CP Rail lawsuit seeks tax repayment, exemptions from Sask. government over 141-year-old contract

CP takes Sask. government to court WATCH: The Canadian Pacific Railway is taking the Saskatchewan government to court over 140-year-old contract. Cole Davenport has more.

REGINA — The Canadian Pacific Railway is presenting arguments this month in a lawsuit filed against the Saskatchewan government over whether or not the rail line should have to pay provincial taxes, based on a 141-year-old contract.

The lawsuit centres around Clause 16 of a contract between CP Rail and the federal government signed in the 1880s that reads, in part, the rail line “and all stations and station grounds, work shops, buildings, yards” and more “shall be forever free from taxation by the Dominion, or by any province hereafter to be established.”

The claim is specific to the main CP line and does not include additional branches and lines.

CP Rail’s statement of claim goes on to detail how the contract was approved and ratified by parliament in the CPR Act and has never been repealed or amended and “is still, in full force and effect as a contractual right.”

The company is seeking repayment on several fronts including fuel and income tax dating back to 2002.

In a statement to CTV News, the company said the exemptions were initially agreed to in exchange for CP to build and operate the rail line forever and that the lawsuit is "asking the courts to ensure the governments honour their commitments."

Saskatchewan Minister of Justice and Attorney General Gordon Wyant would not comment on the specifics of the case given that it's currently before the courts, but did say the government is "concerned about the case".

"We're going to vigorously defend the claim that's been brought by the railway to defend the interests of the people of Saskatchewan," Wyant said Wednesday.

The province’s statement of defence argues the clause does not apply to taxes levied and collected against CP Rail that “relies upon the conduct of CP since 1880” in support.

It further denies that the contract is part of the Canadian constitution and that if the clause applies, the repayment should not be in order in all circumstances.

“CP has paid these taxes over a substantial period of time knowing that they would be used in the ongoing operations of the government,” the statement reads, ending with a request that CP’s claim be dismissed with costs.

Arguments in the trial are currently underway and are expected to continue for the next few weeks.

More details to come...