CP Rail loses suit chal­lenge

Judge rules against com­pany’s case against Lac-Megantic suit

Cape Breton Post - - CANADA -

A Que­bec judge has re­jected Cana­dian Pa­cific Rail­way Ltd.’s chal­lenge of a court set­tle­ment that is aimed at com­pen­sat­ing res­i­dents of Lac-Megantic, Que.

About 25 com­pa­nies ac­cused of re­spon­si­bil­ity in the 2013 train tragedy that killed 47 peo­ple have put up a fund of $431.5 mil­lion.

The set­tle­ment was be­ing op­posed by Cana­dian Pa­cific.

The com­pany wanted Su­pe­rior Court Jus­tice Gae­tan Du­mas to de­clare the on­go­ing bank­ruptcy pro­ceed­ings for the rail­way re­spon­si­ble for the dis­as­ter — Mon­treal Maine and At­lantic Rail­way Ltd. — il­le­git­i­mate.

It ar­gued the case should be heard in Fed­eral Court, not Que­bec Su­pe­rior Court.

CP also wanted Du­mas to rule that the set­tle­ment fund was un­fair be­cause it would have lim­ited the rail­way com­pany’s abil­ity to coun­ter­sue the other firms in­volved in the tragedy.

In his rul­ing Mon­day, Du­mas stated that Su­pe­rior Court has le­git­i­mate ju­ris­dic­tion and that the set­tle­ment process to com­pen­sate vic­tims can go ahead.

CP said Mon­day it would re­view the de­ci­sion and that it would have no other im­me­di­ate com­ment.

A lawyer for the rail­way com­pany said last month the terms of the set­tle­ment fund were un­fair and would limit its abil­ity to de­fend it­self in court.

The fund was unan­i­mously ac­cepted by vic­tims and cred­i­tors of the dis­as­ter dur­ing a June 8 meet­ing.

On July 6, 2013, an un­manned train owned by the Mon­treal Maine and At­lantic Rail­way Ltd. (MMA) roared into Lac-Megantic and de­railed, with its cargo ex­plod­ing and dec­i­mat­ing part of the down­town core.

MMA didn’t have enough in­sur­ance to pay dam­ages to vic­tims and cred­i­tors, so it filed for bank­ruptcy in the United States and Canada. The set­tle­ment fund is tied to the bank­ruptcy pro­ceed­ings on both sides of the bor­der.

The terms of the fund of­fer all the com­pa­nies that are giv­ing money a full re­lease from le­gal li­a­bil­ity for the dis­as­ter in both the United States and Canada.

While CP has said pre­vi­ously it doesn’t dis­pute that fam­i­lies of the vic­tims de­serve com­pen­sa­tion, it in­sists it was not re­spon­si­ble for what hap­pened.

Its lawyer, Alain Rien­deau, re­minded Du­mas last month that the dis­as­ter “did not in­volve our tracks, did not in­volve our rail cars, our prod­ucts or our em­ploy­ees.”

The prob­lem for CP is if any of the 25 com­pa­nies de­cides to sue it to re­coup money put to­ward the fund. Be­ing freed from li­a­bil­ity means CP wouldn’t be able to coun­ter­sue.

Rien­deau also ar­gued that the fund is tech­ni­cally illegal be­cause Canada’s bank­ruptcy process doesn’t al­low third par­ties to be fully re­leased from li­a­bil­i­ties in cer­tain types of in­sol­vency pro­ceed­ings such as the one in­volv­ing MMA.

The ap­proved plan would see just un­der $200 mil­lion go to the gov­ern­ment of Que­bec and the town of Lac-Megantic for cleanup and other re­lated costs.


Wrecked oil tankers and de­bris from a run­away train in Lac-Megantic, Que. are pic­tured July 8, 2013. A Que­bec judge has re­jected Cana­dian Pa­cific Rail­way Ltd.’s chal­lenge of a court set­tle­ment aimed at com­pen­sat­ing res­i­dents of Lac-Megantic.

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