Canadian National Railway has been hit with a landmark $24.4 million court judgment for failing to deliver grain cars during the winter of 2014, including lost profits and interest, in a decision that could reshape accountability for federally regulated railways.Blacklock's Reporter says the Federal Court ruled in favour of Calgary-based Louis Dreyfus Co. after more than a decade of litigation and four trials stemming from the near-collapse of grain shipments across Western Canada. Justice Alan Diner said CN’s erratic service directly caused the company to forfeit sales it otherwise would have made.“Louis Dreyfus Co. has shown, on a balance of probabilities, that Canadian National’s breach caused it to lose sales and thus profits,” Justice Diner wrote. “If CN had not failed to supply the required railcars, Louis Dreyfus could and would have sold additional grain at favourable rates.” The award includes lost profits at 5% interest plus costs..Records show Louis Dreyfus signed a 15-year contract with CN in 1999 to supply grain cars to elevators in Saskatchewan and Alberta. The court noted the company was effectively “captive” to the railway, entirely reliant on CN for transport.During the winter of 2014, CN failed to ship 3,376 cars amid what the railway called the largest harvest in Canadian history and extreme cold that slowed operations. Justice Diner rejected those excuses, ruling that the only impediment to additional grain sales was the lack of railcars. The shortfall, he wrote, prevented Louis Dreyfus from moving an extra 309,000 metric tonnes to the West Coast.The case is the first test of Parliament’s 2013 Fair Rail Freight Service Act, which allows shippers to pursue binding arbitration and fines against railways for non-compliance. .Critics have long argued that in monopoly conditions, railways lack incentives to meet service obligations, leaving shippers with little recourse.“Railways often get off scot-free if they don’t perform according to what they promised,” said former Liberal MP Ken Hardie during committee hearings. Thursday’s judgment signals that courts are willing to hold them financially accountable.
