UPDATE: Nalcor CEO disagrees with court ruling on Churchill Falls contract

James McLeod
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Decision will be appealed, Martin says

Around $4 million of taxpayers’ money has already been spent, but Nalcor CEO Ed Martin said today he’s ready to appeal all the way to the Supreme Court of Canada, when it comes to the province’s good faith court case dealing with the Churchill Falls hydro contract.

Transformers at the Upper Churchill power plant. — Transcontinental Media file photo

This week, a Quebec judge issued a lengthy ruling against the Churchill Falls Labrador Corporation (CFLCo) — which is owned by the Newfoundland and Labrador government.

The government argued that the 1969 electricity contract between CFLCo and Hydro-Quebec needs to be revised because it’s so lopsided in favour of Quebec.

Judge Joel Silcoff dismissed that argument.

The judge referred to “newly identified and creative legal theories” on the part of CFLCo, but said that at its core, they were arguing essentially the same thing that the Newfoundland and Labrador government has complained about since the 1970s.

Martin, speaking to reporters Friday morning, said that Nalcor fundamentally disagrees with the ruling, and is planning on appealing.

Ultimately, he said, it could go all the way to the Supreme Court of Canada.

Thus far Nalcor has spent $4 million on the court case, but that doesn’t count the $1.4 million in court costs that CFLCo was ordered to pay to Hydro-Quebec in the ruling. That part of the ruling is subject to appeal as well, so Martin said the taxpayers aren’t necessarily on the hook for that yet.

Almost immediately after Martin announced that Nalcor is planning to appeal, New Democrat Leader Lorraine Michael took to Twitter to voice her disappointment.

“More of the people's money going down the drain,” Michael wrote.

jmcleod@thetelegram.com Twitter: TelegramJames


(Earlier story)

Government loses Churchill good faith court case

The Newfoundland and Labrador government has lost its good faith court case in Quebec, seeking to renegotiate the terms of the Churchill Falls hydro contract, as a result of the overwhelmingly lopsided deal.

The court case, which was started in 2010, asked a Quebec court to amend pricing terms for the 1969 contract, which runs for another 26 years through to 2041.

Moreover, judge Joel Silcoff awarded Hydro-Quebec court costs of more than $1 million in the case.

For years, the Newfoundland and Labrador government has argued that it’s incumbent on Hydro-Quebec to renegotiate the contract because power prices have increased dramatically since the 1969 contract was signed, and the deal unfairly benefits Quebec.

Hydro-Quebec argued that except under very limited instances in Quebec law, there is no authority for courts to revise a validly negotiated contract just because of a change of circumstances.

The court found that both Quebec and Newfoundland and Labrador thought the contract was reasonable when it was signed.

Examining the contract history, the judge concluded that both parties got what they bargained for.

Read the court decision here.

Organizations: Hydro-Quebec, Hydro Place

Geographic location: Quebec, Newfoundland and Labrador

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Recent comments

  • jes"n penwa"
    August 25, 2014 - 17:12

    If Quebec Judges cannot see reason or common sense then bring it to the Supreme Court and then to the World Court....In the meantime Pull the plug...and see what Hydro Quebec does......NL is not making any money on this deal any more anyway

  • dupce
    July 27, 2014 - 16:59

    What is wrong with the Electorate on the Rock. It’s a done deal, the contract was signed, sealed, and delivered. As in English Common Law or the Civil Code of Quebec (Code Civil du Quebec) it’s very clear. When a contract does not go against any laws, it will stand the test of time. In 1969, BRINCO went under and was saved by Hydro Quebec who took over the debt, installed cabling, and promised to purchase 100% of the electricity at a good $$$$. This was all because, at that time, Oil $$$$ were very, very, very low. It was an uncertain future for Electricity. So maybe the Hydro Quebec negotiators were smarter than the average Bear, but your people were caught between a Rock and a Hard Place, BRINCO was going under. You always seem to get sucked in by your Politicians, and you believe them. As my Lawyer friend told me Saturday AM at breakfast: thank god for people like you, he makes $$$$$$. You had Danny with his Anti-Quebec & Anti-French behavior when he was in power, and you were all clapping. I know, because I spend 6 weeks on the Rock in 2010, great place and great people. The story of incompetence does not stop with BRINCO, but continued at the “Come by Chance” Refinery which went bankrupt and ended up in South Korean hands. Oh yes, and now with Muskrat Falls, the cost of Electricity will be so high, that Hydro Quebec could lay the cable and still supply Newfoundland at .07¢ / Kwhrs as it does for the Americans (NB. And it would not come from Upper Churchill Falls).

  • Baz
    July 26, 2014 - 11:27

    Some questions for the 'deal-is-a-deal' Common law absolutists: 1. Say this deal was for a thousand years rather than the current piffling term. Would you still demand that it be respected until the 30th century? 2. The parties who signed it were companies. Were either of them independent of their governments? 3. If Canada, or some company with Canadian govt. support, had signed a deal like this with, say, Nigeria, would the international community have allowed it to stay in place? Would the local govt. have said fine, carry on stealing our resources, a deal is after all binding? 4. Show me a similar resource deal in Canada involving massive transfer of assets from a big province to a small one.

  • EDfromRED
    July 25, 2014 - 13:31

    Simple solution: Shut down Churchill Falls and make Quebec come to the table to renegotiate a fairer deal...its on out territory. But then the friends, relatives and PC Puppet Masters who are lawyers would stop getting rich off the public purse. The PC`s might as well hold a massive bonfire --once the fire ban is lifted -- and burn our money on a pyre...at least we could roast a marsh-mellow.

  • Jon Smith
    July 25, 2014 - 11:54

    Maggy, Einstein is also credited with saying that only two things in this world are infinite, the universe and human stupidity but he said he wasn't sure about the former. Only the Federal government can right the Upper Churchill contract and the heavily ABC'd Conservatives certainly have been given no incentive to do so from this province. The Muskrat Fall's loan guarantee which was shoved down the throats of our politicians guarantees that we will voluntarily give back to Upper Canada all of the oil resource wealth/benefits which Scott Chafe secured from Paul Martin for us and that sits very well with Stephen Harper and Peter Mackay and Upper Canada.

    • Maggy
      July 25, 2014 - 14:42

      The opportunity for the feds to have waded in on the Upper Churchill contract was when Smallwood was pushing then PM Louis St. Laurent to use its constitutional powers to force Quebec to allow NL to wheel its power through that province. That kind of intervention is no more politically palatable today then it was fifty years ago. Smallwood went ahead anyway - not only as a consequence of the stupidity of which you talk, but an extraordinary measure of arrogance. The same stupidity and arrogance are evident today in the Muskrat debacle. It shows how little we've progressed in our rational thought process since then. As abusive as the Harper government has been toward this province by the way, it had no hand in shoving the Muskrat loan guarantee down anybody's throat. That was all down to the Dunderdale government and the cabal of moneyed interests behind Muskrat.

  • Henry Jefford
    July 25, 2014 - 10:21

    The one sided power contract now in place with Quebec is Highly Questionable ? Did the signing of this Contract that has given Quebec " ONE HUNDRED BILLION DOLLARS FOR ITS SHARE OF THE SALE OF POWER ? TO Newfoundlands SHARE OF ONLY "ONE BILLION DOLLARS" ? and the loss of lives of the party that flew up to Quebec to sign the CHURCHILL FALLS DEVELOPMENT CONTRACT ? IS THE ONE SIDED CONTRACT NOW IN PLACE THE CONTRACT THAT WAS SIGNED ?

  • ABC er
    July 25, 2014 - 09:50

    So how much will THE TAXPAYER PEOPLE OF THIS PROVINCE, have to pay for the court case for this.......AND THE APPEAL. Ed Martin is a moron just the same as Dunderdale was when she signed off of the PROVINCE SINKING deal called Muskrat Falls........and neither of them give a damn what happens to us.

  • Maggy Carter
    July 25, 2014 - 09:42

    As Einstein put it, insanity is doing the same thing over and over again while expecting a different outcome. Martin implies (in VOCM coverage) that the province chose Quebec's Superior Court to launch its latest challenge to the 1969 Upper Churchill contract. The reality, of course, is that among the horrendous errors this province made in negotiating that contract was its stipulation to Quebec's demands that its courts - not NL's courts - would have exclusive jurisdiction. And as history has amply demonstrated, NALCOR's planned appeal to the Supreme Court of Canada will produce nothing except fat cheques for law firms on both sides - fees the ratepayers of this province will wind up paying. Quebec has always had and always will have three justices on the Supreme Court of Canada. After 65 years of indenture to Canada (known as Confederation), this province has yet to have one. NL's original Supreme Court challenge to the Upper Churchill contract was widely expected by legal scholars to go in this province's favour. That it did not was not down to sound jurisprudence, but simple mathematics. On matters affecting one province over another, the SCOC is biased. The merits of the province's case are irrelevant. The SCOC will not lift a legal finger to inject a measure of fairness and equity into that contract. NL should stop looking for fairness and equity. It is costing us far too much money with absolutely no prospect for success. This latest knock back from the Quebec courts is a harbinger of things to come. Hydro Quebec's ongoing challenge of this province's Water Management Agreement (which agreement did not include Quebec) will likely meet the same fate. If that happens, then of course an extra billion or so in cost overruns on the Muskrat boondoggle will be the least of our worries.

  • Don II
    July 25, 2014 - 09:21

    The Government of Newfoundland is trying to win a "good faith" case in Court despite the fact that it has never practiced "good faith" in any dealings it has ever had with anyone in the past. The Government of Newfoundland has always employed intimidation, deceit, expropriation, unreasonable delay and slick legal moves in its dealings with individuals, Unions and Corporations in the decades past. The Government of Newfoundland is throwing away tax payers money trying to make Quebec look like the bad guy. From the Quebec point of view a deal is a deal and nobody made Newfoundland sign it. The fact is that the "mega project" politics and the incompetence of the Government of Newfoundland led to the one sided contract in the first place. It was a case of the Government of Newfoundland trying to pull as fast one on Quebec that backfired big time. More tax payer money will now be required to fund the appeal of this decision. What goes around comes around.

    • Maurice E. Adams
      July 25, 2014 - 10:01

      And is the so-called Water Management Agreement (which Quebec as refused to 'agree' to), and on which the so-called 824 MW output of Muskrat Falls depends, any different? Unless Muskrat is stopped, come 2041 this province will be weak financially and just like in 1969, we will not be in a strong negotiating position, once again, when it comes to the post 2041 sale of our near zero cost 5,400 MW of power from the Upper Churchill.

  • Kevin
    July 25, 2014 - 09:00

    WOW......strike two. So we get screwed in the Churchill Falls Hydro deal and now we are up the creek with Muskrat Falls. Gotta love our STUPID so called leaders that make those aweful decisions. And here we go again. People leaving for better jobs and better living conditions than what we have here and what we will have to face !!!!!

  • lonenewfwolf
    July 25, 2014 - 08:32

    another million down the river...what else did we lose in this case? there is more to this to be sure

  • Paul
    July 25, 2014 - 08:19

    Well this comes as a real shock to evey resident of this province!