Decision No. 388-R-2013

October 7, 2013

IN THE MATTER OF Decision No. 202-R-2013 in response to the application by Canexus Chemicals Canada, LP; Olin Canada ULC, doing business as Olin Chlor Alkali Products; ERCO Worldwide, a division of Superior Plus LP; and Chemtrade Logistics Inc. and Chemtrade West Limited Partnership.

File No.: 
T7375-3/13-04111

INTRODUCTION

[1] In Decision No. 202-R-2013 (Decision), the Canadian Transportation Agency (Agency) made final findings and expressed preliminary opinions on certain matters concerning the application by Canexus Chemicals Canada, LP; Olin Canada ULC, doing business as Olin Chlor Alkali Products; ERCO Worldwide, a division of Superior Plus LP; and Chemtrade Logistics Inc. and Chemtrade West Limited Partnership (applicants) against the Canadian Pacific Railway Company (CP).

[2] The application related to Tariff 8 (Tariff) that was issued by CP on December 1, 2011. The Tariff applies to the movement of hazardous commodities, and describes hazardous commodities as dangerous goods, hazardous materials and poisonous inhalation hazards or toxic inhalation hazards.

[3] Item 54 of CP’s Tariff (Item 54) applies to shippers of hazardous commodities. It contains indemnification obligations and a liability regime related to movements of traffic, which transfer to a shipper the responsibilities for damages or costs arising out of the transportation of hazardous commodities, including liability to third parties. The terms and conditions contained in Item 54 are set out in the Appendix.

[4] In the Decision, the Agency identified three issues:

  1. Does the prohibition against limitation of liability found in section 137 of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA) apply only to loss and damage to the cargo being carried by the railway company for the shipper?
  2. Are the indemnification and liability terms and conditions in CP’s Tariff 8, Item 54 in violation of section 137 of the CTA?
  3. Is section 120.1 of the CTA applicable to CP’s Tariff 8, Item 54?

Issue 1: Does the prohibition against limitation of liability found in section 137 of the CTA apply only to loss and damage to the cargo being carried by the railway company for the shipper?

[5] The Agency found that the prohibition is not restricted to loss and damage to cargo being carried by the railway company for the shipper.

Issue 2: Are the indemnification and liability terms and conditions in CP’s Tariff 8, Item 54 in violation of section 137 of the CTA?

[6] The Agency found that two aspects of Item 54 constitute a prohibited limitation of liability to a shipper within the meaning of subsection 137(1) of the CTA.

[7] With respect to the phrase “Shall not be liable to Customer,” the Agency found that the exclusion of liability to a shipper for the movement of traffic in a tariff, including the exclusion of liability found in Item 54, is contrary to subsection 137(1) of the CTA.

[8] With respect to the phrase “fully indemnify, defend, and hold harmless CP,” specifically as it applies to the Joint Liability section of Item 54, the Agency found that because Item 54sets aside the principle of allocation of liability under the law governing joint liability between CP and the shipper, by reducing or nullifying CP’s share of liability, it constitutes a limitation of liability to a shipper, and is therefore prohibited under subsection 137(1) of the CTA.

[9] In addition, the Agency found that by imposing on the shipper an obligation to indemnify, defend and hold harmless CP, CP has integrated in the Tariff a mechanism by which CP ensures that it will be made whole by the shipper for third party liabilities. This obligation goes beyond a limitation of liability and therefore may not be a limitation of liability to the shipper.

[10] As there were no pleadings on whether the obligation to indemnify and hold harmless is equivalent to a limitation of liability to a shipper for the movement of traffic, the Agency directed the following question to the applicants and CP: “Is the obligation to indemnify and hold harmless CP, as set out in Item 54, equivalent to CP limiting its liability to the applicants?”

Issue 3: Is section 120.1 of the CTA applicable to CP’s Tariff 8, Item 54?

[11] The Agency provided the parties with an opportunity to comment on whether the Agency can rule on Item 54 pursuant to section 120.1 of the CTA, and directed the parties to focus their comments on the interpretation of that section.

FINAL DECISION

[12] Based on the submissions filed in response to the Decision, the Agency has identified three main issues to be addressed to render a final decision in this case:

  1. Are the indemnification and liability terms and conditions contained in Item 54 of CP’s Tariff prohibited under section 137 of the CTA, specifically, is the shippers’ obligation to indemnify, defend and hold harmless CP, as set out in Item 54, equivalent to CP limiting or restricting its liability to the applicants?
  2. Can the Agency rule on Item 54 pursuant to section 120.1 of the CTA?
  3. If so, is Item 54 unreasonable pursuant to section 120.1 of the CTA?

The law

[13] Subsection 137(1) of the CTA provides that:

A railway company shall not limit or restrict its liability to a shipper for the movement of traffic except by means of a written agreement signed by the shipper or by an association or other body representing shippers.

[14] Subsection 120.1(1) of the CTA states that:

If, on complaint in writing to the Agency by a shipper who is subject to any charges and associated terms and conditions for the movement of traffic or for the provision of incidental services that are found in a tariff that applies to more than one shipper other than a tariff referred to in subsection 165(3), the Agency finds that the charges or associated terms and conditions are unreasonable, the Agency may, by order, establish new charges or associated terms and conditions.

[15] Subsection 120.1(7) of the CTA states: “For greater certainty, this section does not apply to rates for the movement of traffic.”

Issue 1: Are the indemnification and liability terms and conditions contained in Item 54 of CP’s Tariff prohibited under section 137 of the CTA, specifically, is the shippers’ obligation to indemnify, defend and hold harmless CP, as set out in Item 54, equivalent to CP limiting or restricting its liability to the applicants?

Positions of the parties

The applicants

[16] The applicants argue that, based on the Interpretation Act, R.S.C., 1985, c. I-21, section 137 of the CTA should “be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.” The applicants point out that, furthermore, the Agency, in the Decision, stated that the “purpose and object […] of section 137 of the CTA [is] the protection of shippers from unauthorized transfers of liability.”

[17] The applicants contend that, given the fact that to hold harmless means to “assume liability in a situation and relieve the other party of responsibility,” the hold harmless provision limits or restricts CP’s liability to a shipper. The applicants state that the obligation to indemnify and hold harmless is both a liability imposed on shippers and a limitation of CP’s obligations to the shippers. The applicants argue that “[i]mplicit in any duty to indemnify and hold harmless is a limitation on a shipper’s ability to claim over against CP where the liability would otherwise by law lie with CP and not the shipper.” The applicants add that the indemnification and hold harmless provisions of Item 54 reduce CP’s liability at the expense of the shipper which results in CP limiting its liability to a shipper and is therefore contrary to section 137 of the CTA, and this is true regardless of the mechanism used to achieve this.

[18] The applicants argue that the provisions in Item 54 serve to alter statutory, common law and equitable principles that would otherwise govern CP’s liability, and therefore the provisions must, by definition, limit or restrict CP’s liability to a shipper, which is contrary to section 137 of the CTA. The applicants further argue that Item 54, taken as a whole, transfers to the shipper CP’s statutory obligation to purchase insurance against third party liability, which is set out in the Railway Third Party Liability Insurance Coverage Regulations, SOR/96-337.

Agrium

[19] Agrium submits that the obligation to indemnify and hold harmless CP, as set out in Item 54, is equivalent to a limitation of liability.

[20] Agrium argues that an interpretation of section 137 of the CTA that would prohibit a limitation of liability to a shipper, but allow an obligation to the shipper to indemnify and hold harmless CP, would be inconsistent and contrary to the purpose of the CTA. Agrium refers to the Decision, where the Agency found, with respect to the obligation on the shipper to indemnify and hold harmless CP, that Item 54:

[H]as the effect of not only excluding CP’s liability to the shipper but it also imposes additional obligations on the shipper with respect to liabilities that may arise related to the transportation of that shipper’s traffic.

[21] Agrium submits that just as the exclusion of CP’s liability to the shipper prevents the shipper from recovering its losses from CP, the obligation to indemnify, defend and hold harmless requires the shipper to assume liabilities that would otherwise be CP’s responsibility, and this would include third party liabilities. According to Agrium, because this alters the ordinary principle of allocation of liability, it falls within the scope of the Agency’s Decision and is contrary to section 137 of the CTA.

[22] Agrium argues that as Item 54 requires the shipper to indemnify, defend and hold harmless CP from and against any and all claims, CP could argue that this includes claims by the shipper against CP, which is contrary to section 137 of the CTA. Agrium maintains that if the indemnity results in “the slightest limiting effect,” it is prohibited under section 137 because that section prohibits a railway company from limiting its liability to a shipper.

[23] Agrium contends that the joint liability provision of Item 54 is subject to the shipper’s obligation to defend and indemnify CP. This means that in a situation where both CP and the shipper would be jointly liable to a third party, the shipper would first be required to indemnify CP and then it could attempt to prove CP’s joint fault or negligence. Agrium argues that this provision prevents the shipper from recovering costs from CP that are caused by anything other than CP’s negligence or fault, and that this effectively limits or restricts its liability to the shipper.

Canadian Industrial Transportation Association (CITA)

[24] CITA submits that the obligation to indemnify and hold harmless CP, as set out in Item 54, is equivalent to CP limiting its liability to the applicants. CITA states that the requirement in Item 54 to indemnify and hold harmless CP “is an obligation to shield CP from the responsibility for the allocation of liability under the law governing joint liability between CP and the shipper,” and this reduces or nullifies CP’s share of liability which, in turn, is a limitation of liability to a shipper.

Canadian Fertilizer Institute (CFI)

[25] CFI argues that section 137 of the CTA applies to the entire spectrum of the railway company’s liability, and not just to the portion that the railway company might owe to a shipper. CFI also submits that the unilateral transfer of unallocated third party liabilities to the shipper is unfair to the shipper.

[26] According to CFI, the Agency should apply the national transportation policy set out in section 5 of the CTA in conjunction with section 137 of the CTA, while also considering the needs of transportation system users in such a way as to lead to a competitive, economic and efficient national transportation system. CFI argues that these should be applied to allow the Agency to address rates and conditions that constitute undue obstacles to the movement of traffic within Canada or exported to or from Canada. CFI also states that the remedial provisions of the CTA should be interpreted broadly to encourage market-like negotiations.

[27] CFI submits that the requirement in Item 54 for shippers to indemnify CP for liabilities relating to the transport of TIH commodities is “anactuallimitation or restriction of liability” within the meaning of section 137 because it transfers liability to a shipper which limits or restricts the liability the railway company would otherwise owe.

[28] CFI acknowledges that section 137 contains the words “liability to a shipper”; however, CFI argues that a broad, purposive interpretation that is consistent with the objective of the CTA evidenced by the national transportation policy leads to the conclusion that the language is meant to merely define “the persons in respect of which or to whom liability is not to be limited or restricted.” In this regard, CFI submits that the provision could be read as saying: “As between a railway and a shipper, a railway company shall not limit or restrict its liability for the movement of traffic except […]”

CP

[29] CP submits that section 137 of the CTA does not set out an absolute prohibition with respect to any limitation or restriction of liability. CP maintains that on plain reading and consistent with judicial interpretations, the phrase “fully indemnify, defend and save harmless” does not constitute a limitation of liability by a railway company to a shipper for the movement of traffic, which is the subject matter of subsection 137(1) of the CTA.

[30] CP states that the words of section 137 of the CTA are precise, and therefore, the ordinary meaning of the words should play a dominate role in the interpretation process. CP argues that section 137 clearly establishes that a railway company may not limit or restrict its liability to a shipper, and that the section does not refer to any restrictions where the claim or proceeding is taken by a third party against the railway company.

[31] According to CP, section 137 of the CTA has three main components:

  1. A railway company shall not limit or restrict its liability “to a shipper”;
  2. “for the movement of traffic”; and
  3. “except by means of a written agreement […]”

[32] CP contends that the most striking deficiency in the shippers’ analysis of the proper interpretation of section 137 of the CTA is their failure to properly consider the implications of the phrase “to the shipper.” CP argues that the liabilities allocated to the shipper in Item 54 are not liabilities owed to a shipper, but rather liabilities owed to third parties.

[33] CP provided the following judicial interpretation of “indemnity” through the definition of indemnify in Black’s Law Dictionary:

Indemnify: To restore the victim of a loss, in whole or in part, by payment, repair or replacement. To save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him. To make good; to compensate; to make reimbursement to one of a loss already incurred by him.

[34] CP maintains that the terms “indemnity” and “save harmless” are in no way related to a limitation of liability to a shipper by a railway company.

Analysis and findings

[35] Section 137 of the CTA provides that:

  1. A railway company shall not limit or restrict its liability to a shipper for the movement of traffic except by means of a written agreement signed by the shipper or by an association or other body representing shippers.
  2. If there is no agreement, the railway company’s liability is limited or restricted to the extent provided in any terms and conditions that the Agency may

(a) on the application of the company, specify for the traffic; or

(b) prescribe by regulation, if none are specified for the traffic.

[36] Under subsection 137(2) of the CTA, a railway company may only limit its liability to a shipper within the limits set out in the Railway Traffic Liability Regulations, SOR/91-488 or in an Agency order. The only way for a railway company to further limit its liability to a shipper is to obtain the shipper’s agreement in writing.

[37] Section 137 of the CTA specifies the liabilities that are captured by the prohibition: the railway company’s “liability to a shipper.” It presupposes that the railway company has or may have a debt to the shipper (for example compensating the damages CP caused to the shipper as a result of the movement of the traffic.) This means that if the claim against the railway company is that of anyone other than the shipper, it is not captured by the prohibition on limitation of liability set out in section 137.

[38] The Agency has already determined in the Decision that the term “liability” found in subsection 137(1) of the CTA is to be given a broad meaning not “restricted to the loss and damage to cargo being carried by the railway company for the shipper.” Liabilities under subsection 137(1) include any damage suffered by a shipper due to the fault or negligence of the railway company, or any claim a shipper may have against the railway company that arose during the transportation of the shipper’s goods by the railway company.

[39] Subsection 137(1) of the CTA does not deal with all aspects of liability that may be related to the movement of traffic. It is specific to the railway company’s limitation of liability to a shipper. In other words, subsection 137(1) only prevents the railway company from limiting the amount it may owe to a shipper as a result of an event that occurred in relation to the movement of the shipper’s traffic which caused damages to that shipper. If the railway company imposes obligations on the shipper in relation to a claim against the railway company from a third party, it is not captured under section 137, and nothing in subsection 137(1) would prevent the railway company from imposing terms and conditions on a shipper to limit or attenuate the financial impact those third party liabilities will have on the railway company.

[40] The applicants argue that the Agency must interpret subsection 137(1) of the CTA broadly to ensure that this provision attains its purpose, which is to protect shippers against unauthorized transfer of liabilities. They argue that the Tariff allows CP to unilaterally impose a self-serving and unfair liability regime on shippers in which the shipper is responsible for defending the railway company and paying its bills, regardless of fault, and that the Agency should exercise its discretion to interpret the wording liberally to attain the “market-like negotiations.”

[41] The unilateral imposition of an obligation on the shipper to indemnify, defend and hold harmless a railway company in relation to third party liabilities may very well be something that the legislator would find appropriate to prohibit, in the same fashion as the limitation of liability to a shipper is prohibited under section 137 of the CTA unless agreed to in writing by the shipper. In effect, both types of terms and conditions are attached to the rate for the movement of goods, are applicable to more than one shipper and might be best negotiated between the parties or otherwise regulated, rather than unilaterally imposed by a railway company. However, there is no indication in the CTA or in extracts from the legislative record presented by the parties that Parliament contemplated terms and conditions dealing with third party liability when section 137 was enacted.

[42] The Agency agrees that a purposive approach to the interpretation of statutes must be used in cases of ambiguity; however, such an approach should hold short of modifying the plain meaning of words used in a provision, unless there is no other reasonable option. In this case, the legislator imposed a restriction on what a railway company can impose on a shipper as a condition for the movement of traffic. The restriction is not a broad prohibition preventing railway companies from inserting provisions in their tariffs that deal with all forms of liability that may arise in relation to or in connection with the transportation of goods by rail.

[43] Subsection 137(1) of the CTA specifies only one term and condition which is prohibited, absent the consent of shippers: the limitation of liability to a shipper. Had the legislator intended to prevent a railway company from imposing any form of terms and conditions dealing with liability, it would have used different language in subsection 137(1). The Agency notes the contrast between the language used in section 92 of the CTA, which deals with “liability”, and that used in subsection 137(1), which deals with “liability to a shipper.”

[44] In light of this, the Agency  concludes that Item 54 will only be contrary to subsection 137(1) of the CTA to the extent that it contains terms and conditions which constitute a “limitation of liability to a shipper” that would exceed the amounts set out in the Railway Traffic Liability Regulations. In other words, terms and conditions found in Item 54 will only be contrary to subsection 137(1) if they have the effect of limiting, restricting, or in any way reducing the amount of a claim a shipper has or may have against CP in connection with the movement of the shipper’s traffic.

[45] In the Decision, the Agency determined that two elements of Item 54 constituted or contained a prohibited limitation of liability to a shipper. The Agency must now determine whether the other terms and conditions found in Item 54, that is, the shipper’s obligation to indemnify, defend and hold harmless CP in relation to third party liabilities against CP, constitute a limitation of liability within the meaning of subsection 137(1) of the CTA.

Obligation to indemnify

[46] In the Decision, the Agency referred to the Black’s Law Dictionary’s definition of the term “to indemnify”:

  • To restore the victim of a loss, in whole or in part, by payment, repair, or replacement;
  • To save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him; and
  • To make good; to compensate; to make reimbursement to one of a loss already incurred by him.

[47] The shippers’ obligation to indemnify CP, as set out in Item 54, requires the shipper to pay CP, or on behalf of CP, third party claims against CP, subject to the shipper’s right to claim back a portion of the amounts paid pursuant to the joint liability provisions set out in Item 54 (the portion the shipper has a right to claim is limited to the amount of such liabilities allocated to CP in proportion of CP’s percentage of responsibility.)

[48] The obligation to indemnify is an obligation for the shipper to pay, and this obligation is owed to CP. With this indemnity obligation, CP’s only right is to require the shipper to pay CP an amount of money equivalent to what CP may owe to third parties. This indemnification obligation does not have the effect of relieving CP from its own obligation to pay third parties and, as such, CP would remain liable to third parties even if the shipper were to refuse or neglect to execute its indemnification obligation to CP.

[49] In the scenarios covered by the obligation to indemnify, CP’s debt is to the third parties. Indemnification by the shipper will only have the effect of reducing or removing the loss CP may incur as a result of obligations it has or may have to third parties in relation to the movement of the shipper’s traffic. However, CP does not owe anything to the shipper with respect to third party claims against CP. For this reason, the indemnification obligation cannot function in a manner that limits or reduces CP’s obligation to the shipper. Therefore, the Agency does not agree with the applicants’ claim that the obligation to indemnify implicitly includes a limitation on the shipper’s ability to claim against CP.

[50] For this reason, the Agency finds that the shippers’ obligation to indemnify CP in relation to third party liabilities is not a limitation of liability to a shipper within the meaning of subsection 137(1) of the CTA.

Obligation to defend

[51] The shipper’s obligation to defend CP in relation to third party liabilities under Item 54 would require the shipper to take charge of CP’s defense against third parties.

[52] The Agency finds that an obligation of this nature does not have the effect of limiting or restricting CP’s liability to the shipper.

[53] For this reason, the Agency finds that the shippers’ obligation to defend CP in relation to third party liabilities is not a limitation of liability to the shipper within the meaning of subsection 137(1) of the CTA.

Obligation to hold harmless                   

54] The Black’s Law Dictionary defines “hold harmless agreement” as:

  • A contractual arrangement whereby one party assumes the liability inherent in a situation.
  • Agreement or contract in which one party agrees to hold the other without responsibility for damage or other liability arising out of the transaction involved.

[55] This definition suggests that the shippers’ obligation to hold harmless CP could extend beyond CP’s liability to third parties. It could also be construed as a waiver by the shipper in respect of any claim that the shipper has or may have against CP in relation to third party liabilities. To this extent, the shipper’s obligation to hold harmless CP would limit or restrict the amount of a shipper’s claim against CP in relation to the movement of the shipper’s traffic.

[56] The Agency is of the opinion that, as currently worded, the shippers’ obligation to hold harmless CP contains a limitation or restriction of the railway company’s liability to a shipper. Considering that this obligation is neither included in a written agreement between CP and the applicants nor established by regulation, the Agency finds that this limitation of liability is prohibited under subsection 137(1) of the CTA.

[57] The Agency has determined that aspects of Item 54 are contrary to section 137 of the CTA. However, as the application was also filed under section 120.1 of the CTA, the Agency will now consider whether it can rule on the reasonableness of Item 54 pursuant to that section.

Issue 2: Can the Agency rule on Item 54 pursuant to section 120.1 of the CTA?

Positions of the parties

The applicants

[58] The applicants acknowledge that subsection 120.1(1) of the CTA requires that the terms and conditions of a tariff be associated with a charge in order for the Agency to have jurisdiction. They submit that section 120.1 was added to the CTA in response to shippers’ concerns about ancillary or incidental charges that were imposed by railway companies in addition to rail rates.

[59] The applicants argue that Item 54 contains charges and associated terms and conditions and is therefore within the Agency’s jurisdiction under section 120.1 of the CTA. The applicants provided several definitions of the term “charge”. They contend that the term “is of broad import” and is used flexibly in other provisions of the CTA, specifically as:

  • the “amounts payable by the Minister to third parties,” as set out in subsection 180.7(2); 
  • the “amounts the Canadian Transportation Agency is obligated to pay others,” as set out in section 188; and
  • depreciation charges, as set out in subsection 156(4), which “contemplates no actual financial outlay at all.”

[60] The applicants argue that the obligation to indemnify, which requires the shipper to reimburse, compensate and make payment to CP, is a charge.

[61] The applicants state that there are, in fact, several charges with which the terms and conditions are associated. The applicants refer to Item 53 of Tariff 8 (Item 53), which requires the shipper to obtain, at its own cost, liability insurance that covers the shipper and CP. The applicants argue that because the shipper must obtain coverage for CP, this is equivalent to CP obtaining the coverage itself. In this regard, according to the applicants, “if CP obtained its own insurance coverage in this respect, and provided by tariff for reimbursement of the attendant costs by the shipper, these costs would plainly be subject to challenge as ‘charges’ under subsection 120.1(1).” The applicants argue that it would be absurd for CP to interpret subsection 120.1(1) such that CP could render such charges immune to challenge by instead requiring the shipper to pay these amounts to the insurer directly.

Agrium

[62] Agrium argues that the Agency can rule on Item 54 pursuant to section 120.1 of the CTA as the terms and conditions in Item 54 are associated with charges in Tariff 8. Agrium also maintains that the Agency’s jurisdiction under section 120.1 includes all terms and conditions associated with the movement of traffic.

[63] Agrium contends that the obligation to indemnify with respect to the liabilities listed in Item 54 constitutes a charge within the meaning of section 120.1 as it requires the shipper to pay or reimburse CP for payment of amounts that CP is obliged to pay to third parties, for example, emergency response costs. In this regard, Agrium maintains that by shifting liability to the shipper, CP is imposing a charge on the shipper.

[64] Agrium points out that, according to CP, the Tariff is in place to highlight prices uniquely applicable to hazardous commodities that are moved by CP. Agrium maintains that Item 53, which requires a shipper, at its own cost and expense, to maintain insurance and name CP as an additional insured, creates a charge that is associated with the terms and conditions contained in Item 54. In addition, Agrium points out that Items 3 to 11 impose surcharges applicable to hazardous commodities.

[65] Agrium submits that a proper interpretation of section 120.1 of the CTA is that the Agency’s jurisdiction is not limited to terms and conditions that are associated with a charge. Agrium maintains that section 120.1 allows the Agency to question the reasonableness of all terms and conditions that are associated with the movement of goods. Agrium contends that a limited interpretation of section 120.1 would be inconsistent with the principle set out in the Interpretation Act, which is that enactments are remedial and should be interpreted in such a way as to best ensure that they meet their objectives. Agrium maintains that section 120.1 allows a shipper to submit a complaint to the Agency regarding any items in a tariff other than rates.

[66] According to Agrium, its interpretation of section 120.1 of the CTA is supported by section 161 of the CTA. Agrium points out that section 161 permits a shipper who is dissatisfied with a rate or any of the conditions associated with the movement of goods to submit the matter to the Agency for final offer arbitration. Agrium is of the opinion that the only difference between sections 120.1 and 161 is that the shipper may not make a complaint regarding rates under section 120.1. Agrium submits that both provisions provide shippers with a mechanism to deal with terms and conditions associated with the movement of traffic, and that there is nothing in the CTA that suggests that section 120.1 was intended to have a narrower scope than section 161.

[67] Agrium submits that the term “associated” in section 120.1 of the CTA is ambiguous and not defined in the CTA, and can only be understood as requiring that the terms and conditions be associated with the movement of traffic.

[68] Agrium states that notwithstanding the above, if the Agency does not have jurisdiction under section 120.1 of the CTA to find that Item 54 is unreasonable, the Agency has jurisdiction to rule on that Item under section 26 of the CTA.

CITA

[69] CITA contends that the Agency can rule on Item 54 pursuant to section 120.1 of the CTA. According to CITA, there are multiple charges with which the terms and conditions are associated. CITA contends that the list of liabilities, that is, “any and all claims […] and associated costs and expenses” contained in Item 54 are charges as they represent amounts the shipper would have to pay. CITA refers to Item 53, which is an insurance provision that requires the shipper to obtain insurance, and CITA argues that this also constitutes a charge.

[70] CITA submits that the Interpretation Act requires that every enactment be deemed remedial, and be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects. CITA argues that, given the above and the fact that section 120.1 of the CTA is meant to provide relief to shippers, relief from the obligation to indemnify and hold harmless is within the Agency’s jurisdiction under section 120.1.

CFI

[71] CFI submits that the transfer of liability from CP to the shipper by way of an indemnity constitutes a charge within the meaning of section 120.1 of the CTA. In addition, CFI maintains that the Agency may rule on Item 54 pursuant to section 120.1 because the Tariff contains charges related to the movement of traffic.

[72] According to CFI, the term “liability” includes a railway company’s obligation to receive, carry and deliver traffic with due care and diligence. CFI adds that the obligation to indemnify transfers financial consequences from CP to the shipper, and these consequences are a charge imposed by CP.

[73] CFI states that in Black’s Law Dictionary, the term “charge” is defined as “[a]n incumbrance, lien, or claim; a burden or load; an obligation or duty; a liability […]” and not simply the price of, or rate for.

[74] CFI maintains that section 120.1 of the CTA supports a broader interpretation that can include complaints from a shipper subject to any charges for the movement of traffic or the provision of incidental services, or from a shipper subject to an associated term or condition for the movement of traffic or the provision of incidental services. CFI argues that it is a sufficient connection that a charge and term or condition appear in a tariff dealing with the same subject matter.

CP

[75] CP submits that section 120.1 of the CTA should be interpreted as being limited to terms and conditions associated with a charge, and as the terms and conditions in Item 54 are not associated with a charge, the Agency cannot rule on the application pursuant to section 120.1. CP argues that the wording of that section, the scheme of the CTA and the legislative history support this interpretation. CP also maintains that the indemnity obligations contained in Item 54 are not charges and are not associated with a charge.

[76] CP states that the wording of section 120.1 of the CTA is clear and unambiguous and therefore can be read using the ordinary meaning of each of the terms in question. CP adds that The Concise Oxford Dictionary of Current English, 9th ed. Clarendon Press, 1995 defines “charge” as “a price asked for goods or services,” and “price” as “the amount of money or goods for which a thing is bought or sold.” CP argues that “charges and associated terms and conditions” are “monetary payment obligations relating to a specific service activity.” CP concludes that as Item 54 does not demand the exchange of money for anything bought or sold, it is not a term or condition associated with a charge.

[77] CP argues that as section 120.1 of the CTA is set out in Division IV, the part of the CTA that deals with rates, section 120.1 must be related to monetary matters. In support of this argument, CP points out that section 120.1 comes after section 119, which deals with freight rates, and before section 121, which deals with joint rates, and there are a number of other sections that follow that govern rates and monetary issues, for example, interswitching rates.

[78] CP submits that a review of the legislative history of section 120.1 of the CTA resolves any ambiguity that may be in that section. CP specifically refers to the legislative summary of Bill C-8 (Clause 3 of Bill C-8 is section 120.1), which states:

Transport Canada officials point out that although railways generate revenue primarily from freight rates for the movement of customers’ traffic, they also apply charges for activities that are incidental or not directly related to the movement of traffic. These are referred to as incidental or ancillary charges, examples of which include demurrage (i.e., additional charges to the shipper for taking longer than the permitted time to load or unload a railcar), cleaning and/or storing railcars and weighing goods.

[79] CP also refers to a statement made by the Honorable Brian Jean, MP, Parliamentary Secretary to the Minister of Transport, Infrastructure and Communities with respect to Clause 3 of Bill C-8:

The bill also contains a new provision that would allow shippers to complain to the agency if they were not satisfied with railway charges or the conditions associated with such charges, other than freight rates. The principle remedy for freight rates will continue to be final offer arbitration. The charges I refer to include what are often referred to as ancillary charges such as fees levied for cleaning or storing cars.

The new provision would also deal with such charges as well as some other charges related to the movement of traffic, such as demurrage.

Analysis and findings

[80] Section 120.1 of the CTA provides, in part:

(1) If, on complaint in writing to the Agency by a shipper who is subject to any charges and associated terms and conditions for the movement of traffic or for the provision of incidental services that are found in a tariff that applies to more than one shipper other than a tariff referred to in subsection 165(3), the Agency finds that the charges or associated terms and conditions are unreasonable, the Agency may, by order, establish new charges or associated terms and conditions.

[…]

(5) The railway company shall, without delay after the Agency establishes any charges or associated terms and conditions, vary its tariff to reflect those charges or associated terms and conditions.

[…]

(7) For greater certainty, this section does not apply to rates for the movement of traffic.

[81] Subsection 120.1(7) of the CTA makes it clear that the Agency has no jurisdiction to review rates under subsection 120.1(1) of the CTA. The Agency’s power under subsection 120.1(1) to review for unreasonableness is strictly limited to “charges and associated terms and conditions” for the movement of traffic or for the provision of incidental services.

[82] This does not mean that anything appearing in a tariff, other than a rate, can necessarily be characterized as “charges” or “associated terms and conditions.”

[83] The term “charge” is not defined in the CTA. CP refers to the Oxford Dictionary’s definition of the term “charge” as: “a price asked for goods or services.” “Price” is further defined in the Oxford Dictionary as “the amount of money or goods for which a thing is bought or sold.” In addition, the applicants refer to several definitions of the term “charge”, including the Oxford Dictionary’s definition, which is “(a) a price asked for goods or services; (b) a financial liability or commitment”; and the Black’s Law Dictionary’s definition, which is “[a]n incumberance, lien, or claim; a burden or load; an obligation or duty; a liability; an accusation.”

[84] It appears that the term “charge” in its ordinary sense can receive a very broad meaning, which could literally include almost any obligation, whether the payment of a sum of money or the execution of an obligation to do something.

[85] Although references to definitions found in dictionaries may be useful, the statutory interpretive process does not end with the ordinary meaning of words. It is a well established principle of interpretation of statutes that the word used in a provision must be interpreted in their entire context within the scheme of the statutory framework. This principle has been recently articulated by the Federal Court of Appeal in Tele-Mobile Company Partnership v. Canada, 2013 FCA 149:

Under the modern contextual approach to statutory interpretation, regard must be given not only to the ordinary and natural meaning of the words, but also to the context in which they are used and the purpose of the provision considered as a whole within the legislative scheme in which it is found: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42 (CanLII), [2002] 2 S.C.R. 559, 2002 SCC 42 at para. 27. The most significant element of this analysis is the determination of legislative intent: R. v. Monney, 1999 CanLII 678 (SCC), [1999] 1 S.C.R. 652 at para. 26.

[86] While the Agency notes that the term “charge”, as a noun, is used in different ways in the CTA, it is the notion of charges, as imposed on a shipper in a railway company’s tariff, that the Agency must consider in deciding this case. Clearly, none of the references to the term “charge” in the examples listed by the applicants involve a charge imposed on a shipper by a railway company. Therefore, other references to the term “charge” in the CTA are of little use in interpreting the term “charge” as used in section 120.1 of the CTA.

[87] The Agency is of the opinion that the context within which section 120.1 of the CTA must be interpreted is that of the provisions set out in Part III of the CTA. In particular, the Agency notes that section 87 of the CTA defines the term “tariff” as “a schedule of rates, charges, terms and conditions applicable to the movement of traffic and incidental services.” A key principle of statutory interpretation is the “presumption of consistent expression.” When the legislator uses different terms in a statute in relation to a matter, it must be assumed that the intent is to give each term a different meaning. Applying this rule of statutory interpretation requires that the terms “rates” and “charges” and the phrase “terms and conditions” applicable to the movement of traffic and incidental services must each have a distinct meaning.

[88] Further, section 120.1 of the CTA specifies that the Agency’s jurisdiction relates to unreasonable “charges and associated terms and conditions” for the movement of traffic or for the provision of incidental services. This language contrasts with that used in section 161 of the CTA, which creates recourse to a shipper dissatisfied with “the rate […] or with any of the conditions associated with the movement of goods.” The fact that the same recourse is not available depending on whether the rate or a charge is being challenged under these provisions supports the interpretation that terms used within the definition of “tariff” have distinct meanings and the terms are not interchangeable.

[89] If the Agency were to find that any obligation imposed in a tariff can constitute a “charge”, it would follow that section 120.1 of the CTA would confer on the Agency jurisdiction to review anything in a tariff that is not a rate. Had the legislative intent been to give the Agency such a broad mandate under section 120.1, less restrictive language would have been used to this effect. Subsection 120.1(1) could have expressly permitted the Agency to disallow, review and/or replace anything contained in a tariff, as is the case under paragraph 114(4)(b) of the CTA, which expressly authorizes the Agency to “disallow any rate or tariff” under certain circumstances.

[90] The Agency therefore concludes that the term “charges” must capture something other than “rates” or “terms and conditions” for the movement of the shipper’s traffic or for the provision of incidental services.

[91] The term “rates” and the phrase “terms and conditions” are not defined in the CTA. However, subsection 113(2) of the CTA sets out a railway company’s obligations associated with the payment of the rate by a shipper as follows: “[t]raffic must be taken, carried to and from, and delivered at the points referred to in paragraph (1)(a) [the point of origin, at the point of junction of the railway with another railway, and at all points of stopping established for that purpose] on the payment of the lawfully payable rate.” The term “rate”, as it is used in Part III of the CTA, is therefore an amount paid by the shipper in exchange for the movement of the shipper’s traffic by the railway company. The obligation to pay the rate is therefore associated not with an incidental or ancillary service, but with the rate for the whole movement.

[92] With respect to “terms and conditions” related to the movement of traffic, the Agency finds that this phrase captures the obligations to be fulfilled by the shipper for the railway company to execute its obligations under subsection 113(2) of the CTA to move the shipper’s traffic.

[93] For instance, in CP’s Tariff, the shipper has the obligation to properly mark and label its shipments. This obligation would constitute an obligation to be fulfilled by the shipper for the railway company to move the shipper’s traffic under the applicable rate. As such, it is a term and condition for the movement of the traffic.

[94] In light of the above, the Agency concludes that the term “charge” must capture  obligations other than the obligation of the shipper to pay the rate or the obligations to be fulfilled by the shipper as a condition for the movement of traffic by a railway company.

[95] CP argues that “charges and associated terms and conditions” are “monetary payment obligations relating to a specific service activity.” Essentially, the Agency agrees with CP’s position that a “charge”, as the term is used in section 120.1 of the CTA, is an obligation on a shipper in return for a specific service to be performed, or specific goods to be supplied, by the railway company. This is distinct from the railway company’s primary obligation to take, carry and deliver the shipper’s traffic, which is compensated for by the payment of the rate and the fulfillment of the applicable terms and conditions by the shipper.

[96] A charge under section 120.1 of the CTA could include a payment for optional services requested by the shipper or necessary as a result of an event under the control of the shipper, including a failure of the shipper to perform its own obligations under the tariff.

[97] Another key principle of statutory interpretation is the “presumption of coherence.” Statutes must be presumed to constitute a logical and coherent whole. In Sullivan and Driedger on the Construction of Statues, 4th ed., 2002, Sullivan describes this presumption in this manner:

It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework; and because the framework has a purpose, the parts are also presumed to work together dynamically, each contributing something toward accomplishing the intended goal. This presumption is the basis for analyzing legislative schemes, which is often the most persuasive form of analysis. The presumption of coherence is also expressed as a presumption against internal conflict. It is presumed that the body of legislation enacted by a legislature does not contain contradictions or inconsistencies, that each provision is capable of operating without coming into conflict with any other.

[98] The Agency finds its interpretation with respect to the meaning of the term “charge” to be consistent with the regulatory framework established in the CTA with respect to railway rates. In effect, apart from section 120.1 of the CTA, charges are contemplated under subsection 116(4) of the CTA, which states:

If the Agency determines that a company is not fulfilling any of its service obligations, the Agency may

(a) order that

(i) specific works be constructed or carried out,

(ii) property be acquired,

(iii) cars, motive power or other equipment be allotted, distributed, used or moved as specified by the Agency, or

(iv) any specified steps, systems or methods be taken or followed by the company;

(b) specify in the order the maximum charges that may be made by the company in respect of the matter so ordered;

[…]

[99] Paragraph 116(4)(b) of the CTA refers to the maximum charges that the Agency may specify in an order, which are payable by the shipper to the railway company with respect to any “matter”, for example, the management of equipment, or the steps, systems or methods to be taken or followed by the railway company. The matters for which the Agency may fix a maximum charge, i.e. services and/or goods, are distinct from and must be performed and/or supplied in addition to the railway company’s obligations set out in subsection 113(2) of the CTA, to take, carry to and from, and deliver the shippers’ traffic on the payment of the rate.

[100] The Agency interpreted the term “charge” in its legislative context as it existed at the time the parties argued their case with respect to the meaning of the term “charges” in section 120.1 of the CTA. However, the CTA was amended after the close of pleadings, and provisions creating a new arbitration process for shippers were introduced in Part III of the CTA.

[101] Charges are contemplated under the new arbitration scheme set out in section 169.31 of the CTA as follows:

(1) If a shipper and a railway company are unable to agree and enter into a contract under subsection 126(1) respecting the manner in which the railway company must fulfil its service obligations under section 113, the shipper may submit any of the following matters, in writing, to the Agency for arbitration:

(a) the operational terms that the railway company must comply with in respect of receiving, loading, carrying, unloading and delivering the traffic, including performance standards and communication protocols;

(b) the operational terms that the railway company must comply with if it fails to comply with an operational term described in paragraph (a);

(c) any operational term that the shipper must comply with that is related to an operational term described in paragraph (a) or (b);

(d) any service provided by the railway company incidental to transportation that is customary or usual in connection with the business of a railway company; or

(e) the question of whether the railway company may apply a charge with respect to an operational term described in paragraph (a) or (b) or for a service described in paragraph (d).

[…]

(4) For greater certainty, neither a rate for the movement of the traffic nor the amount of a charge for that movement or for the provision of incidental services is to be subject to arbitration.

[102] Section 169.31 of the CTA provides recourse to arbitration for shippers who are unable to agree on and enter into a level of service contract with a railway company. Matters that can be submitted for arbitration include various “operational terms” and incidental services that the railway company must comply with. Under paragraph 169.31(1)(e), the arbitrator may be asked to determine “whether the railway company may apply a charge with respect to an operational term.” Clearly, section 169.31 associates the railway company’s right to apply a charge to an “operational term” to be performed by the railway company which would be something specific debundled from and not included in the rate. The Agency is of the opinion that this interpretation of the term “charge” will remain coherent with the statutory scheme set out in Part III of the CTA.

[103] The Agency also finds that its interpretation is consistent with legislative history. Section 120.1 of the CTA was introduced to provide shippers with a remedy for incidental and ancillary charges and their associated terms and conditions that a shipper thought were unreasonable. The legislative summary of Bill C-8 clearly indicates that the types of charges that were of primary concern to shippers were demurrage, car cleaning and car storage. All of these charges are incidental, optional or ancillary, and all of them relate to specific activities or transactions that had been debundled from, and thereafter not included in, the rate for the movement of goods.

[104] In this case, the shipper’s obligation to indemnify, defend and hold harmless found in Item 54 is not linked or related to a specific service to be performed or goods to be supplied by CP, that is, it is not debundled from the rate. Under Item 54, the shipper must undertake to indemnify, defend and hold harmless CP as a condition for the transportation of that shipper’s traffic. In return for undertaking that obligation, the shipper only obtains the execution of CP’s primary obligation, which is the movement of the traffic. That is to say, the railway company’s obligation is incorporated into the rate.

[105] For these reasons, the Agency finds that the shippers’ obligation to indemnify, defend and hold harmless CP is not a charge nor a term and condition associated with a charge as contemplated by section 120.1 of the CTA. Accordingly, the Agency lacks jurisdiction under section 120.1 to grant the remedy sought by the applicants in this proceeding for a cause of unreasonableness.

Issue 3: Is Item 54 unreasonable pursuant to section 120.1 of the CTA?

[106] As the Agency finds that the shippers’ obligation to indemnify, defend and hold harmless CP is not a charge nor an associated term and condition and the Agency lacks jurisdiction under section 120.1 of the CTA, it need not determine whether Item 54 is unreasonable.

[107] The Agency notes Agrium’s suggestion that, should the Agency conclude that it lacks jurisdiction under section 120.1 of the CTA, the Agency should exercise its powers under section 26 of the CTA to grant the remedy sought by the applicants. However, the Agency cannot do so.

[108] Although the Agency’s power under section 26 of the CTA is quite broad, it is not unlimited. Under that provision, the Agency may only require a person to do or refrain from doing anything that the person is required to do or is prohibited from doing under any Act of Parliament that the Agency administers. Therefore, in this case, the Agency could only use its power to order CP to cease and desist from imposing Item 54 if the Agency found that this imposition of term and conditions set out in Item 54 was prohibited under section 120.1 of the CTA. While there have been extensive arguments made as to the reasonableness of the unilateral imposition of the impugned Tariff, the requirement to not be “unreasonable”, as set out in subsection 120.1(1) of the CTA, only applies with respect to “charges and associated terms and conditions.” As the Agency found that the obligations contained in Item 54 are not “charges” nor “associated terms and conditions,” the content of Item 54 in the Tariff cannot be contrary to section 120.1 of the CTA. Based on the above, the Agency finds that it cannot exercise its powers under section 26 of the CTA to order the relief sought by the applicants under section 120.1 of the CTA.

SUMMARY OF CONCLUSIONS

Issue 1

[109] The shippers’ obligation to indemnify CP in relation to third party liabilities is not a limitation of liability to a shipper within the meaning of subsection 137(1) of the CTA.

[110] The shippers’ obligation to defend CP in relation to third party liabilities is not a limitation of liability to a shipper within the meaning of subsection 137(1) of the CTA.

[111] The shippers’ obligation to hold harmless CP contains a limitation or restriction of the railway company’s liability to the shipper. Considering that this obligation is neither included in a written agreement between CP and the applicants nor established by regulation, this limitation of liability is prohibited under subsection 137(1) of the CTA.

Issue 2

[112] The shippers’ obligation to indemnify, defend and hold harmless CP is not a charge nor terms and conditions associated with a charge as contemplated by section 120.1 of the CTA. Accordingly, the Agency lacks jurisdiction under section 120.1 to grant the remedy sought by the applicants in this proceeding for cause or unreasonableness.

Issue 3

[113] The Agency need not rule on the unreasonableness of Item 54 and cannot exercise its powers under section 26 of the CTA to order the relief sought by the applicants under section 120.1 of the CTA.

OTHER MATTER

[114] In the Decision, the Agency described the effect of the provision set out in Item 54 and the nature and extent of the obligations it imposes on the shipper. In particular, the Agency concluded that:

[88] The use of the expression “are associated in any way with transportation of the commodities” makes the indemnification provision found in Item 54 apply very broadly to virtually any liability that may arise in connection with the movement of hazardous materials by CP.Because of the broad wording used in this provision, it is not necessary for the shipper’s cargo to cause or in any way to contribute to the events that gave rise to the liability for the shipper’s obligations under Item 54 to apply.[Emphasis added]

[…]

[93] The Agency therefore finds that Item 54 has the effect of not only excluding CP’s liability to the shipper but it also imposes additional obligations on the shipper with respect to liabilities that may arise related to the transportation of that shipper’s traffic. In other words,should an event arise triggering the application of Item 54, a shipper would not only be entitled to receive nothing from CP to compensate the loss caused to it by CP, but the shipper would also need to compensate CP for CP’s liability to third parties, and to assume the costs for CP’s defense against third parties’ liabilities.[Emphasis added]

[115] It is quite apparent that Item 54 imposes very onerous obligations on shippers. These obligations are such that they have the effect, for all practical purposes, of transforming the shipper into the insurer of CP’s rail operations. As indicated above, the shipper does not need to be at fault for the obligation to indemnify, defend and hold harmless to be triggered. Such an obligation, if it materializes, would be clearly disproportionate to CP’s own obligation under the Tariff, especially if it materialized in the context of a catastrophic event. However, the existence of an imbalance does not automatically confer jurisdiction on the Agency when the plain reading of the relevant provisions of the CTA preclude it. Further, nothing in the legislative record suggests that the lawmakers considered legislating the allocation of third party liability or would have implicitly intended for the CTA to capture terms and conditions of this nature through a broad interpretation of the provisions of the CTA, creating recourses to the Agency for dissatisfied shippers.

[116] In this case, the Agency could not intervene to remedy the imbalance caused by the unilateral imposition of the allocation of liability under Item 54 because the CTA is silent on this aspect of a railway company’s business. However, the Agency can only conclude that as there was a need to enact legislation to prevent railway companies from limiting their liability to a shipper without the written agreement of that shipper, there is also a need for regulatory intervention when a railway company unilaterally imposes indemnification, defense and hold harmless obligations on a shipper as a condition for the movement of the shipper’s traffic. This need exists because of the magnitude that such an obligation can take when, as it is in this case, it is left to the railway company to unilaterally allocate third party liability to a shipper.

[117] The Agency is of the opinion that the allocation of liability between the parties involved in railway operations, including the transportation of dangerous goods, should be subject to similar or even more rigorous restrictions than those found in section 137 of the CTA because this liability regime has an impact not only on CP and the shippers, but also on third parties.

[118] The Agency recognizes, as CP states, that “this case is really about […] who bears the unallocated or residual risk […] inherent in TIH where neither the shipper nor the railway have been negligent or at fault.” Section 137 of the CTA sets out that a railway company may not limit its liability to a shipper “except by means of a written agreement signed by a shipper or by an association or other body representing shippers.” This clearly indicates that the preferred means by which allocation of liability between a railway company and a shipper should be determined is by way of a negotiated agreement and not unilaterally imposed by a railway company.

ORDER

[119] Having found that as it is currently worded,  Item 54 contains terms and conditions that limit CP’s liability to a shipper and are prohibited under section 137 of the CTA, the Agency, pursuant to section 26 of the CTA, orders CP to refrain from applying Item 54 of its Tariff 8 unless and until such time as it has been amended to expressly remove prohibited limitation of CP’s liability to a shipper from the obligations that Tariff item imposes.

[120] This Order applies to Item 54 of Tariff 8 as it was written at the time of this application, and to any subsequent amendments made to that Tariff item that impose obligations containing prohibited limitations of liability to a shipper.


                 APPENDIX

ITEM 54 OF TARIFF 8 ISSUED DECEMBER 1, 2011

Indemnification and liability

In addition to the provisions set out above, CP shall not be liable to Customer, and Customer shall fully indemnify, defend, and hold harmless CP, from and against any and all claims, lawsuits, actions, applications, demands, complaints, loss, harm, judgments, liens, awards, costs (including, without limitation, attorney’s fees and other reasonable costs of litigation including litigation to enforce this indemnity, emergency response and evacuation costs, remediation costs, and government oversight costs), damages (including without limitation special and consequential damages), injury to or death of persons, or adverse effects on wildlife or the environment, and for any and all liability, claims, actions, fines, penalties, and associated costs and expenses (collectively “Liabilities”) which are caused, arise from, or are associated in any way with transportation of the commodities or anything done or failed to be done under this tariff. Customer’s indemnity shall include, but not be limited to, any liabilities arising from:

  • Any failure of, release from, or defect in equipment tendered by customer for the transportation of commodity;
  • Loading, sealing and/or securing commodity in such equipment;
  • Release, unloading, transfer, delivery, treatment, dumping, storage, or disposal of commodity;
  • Any fines, penalties, actions, or suits resulting from alleged or actual violation of Federal, State or Local environmental or other law, statute, ordinance, code, or regulation; and
  • Any loss caused by the sole negligence or fault of Customer.

However, the Customer shall have no such obligation to indemnify CP to the extent that Liabilities arise from the sole negligence or willful misconduct of CP, its agents, or employees.

Customer is solely responsible for and will defend, indemnify, and hold CP harmless against any Liabilities due to the presence of chemicals or contaminants in the commodity which are not properly described in the commodity shipping document.

Customer’s indemnity obligations under this Item do not include claims for alleged loss, damage, or delay to the commodities.

Joint liability

Subject to Customer’s obligations to defend and indemnify CP as set forth above, should Customer believe that Liabilities are caused in whole, or in part, by the joint, contributory, or concurrent negligence or fault of CP, responsibility for Liabilities shall be adjudicated under principles of comparative fault in which the trier of fact shall determine the percentage of responsibility for CP, Customer, and any other party. CP shall be liable only for the amount of such Liabilities allocated to CP in proportion to CP’s percentage of responsibility. Customer shall be liable for all other Liabilities.

Member(s)

Raymon J. Kaduck
Geoffrey C. Hare
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