Friday 23 August 2013

Can  you be  responsible  for  an  accident  you didn’t  cause? 


On July 6, 2013, when an unattended 74-car freight train owned by the MM&A railway firm that was carrying crude oil was a runaway and derailed, it resulted in a fire and explosion of multiple tank cars in downtown Lac Megantic, Quebec. Forty-seven people were confirmed dead. More than 30 buildings in the town's centre, roughly half of the downtown area, were destroyed. The blast covered a radius of one square kilometer.

On August 6, 2013, The CEO of MM&A said that his railway has no further plans to carry oil by rail. On August 7, 2013, the company filed for bankruptcy protection in both the Quebec Superior Court in Montreal (under the Companies Creditors Arrangement Act) and the United States Bankruptcy Court in Bangor, Maine (under Chapter 11).

Because the cleanup of the derailment area could take 5 years, about 115 businesses are planning to relocate. 40 buildings have already been destroyed but another 160 may need to be expropriated for demolition because they sit on ground that might be hazardous because of oil seeping into the soil. It may be necessary to remove several metres of contaminated soil leaving a hole to be filled in. Subsequently rebuilding on top of the fill may be impractical as new building foundations would require deeper and more expensive construction.

The cleanup will cost $200 million and the province of Quebec is paying for the cleanup. MM&A’s insurance liability coverage was only $25 million. For this reason, the province of Quebec is demanding that the Canadian Pacific Railway (CPR) contribute to the cost of the cleanup.

CPR had subcontracted with MM&A to help move the 72 tankers of oil from North Dakota to New Brunswick. Because there was a subcontracting relationship with MM&A, the province was holding CPR also liable for the cost of the cleanup. CPR denied liability because it didn’t believe that it should be held responsible in part for the accident caused by MM&A or be responsible in contributing towards the cleanup.

There is no doubt that MM&A was responsible for the crash and the resulting damage but since it is now in bankruptcy and has no money other than the insurance of $25 million to contribute towards the cleanup, the question of everyone’s mind is; Does Quebec have the authority to demand that another railway company (CPR) contribute to the cleanup when it wasn’t that particular railway’s direct fault for the accident?

This raises an interesting question as this problem no doubt crops up many times. For example, if a travel agency makes arrangements with a bus company to transport 30 people for a trip to another city and the bus driver is drunk and he crashes his bus into a telephone pole and ten people are killed, and it turns out that the bus driver was an known alcoholic by the bus company, can the travel agency also be held responsible if it didn’t know that that particular bus driver was an alcoholic?

The questions that a court in Quebec will have to answer is; Does Quebec have the right to demand money from the CPR if the CPR had no way of knowing that an engineer employed by the MM&A would abandon the engine that later was a runaway especially considering the fact that the MM&A was also responsible for an involvement with a 1996 derailment on the Wisconsin Central in which hazardous materials burned for over two weeks?  If the CPR didn’t know about the 1996 accident, they should have made enquiries. Further, did they know that the upper limit of MM&A’s insurance was only $25 million? If they did know, was the CPR content with that low coverage? 

A principal firm such as the CPR is in the transportation business which includes transporting oil through an agent (MM&A), may also be held liable for any damage resulting from the CPR’s own negligence or recklessness if it involved giving improper instructions to MM&A, authorized the use of improper materials (such as thin-skinned tank cars) not reassuring itself that MM&A’s insurance would cover the cost of damages that would exceed $25 million dollars and not objecting to MM&A’s policy of permitting one engineer alone to operate the engine and permitting the engineer to abandon the engine while its engine is still in the operating mode or satisfying itself that the 1996 derailment might be a factor that another such derailment might occur with a MM&A train.   

Under the law, a principal can be held liable even if he didn’t know of the failings of the firm it hires to serve its purpose because there is an obligation on those who retain the services of others to know pertinent facts about who they are dealing with.

For example, if you hire a man to drive your truck and you don’t know that he has a horrific driving record and he has an accident that is later determined to be his fault, you can also be held liable for any damages incurred as a result of the accident that occurred because you should have checked his driving record before considering him as a driver of your truck.         

But suppose for argument’s sake, that although he had a horrific driving record ten years ago, his driving record for the last ten years is excellent and he still has an accident in which he is deemed to be at fault, can you still be held liable? The answer is yes, you can because you hired the man and he is in fact working for you.   

Surely it must follow that if the CPR retained the services of the MM&A as a subcontractor to transport oil to New Brunswick (which it did) then the CPR is equally liable for the damages, especially if it failed to keep itself apprised of the operating policies of MM&A and didn’t object to them being followed—policies that were not suitable for any railway company to operate under.  

The real issue is whether the CPR’s duty to the people of Lac Megantic is non‑delegable.  In essence, a non‑delegable duty is a duty of a contractor not only to take care, but to ensure that care by its subcontractor is also undertaken. To determine whether a non‑delegable duty should be imposed, the Court will have to examine the relationship between the parties and ask whether that relationship possesses elements that make it appropriate to hold the contractor (CPR) liable for the negligence of its subcontractor (MM&A). 

A failure by an subcontractor (MM&A) to operate reasonably may give rise to a liability on the part of the original contractor (CPR) if it amounts to a breach of the contractor’s duty to make sure that the subcontractor was operating reasonably.

As I see it, the CPR cannot deny its duty in this case merely by showing that it exercised reasonable care in retaining the MM&A to deliver the oil to its final destination. It must go further and ensure that the MM&A’s task of carrying the oil was carried out without negligence. The negligence I am speaking of is permitting one engineer alone to operate the engine and permitting the engineer to abandon the engine while its engine was still in the operating mode—which were two of the reasons why the MM&A train was a runaway train.

 I will let you know how the court decides as to whether or not the CPR can be liable for the cleanup costs when I learn of the court's decision.




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