Executive Summary: Key Legal and Evidentiary Issues

• Scope of permissible discovery concerning CP’s internal derailment investigation, including privileged materials and identification of knowledgeable witnesses and documents
• Extent of CP’s obligations to inspect railcars, identify Transcona-manufactured wheelsets after industry Early Warnings, and the relevance of its CEO’s prior role at CN to knowledge and limitation arguments
• Relevance and proportionality of historic wheel profile detector data, derailment records, and DDCT entries about Transcona wheelsets over broad multi-year periods
• Significance of CP’s prior inspections, maintenance and possession of the specific tank car PROX15199 versus more general evidence about Transcona wheelsets on other cars
• Necessity and temporal scope of track maintenance, rail condition and detector records to Procor’s contributory negligence and causation theories
• NorFalco’s entitlement to discovery on CP’s communications to customers (including safety handbooks and information sessions) regarding risks posed by Transcona wheelsets, and CP’s practices on shipper AAR membership inquiries

Background and facts of the derailment dispute

The underlying action arises from the derailment of a Canadian Pacific Railway Company (CP) freight train near Sultan, Ontario, on 20 March 2020. Twenty-six railcars derailed, beginning with a tank car carrying sulfuric acid, identified as PROX15199. This car was owned by Procor Limited (Procor), was equipped with wheelsets manufactured at Canadian National Railway Company’s (CN) Transcona wheel shop (the “Transcona wheelset”), and was being transported as private equipment by CP under a contract of carriage with Glencore Canada Corporation doing business as NorFalco Sales (NorFalco). CP alleges its investigation determined that a wheel on the right side of wheelset #4 of PROX15199 demounted and caused the derailment. It claims that the wheelset was defectively manufactured by CN at Transcona and that failures in the performance of obligations by CN, Procor and NorFalco resulted in the derailment and CP’s losses.

Claims in negligence and contract against the defendants

As against CN, CP sues in negligence. It pleads that CN’s modified boring process used to manufacture Transcona wheelsets caused them to regularly fail, prompting both an industry Early Warning through the Association of American Railroads (AAR) and a Transport Canada warning requiring a population of Transcona wheelsets to be removed and replaced. CP alleges CN negligently manufactured the particular Transcona wheelset installed on PROX15199 and negligently installed it in 2005 after industry warnings had already been issued. CN is alleged to have owed CP a duty of care and to have breached that duty in multiple ways, including negligent manufacture, failure to properly inspect railcars such as PROX15199, failure to identify and replace the faulty Transcona wheelset, and a general failure to ensure that the tank car was suitable for its intended use. Against Procor, CP also advances negligence claims, pleading that as owner of PROX15199, Procor owed a duty of care to maintain, monitor and repair the car and breached that duty in ways detailed in the statement of claim. Procor’s alleged omissions include failures in inspection, maintenance and remedial measures that could have prevented the derailment or the extent of damage.
CP’s claim against NorFalco is principally contractual. Procor supplied PROX15199 to NorFalco, which used it as a private container to ship sulfuric acid. CP pleads that under its bill of lading with NorFalco for this private shipment, NorFalco was responsible for ensuring that the car was free of mechanical defects and failures, compliant with industry standards, and otherwise suitable for safe rail transportation. The bill of lading is also said to contain an indemnity term requiring NorFalco to indemnify CP for any loss or damage CP incurs arising from defects in, or failure of, the private equipment. This alleged allocation of risk and responsibility for private railcar condition and compliance sits alongside CP’s negligence claims against CN and Procor and is expected to be central at trial.

Competing positions on causation and fault

CN denies that any act or omission on its part, including its manufacture of the Transcona wheelset, caused or contributed to the derailment. Instead, CN alleges that CP’s own conduct was negligent and contributed to the derailment, including by operating locomotives and railcars in an inadequate state of repair, operating the train at unsafe speeds, and permitting the train to be operated by personnel with insufficient experience and competence. Both CN and Procor also seek to rely on what they say were CP’s numerous opportunities to inspect PROX15199 over the years while it was in CP’s possession and to identify the Transcona wheelset and remove it from service. They refer to Early Warnings from AAR beginning in late 2001 and other industry and regulatory information concerning Transcona wheelsets to argue that CP knew or ought to have known of the risks and should have implemented systems to detect and remove such wheelsets during inspections, maintenance and repairs. NorFalco, for its part, raises issues about the adequacy of CP’s communications to customers regarding the risks associated with Transcona wheelsets and asserts that CP’s own failures in this regard are relevant to any allocation of fault or contractual responsibility.

The discovery motions brought by CN, Procor and NorFalco

Each defendant brought a motion to compel CP to answer questions it refused on examination for discovery and, in some instances, to clarify or complete undertakings. Although all parties agreed on the governing legal principles for proper discovery questions, they disagreed over relevance and proportionality in relation to particular questions and document categories. CN’s motion focused on three main areas. First, it sought further particulars of CP’s internal investigation of the derailment, including steps taken, conclusions reached, whether CP employees were found to have made mistakes, and associated documents. The court required CP to answer some questions, such as clarifying its written undertakings and explaining certain photographs, but upheld refusals where questions were too broad or effectively required CP to generate new evidence rather than identify existing information. Second, CN pursued questions about CP’s obligations to inspect railcars and identify Transcona wheelsets following the AAR Early Warnings, including CP’s policies and the knowledge of CP’s CEO, Keith Creel, who had previously been an executive at CN responsible for developing CN’s own response plan for Transcona wheelsets. Given CN’s specific pleadings relying on Creel’s knowledge for negligence, limitation and estoppel arguments, the court ordered certain questions about his knowledge and CP’s inspection obligations to be answered, while rejecting other expansive requests, such as for very long-term wheel profile detector data, as disproportionate or misaligned with the pleaded issues. Third, CN sought disclosure of Creel’s internal criticisms or views about CN’s steps to address Transcona wheelset issues. The court held those questions were not relevant because Creel’s internal, subjective views about CN’s conduct did not materially narrow the issues or affect the probability of any fact in issue, distinguishing them from questions about measures he directed CP to take or not take.
Procor’s motion addressed two broad groups of questions. The first concerned CP’s knowledge and inspection of Transcona wheelsets on railcars in CP’s possession, with Procor seeking historic information back to 1998, later reduced on the motion to 2009–2020. The court held that the question, as originally framed, was overly broad and that the motion hearing was not the place to re-draft questions to make them narrower and relevant. It emphasized that Procor’s own pleadings focused on three specific periods when PROX15199 was in CP’s possession (June 2009, June 2012 and January 2018) and CP’s alleged failures to inspect and remove the Transcona wheelset at those times. In that context, broad evidence about thousands of Transcona wheelsets removed from other cars and historic entries in the industry Damaged and Defective Car Tracking System (DDCT) was not relevant and the refusals were upheld. Procor also sought track and roadway maintenance records at the derailment site going back ten years, later reduced to three. The court accepted that rail conditions at the time of derailment were relevant but held that the temporal focus was the conditions at or close to the time of the incident. It noted CP had already produced a “derailment package” including documentation about rail conditions at the time, and it rejected Procor’s attempt to expand discovery far back in time as disproportionate and unnecessary.
NorFalco’s motion was narrower but largely successful. It sought clarification of CP’s answers about whether CP asked shippers if they were members of the AAR, further information about customer safety handbooks, and information on whether NorFalco received an information session or completed certain checklists. The court directed CP to confirm in clear terms that it did not believe it asked shippers about AAR membership, so NorFalco could rely on that answer. It ordered CP to answer a question requesting any post-incident versions of a customer safety handbook, holding that later versions might be relevant to NorFalco’s allegation that CP had failed to communicate to customers the risk posed by Transcona wheelsets at the time. By contrast, a question about other work CP had done on NorFalco cars, not limited to Transcona wheelset identification or replacement, was found overly broad and not relevant. CP was also required to confirm, to the best of its knowledge, that NorFalco did not receive an information session and that CP did not collect certain checklist information from NorFalco.

Discovery rulings on specific questions and undertakings

The decision deals in detail with particular discovery questions grouped by topic. On CN’s motion, the court ordered CP to provide certain written confirmations and answers (for example, clarifying an internal report reference and answering a question on whether employees were found to have made mistakes leading up to the derailment), and to answer a question explaining photographs at a continued discovery when all parties could review the images together. Other CN questions were refused as going beyond what discovery requires—such as a demand for a “list of evidence” from all known site attendees—or as seeking material that CP had already confirmed did not exist, such as further emails beyond those produced in a particular chain. In the group relating to CP’s inspection obligations and CN’s early warnings, a question about the source of any obligation to inspect for Transcona wheelsets (whether arising from Early Warnings, other documents or internal policies) was ordered answered, as were questions targeting Creel’s knowledge and involvement given CN’s specific pleadings relying on his prior CN role. In the group of questions about CN’s steps to address Transcona wheelset defects, the court declined to order answers to questions probing Creel’s internal comments or concerns about CN’s measures, finding them insufficiently tied to any pleaded issue.
For Procor, the court consistently tied relevance to the specific allegations in Procor’s pleading that CP had multiple opportunities, on defined dates when PROX15199 was in its possession, to inspect and remove the Transcona wheelset. Viewed through that lens, broad historical questions about all defective Transcona wheelsets on CP’s tracks since 1998, and a request for derailment data back to 1998 when CP had already produced five years of Transcona-related derailment information, were rejected as not relevant or as providing minimal incremental value in light of existing production. Similarly, expansive requests for long-term track and roadway maintenance records were refused where CP had already produced derailment-related documentation about rail conditions around the accident. However, Procor did obtain an order that CP provide certain hot box detector reports limited to the operation of the train that derailed, after CP agreed to provide those if not already included in the derailment package.
NorFalco obtained orders requiring CP to clarify and confirm certain answers so that NorFalco could safely rely on them. This included confirming that CP did not, to its knowledge, ask shippers whether they were AAR members, and confirming that NorFalco did not receive an information session and that CP did not collect certain checklist information from NorFalco. The court also ordered production or identification of any customer safety handbook versions issued after the incident, on the basis that such documents could shed light on NorFalco’s theory that CP had previously failed to communicate known risks about Transcona wheelsets to customers. The one NorFalco question rejected as overly broad sought information on other work CP had done on NorFalco cars without limiting the request to Transcona wheelset-related work, and was found not sufficiently connected to the pleaded issues.

Costs rulings and practical next steps

On costs, the associate justice treated each motion separately and recognized that success was divided. On CN’s motion, CP was ordered to answer four of twelve questions in dispute, and the court concluded that each of CN and CP should bear its own costs, resulting in no monetary award between them. On Procor’s motion, CP succeeded on most of the contested refusals: only one of nine questions was ordered answered. As a result, Procor was ordered to pay CP $5,000 as a contribution toward CP’s partial indemnity costs of responding to that motion. On NorFalco’s motion, NorFalco was largely successful, with CP ordered to answer three of four questions; accordingly, CP was ordered to pay NorFalco $7,500 in costs of that motion. No single party was declared the overall successful party across all three motions. Instead, the court issued discrete cost awards reflecting relative success on each motion. In net terms, CP receives $5,000 from Procor but must pay $7,500 to NorFalco, so the cost outcomes do not produce a clear monetary winner across all defendants. The decision does not determine any damages or indemnity amounts related to the derailment itself, and the total quantum of any ultimate judgment on liability remains undetermined at this stage. The court directed that CP’s representative re-attend for discovery to answer those questions and undertakings it was ordered or agreed to answer, and set a deadline of 13 February 2026 for CP to provide the ordered answers, ensuring that the parties can move the main action toward trial based on a clarified and proportionate evidentiary record.