Mind The Gap: Navigating Security Registrations For Railway Assets In Canada

This article examines the registration of interests in the rolling stock of federally regulated railway companies under Sections 104 and 105 of the Canada Transportation Act ("CTA")¹ and contrasts it with the mechanisms generally provided for under applicable provincial or territorial legislation (typically titled Personal Property Security Act, or, in Québec, registered in the Register of Personal and Movable Real Rights as governed by the Civil Code of Québec, CQLR c CCQ-1991, referred to here collectively as the "PPSA"). We will also consider several practical issues, including strategies for navigating gaps between federal and provincial regimes, and conclude with an assessment of whether it is appropriate for counsel to provide legal opinions on the content of the CTA registry.

Railway regulation in Canada does not always follow a single track. While the regulation of interprovincial and international railways falls within federal jurisdiction, provincial powers interject in important ways. Provincial authority includes not only railways operating exclusively within a province, but also some of the property, contractual, and civil rights issues that arise in relation to both federally and provincially regulated railways.² Like other commercial entities, railway companies routinely enter into transactions that create security interests over their assets. What sets railways apart, however, is the extraordinary level of capital investment required to operate within a highly regulated industry. The acquisition and ongoing maintenance of essential rail infrastructure and equipment typically require substantial financing, giving rise to security interests in favour of lenders and investors.

Registering Security Interests Under the CTA

Sections 104 and 105 of the CTA allow parties to deposit instruments creating an interest in federally governed rolling stock or other railway-related assets with the Registrar General of Canada.³ Rolling stock refers to all railway vehicles and equipment designed to move on rails, including locomotives, engines, motor cars, tenders, snowplows, flangers and any other cars or equipment intended for movement on wheels along railway tracks.⁴ In practice, these registrations typically evidence mortgages, liens or reservations of ownership on railcars.

The Constitutional Basis for Federal Registration

The existence of a federal registration regime reflects the constitutional framework governing railways. Where a railway operates interprovincially, federal jurisdiction applies not only to the undertaking itself but also to the civil rights that arise out of, or relate to, the operation of that railway, including interests in integral assets.⁵ Property and civil rights are ordinarily a provincial power under subs. 92(13) of the Constitution Act, 1867, which means that jurisdiction over the property and civil rights involving assets belonging to federally regulated railway companies is shared between federal Parliament and the applicable provincial legislatures. The case law on this subject is voluminous and as of this writing has concluded that where jurisdiction is shared, "interjurisdictional immunity" serves to protect the core of an exclusive power, either federal or provincial, from being impaired by the other level of government.⁶ Here, a provincial regime governing property and civil rights such as a PPSA may not impair the CTA registration scheme, which gives effect to Parliament's exclusive power over extra-provincial rail undertakings. A corollary of interjurisdictional immunity is that where Parliament does not legislate in an area, the applicable provincial legislation applies to the extent that such legislation does not impair the federal power. Security interests in assets belonging to federal railway companies are thus subject to federal registration under the CTA, but may be registered under provincial schemes as well, with the caution that the federal registration would prevail over any provincial registration in case of any discrepancy.

Comparison with Other Federally Regulated Transportation Undertakings

The existence of the registry raises an important question, that being why federally regulated railway-related assets and rolling stock are subject to federal registration, while assets used in other federally regulated interprovincial undertakings, such as trucking, are not. A comparison of the regulatory treatment of motor vehicles and railways helps to explain this distinction.

The regulation of motor vehicles, including the registration of security interests in such vehicles, generally falls within provincial jurisdiction under subsection 92(10), "Local Works and Undertakings", of the Constitution Act, 1867.⁷ However, federal jurisdiction is engaged when a motor vehicle undertaking operates across provincial boundaries, a principle grounded in subsection 92(10) and reinforced by case law.⁸ Federal jurisdiction most commonly applies to extra-provincial bus and truck undertakings, whose operations extend beyond a single province.⁹

The regulation of extra-provincial motor carrier undertakings is addressed through the federal Motor Vehicle Transport Act ("MVTA").¹⁰ The MVTA, one of the purposes of which is to give effect to the National Transportation Policy set out in the CTA,¹¹ establishes a regulatory regime focused on motor carrier safety performance and on the consistent application of operating standards across Canada.¹² Importantly, the MVTA delegates authority to provinces and territories to enact legislation and regulations governing these undertakings in a manner aligned with federal policy and with the National Safety Code, a set of standards agreed to between the federal government and the various provinces and territories.¹³ The resulting absence of a federal motor vehicle regulator explains in part why no federal registry exists for motor vehicles, and why the registration of related security interests is governed by the PPSA of each province and territory.

Unlike motor transport undertakings, extra-provincial railways are governed directly by federal legislation. Today, that legislation is found mainly in the CTA and the Railway Safety Act¹⁴

Purpose and Limitations of the Federal Registry

Predecessor railway legislation consistently included provisions analogous to Sections 104 and 105 of the CTA. The Railway Act, SC 1888 (51 Vict) c 29¹⁵, The Railway Act, SC 1903, c 58¹⁶ and The Railway Act, RSC 1906, c 37¹⁷, each contained provisions permitting the deposit of instruments creating interests in federally governed railway assets with the Secretary of State of Canada.¹⁸ The deposit of a mortgage deed with the Secretary of State of Canada operated to perfect the secured interest, in a manner closely resembling the current CTA regime.¹⁹

Commentary on the Railway Act, 1903 and the Railway Act, 1906 indicates that the purpose of the federal registry was to establish a uniform method of registering mortgages affecting the real and personal property²⁰ of railways subject to federal jurisdiction, replacing the diverse and often inconsistent provincial and territorial laws that then governed such interests.²¹ At the time, provincial and territorial systems for registering interests in real and personal property were fragmented and largely asset-specific, with separate registries for different forms of collateral.²² For railway companies operating across provincial and international boundaries, this patchwork of registration regimes created significant practical challenges, particularly since all assets were generally charged under a single security device.²³

The federal emphasis on uniformity, however, was not without its limitations. The same commentary from the early 20^th century notes that from its inception, the federal registration system did not clearly address questions of priority and suggests that out of an abundance of caution and to preserve priority, secured parties might wish to register their interests under the then-applicable provincial or territorial laws, no matter how fragmented and asset-specific such provincial or territorial laws were.²⁴

Although provincial PPSA systems have since been modernized, the practice of depositing security interests in federally governed rail assets with the Registrar General of Canada continues under the CTA. The CTA registration regime remains silent on matters of priority and enforcement and operates primarily as a public notice system for the interests contained in the deposited documents.²⁵ Registration under the CTA therefore serves to perfect a security interest, while questions of priority and enforcement (in respect of which Parliament has not legislated) are determined under the applicable PPSA framework(s).²⁶

Nature and Effect of CTA Registration

All documents deposited with the Registrar General of Canada under the CTA are stored in a publicly searchable railway database dating back to 1868.²⁷ Records are never removed or updated, regardless of the circumstances.²⁸ To be accepted, documents must be signed, be filed under the correct section of the CTA, clearly indicate the effective date, and be submitted as a searchable, optical character readable PDF.²⁹ Beyond these technical requirements, there are no content-related obligations.³⁰ Upon deposit of a mortgage, hypothec, security agreement, assignment, or similar instrument, the interest is deemed perfected and enforceable against all persons.³¹ No additional registration under statutes governing real or personal property is required.³²

Searches of the registry must be conducted manually by individuals.³³ Corporations Canada, which administers the database on behalf of the Registrar General of Canada, does not perform searches or issue reports summarizing, confirming, or otherwise verifying results or the contents of the filings.³⁴

Registering Security Interests Under the PPSA

PPSA are generally harmonized across Canadian provinces and territories, with largely consistent form and content. Like the CTA registry, registration under the PPSA perfects a security interest, making it valid and enforceable against all persons.³⁵ Beyond perfection, PPSA frameworks provide a comprehensive system for determining the priority of competing interests when multiple registrations exist against the same collateral.³⁶ They also establish clear remedies, rights, and enforcement mechanisms for secured parties.³⁷ Notably, when a PPSA registry search is requested, the registrar must issue a certificate or printed search result, which serves as proof of the registry's contents unless evidence to the contrary is presented.³⁸

Dual Registration: Closing the Gaps

The coexistence of federal and provincial registration regimes raises a practical question for secured parties: how can lenders and investors ensure that their interests in railway assets and rolling stock are protected where both frameworks apply? While the CTA provides a mechanism for perfecting interests in federally regulated railway-related assets and rolling stock, it does not address priority or enforcement. By contrast, PPSA regimes offer a comprehensive framework for determining priority, resolving competing claims, and enforcing security interests.

PPSA statutes, except those in Ontario and Yukon, include provisions stating that the PPSA does not apply to a security agreement where an Act of Parliament governs the rights of the parties to the agreement or third parties affected by a security interest.³⁹ However, as discussed above, these provisions do not preclude PPSA registration in respect of federally regulated railway-related assets and rolling stock, even where the security interest has been perfected under the CTA.⁴⁰

Consequently, where railway-related assets and rolling stock fall within federal jurisdiction, parties commonly register under both the PPSA and the CTA to ensure comprehensive protection of their interests.⁴¹ Effectively, dual registration acts as a risk mitigation strategy rather than a statutory requirement. Filing under the CTA satisfies the federal notice and perfection regime applicable to federally regulated railway-related assets and rolling stock, while PPSA registration preserves access to established priority rules and enforcement mechanisms. When used together, these registrations provide an added layer of protection and greater certainty across jurisdictions than would be the case using only one of the two, thus reducing the risk that an interest perfected under one regime will be challenged or subordinated under the other. ⁴²

CTA Registrations and Legal Opinions: Key Considerations

In transactions that create security interests, legal opinions may be requested as a condition to closing. For personal property security, legal opinions typically address three areas:

1. Enforceability: confirming that a valid and binding agreement exists between the debtor and the secured party, covering remedies against the debtor but not the collateral;⁴³
2. Creation: assuring that the security agreement grants the secured party an interest in the collateral securing the debtor's obligations;⁴⁴ and
3. Perfection: stating that the security interest has been perfected, without opining on priority.⁴⁵

These opinions do not generally address the contents or validity of existing security interests.⁴⁶ On that basis, a legal opinion on the validity of CTA registrations will typically be unnecessary. Additionally, because the CTA database is not maintained, is searchable only on an individual basis, and its contents and search results are not guaranteed by the Registrar General of Canada, any opinion on CTA registrations should be approached with caution. Opinions should also be carefully limited given the absence of priority rules and enforcement mechanisms under the CTA.

Instead of requiring a legal opinion on existing registrations, the vetting of security interests and the review of registrations is typically handled during the due diligence process.⁴⁷ PPSA searches are a standard part of due diligence, and where relevant, CTA searches should also be performed.⁴⁸ Any potential or identified risks can be addressed through the representations and warranties of the parties, and, if necessary, insurance.⁴⁹ Thus, legal opinions on existing security registrations, particularly CTA registrations, are rarely necessary. If an opinion on this topic is requested, it should be narrowly focused and carefully qualified in light of the CTA's limitations.

Conclusion

Navigating security interests in railway-related assets and rolling stock requires an understanding of both federal and provincial regimes. Registration under the CTA serves to perfect an interest and provide public notice, but it does not address priority or enforcement. PPSA registration offers greater certainty in those areas, making registration under both regimes, where appropriate, the most effective means of protecting secured interests.

In transactions involving rail assets subject to both the PPSA and the CTA, counsel should prioritize thorough due diligence and conduct comprehensive searches in each applicable registry. Broad legal opinions on existing registrations, particularly under the CTA, should generally be avoided. Where opinions relating to CTA registrations are required, they should be carefully framed and qualified to reflect the inherent limitations of the registry system.

Footnotes

1. Canada Transportation Act, SC 1996 ("CTA").

2. Practical Law Canada, Security Interests: Rolling Stock and Railway Assets (29 October, 2025), online: <(PL) Thomson Reuters Canada> ("Rolling Stock and Railway Assets") at "Constitutional Conflict".

6. Opsis Airport Services Inc. v Quebec (Attorney General), 2025 SCC 17, para 32. See also an article prepared by colleagues of the authors on this subject: https://www.mccarthy.ca/en/insights/blogs/canadian-appeals-monitor/supreme-court-of-canada-clarifies-when-provincial-laws-apply-to-activities-or-businesses-under-federal-jurisdiction.

7. The Constitution Act, 1867, 30 & 31 Vict, c 3, subs.92(10).

8. Ibid; AG Ont et al. v Winner et al., 1954 CanLII 289 (UK JCPC), at 678–681; Re Ottawa-Carleton Regional Transit Commission and Amalgamated Transit Union, Local 279 et al., 1983 CanLII 1936 (ON CA), para 15; Consolidated Fastfrate Inc. v Western Canada Council of Teamsters, 2009 SCC 53.

9. Canadian Transportation Agency, At The Heart Of Transportation: A Moving History (2017), online < https://otc-cta.gc.ca/eng/publication/at-heart-transportation-a-moving-history>, at "Taking Control: The Canadian Transport Commission, 1967 to 1988".

10. Motor Vehicle Transport Act, RSC 1985, c 29 (3rd Supp) ("MVTA"), ss.2 and 3.

11. The MVTA, formerly the Motor Vehicle Transport Act, 1987, was amended in 2001 to change its name and to give effect to the National Transportation Policy set out at section 5 of the CTA, which had been adopted in 1996; see An Act to Amend the Motor Vehicle Transport Act, 1987 and to Make Consequential amendments to other Acts, SC 2001, c 13.

12. MVTA, s.3.

13. Ibid, subs.3(2) and (3); Motor Carrier Safety Fitness Certificate Regulations, SOR/2005-180.

14. Railway Safety Act, RSC 1985, c 32 (4th Supp).

15. The Railway Act, SC 1888 (51 Vict) c 29 ("Railway Act 1888"), ss.94 and 95.

16. The Railway Act, SC 1903, c 58 ("Railway Act, 1903"), s.112(4) and (5); Angus MacMurchy and Shirley Denison, The Canadian Railway Act 1903 (Annotated) (Toronto: Canada Law Book Company, Limited, 1905) ("Railway Act 1903 – Annotated"), subs.112(4) and (5).

17. The Railway Act, RSC 1906, c 37 ("Railway Act, 1906"), s.140; Angus MacMurchy and Shirley Denison, The Canadian Railway Act and Amending Acts 1907-1910 with Notes of Cases Decided Thereon Including the Decisions of the Board of Railway Commissioners Respecting Telephone, Telegraph and Express Companies (Toronto: Canada Law Book Company, Limited, 1911), 2nd ed ("Railway Act 1906 – Annotated"), s.140.

18. Railway Act 1888, supra note 15, ss. 94 and 95.

19. CTA, supra note 1, ss. 104 and 105.

20. The terms "real property" and "personal property" in this article are intended to also capture "immovable" and "movable" property, respectively, as defined by the CCQ.

21. Railway Act 1903 - Annotated, supra note 16 atcommentary unders.112(4); Railway Act 1906 - Annotated, supra note 17 at commentary unders.140; see also, Roderick J. Wood, The Evolution of the Personal Property Registry: Centralization, Computerization, Privatization and Beyond (1996), 35:1 Alta L Rev 45 at 48; Roderick J. Wood, The Nature and Definition of Federal Security Interests (2001), 34:1 Can Bus LJ 65 ("Roderick 2001") at 98-100.

22. Roderick J. Wood, Ronald C.C. Cuming and Catherine Walsh, Personal Property Security Law, 3rd ed (Irwin Law: 2022) ("PPSL"), at 360.

23. Ibid.

24. Railway Act 1903 – Annotated, supra note 16 atcommentary unders.112(4); Railway Act 1906 – Annotated, supra note 17 at commentary unders.140.

25. Government of Canada, Railway tool services, online: <https://ised-isde.canada.ca/site/corporations-canada/en/railway-tool-services> ("Railway Tool") at "Frequently asked questions - Does deposit under section 104 or 105 of the CTA establish a system of priorities?" and "Deposit railway documents"; Rolling Stock and Railway Assets, supra note 2 at "Canada Transportation Act".

26. Bruce MacDougall, Canadian Personal Property Security Law (Lexis: 2023), vol 1, 3rd ed. <https://lexisdl.com/library/mccarthy/title/5645190> at "12.03[2. – Railway Security"; PPSL, supra note 21 at 775–776; Ibid.

41. Practical Law Canada, Security Interests in Special Classes of Personal Property Toolkit, online: <(PL) Thomson Reuters Canada> at "Railcars, rolling stock and related assets".

43. Wilfred M. Estey, Legal Opinions in Commercial Transactions, 4th ed (Toronto: LexisNexis, 2022), online: <LexisNexis> at "9.02. Enforceability of the Security Agreement".