March 15, 2018
In November 2017, the Canadian federal government sued Omnitrax and related parties for the return of approximately $19 million in funding received under a 2008 maintenance contract after it refused to repair flood damage to its railway link in Churchill, Manitoba. However, in early March 2018, a judge amended the lawsuit leaving Hudson Bay Railway Company (HBRC), a non-operating subsidiary of Omnitrax, as the only defendant. In an article in the Winnipeg Free Press, reporter Dylan Robertson explores the likelihood of the federal government being able to recuperate its damages from HBRC. In the article, Robertson refers to interviewing four lawyers on the subject, including Kevin O’Brien, a partner in Osler’s Litigation Group who specializes in complex commercial and corporate litigation matters.
According to Kevin, it would be “rare” for a judge to order a parent company to pay damages on a subsidiary’s behalf “because it violates that bedrock possibility of corporate law: that a corporation is its own, separate entity.
“The law’s pretty clear on it,” he continues. “You really need to be able to show that the subsidiary was a sham, if you want to have a chance. These cases get fought all the time. It’s a very common issue.”
To learn more about this case, read Dylan Robertson’s full article “Feds may not recoup $19M: lawyer” in the March 15, 2018 edition of the Winnipeg Free Press.