Nalcor undeterred by Quebec court loss

James
James McLeod
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Will appeal decision in Upper Churchill good faith case

Taxpayers are on the hook for $4 million in legal costs for a Quebec court challenge, and that number could keep climbing.

Nalcor CEO Ed Martin spoke to reporters Friday morning at Hydro Place in St. John’s. Nalcor was handed a loss in its case to get redress on the Upper Churchill contract. Martin said he’s planning to appeal. — Photo by James McLeod/The Telegram

The provincial government was handed a major legal setback this week, when a Quebec judge dismissed the good faith court case to redress the 1969 Churchill Falls hydro contract.

But Nalcor CEO Ed Martin said that he’s already looking to appeal the ruling, and Premier Tom Marshall said the stakes are too big for the government to back away now.

Martin said the dollar figure is between $300 million and $600 million per year.

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

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

Judge Joel Silcoff dismissed that argument.

Essentially, Silcoff found that back in the 1960s, Brinco, which was developing the project, wanted low risk and high certainty. Because Hydro-Québec bore most of the risk, Silcoff said, it stood to benefit disproportionately.

“CFLCo and Hydro-Québec got what they bargained for,” he wrote in his ruling.

As for the Newfoundland and Labrador argument about good faith, 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.

Speaking to reporters Friday morning, Martin rattled off a list of legal experts in Quebec who have said that Nalcor has a valid legal case, and he said the judge never directly addressed the good faith argument.

He said that when the court case started, Nalcor anticipated that no matter which way the ruling went, the loser would almost certainly appeal.

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

Liberal Leader Dwight Ball said that he can understand why the government would go that way.

Ball said he hasn’t seen the legal case, and he can’t say for sure that he would have taken it to court, but now that it’s there, it makes sense to keep pushing.

“As a matter of principle, when you’re prepared to take anything or anyone to court, you may as well be prepared, if you’re willing to start it you’d better be prepared to finish it,” Ball said.

Meanwhile, 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.

She said that the court case is motivated more by politics than anything else.

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: CFLCo, Hydro-Québec, Churchill Falls Labrador Corp. Supreme Court of Canada

Geographic location: Quebec, Newfoundland and Labrador

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Recent comments

  • Yo mama
    July 28, 2014 - 11:14

    The Smallwood family must be red with shame.

  • dupce
    July 26, 2014 - 15:47

    I often find that some Newfoundlanders act a bit like children, they’re always throwing tantrums when they don’t have their way. In 1969, BRINCO went under and was saved by Hydro Quebec who took over the debt, installed the cabling, and promised to purchase 100% of the electricity at a good $$$$, because at that time Oil $$$$ were very low. It was an uncertain future for Electricity. HQ owned 20% of Hamilton Falls (renamed Churchill Falls) and ended up with 34% of Churchill Falls (Labrador) Corporation Limited. English Common Law is very clear. When a contract does not go against any laws, it will stand the test of time. Now if Danny’s Anti-Quebec & Anti-French behavior was good for some Newfoundlanders and some English Canadians, so be it. But I can assure of one thing, after that episode, the transportation of Electricity from the Lower Churchill (Muskrat Falls) will never be transported on Quebec territory in my life time. The story of incompetence does not stop with BRINCO, but continues at the “Come by Chance” Refinery which went bankrupt and ended up in South Korean hands. Oh yes, the cost of Electricity will be so high at Muskrat Falls, that Hydro Quebec could lay the cable and still supply Newfoundland at .07¢ / Kwhrs.

  • dupce
    July 26, 2014 - 12:04

    I often find that some Newfoundlanders act a bit like children, they’re always throwing tantrums when they don’t have their way. In 1969, BRINCO went under and was saved by Hydro Quebec who took over the debt, installed the cabling, and promised to purchase 100% of the electricity at a good $$$$, because at that time Oil $$$$ were very low. It was an uncertain future for Electricity. HQ owned 20% of Hamilton Falls (renamed Churchill Falls) and ended up with 34% of Churchill Falls (Labrador) Corporation Limited. English Common Law is very clear. When a contract does not go against any laws, it will stand the test of time. Now if Danny’s Anti-Quebec & Anti-French behavior was good for some Newfoundlanders and some English Canadians, so be it. But I can assure of one thing, after that episode, the transport of Electricity of the Lower Churchill (Muskrat Falls) Electricity will never be transported on Quebec territory. The story of incompetence does not stop with BRINCO, but continues at the “Come by Chance” Refinery which went bankrupt and ended up in South Korean hands. Oh yes, the cost of Electricity will be so high at Muskrat Falls, that Hydro Quebec could lay the cable and still supply Newfoundland at .07¢ / Kwhrs.

    • Joan Forsey
      July 26, 2014 - 22:19

      Dupce: You say, "But I can assure of one thing, after that episode, the transport of electricity of the Lower Churchill (Muskrat Falls) Electricity will never be transported over Quebec territory." (The mistakes in that sentence are yours, incidentally.) In fact, Quebec Premier Jean Lesage was quoted on page one of Le Devoir in 1965 as saying that any electricity that came into Quebec from Labrador would belong to Hydro Quebec. So this has been Quebec policy since at least 1965.

    • dupce
      July 27, 2014 - 10:21

      @Joan Did not Danny bring Hydro Quebec to court to try to get them to transport the Lower Churchill Electricity production in the future? Yes. And as I said before the 2012 election in Quebec, neither Charest then premier of Quebec, Quebecers, French Canadians whom Danny poured his venom of hate by traveling and propagating his message in New York, Toronto and Calgary would give him the time of the day. Also, the series of insults Danny threw at the then premier of New Brunswick, when he approach Charest and ask to have Hydro Quebec make an offer to buy out NB Power, all of which was scuttle (Danny's political $$$$$$$?). After the Election of 2012 when the PQ came to power, I predicted that never would they permit any transport of Electricity on Quebec territory. And knowing the Liberal party in Quebec today, after the 2013 election, that issue will not be touch politically for the next 8 years. PS. And I almost forgot, Danny was showed the door by your Progressive Conservative Party, because of his interprovincial behavior??????

  • John
    July 26, 2014 - 10:26

    when are they dummies going to realize that no quebec judge is going to side with newfoundland, stop wasting more of our money!

    • dupce
      July 26, 2014 - 16:07

      The problem with your argument is that you think that the Law on the mainland is applied the same way that you would want to apply it on the Rock, depending on your feelings at a moment in time. By the fact that your politicians are trying to manipulate Canadians Law, presupposes that your province manipulates the provincial and Federal laws on the Rock. You are being taken in by your own and you just don’t have the where with all to see it. Continue to spend your hard paid TAXES to Quebec law firms at 500$ to 1000$ an hour. Oh yes, as my lawyer friend said this AM at breakfast: thank god for people like you who are convince that you are going to win, more money in his pocket to dry a Mercedes.

  • gerry
    July 26, 2014 - 10:26

    “More of the people’s money going down the drain,” Michael wrote.'....I can think of the people's money wasted on individual's bloated salaries, perks & pensions....

  • Mark Graesser
    July 26, 2014 - 09:23

    On this one, Lorraine is right and Marshall and Ball in the tilting at windmills crowd. Ed Martin claims the judgment did not address the "good faith" argument (which is a rather obscure feature of the Quebec civil code). The judge actually devotes many pages to this, citing many legal opinions and authorities. The whole decision makes very interesting reading. The judge found that both of Nalcor's expert witnesses lacked credibility. Would Martin, Marshall and Ball pour more millions of $$ into this hopeless legal cause if it was there own money -- rather than our tax dollars?