Claim against CN over sale of contaminated property going forward, in part

This is another decision on motions for summary judgment.  The action involves land owned in North Bay by Canadian National Railway Company (CN) that was sold by Canadian National Railway Properties (CNRP), a special purpose subsidiary of CN that was used to sell the lands, to Drosophilinks Consulting Inc. (DCI). It is alleged that there were environmental problems with one of the parcels sold by CN known as the Main Street lands. Damages are claimed by DCI for breach of contract and by the plaintiff Aldo Forgione under the Occupiers Liability Act, at common law and for breach of an alleged duty of good faith owed to him.  Forgione was involved because the property had come to DCI through an agreement between CN and Forgione "in trust" (for DCI).

The plaintiffs claim that in late July 2005, Mr. Forgione discovered a trailer on the Main Street property that contained transformers containing PCBs that exceeded federal and provincial guidelines. It is accepted that these transformers were there when the sale to DCI closed, although CN says that at the time of the sale, it thought that the property had previously been successfully decommissioned of environmental problems. It is claimed that DCI has incurred substantial expenses to comply with an order of the Ministry of the Environment, that Mr. Forgione has suffered personal damages as result of coming into contact with the PCBs and that he has suffered damages by reason of a lessening in value of the other properties that he purchased from CN in North Bay due to the notoriety of the PCB problem at the Main Street property.

The Ontario Superior Court declined to dismiss the DCI claim for breach of the agreement of purchase and sale, finding that there were genuine issues for trial.  The Court did, though, dismiss all of Forgione's personal claims, ruling that: 1) CN could not be liable under the Occupiers Liability Act when it had already sold the property to DCI; 2) Forgione provided no evidence of personal injury or harm; 3) Forgione provided no evidence of damage caused to other neighbouring properties purchased by companies he owned; 4) Forgione has no claim for a breach of the "duty of good faith":

Moreover, Canadian law has not recognized a general duty of good faith independent from or contrary to the terms of contract.

Even if Forgione were a party to the contract, which he wasn't, a breach of the contract by CN could not give rise to a cause of action for Forgione based on a separate breach of the "duty of good faith".

Read the decision at: Drosophilinks Consulting Inc et al v. Canadian National Railway Company.

Federal Court of Appeal rules on revenue cap for CN for movement of western grain

The Federal Court of Appeal has ruled on an appeal by Canadian National Railway Company (CN) of a Canadian Transportation Agency (CTA) decision related to the calculation of CNR's revenue cap for crop year 2007-08.  Revenue earned in a crop year by prescribed railway companies for the movement of western grain is subject to a cap. The CTA determines a prescribed railway company’s revenue for a crop year and whether it exceeds the revenue cap. CN, a prescribed railway company, said that the CTA wrongly included certain items in its revenue; the inclusion of an item in a railway company’s revenue pushes it closer to the cap.

CN appealed the decision of the CTA (Decision No. 628-R-2008), dated December 30, 2008, and a decision in a confidential letter of the same date (File Nos. T6650-2 and T6650-7-7), in respect of the crop year 2007-08. CN’s principal submissions were that the CTA erred in law or jurisdiction by including the following three items in its revenue cap calculation:

a. earnings from carrying American-grown grain from the U.S.-Canada border to ports in British Columbia for export to third countries, without entering the Canadian market. CN says that this grain is not “imported into Canada” within the meaning of the Canada Transportation Act, S.C. 1996, c. 10, section 147 (“Act”);

b. earnings from lifting grain-carrying containers from a truck onto a flat-bed rail car and vice versa. CN says that this is not the “carriage of grain … over a railway line” within the meaning of section 147; and

c. a sum paid by [a shipper] to CN under a penalty clause in their contract of carriage for failing to ship the promised amount of grain. CN says that this sum was reasonably characterized as a performance penalty and should have been excluded under paragraph 150(3)(b).

The third issue was already resolved in CN's favour based on an earlier decision in another case.  However, the Federal Court of Appeal decided that the CTA's other two determinations were not unreasaonable and, therefore, should stand. 

Read the Federal Court of Canada decision at: CNR v. Canadian Transportation Agency.