CTLA Feature Articles and Case Notes

shipper WFS and the consignee-buyer IOL had the final say in determining the route. This seemed normal given that: (i) IOL could receive tank cars either from MMA in interchange with New Brunswick Southern Railway (NBSR) or from CN, whichever was more convenient; and (ii) WFS paid the transportation costs and consequently, following IOL’s complaints, asked for new options to be submitted.

Based on the evidence presented regarding the negotiations and steps taken, prior to finalizing the contract between WFS and CP, and then in the course of the ongoing discussions related to the extension of this contract, the Court considered that it was not CP that made the final choice of the route and that imposed on WFS or IOL the use of MMA’s services.

Further, it was not CP’s role to monitor MMA’s activities or even to act to identify flaws in its operations that might lead MMA’s exclusion from the routes being considered for the transportation of dangerous goods.

The Court considered that all the rules, all the customs and all the standards generally accepted by the railway industry do not lead to the conclusion that CP should have intervened and subsequently, before entrusting dangerous goods to MMA, either verified or be concerned about the condition of MMA’s tracks, the condition of its equipment or the poor safety performance of its operations.

The Court also found that there is no legal or even customary obligation bearing on CP, whether acting as an originating carrier or considered as a Class 1 carrier, to ensure that a connecting carrier, to whom it transfers tank cars, operates in an adequate manner and on safe tracks with equipment in good condition. No such obligation exists whether the connecting carrier is itself a Class 1 carrier, a regional carrier or even a shortline.

Based on all of these circumstances and the evidence presented, the Court found that CP was not negligent in its discussions and negotiations with WFS, or even with IOL, for the selection of the route between New Town and Saint John, nor did it, even if its role is important, have a faulty

impact on the final decision as to the route.

Incorrect Classification and Dangerousness of the Product Transported

The plaintiffs argued that CP had, considering a number of specific elements, several grounds or had sufficient clues or information such that it had to know, in 2012 and 2013, that the product transported was misclassified and that it was much more dangerous than what the packing group used in the classification suggested.

The evidence revealed that different employees or officers of CP had access to certain information that may, at first glance, appear to be indicative of the misclassification of the product transported. However, further analysis of this disparate information does not lead to the conclusion that the information should create serious suspicions requiring CP, as the carrier, to proceed as suggested by the plaintiffs; that is, to refuse transportation and to require not only that WFS revise its classification, but also that it submit convincing evidence of its correctness.

The Court did not consider that the obligations created by the provisions of the U.S. and Canadian legislation require such interventions.

The carrier, as a general rule, may rely on information provided by the shipper of the dangerous good or a previous carrier unless the carrier knows or a reasonable person acting under the same circumstances and exercising reasonable diligence should have known of the misclassification or, at least, should have reasonably suspected that it is incorrect. Indeed, the carrier cannot ignore obvious errors in the shipping documentation or sufficiently clear evidence of a discrepancy between the documentation submitted by the shipper and the information on the packaging containing the dangerous goods.

However, where the shipper, who is supposed to be the expert on the goods entrusted for transport, selects a packing group and proceeds to identify the product and certify it as conforming to the packing group, and where the methods for classifying the products require analysis, and especially when the dangerous products are packaged in sealed containers, the carrier, according to the evidence, is not obligated consult the analysis or the tests nor is required to question the processes of extraction, manufacture, treatment and classification of the product.

The Court was not convinced that a reasonable carrier must ensure that this entire classification process, which obviously takes place prior to the product being packaged and delivered to the carrier, must be verified or examined by the carrier by requiring specific evidence from the shipper related to its classification process.

Lack of Intervention in MMA’s Unsafe Operating Practices

The plaintiffs asserted that as the originating carrier, responsible for implementing a through route tariff at the request of WFS, CP had obligations not only to WFS, but also generally to all with respect to all aspects of providing for the safe transportation of the particularly dangerous good that is Bakken’s crude oil. As the organizer of that through route, CP had to make adequate inquiries about the connecting carrier MMA.

CP argued that the transportation system, and particularly the rail system, is largely regulated and its operations monitored by regulatory authorities. They added that the standards of operation and the rules of business established over a considerable number of years, either by customary practice in the field or by statutory and regulatory provisions, do not in any way require an originating carrier, regardless of the nature of the commodity being transported, to audit the operations, the manner of operation or the safety record of a connecting carrier, whether it be a Class 1 carrier or a shortline railway.

The Court was of the view that it is neither the role nor the responsibility of a railway company, even a large one, to ensure that a connecting carrier holds all the necessary authorizations to operate a railroad, especially when dangerous goods activities are carried out with the knowledge and oversight of the regulatory authorities, such as TC, who oftentimes carry out inquiries. It is also not a railway company’s responsibility to ensure that the connecting carrier follows the rules, that its employees are well trained, that its tracks are in good condition, that its equipment is adequate, and that, in general, the company meets safety standards.

After consideration, the Court concluded that based on the evidence it could not find that CP knew, or should have known, that at that time MMA was poorly organized; its employees were poorly trained; its Safety Management System (SMS) was ineffective; its means of monitoring and verifying the application of safety measures by its employees were deficient; numerous incidents had occurred in recent years in connection with measures relating to the application of hand brakes; it did not