Churchill port and rail operator sues government for losses

The company that runs the port of Churchill and the rail line to it is suing the provincial government for more than $1.7 million, saying former premier Greg Selinger guaranteed Manitoba would cover its losses for the 2015 season.

HudsonBay Port Company's suit says it's owed$1,732,655 in operating losses, plus damages, interest and costs. The company is a subsidiary of Denver-based OmniTrax Rail Inc.

The company laid off workers at the port this past summer.

• Port of Churchill layoffs 'came out of nowhere,' says town's mayor

The statement of claim filed in Manitoba's Court of Queen's Bench saysaround March 2015, the then-premier of Manitoba contacted the company"to ensure the continued operation of the Hudson's Bay Railway and the Port of Churchill for the 2015 season."

The suit alleges that "the Premier undertook that the Province of Manitoba would underwrite any and all losses occasioned by the plaintiff for the operating the Hudson's Bay Railway and the Port of Churchill for 2015."

It also saysa formal written agreement was completed on July 1, 2015 between the company and the province.

Manitoba, the suit says, had until April 29, 2016 to make the payment. By that time, the company wasdealing with a new Progressive Conservative government led by Brian Pallister, who was elected on April 19.

Pallisterdealt with the port and rail issues aggressively in public, suggesting OmniTrax was attempting to wrestle subsidies from the government and telling media, " I don't ever respond to threats."

• Premier calls OmniTrax closure of Churchill port a 'leverage tactic'

According to the allegations in the lawsuit, the province then retained an independent accounting firm to evaluate the audited financial statements provided by HudsonBay Port Company, but the governmentdidn't make any payments and didn't share the findings of the review.

Churchill residents and workers at the port have lobbied both the federal and provincial governments for a long-term solution to the lack of shipments from the port.

• Stubborn northerners want to keep Port of Churchill going

The company went public in August, claiming it was owed the money by the province and blamed Manitoba and the federal government for the fact there were no shipments in the 2016 season.

• OmniTrax blames provincial, federal governments for loss of 2016 shipping season

The company alleges that bymid-October 2016, Manitoba had made "all necessary inquiries" and"there were no outstanding issues with respect to the operating losses of 2015."

The suit alleges Manitoba, in violation of the agreement, "refused or neglected to provide any documentation relating to its assessment of the loss, nor has it complied with the terms of the agreement by making the payment that was due and owing as of April 19, 2016."

The company claims the government of Manitoba is acting in a "malicious and/or highhanded manner" due to " the wanton and reckless disregard of its legal obligations," and is asking the courts to "punish" the province by awarding extra damages.

Deals 'subject to fresh eyes': province

A request to speak to former NDP premier Greg Selinger was declined. A spokesperson for the NDP says the silence is because the matter is before the courts.

A spokesperson for the current PC government responded in asimilarmanner, but did point fingers at the former government.

"While we are unable to comment on a matter that is subject to legal proceedings, the previous NDP Government did make a number of deals in the year leading up to the election which are subject to fresh eyes under the new administration," the spokesperson wrote in an email.

'No explanation':OmniTrax

Merv Tweed, the president of OmniTrax Rail, responded to CBC News in an email saying the company hadresponded to a series of questions posed by the government regarding the nature of the losses for 2015. Tweed saidthe companywas advised that all inquires by the government have been answered to its satisfaction.

Tweed said despite this, no payment was made.

"We have been provided with no explanation despite repeated demands for payment as to why the government has failed to pay the losses for 2015 thereby necessitating the filing of the statement of claim," Tweed wrote.