CP Rail sues Sask. government over tax issue
Angela Hall
Canwest News Service

Thursday, August 14, 2008

REGINA – The Canadian Pacific Railway company is using a 128-year-old contract as a basis for a lawsuit against the Saskatchewan government for back taxes.

A statement of claim filed in the Court of Queen's Bench in Regina this week alleges the company has been assessed some taxes from which it should be exempt, which breaches an 1880 contract.

Statements of claim contain allegations that have not yet been proven in court.

This statement of claim does not include the dollar amount the company claims it's owed.

CP spokesman Mark Seland said he couldn't comment on the lawsuit because it's before the courts, but described it as "really just a technical taxation matter."

He couldn't say whether the company has launched similar actions in other provinces.

The Canadian Pacific Railway Company (CPRC) was incorporated in 1881, with George Stephen as the company's first president.

By a contract dated Oct. 21, 1880, and signed by Stephen, federal minister of railways and canals Sir Charles Tupper, and other individuals, "the parties agreed to terms which would result in the construction of the remaining portion and permanent working of the Canadian Pacific Railway," the statement of claim says.

Clause 16 of the 1880 contract – referred to in the lawsuit as the "exemption" – agreed that "Canadian Pacific Railway, and all stations and station grounds, work shops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof and the capital stock of (CPRC), shall be forever free from taxation by the Dominion, or by any province hereafter to be established," says the court document.

The lawsuit says that through the Canadian Pacific Railway Act of 1881, the Canadian Parliament approved and ratified the 1880 contract.

"The exemption provides that CPRC holds its right and privileges and advantages with respect to taxation 'forever.' "

© Reuters 2008