Sorting out complex web of companies, multiple lawsuits a challenge facing Churchill rail line buyers
CBC found several recent lawsuits on record involving Omnitrax and related corporate entities
The complexity of unraveling, then repackaging, the assets that Omnitrax head Pat Broe owns — or doesn't own — in Manitoba could be enough to make a lawyer's pulse quicken with thoughts of fees the size of locomotives.
Sorting it all out — and keeping multiple federal government departments in the loop and interested in the deal — is the undertaking facing One North, Missinippi, the consortium of northern communities, First Nations and Toronto-based Fairfax Financial Holdings involved in the tentative agreement to buy the flood-damaged rail line to the northern Manitoba town of Churchill and its port.
A pass through files of legal action both in Manitoba and federally shows several recent lawsuits on record and churns up at least a dozen Omnitrax corporate entities that operate here in the province that are connected — or maybe aren't.
For those keeping track, that includes:
- Omnitrax Canada Freight Service.
- Hudson Bay Port Company.
- Hudson Bay Railway Company.
- Churchill Marine Tank Farm Company.
- Churchill Terminal Company.
- Omnitrax Canada.
- Omnitrax Enterprises Inc.
- Marine Investment Company.
- Omnitrax Canada Freight Investment Company.
- Hudson Bay Investment Company.
- Northern Manitoba Investment Company.
Oops. Missed one. There is also Omnitrax Holdings Combined Inc.
Several of these are incorporated in Nova Scotia but registered to do business in Manitoba.
A mere eight days after the flood swept away chunks of the rail line to Churchill in 2017, one of the first moves by the Omnitrax group of companies was a merger.
Omnitrax Canada, the Churchill Terminal Company and the Hudson Bay Railway Company were all amalgamated under one name — Hudson Bay Railway Company.
The myriad companies and legal issues that spout from all this are complicated and opaque for a non-legal mind to grasp. Unsticking them is part of the key to successfully restoring the assets to Canadian hands.
Thorny legal liabilities
Lawyers representing Dr. Broe (honorary doctorate of laws, University of Winnipeg, 2008), managed to have his U.S. parent company — Omnitrax Inc. — removed from a lawsuit brought against it by the Government of Canada for not fixing the rail line to Churchill.
Left in the wake of that decision is a federal government suit against Hudson Bay Railway Company alone.
Omnitrax Inc. may be owned by Pat Broe, and it may own the more than a dozen corporate entities CBC News found, but in court, the liability link between Omnitrax and Hudson Bay Railway Company in that key federal lawsuit has now been washed away.
Some thorny legal liabilities have been scrubbed away by the current attempt to purchase the rail line and port.
Irony (if that is the right word) appears to abound.
A Regina-based company called Alliance Pulse Processors launched legal action in 2016 against the Hudson Bay Port Company over a dispute.
Alliance is a subsidiary of a company called AGT Food and Ingredients, one of the companies now involved in the proposed deal to buy the rail line and port.
Then last year, Toronto's Fairfax Financial Holdings invested $190 million in the company. Shortly thereafter Fairfax announced it was now part of the group seeking ownership of … Hudson Bay Rail.
According to the head of AGT, the legal action between it and Hudson Bay has been "discontinued."
Closer to home
Some of Omnitrax/Hudson Bay Rail's legal issues aren't so complicated and are closer to home. HBR is being sued by another northern Manitoba rail outfit — Keewatin Railway Company.
KRC had one of its locomotives go up in flames last year while sitting in Hudson Bay Rail's yard in The Pas. Though arson is thought to be the cause, the liability is still being fought over through the courts.
Whoever ends up owning the northern rail line will also have to address a legal issue with a human element.
In July 2015, HBR employee Scott Carrigan was driving his ATV home along a path on the railroad's property. He struck a piece of rail on the ride and was killed.
The path was commonly used by locals and Carrigan's family is suing HBR for damages following his death.
The family's lawyer, Martin Pollock, says the lawsuit is being actively pursued.
Former Manitoba premier Greg Selinger and former cabinet minister Steve Ashton are both likely cheerleading for a resolution to the Churchill debacle, but they also have a legal interest in the affair being settled.
Both men, and the Province of Manitoba, were named in a lawsuit by Omnitrax Canada (etc.) in 2016 for allegedly disclosing confidential information connected to the potential sale of the northern assets.
The company is also suing the province for $1.7 million in subsidies it says Manitioba was contractually obligated to pay.
Both of those suits, according to Omnitrax lawyer Jamie Kagan, are in "abeyance," meaning suspended temporarily as efforts to get a deal done on the sale continue.
Then there is a bunch of grain sitting on the Hudson Bay — nearly 30,000 tonnes of it, to be exact, and its owner wants the wheat moved before it deteriorates to mouse meal.
Saskatchewan-based Providence Grain Solutions shipped the wheat to Churchill before the flood swept away the rail line. It has sat in the terminal in the northern town since 2015 and Providence has been battling it out legally with at least seven of the Omnitrax/Hudson Bay companies since.
The company claims it has lost two shipping seasons and its grain is virtually disappearing while it sits, estimating 1,500 tonnes worth nearly half a million dollars has been lost through deterioration.
Hudson Bay and Omnitrax may not own the grain, but whoever buys the facilities must address the liability of it sitting in the towering Port in Churchill.
Solution may be close
Complicated enough for you?
Throw in pension liabilities for current and former staff, insurance claims that may or may not exist for things no one knows about, inexact estimates for the cost of repairing the rail line, the fact the potential ownership group hasn't actually been physically on the line to inspect the damage and a lack of goodwill in the negotiations.
If you've made it this far and are shaking your head because you are quietly (or loudly) cheering for Canada's only deep-water arctic port and rail line to be restored to Canuck ownership, there are some things that point to a resolution coming soon.
Manitoba's point guy on the file, federal Natural Resources Minister Jim Carr, will be in Churchill at the beginning of July. Fair to say he would like to walk the streets of the town with a deal in his pocket.
Omnitrax faces an early July deadline to file an appeal of the ruling from the Canadian Transportation Agency ordering the company to fix the line or face penalties.
And propane is running low in Manitoba's most northern town. A new shipment is on the way by sea, but next winter's supply either comes in by water or by rail — and the rail option is by far cheaper.
So have heart. A solution may be close.
Failure means many things, but it means most to those few souls sticking it out on Hudson Bay. Waiting.
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