Judge OK’s $430-million settlement fund for Lac-Megantic victims and creditors by Guiseppe Valiante, The Canadian Press, July 12, 2015, Calgary Herald
The $430-million settlement fund proposal for victims of the Lac-Megantic train disaster is fair and can proceed despite objections by Canadian Pacific Railway Ltd., a Quebec judge ruled Monday.
Superior Court Justice Gaetan Dumas rejected two Canadian Pacific (TSX:CP) motions aimed at stopping the fund, which is earmarked for more than 4,000 victims and creditors in connection with the derailment that killed 47 people in July 2013.
CP said Monday it would review the decision and that it would have no other immediate comment. While the company can appeal the ruling, it will require the permission of an appeals court justice to do so.
Lawyer Jeff Orenstein, who represents the victims of the tragedy, said if CP is not granted the right to appeal, he hopes to have the millions distributed to victims as soon as possible.
“We will push to get the cheques out by the end of the year,” he said. “If it’s possible we’ll do it.”
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.
About 25 companies accused of responsibility in the 2013 tragedy agreed to pay roughly $431.5 million to victims.
The terms of the fund offer all the companies that are giving money a full release from legal liability, in both the United States and Canada, for the disaster. The fund was unanimously accepted by victims and creditors during a June 8 meeting.
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.”
CP wanted 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 its ability to countersue the other firms involved in the tragedy.
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.
Dumas’ ruling on Monday states CP waited too long to file motions against the court’s jurisdiction and the settlement fund terms. [Justice N Wittmann gave the Alberta government three years to file motions against the ernst vs encana lawsiut. ]
CP was heavily criticized by lawyers representing victims and other companies in the fund for waiting almost two years before objecting to the court process.
“(CP) cannot come back two years later and complain that a judgment has no force — especially after CP participated in the court process,” Dumas wrote. [The Alberta government had also “participated in the court process” in the Ernst case in the three years it waited to file]
Moreover, Dumas ruled that his court has jurisdiction to oversee MMA’s bankruptcy proceedings.
On the second motion, Dumas said the settlement fund is fair and “nothing prevents CP from defending itself from actions taken against it in court.”
“If it is not responsible (for the derailment), then the actions will be rejected.”
Orenstein had won approval for a class action on behalf of victims of the derailment and since all other companies will be released from liability, only CP remains to be taken to court. “Absolutely we intend to proceed in our case against (CP),” he said.
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.
About $111 million would be distributed to families of the deceased and the remaining millions are reserved for other claims such as psychological and material damages suffered as a result of the train derailment.
As much as $21 million is earmarked for lawyers’ fees. [Emphasis added]
Judge rejects CP Rail’s challenge of Lac-Mégantic settlement by Richard Blackwell and Jeff Gray, July 13, 2015, The Globe and Mail
Canadian Pacific Railway Ltd. has failed in its attempt to block a court settlement that could pay millions of dollars in compensation to families of the victims of the 2013 Lac-Mégantic oil-train disaster.
Quebec Superior Court Justice Gaétan Dumas rejected CP’s challenge of the settlement in a decision released on Monday, saying the process can go ahead. CP had argued that the court had no jurisdiction over the settlement, which was proposed under bankruptcy proceedings for the Montreal, Maine and Atlantic Railway Ltd., which was responsible for the explosion.
… The judge rejected CP’s argument that, because the Companies’ Creditors Arrangement Act excludes railways, the court had no jurisdiction over Montreal, Maine and Atlantic.
In his ruling, the judge said CP should have raised its arguments over the past two years, after the rail company sought bankruptcy protection.
“Where was CP during all of these processes?” the ruling asks in French, calling CP’s move a “disguised appeal” made “two years too late.”
… CP has said it has no responsibility for the accident that destroyed the centre of the town and killed 47 people. CP hauled the oil train from the Bakken area in North Dakota to Montreal, where MMA took control. The operator of the train, who is facing charges of criminal negligence causing death, allegedly left it unattended before it rolled down a hill on July 6, 2013, derailed and blew up in the centre of Lac-Mégantic.
CP said it had no choice but to carry the oil to Montreal, because it is under a “common carrier obligation,” which means it hauls whatever goods its customers require, and does not get to choose the route.
CP’s refusal to contribute means that, unlike the other defendants, it still faces litigation from a class action launched over the disaster and other potential litigation.
Patrice Benoit, a lawyer acting for Montreal, Maine and Atlantic, said the ruling was a step forward for the families of the victims of the disaster. “We are extremely pleased with these two judgments. It’s great news for our 4,000 victims or so, and we do hope that the same thing will [be approved] in the U.S.,” Mr. Benoit said..
… The names of contributors to the compensation fund have generally been kept private, but some have been identified. Irving Oil Ltd. issued a news release in March saying it was contributing $75-million to the fund. Oil broker World Fuel Services Corp., which sold the crude to Irving Oil’s New Brunswick refinery, agreed to pay $135-million. Others who have contributed include ConocoPhillips Co. and the makers of the tank cars. The negotiated payments to the settlement fund give contributors a release from any current or future lawsuits or liabilities stemming from the disaster. [Emphasis added]
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