Executive Summary: Key Legal and Evidentiary Issues

• The court considered whether demurrage and supplemental service fees were contractually enforceable under a siding agreement and incorporated tariff.

• CP argued that its tariff applied to interswitching services, while SouthSask claimed the tariff ceased to apply once CN became its primary rail carrier.

• The dispute turned on the interpretation of federal regulatory obligations under the Canada Transportation Act.

• The court rejected SouthSask’s limitation defence, finding the claims were brought within the statutory two-year window.

• CP was found entitled to enforce its tariff as incorporated into the siding agreement for services provided post-termination of its carrier role.

• Summary judgment was granted in CP’s favour, with a net award of $997,476.15 plus interest and costs.

Background and procedural history

Canadian Pacific Railway Company (CP) brought an action against SouthSask Quality Processors Ltd. (SouthSask) for unpaid demurrage and supplemental service charges totaling nearly $1 million. SouthSask operates a grain-handling facility near Moose Jaw, Saskatchewan, which was originally serviced by CP under a siding agreement signed in 2015. In 2019, SouthSask switched its primary rail carrier from CP to Canadian National Railway Company (CN), using interswitching under the Canada Transportation Act to move railcars between the facilities and carriers.

Despite no longer being SouthSask’s primary carrier, CP continued to provide limited services, including car storage and interswitching support. CP invoiced SouthSask under its Tariff 2, which included demurrage and supplemental service charges. SouthSask refused to pay, arguing that CP had no contractual or statutory basis to impose such charges once it was no longer the contracted carrier.

CP applied for summary judgment, asserting that its right to charge arose from the ongoing applicability of Tariff 2 through the original siding agreement and regulatory obligations. SouthSask argued that no contractual obligation existed post-2019 and raised a limitation period defence.

Legal analysis of contractual and statutory framework

Justice Megaw first addressed the applicability of CP’s tariff and whether it formed part of an enforceable agreement after CP ceased to be SouthSask’s primary rail service provider. The court held that the siding agreement incorporated Tariff 2 and remained in effect for services CP continued to perform. The fact that CP was no longer the line-haul carrier did not nullify the contract, as CP continued to provide and charge for specific regulated services.

On the regulatory side, the Canada Transportation Act and interswitching regime allow for cost recovery through published tariffs. The court agreed with CP that demurrage and supplemental charges were valid under both the contractual and statutory frameworks. The evidence showed that CP continued to provide services and that SouthSask received, used, and benefited from them.

Limitation period and procedural findings

SouthSask argued that the claim was statute-barred under The Limitations Act of Saskatchewan. Justice Megaw rejected this argument, finding that the last invoice was issued in March 2022 and the claim was filed in March 2023—within the two-year window. The court noted there was no evidence of any earlier denial of liability that would have triggered the limitation clock.

Having concluded that the services were provided, that a contractual basis existed, and that the claim was timely, the court granted summary judgment. SouthSask’s defences were found to have no reasonable chance of success at trial.

Disposition and award

Justice Megaw awarded CP a net judgment of $997,476.15 plus pre-judgment and post-judgment interest. The court also awarded CP costs of $8,000, inclusive of disbursements and taxes.

This case confirms that railway service providers may enforce tariffs and collect fees for interswitching-related services, even when they are not the primary carrier, provided there is an existing contractual or statutory foundation. It also highlights the effectiveness of summary judgment in commercial disputes where the facts are largely uncontested and the legal issues are clear.