action to enforce the TML/CN Switching Agreement or otherwise pursue it with CN. Further, there is also no evidence that TML responded in any way to the November 25 email. In fact, there was an incomplete not a complete understanding of the consequences of this message. [479] Both the respondent in Brown and TML were notified of the repudiation although there was no express repudiation by CN, as CN did not even appreciate the existence of the TML/CN

Switching Agreement. However, the letter sent by the respondent in Brown directly stated that the respondent was no longer bound by the agreement. The November 25th email, in contrast, was worded much more ambiguously, without apparent knowledge that CN was breaching anything. Moreover, Ms. Low and Mr. Murphy reasonably but mistakenly interpreted the November 25 email as being in reference to the haulage agreement between BNSF and CN. CN did not set out precisely the repercussions to TML, as CN did not convey that CN's actions meant that TML would be billed the $315/car by BNSF, an amount in excess of what they were paying. [480] Further, the respondent in Brown remained silent for 13 years after learning of the City's intention to repudiate the contract. TML, in contrast, did not have a full understanding of the consequences of CN's breach until August 2007 (approximately 22 months following CN's unilateral implementation of the interswitching charges) when BNSF discovered that CN had been charging it the $315/car switching charge and that apparently CN had intended that BNSF pass that on to TML. [481] The factual circumstances in Brown provide further support that TML did not waive its right to rely on the Cominco/CN Switching Agreement. [482] CN argues in the alternative that TML acquiesced to CN's breach of the Cominco/CN Switching Agreement. However, the Court of Appeal in

Brown stated that laches (i.e. acquiesce) is an equitable defence that is "of limited application in the case of a claim for enforcement of the benefit of a contract and these claims are founded in law rather than equity". For this reason, it rejected the City's argument of acquiesce. As TML's claim is for the enforcement of the benefit of a contract, it can be similarly argued that acquiescence is not available in this case. [483] The Supreme Court of Canada in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance, [1994] 2 SCR 490, summarized the essential elements of waiver of contract as follows: The elements of waiver were described in Federal Business Development Bank v. Steinbock Development Corp. (1983), 42 A.R. 231 (C.A.) : The essentials of waiver are thus full knowledge of the deficiency which might be relied upon and the unequivocal intention to relinquish the right to rely on it. That intention may be expressed in a formal legal document, it may be inferred from conduct. In whatever fashion the intention to relinquish the right is communicated, however, the conscious intention to do so is what must be ascertained. Waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. [484] The BC Court of Appeal in Dallas Park Shopping Centre Ltd. v.

Buy-Low Foods Ltd., [2002] BCJ No. 2923, similarly confirmed that waiver "requires a conscious and unequivocal intention to waive, and communication of that intention to the opposite party. [485] TML did not respond to CN's November 25, 2005 email or otherwise communicate to CN that it had accepted CN's repudiation of the Cominco/CN Switching Agreement. Therefore, TML cannot be said to have had an "unequivocal and conscious intention" to waive its right to rely on the Cominco/CN Switching Agreement, nor did it communicate such an intention to CN or any party. [486] CN may argue that an intention to waive can be inferred from TML's inaction from November 2005 to August 2007. However, the Supreme Court of Canada in R. v. Park stated that although no particular form of words is necessary, the waiver must be express. Silence or mere lack of objection does not constitute a lawful waiver. [487] The BC Supreme Court in Suzuki v. Polygon Homes Ltd., 2013 BCSC 1709, paras. 38-39, applied a similar statement in the Court of Appeal decision of First Majestic Silver Corp. v. Davila, [2014] B.C.J. No. 1103, that an intention to waive one's legal rights under a contract cannot be inferred from silence or inaction alone; there must be something more in granting leave to appeal an arbitration award. [488] In Suzuki, the Court found that an intention to waive could only be inferred from the

petitioner's inaction (i.e., its failure to take issue with the late delivery of an executed counteroffer) coupled with the petitioner's positive actions (i.e. the positive steps it took to coordinate the delivery of the executed counteroffer). According to the Court, an intention of waiver could not have been inferred from the former alone. [489] TML's lack of a further response to CN's notice was not a waiver. In light of Suzuki and Park, TML's silence and lack of objection is insufficient to support an inference of waiver without something more. [490] Unlike the petitioners in Suzuki, there is no evidence that TML took any positive steps to affirm or accept CN's repudiation of the Cominco/CN Switching Agreement. For this reason, an unequivocal and conscious intention cannot be inferred from TML's conduct in 2005 - 2007. [491] In light of the above it is clear that TML's inaction during the period November 2005 - August 2007 does not constitute waiver of contract and, as such, TML did not relinquish it right to subsequently rely on the Cominco/CN Switching Agreement. [492] The consequences of finding that TML accepted CN's repudiation or waived its right to rely on the Cominco/CN Switching Agreement would be to reward CN for its mistakes and its breach. That is an outcome to be avoided. [493] TML can also rely on the doctrine of practical compulsion and/or economic duress to

recover the payments it made to CN from 2007 onwards. [494] Pursuant to the Cominco/CN Switching Agreement, TML was contractually obligated to pay switching fees to CN at an agreed upon contractual rate. However in 2007, TML began paying BNSF the CN switching fees at the statutory rate, as Mr. Smith testified so as not to impair the movement of TML's Concentrates to the smelter at Trail, which is essential to TML's operations. [495] There is no waiver of contract that can be inferred from TML's positive action of paying BN switching fees at the statutory rate and TML should therefore be entitled to rely on the Cominco/CN Switching Agreement. [496] TML made it clear once the situation clarified that it did not agree to CN's unilateral changes. Mr. Murphy and Mr. Smith tried to convince CN to honour the agreements in place including the TML/CN Switching Agreement. CN refused. [497] CN proceeds from the proposition that its contract was specifically for the Red Dog Concentrates. This is not correct. As of February, 1992 the contract CN had with Cominco included the non-Red Dog Concentrates on the same terms as the Red Dog Concentrates. There is no evidence that there were car loads of Concentrates before this time. If there were any, they were few, and the contractual amendment affected in February 1992 put an end to the distinction. There was (as I have noted before) a

considerable amount of discussion on this topic among others. At the end of the case the Red Dog/non-Red Dog distinction if it ever mattered, was lost in the mists of time. The same is true of the through rate arrangement with BNSF. Despite some tantalizing bits of evidence, there is no proof of such an arrangement. The Concentrates moved in accordance with the amending letter of February, 1992, and the CN contract made changes in March 1992 and June 1992 for the duration of the contract. [498] It is impossible, now, to sort out exactly what happened with respect to CN's failure to bill for the non-Red Dog cars. On November 29, 1999 TML was requesting advice about the "Custom Concentrates"; as CN had once again fallen behind in its billings. This is proof that to this point in time TML expected to pay for Red Dog and non-Red Dog cars. [499] On January 10, 2000 Ms. Low replied to Ms. Katnich as follows: "On all non-Red Dog, custom concentrate cars, our rail rate is deemed to be from Vancouver, B.C. origin and is inclusive of all switch charges from Vancouver Wharves, this agreed to when we first began regular shipment of Custom Concentrates in 1994, Therefore, no CN switch charges payable nor should they be accrued for on the Custom Concentrate movements from Vancouver Wharves." [500] There is no explanation for this communication. By the time of trial, Ms. Low conceded there

was never any "through" rate between BNSF and TML. [501] CN did not terminate its agreement with TML effective April 1, 2005. All TML knew was that CN was not billing it for the carriage of the Concentrates, which was not unusual, in any event. It knew nothing of the $315 BNSF was paying to CN and which CN expected BNSF would pass on to TML. CN says it advised TML that it was doing so on November 25, 2005. This was not effective notice. TML was confused, and the fact is that BNSF was, again, absorbing the $315 CN expected would be picked up by TML not that CN ever mentioned it. BNSF never sent the accounts on to TML. The linehaul portion of the BNSF contract, very much the largest part of the arrangement, continued to be paid on time by TML. The $315 was not added to the billing and was not noted by TML. [502] CN says these comparatively centralized agreements, put in place by TML do not necessarily continue to exist. This is a statement that does not have much to do with the arrangements made in 1990. They were, for twenty years and would have lasted that long but for the breaches of the agreement by CN. The fact that BNSF invoiced all of CN's switching charges for April 2005-September 2007, on August 18, 2008, was not an example of the way it ought to be done, but was an example of one way of attempting to rectify the problem. [503] The treatment of the Cominco/Vancouver

Wharves agreement is cited as an example of a contract that TML could break. This was not exactly what happened. When BCOL was no longer available, because of its merger with CN, the task became that of CN. TML accepted that Vancouver Wharves was no longer entitled to payment but it was the same entity (BCOL/CN) that performed the work of Vancouver Wharves. The contract was transferred, not ended. In any event the TML/Vancouver Wharves agreement did affect the Cominco/CN agreement which always remained in place. There was no tacit acceptance that the agreement was over. [504] BNSF's claims against TML and CN for the period April 1, 2005 to September, 2007, leave no question that TML was enriched for the period April 2, 2005 to September 30, 2007 to the extent of its contractual rates were not paid. It paid nothing and had its Concentrates delivered. [505] CN says it was not enriched. It performed services in order to be paid and it was paid for those services. CN delivered the cars to BNSF and thereby enabled it to earn its linehaul freight rate. This would only be true if it were receiving the proper amount under the contract. To the extent it received more ($315) it was unjustly enriched. Positive Defence of CN to the claim by BNSF [506] CN in ignorance of the state of affairs, which could have been avoided if it simply contacted TML, completely upset the arrangement that had

been in place since 1990. CN did not notify TML of its intention to do so. It was high-handed to completely change the arrangements that had been carefully set up by TML in 1990. CN did not notify TML or BNSF of its intentions. The notice tendered by TML on November 25, 2005 was incomplete and ineffective. TML was unsure what arrangements had been made. It left the new arrangements in place because it was unaware that the actual intention was that CN would pass the $315 charge on to TML. This would have brought the matter to the attention of TML right away. Instead TML continued to pay the linehaul rate and the situation went on with BNSF paying in error, in not recognizing that it was being wrongfully billed. This went on for some 28 months. It is clear that in retrospect TML could have made further inquiries to clarify what the incomplete November 25, 2005 communication meant but this was an oversight - not an example of bad faith. [507] BNSF characterized this as a plot to cheat BNSF. This is unwarranted. [508] TML's lack of response was not an acceptance of a situation whereby BNSF would continue with its contract with TML by absorbing a new charge paying more than $100 per car and passing the charge on to TML. [509] As the parties advised, the counterclaim by CN has been settled. [510] The claim against CN is for breach of contract in Period 2 and Period 3. [511] CN

discusses the notion that TML's non-Red Dog Concentrates moved in a through rate negotiated with BNSF. I emphasize again that there is no reliable evidence about this and TML concedes that everything moved on the same terms, Red Dog and non Red Dog. CN discussed Tariff 1131 and its limitations. It notes the following: (a) CN would manually bill Cominco for the Leg 2 Movement of both the Red Dog Concentrates and the non-Red Dog Concentrates; (b) CN at times failed to send Cominco a bill for either or both of the movement of the Red Dog Concentrates and the non-Red Dog Concentrates; (c) CN's lapses in billing would, in turn, lead to accruals by Cominco's accounting department (Rose Katnich) and enquiries from Cominco (Rose Katnich) to both CN and to Cominco (Suzanne Low); (d) CN was relying upon the shipping reports it received from Vancouver Wharves as to the number of BNSF railcars (loaded with both Red Dog Concentrates and non-Red Dog Concentrates) that had been moved by CN from the BCOL/CN interchange to the CN/BNSF interchange for the purposes of billing Cominco; (e) By July of 1998, CN had inadvertently stopped billing Cominco for the Leg 2 Movement of non-Red Dog Concentrates by CN between the BCOL/CN interchange and the CN/BNSF interchange; (f) In May 1999 Cominco (John Murphy, Suzanne Low), following an inquiry by Cominco (Rose Katnich), discovered that the Tariff No.

1131 did not, as set out above, reference non-Red Dog Concentrates as freight (CB-4-83B); (g) Thereafter, Cominco (John Murphy, Suzanne Low): i. Instructed Cominco (Rose Katnich) not to make any further enquiries of CN about outstanding bills for the Leg 2 Movement by CN of the non-Red Dog Concentrates; ii. Told Cominco (Rose Katnich) that an agreement had been reached, long ago, between Cominco and BNSF that BNSF would pay/absorb the transportation charges for the Leg 2 Movement of the Non-Red Dog Concentrates by CN; iii. Specifically instructed Vancouver Wharves (Allan Eisel) not to send his monthly reconciliation reports (where were then being sent by Vancouver Wharves to Cominco, BCOL and BNSF) concerning the Leg 2 Movement by CN of the Non-Red Dog Concentrates to CN. [512] This is described by Cominco as an "absurd conspiracy" theory. CN says that "it is shocking but also supported on the evidence." It further notes that CN does not take a position on the existence of a through rate agreement and says that in the circumstances it does not matter. The through rate, I say again, was not proved. [513] CN says that after March 31, 2005, "with the continuation of the BCOL and CN switching they were billed to the linehaul carrier "in the usual automated way" and billed at CTA rates of $315 for all cars. [514] CN again reverts to the formula it has spoken of elsewhere to say that

the $315 Interswitching Rate was a reduction on the overall tariff. This was wrong and wrong for the reasons that TML, despite numerous attempts, could never get CN to concede. [515] Despite TML's constant urging upon CN the incremental increases in the rate and the rate itself CN makes allegations that suggest that the burden is in TML to ensure that the appropriate rates were paid. This was never true, however and the way to establish rates was always within CN's power to ensure. When TML, for reasons that are now inexplicable changed the billing to eliminate the non-Red Dog payments it was incumbent on CN to ensure that it was being paid for everything it delivered. It is not in CN's power to cast aspersions on TML, in view of the number of mistakes made by CN before and after April 1, 2005. [516] CN argues that Ms. Sinclair's email of November 25, 2005 was "clear enough" that CN was terminating its arrangement with Cominco and seeking to recover switch charges from BNSF directly. It says Cominco made a choice not to respond to CN and implicitly accepted CN's termination. [517] CN, despite the flaws in its notice, says that from and after April 1, 2005 it did not notify Cominco but it alleges that TML knew it was not receiving invoices from CN and that as of November, 2005 BNSF was being invoiced at the $315 inter switch rate and that in the face of these factors TML did

nothing. [518] CN says that TML initially breached the CN/Cominco Agreement. [519] CN alleges, again, that TML made a through rate agreement whereby BNSF would absorb the switch charge so that CN would have to look to BNSF to be paid for its services. TML acted on this such that the only communications TML generated for billing purposes, Vancouver Wharves on behalf of TML, was no longer available to CN. This description of the information flow constituted a breach by TML of the express or implied terms of the Cominco/CN Agreement as represented by letters exchanged between the parties. [520] CN says that on entering into a through rate agreement with BNSF/TML violated its responsibility to discharge a duty of good faith Bhasin v. Hrynew, [2014] 3 S.C.R. 494. [521] This agreement has not been proved, however and it is not the basis for a reliable submission. The known facts that are established in evidence, are that TML and CN made a deal that was modified in 1992 to treat all cars the same way. The contract provided for escalations in step with the CPI. CN fell behind repeatedly on its billings to TML and had to be repeatedly reminded. In 2000 a piece of bad advice circulated and TML took the position that the non-Red Dog cars did not fall under the contract. This is, as I have said, inexplicable. TML did not maintain this later. I simply emphasize that TML makes it clear that

CN had other avenues to check the accuracy of the counts to ensure that it was being paid properly. For example, the non-Red Dog cars kept going through the system. If a rate had been worked out with BNSF there would have been billings under that rate. These would have been discernable by any one of the parties. CN was moving the non-Red Dog cars. They had only to check if someone else (CPR) was delivering them. [522] CN says that TML accepted its termination of the remainder of the Cominco/CN agreement on April 1, 2005. It cites Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10, where Mr. Justice Cromwell said: 144 The term repudiation refers to the situation in which a breach of contract by one party gives rise to the right of the other party to terminate the contract and pursue the available remedies for the breach: J.D. McCamus, The Law of Contracts (2nd ed. 2012), at pp. 676-78. This occurs when one party actually breaches the contract in some very important respect and is said to thereby repudiate the contract. If the other party "accepts" the repudiation, the contract is over. If the other party does not accept the repudiation, the contract continues (subject to various other doctrines). In either case, the non-breaching party can pursue the available remedies, which may vary depending on whether that party has accepted the repudiation or affirmed the

contract. 145 There is a wealth of learning about the types of breach that constitute repudiation. Without getting into the details, we may say in brief that a breach is a repudiation of the contract if it is a breach of a contractual condition or of some other sufficiently important term of the contract so that there is a substantial failure of performance: S. M. Waddams, The Law of Contracts (6th ed. 2010), at ¶590; McCamus, at pp. 676-77. [523] In Salminen v. Garvie, 2011 BCSC 339, The Supreme Court of British Columbia said the following at paras. 35-36: a. Repudiation occurs where, without justification, a party, by words or conduct, demonstrates an intention to refuse the performance of the contract and not to be bound by it; b. The totality of the circumstances must be considered in determining whether a party repudiated a contract through conduct that amounts to a rejection of his or her obligations under that contract; c. The test to determine if an alleged repudiator has evinced an intention no longer to be bound is that of an objective reasonable person; d. The effect of a repudiation depends on the election made by the non-repudiating party. If the non-repudiating party treats the contract as still being in full force and effect then it remains in effect for both sides. However, if the non-repudiating party accepts the repudiation, the contract is terminated; and e.

Acceptance of repudiation can be inferred trough conduct that indicates that the non-repudiating party does not intend to continue with the contract. [524] In White v. E.B.F. Manufacturing Ltd., 2005 NSCA 167, Saunders J.A. accepted the following, set out in Chitty on Contracts, 28th ed. (London: Sweet & Maxwell 1999), Vol 1, at p. 25-012: Where there is an anticipatory breach, or the breach of an executory contract, and the innocent party wishes to treat himself as discharged, he must "accept the repudiation." It is usually done by communicating the decision to terminate to the party in default although it may be sufficient to lead evidence of an "unequivocal overt act which is inconsistent with the subsistence of the contract without any concurrent manifestation of intent directed to the other party" Acceptance of a repudiation must be clear and unequivocal and mere inactivity or acquiescence will generally not be regarded as acceptance for this purpose. But there may be circumstances in which a continuing failure to perform will be sufficiently unequivocal to constitute acceptance of a repudiation. It all depends on "the particular contractual relationship and the particular circumstances of the case." [525] CN submits that CN demonstrated by its actions, the change in the billing regime on April 1, 2005, and its words, Ms. Sinclair's e-mail of November 25, 2005, its

intention not to be bound by the Cominco/CN agreement. Cominco had the option to accept the repudiation and treat the contract as at an end or to affirm the contract and sue for specific performance or damages for breach. This election must be made within a reasonable time. [526] CN says that TML's termination of the agreement with Vancouver Wharves and arrangement of a refund for the 11 months following April 1, 2005, shows that it did not intend to pay switching charges to anyone after April 1, 2005. This is, according to CN an obvious acceptance of CN's position as communicated in November 2005, that the agreement was at an end. [527] As of April 1, 2005, CN continued to move the Concentrates but ceased billing TML for them. TML knew that its Concentrates were still moving but that TML was not paying for them. This was not CN's doing entirely. BNSF had, again, failed to pass the charges on. [528] CN says that the election by TML to disaffirm the contract must have been clearly and unequivocally communicated to CN within a reasonable time. A direct communication to CN of the election is not essential where a fair inference of acceptance of repudiation can be inferred from the proven facts: "Repudiation of a contract does not, in itself, terminate the repudiated contract, and mere inaction by the innocent party does not amount ot acceptance of an anticipatory repudiation or

breach of a contract. Where the innocent party to a repudiatory breach or anticipatory repudiation wishes to be discharge, page 562, from the contract, the election to disaffirm the contract must be clearly and unequivocally communicated to the repudiating party within a reasonable time. A direct communication to the repudiating party of the election is not essential where a fair inference of acceptance of repudiation can be inferred from the proven facts." Brown v. Belleville (City), 2013 ONCA 148, 114 O.R. (3d) 561 at headnote [529] CN says it is beyond dispute that TML did nothing when it was explicitly advised by CN in November 2005, that the charging regime was changing. TML did not seek to enforce its rights and would likely not have done so but for the position taken by BNSF. [530] BNSF maintains that 9028 cars, a figure it accepts from TML, moved in the April 1, 2005 to September 30 period and that accordingly its claims against both Cominco and CN amount to $3,014,449.20. Practical compulsion [531] TML did not thereafter pay CN the statutory interswitching fees voluntarily but did so under the compulsion of urgent and pressing necessity. This is referred to as the doctrine of Practical Compulsion. [532] Practical Compulsion is an exception to the general rule that money is not recoverable when it is paid with knowledge of the facts and in circumstances where there is

no legal obligation to pay. The Supreme Court of Canada in George (Porky) Jacobs Enterprises Ltd. v. Regina (City), [1964] SCR 326 summarized the doctrine as follows: If a person pays money which he is not bound to pay, under the compulsion of urgent and pressing necessity, or of seizure, actual or threatened, of his goods, he can recover it as money had and received. The money is paid, not under duress in the strict sense of the term, as that implies duress of person, but under the pressure of seizure or detention of goods, which is analogous to that of duress. Payment under such pressure establishes that the payment is not made voluntarily to close the transaction. The payment is made for the purpose of averting a threatened evil, and is made, not with the intention of giving up a right, but under immediate necessity and with the intention of preserving the right to dispute the legality of the demand. [533] In Maskell v. Horner, [1915] 3 K.B. 106, the Court found that the plaintiff's continued payments over 12 years were compelled under the threat that the defendant would seize the plaintiff's goods if the plaintiff failed to pay. TML's continued overpayments to CN, through BNSF, were compelled under the real prospect that one of CN or BNSF would not move TML's Concentrates to Trail without payment of the accounts as rendered. [534] In other words, TML paid the statutory

Interswitching Rate, not voluntarily, but out of immediate necessity, as its commercial interests were directly at stake. [535] The doctrine of practical compulsion does not require that the payor be faced with a situation where there was no other alternative but to pay a practical compulsion is alone necessary. In Eadie v. Brantford (Township), 2015 BCCA 421, the Supreme Court of Canada found that even if there are other courses available to the plaintiff, the plaintiff may still be under practical compulsion of those other courses are time consuming and impractical. [536] TML had no other practical alternative as TML was obligated by economic necessity and practicality to send its Concentrates on to BNSF. Using CP direct into Trial for all Concentrates was not practical as there was insufficient storage space in Trail. [537] The choice to delay litigation does not necessarily mean that continued payments were not practically compelled. According to the BC Court of Appeal in Barafield Realty Ltd. v. Just Energy (BC) Limited Partnership, 2015 BCAA 421, para. 41: The question to be answered in whether the plaintiff was truly practically compelled to continue paying the defendant for two years under urgent and pressing necessity rather than pursuing other options, including litigating against the defendant or requesting the defendant return the plaintiff to their market natural

gas supply. [538] In light of the above, although TML paid statutory switching fees to BNSF for a continuous period of time, it did not give up its right to rely on the Cominco/CN Switching Agreement. In other words, TML did not relinquish its right to pay switching fees at the CN Contractual Rate pursuant to the Cominco/CN Switching Agreement. Claims of TML against CN (October 1, 2007 to December 31, 2010 [539] TML's claim against CN is in breach of contract. TML alleges that it made payments under a practical compulsion. CN says that unbeknownst to it TML had already repudiated that part of the TML/CN Agreement that covered non-Red Dog Concentrates. TML makes its claim on the same basis that is that it had long term contractual arrangements which were supposed to cover BCOL's and CN's services and it should not have to pay more than those arrangements required it to pay. [540] CN says that its position with respect to the October 2007-December 2010 is the same. The switching of the cars ended on March 31, 2005 and TML accepted the termination. [541] TML further says that for the October 2007-December 31, 2010 period it reimbursed BNSF for the CN invoices but did so under protest. TML seeks to recover from CN what it overpaid, the difference between the CN/Cominco switching agreement and CN which it has third partied on the basis that it has been unjustly enriched by accepting

the overpayment. [542] From October 2007 to December 2010 TML plead a breach of contract against CN. [543] During this time CN continued to charge the CTA Zone 4 interswitch rate to BNSF and BNSF sought and received reimbursement for those charges. TML claims that it paid under protest. [544] CN says that in respect of its third party claims against CN, before the merger of CN and BCOL, TML paid for Leg 1 and Leg 2 under separate contracts. CN says contrary to the evidence that TML may have paid less than it had paid prior to the merger. [545] CN suggests that TML was paying $68/car for the BCOL part of the railway switching and $125 for the CN switching. It says that CN's calculation of $169 for this service would put it in a better position than if it had been paying the combination of the two figures. This is a mistake. The error is shown on TML's Table 1 (at p. 96) where in the total charges/car column two figures are shown: the escalated and unescalated value of $125. The $169 erroneously fails to include the $63 charge for BCOL. Conclusion [546] The parties to this transportation network all made mistakes. BCOL charged BNSF $208/car for the period July 1990 until April 1, 2005. This claim is subject to a Limitation Act bar which cuts the claim off at 6 years. [547] BNSF made a claim against CN for $2,866 million it made to CN from April 1, 2005 until September 30, 2007

(Period 2). During this period CN paid BNSF $315 per car. This discharged TML's responsibility to pay what it owed under its contract with CN. The amount of the money it owes depends on whether the CN contract is "frozen" at $125 or increases as the contract provided by the annual amount of the CPI adjustment. By TML's reckoning this amount is $1,703,166 for all cars on the basis on non accelerated figure and $1,993,759.65 if the acceleration is taken into account. Table 1 (at p. 96) shows the basis of these calculations. Table 2 (p. 116) shows the totals. Table 3 (p. 116) shows the charges based on CN's Interswitching Rates. Table 4 (p. 116) shows the difference between Interswitching Rates and Contractual Rates. Table 5 (p. 117) shows the switching charges for BC Rail and CN contractual rates (not increased by the CPI, and increased by the CPI). Table 2 Switching BC Rail and CN Contractual Charges Period Red Dog Cars/Charges Specialty Cars/Charges Total Cars/Charges April 1, 2005 - September 30, 2007 7722 *$1,704,003.40 **$1,456,700 1306 *$289,756.25 **$246,466.75 9028 *$1,993,759.65 **$1,703,166.75 October 31, 2007-December 31, 2010 10,827 *$2,515,835.94 **$2,074,408.44 2465 *$571,585.93 **$471,887.93 13,291 *$3,087,421.87 **$2,546,296.37 *calculated based on CN and accelerated rates for BCOL switch per BP 113 **calculated based on the rate CN was actually charging as of

March 31, 2005, $125/car plus accelerated rates for the BCOL switch per BP 113 Table 3 CN Charges Based on Interswitching Rates Period CN charges @ $315 Interswitching Rate Red Dog CN Charges @$315 Interswitching Rate Specialty Concentrates Total CN Charges April 1, 2005- September 30, 2007 7722 cars $2,432.430 1306 $411,390 9028 $2,843.820 October 31, 2007 - December 31, 2010 10,827 $3,410.505 2464 $776,160 13,291 $4,186,665 Table 4 Difference Interswitching Rates and Contractual Rates Period Difference CN Charges @$315 and Contractual Rate (Red Dog) Difference CN Charges @ $315 and Contractual Rate (Red Dog) Difference CN Charges @ $315 and Contractual Rate (All Cars) April 1, 2005 - September 30, 2007 7722 cars *$238,426.60 **$975,730 1306 cars *$121,633.75 **$165,923.25 9028 cars *$850,060.35 **$1,140,653.25 October 31, 2007 - December 31, 2010 10,827 cars *$894,669.06 **$1,336,096.56 2464 cars *$204,574.07 **$304,272.07 13,291 cars *$1,099,243.13 **$1,640,368.63 ** calculated based on CN and BC Rail accelerated rates ** calculated based on the rate CN was actually charging as of March 31, 2005 $125/car plus accelerated rates for the BCOL switch per BP 113 Table 5 Switching Charges BC Rail and CN Contractual Rates Period Red Dog Cars Specialty Cars CN charges @$125 including BCOL (BP 113 charges) CN accelerated charges including BCOL (BP 113 charges) April 2005-Dec. 31,

2005 1701 24 $320,638.50 $4,524 $368,266.50 $5,196 Jan 2006-Feb. 28, 2006 629 0 $118,566.50 $139,323.50 March 1, 2006-Dec. 31, 2006 2940 647 $554,190 $121,959 $649,740 $142,987 Jan 1, 2007-Sept 30, 2007 2452 635 $463,305.40 $119,983.25 $546,673.40 $141,573.25 Oct. 1, 2007-Dec. 31, 2007 860 330 $162,497 $62,353.50 $191,737 $73,573.50 Jan 1, 2008-Dec. 31, 2008 3249 514 $619,096.95 $97,942.70 $742,558.98 $117,474.70 Jan 1, 2009 - Dec. 31, 2009 3213 453 $619,402.14 $87,329.34 $760,774.14 $107,261.34 Jan 1, 2010-Dec. 31, 2010 3505 1167 $673,555.85 $224,262.39 $820,765.85 $272,276.39 Total Period 2 7722 1306 $1,703,166.65 $1,993.759.65 Total Period 3 10,827 2464 $2,546,296.37 $3,0887,421.87 Breach of Contract [548] CN claims that TML was the original party in breach of contract. This is a theory that depends on TML having an agreement with BNSF for a through contract. [549] As it turns out, regardless of the pleadings, there was no through rate with BNSF. TML did not cut off the information CN relied upon. TML maintains that CN had adequate information. There was a waybill for every shipment made by TML. [550] In the period before January 2000 there were several instances where CN fell behind in its billings. On December 21, 1995 a note from Suzanne Low showed clearly that the shipments were of Red Dog and other custom concentrate cars from Vancouver Wharves [BCOL] to [BNSF] and

throughout 1996 TML continued to offload Red Dog Concentrates and custom Concentrates and move them through the network via BCOL, CN and BNSF. In April 1999 TML had not received bills from CN going back to July 1998. Suzanne Low contacted CN Mike Corr and said: "Left you a message last week. Wanted to ask you about switching charges in Vancouver area. We currently have railcars of concentrate that are switched at Vancouver Wharves in North Van by the CN from [BCOL] to the BNSF - this is performed at an agreed rate of c$125.00 per railcar. Apparently we have not received a bill from the CN for this operation in several months (I believe since July of 1998), although we have been accruing for the charges on our end. Wanted you to be aware of this situation and see if you could provide an update on the billing status. Would you please let me know what you find out." On November 29, 1999 there was a further communication from Suzanne Low. "Near every month-end the question comes up "Have we received any CN Billings for Custom [Concentrates]?" A few months back I had left this with you to check out. Have you made any progress? Just a note that the CN Billings for Red Dog [Concentrates] are up to date and currently being billing on a regular basis." [551] There was no response from anyone at CN. [552] On January 6, 2000 Rose Katnich contacted Suzanne Low: "I haven't heard from you -

have you had any chance to review the CN Billings for [Custom Concentrates]? [553] On January 10, 2000 Suzanne Low issued the following: "The CN switching charge to switch railcars between Vancouver Wharves [BCOL] and [BNSF] applies to Red Dog concentrate cars and is payable by Cominco to the CN. This rate currently stands at C$125.00 per carload. On all non-Red Dog, custom concentrate cars, our rail rate is deemed to be from Vancouver, BC origin and is inclusive of all switch charges from Vancouver Wharves, this agreed to when we first began regular shipment of [Custom Concentrates] in 1994. Therefore, no CN switch charges payable nor should they be accrued for on the [Custom Concentrate] movements from Vancouver Wharves. If you have any further questions about this, please give myself or John Murphy a call." [554] There is much wrong with this communication. a) There was never a through rate for the movement of Custom Concentrates; b) There was never a billing system based on this "agreement"; c) Since February 20, 1992 the transportation agreement had applied to the Leg 2 movement by CN of Custom Concentrates; d) No one contacted Suzanne Low or Mr. Murphy about this; e) Pertained to traffic in Red Dog and Custom Concentrates which moved through the system and were segregated as to Red Dog and other Concentrates. [555] On October 3, 2001, a fax transmittal called Shipment Red

Dog 01001L explains that "as these cars are "Waneta based but contain products other than zinc they have flagging tape on the railcar towing loops". This was the way Red Dog and non-Red Dog materials were distinguished. [556] On July 24, 2002 and August 21, 2002, there was further communication between Suzanne Low and Mike Cater and Bill Arabsky: "Suzanne, by token of this email I will ask {Bill Arabsky] if he knows how this charge is being administered. [Bill Arabsky], pls advise yr thoughts." [557] By this time the notion that Red Dog Concentrates were the only ones involved in the Network had become entrenched. On August 21, 2002 Suzanne Low sent the following to Allan Eisel: "I understand that you will be sending the CN monthly summary reports of the [Cominco] concentrate cars that are loaded out from [Vancouver Wharves], for their invoicing purposes. Can you please ensure that CN are sent advice on only the Red Dog lead and zinc concentrate carloadings and not any of the other customs import concentrate cars as these operate under a different switch charge agreement." [558] On August 26, 2002 Cominco (Suzanne Low) replied to Cominco (Rose Katnich): "[Suzanne Low], just to let you know I have had a response from [CN]. We will be working our payment of all past due bills. They inform me that the problem was when [Vancouver Wharves] switched new systems (faxes) they must have

been dropped from the distribution. I think this may have been resolved. Thanks for your follow-up on this matter." [559] The Restated Transaction Agreement was made November 25, 2003. It specifically provided that CN was under an obligation to perform any outstanding agreements BCOL was a party to and expressly included Vancouver Wharves/BCOL Transportation Agreement, along with Amendment #9. [560] The remaining documentation carriers through in a similar fashion. It is difficult to know on the evidence, how TML came to the conclusion that the Red Dog traffic should be the only traffic addressed by the Network. The communication of this was rather direct but emerged from a series of communications that were rather confused. Apart from the delinquent billings from CN there is this from Irwin Robinson writing Suzanne Low at TML: "Mike Corr had asked me to furnish information on the publication that covers switching at North Vancouver for your traffic, but I had forgotten to send it earlier. I have attached a copy of the page of the tariff that applies to your situation. It is taken from Tariff 1131, and item 10500 pertains to shipments of concentrate from North Vancouver." This was the first time Suzanne Low had ever seen Tariff 1131. She may have drawn the wrong inference from it. Certainly by the time of trial she was prepared to admit that there was never a through

arrangement, with BNSF. [561] CN always had adequate information or the means to acquire it. She several occasions on which TML had to advise it that it's bills were overdue and seek to rectify the problem do not suggest that TML was ever to take advantage of CN. CN was moving both kinds of freight and that freight was segregated - it was possible to tell how many non-Red Dog cars were moving quite apart from anything TML might have to say about it. The notion that TML was in breach of the Cominco/CN Agreement and therefore disentitled to the relief it seeks for recession, is impossible to make out on the facts as known. Summary [562] BNSF paid $208 per car for 15 years to BCOL. This was a mistake. The question for the court was whether BCOL could recover the full amount it had paid or whether it was caught by a limitation. I have found that a six year limitation applied and that BCOL is estopped from collecting past that six year point. BCOL owes BNSF this much money. Counsel may work out the exact amount. If there is any dispute about how much is due. There shall be liberty to apply. [563] The whole notion of who, as between TML and CN is responsible for the situation that developed, is not really difficult to determine. TML spent the first 9 years of the relationship periodically chasing CN for its bills. There was a point where CN stopped billing the rate it was entitled to

pursuant to the cost of living increase and settled for $125 per car as the rate it was charging. This may be related to its Tariff 1131. The TML calculations included at p. 65-67 of TML's submissions, incorporated into this judgment at p. 96 and pp. 116-117, show the effect of the increase in place from and after April 2005. I am not inclined to go beyond those numbers in an attempt to recoup the shortfall between the amounts that should have been charged before that date. Although there is reason not to, I consider that the fairest thing to do is to return to the contracts TML had with the other participants in the network, back to April 1, 2005 for CN and utilizing the rate paid by BCOL, $1,993,759.65 for Period 2 and $3,087,421.87 for Period 3. [564] I have considered the submissions made by each party as to the issue of acceptance of notice by CN. I find that TML did not accept CN's unilateral changes at any time and remained able to maintain its contracted rights throughout the controversies. TML had carefully put together the transportation network. It was structured as a series of confidential contracts. There was no way they could be unilaterally amended without consent. The various events that occurred over the years were all contrary to the contract. Included in this is TML's inexplicable error in suggesting the non-Red Dog Concentrates ran on a different rate than

the Red Dogs. CN simply had no business changing the billing system, which was incompetently carried out. This was the cause of the issues in Period 2 and 3. TML made an inexplicable choice about the non-Red Dog shipments after a long history of chasing TML for its bills, for a time as increased by the CPI and for another period at $125. From the time of the changes on the billing structure brought about by CN's unilateral change to the interswitching billing system, TML did not pay for CN's services. This was initially a mistake based on ignorance or confusion, and was not deliberate. When the time came in August 2007, that BNSF was being charged wrongfully, TML actively attempted to see that changes were made. Despite it being pointed out numerous times that TML was not responsible for the $208 per car charge BCOL billed BNSF, on the theory that TML would have had the account passed down, CN utterly refused to change its' position that $315 was a better rate than TML had under its contract. TML paid the $315 under protest. [565] At this point, I will not go behind the facts which are outlined in the judgment. TML did not plead practical compulsion but it was clear that in the face of the intransigence of CN it had no other practical choice. CN has not plead in the alternative that TML owes it for the contractual amounts that would have been payable for Period 2. [566] It is

nevertheless ordered that: 1. The contractual arrangements amongst TML and BNSF and CN continued in effect through Period 1, that is July 1, 1990-April 1, 2005. Beyond 6 years, BNSF's mistake claim against BCOL is time barred. There are 16 payments which fall within the limitation period (found herein at p. 64); 2. For Period 2, April 1, 2005-September 30, 2007, the number of cars that went through the system was 9028, for a total of $2,843,820. I am directing that CN pay BNSF this amount, and I direct TML pay CN $1,993,759.65; 3. With respect to Period 3, I direct that $1,640,368.63 be paid by CN to TML. [567] With respect to Period 1, BNSF is entitled to interest at Registrars' rates on 6 years of mistaken payments. The allocation of this is reserved with liberty to apply. Interest [568] The Court Order Interest Act, RSBC 1996 c. 79, provides the court may provide: 1 (1) Subject to section 2, a court must add to a pecuniary judgment an amount of interest calculated on the amount ordered to be paid at a rate the court considers appropriate in the circumstances from the date on which the cause of action arose to the date of the order. The court must not order interest on interest or interest on costs. [569] Interest is mandatory but a court has discretion with respect to the rate of interest. In Baart v. Kumar, [1985] B.C.J. No. 2461, the rate should be the Registrars' rate

unless it would be manifestly inequitable and unjust not to do so. [570] I do not see a claim for wrongdoing on the part of the BCOL or CN in this case. BCOL simply billed by mistake and BNSF paid. In the CN period, April 1, 2005-September 30, 2007, BNSF paid CN in ignorance of its responsibilities. In Period 3, TML overpaid, despite pointing out numerous times how CN was wrong. There remains a claim by TML against BNSF for maintaining its claims. The implications of any of these if necessary, I leave to counsel with liberty to apply. [571] Liberty to apply is granted with respect to the issue of costs. "McEwan J."