Following orders: the Abitibi ruling

Peter
Peter Jackson
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Court decisions often have a tone. They are supposed to be objective interpretations of law, but invariably a certain amount of disdain, disbelief or political bias threads its way through the lines of argument.

This is not unexpected, nor is it necessarily a bad thing. Recently, judges in this province have taken particular umbrage at bad acts such as assault, drunk driving and breach of probation. A few have even tried to give stiffer sentences, not always successfully.

Court decisions often have a tone. They are supposed to be objective interpretations of law, but invariably a certain amount of disdain, disbelief or political bias threads its way through the lines of argument.

This is not unexpected, nor is it necessarily a bad thing. Recently, judges in this province have taken particular umbrage at bad acts such as assault, drunk driving and breach of probation. A few have even tried to give stiffer sentences, not always successfully.

Politicians have tones, as well. Premier Danny Williams and his senior ministers have a very nasty one. They mock and insult sitting politicians, former politicians, civil servants, doctors, academics, business executives and journalists, among others.

The premier also mocks judges, as he did recently when Quebec Superior Court Judge ClÉment Gascon ruled against the province in its move to impose environmental cleanup orders on AbitibiBowater, which is currently in bankruptcy protection. In the legislature, Williams slammed the decision and referred to the judge as "The Great Gatsby, or whatever his name is."

Hardly an appropriate attitude when you are appealing to the courts for a balanced judgment.

As fellow editor Russell Wangersky pointed out to me last week, the anti-Quebec utterings of Newfoundland MHAs were actually cited (though not given weight) in the Supreme Court ruling that struck down Newfoundland's Water Rights Reversion Act of 1984.

All that aside, I believe the premier has good reason to question the Abitibi ruling.

----

Reading Gascon's 57-page ruling, one does sense a great amount of supposition on the judge's part, and that supposition seems largely based on the arguments presented by Abitibi's lawyers. The province's supposed ulterior motives are analyzed in depth, even though evidence of those motives is purely circumstantial.

The ruling does not, as some may think, hinge on whether or not Abitibi is legally liable for environmental cleanup at properties expropriated by the province (such as the Grand Falls paper mill) and other properties the company still owns or once owned. Rather, it seeks to establish whether the province's cleanup orders are strictly financial in nature. If they are, then they are "claims" under the law and are subject to bankruptcy protection procedures.

A unique difficulty in this case arises from the fact that the province is both the new owner of most of the properties and also the legislative authority. This is largely what leads the judge to surmise an inherent conflict of interest in issuing environmental orders.

Gascon places considerable weight on the province's actions before and after its expropriation of Abitibi's assets without entertaining any notion that those actions may have been perfectly justified.

For example, he questions the rush to expropriate the mill et al., without taking into account the circumstances at the time - the shaky financial status of Abitibi, the company's rocky relationship with its workforce, the fact that millions in government subsidies had been absorbed by the company over the years and that the company had abandoned promises in better times to upgrade the mill. He overlooks the fact that the original agreement with Abitibi's predecessor only grants resource rights while a mill is being operated here. Most importantly, Gascon either ignored or was unaware that the company was reportedly on the verge of selling its rights and assets to a third party.

----

The judge also takes great pains to dissect the motive of environmental contamination reports prepared for the province by an outside consultant.

There are, indeed, some holes in those reports. Most notably, they don't fully take into account the fact some of the mess may have been left by former property owners or subsequent interlopers. But there are exceptions. The report on the old Stephenville linerboard mill does refer to past occupants of the site and acknowledges the difficulty in determining the true source of contamination.

Gascon lingers on the fact that the reports appear to have been prepared for the purpose of fighting a $500-million challenge by Abitibi under the North American Free Trade Agreement (NAFTA).

My question is, so what? Is it so unthinkable that a report aimed at such a purpose could not also be used as a source for establishing cleanup orders? Would Gascon prefer that the province duplicate its efforts just for appearances?

While there is room to challenge some of the specifics of the orders, the original purpose of the reports is hardly a fair consideration.

----

The fundamental issue for Gascon is that of whether the province is simply looking for money, as would a typical creditor, or whether it is simply looking for environmental compliance.

There is a clause in the federal Companies' Creditors Arrangement Act (CCAA) that specifically exempts Crown-issued orders related to health, safety and the environment from being treated as claims under the act.

Yet Gascon goes to great lengths to portray the orders as nothing more than a money grab.

He does not seem to address one simple question: in what rare circumstances, if any, would environmental (or health or safety) orders not involve some sort of expenditure? Installing hand gel dispensers, hiring a nurse or supplying extra safety harnesses all involve expenditures at some point. Surely the exemption under the CCAA did not only apply to cost-free measures. If it did, environmental cleanups could only be performed by troops of boy scout volunteers using borrowed heavy equipment.

Gascon legitimately points out that repayment for environmental cleanup already performed - as well as fines or levies - would qualify as a claim under the CCAA. But only a small portion of cleanup at the five properties in question has ever actually been undertaken in advance. And the province is not imposing fines or levies.

----

Abitibi argues, and Gascon echoes, that lack of ownership makes it nigh on impossible for the company to carry out cleanup operations itself. That's like saying a contractor who built your house is not liable for mistakes he made because you own it now. Abitibi, or a designated third party, would be more than welcome past its old gates again to carry out such obligations.

Curiously, Gascon turns this argument on its head. He portrays the orders as asking Abitibi to "spend money to increase the value of properties for the benefit of those who took it from them."

And then he makes one of his most scathing remarks.

"This is, at a minimum, rather awkward. The expression 'having your cake and eating it too' comes to mind. Some would go as far as to say that it is preposterous."

But we are not, as the judge suggests, talking about installing a swimming pool, adding a lick of paint or doing a little landscaping. We are talking about remediating polluted land that was caused - in part or in full - by the previous owner.

And "those" - i.e. the Crown - who "took it from them" have always maintained it will compensate the company for expropriated infrastructure.

It is, in my view, Gascon's interpretation of this matter that is "preposterous."

----

The province's counsel did not wade very far into the gnarly thicket of motive - either theirs or Abitibi's - because it no doubt felt such matters had little to do with the case. The province has a sovereign right to enforce its own environmental laws, period, and this ruling did little to puncture that argument.

In fact, the province of British Columbia applied as an intervener in the case. While Abitibi still operates in that province, and there are no outstanding orders against the company, B.C. realized the Newfoundland case could set a precedent that would threaten any province's legislative authority over insolvent companies.

B.C.'s intervention, by the way, was dismissed.

----

I've expressed what I feel is the thrust of Gascon's ruling. There are many facts and analyses in this case that reflect badly on the province's preparedness, but the relentless indictment of the province's acts and "behaviour" is a little over the top, particularly in the complete absence of similar scrutiny of the other party.

The province has decided to appeal the ruling. This is not surprising, given that it questioned the court's jurisdiction in the first place. I think there is good reason for the province to expect something approaching a more fair and objective assessment.

Mocking judges, though, is never good form.

Peter Jackson is The Telegram's commentary editor. Contact him by e-mail at pjackson@thetelegram.com.

Organizations: AbitibiBowater, Supreme Court, NAFTA

Geographic location: Abitibi, Newfoundland, Quebec Grand Falls British Columbia

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Recent comments

  • Newfie
    July 02, 2010 - 13:31

    Once again we see NL being told that Quebec is one sided. The Williams government, although right in stating that they would have been left with the mess anyway, continues to be the great negotiators that they are: NOT VERY GOOD!

    You can't fight the law, that Williams himself is part of, with yelling and name calling. Unfortunately, the People of NL believe it is a great leader who has the biggest mouth, who APPEARS to be able to win the battles by bullying their way to the top. It saddens me to think so many are being MISLEAD by a few of OUR lawyers, now politicians (who are probably in the political field now due to the way they conducted themselves in the Courts). Canadian Law, although noticibly weak, still stands up to evidence and no amount of yelling and screaming will ever supercede evidence.

  • Bones
    July 02, 2010 - 13:31

    McLean: So they wouldn't be sold to a third party. You DO realize we would then we'd be fighting to stop that third party from taking what they would now consider their property? Wood fiber can be shipped away and hydro profits can easily go into another account, right? I know you're not dumb, I also know you think we are. Whatever your reasons, it matters not, we own that resource now,and we will own it forever. Dig away, lol

  • don
    July 02, 2010 - 13:28

    The ulterior motives and lame attempt to justify the unjustifiable by the Government of Newfoundland and Labrador are what cemented the Judge's decision in this case. There is a well respected understanding in legal circles that simply states that the party making the claim and causing the action in Court should have come to the process with CLEAN HANDS! That is not the case here. The Government of Newfoundland and Labrador did not have clean hands when it came to Court and no amount of scrubbing is ever going to change that! I suspect that Dictator Danny will try to appeal this ruling all the way to the Supreme Court of Canada. I also suspect that the final verdict will be against the Government of Newfoundland and Labrador. The appeal by the Government of Newfoundland and Labrador will be a colossal waste of time, effort and tax payer money! The Government of Newfoundland and Labrador expropriated Abitibi assets and contaminated liabilities whether it meant to or not. The Government of Newfoundland and Labrador must accept the consequences of such ill-advised and incompetent action!

  • Ed
    July 02, 2010 - 13:22

    Actually, Peter if you read the background material the judge had - it is available online - you get a much better sense of where he got his ideas from.

    He does raise questions about the nature of some of the information, such as efforts to attribute to Abitibi pollution done by others. Again, if you read the entire documentary record, the various problems he points to become readily apparent.

    If you then read the appeal documents submitted by the provincial government, you will noticed is is long on claims and short on evidence. One of the key things it omits is one of things which undoubtedly influenced Gascon: namely that the environment minister didn't issue clean-up orders with unrealistic timescales until after - well after - the expropriation.

    The environmental work was done by a company retained not by the department in the ordinary course of exercising its legal responsibilities but by the lawyers representing the provincial government in the NAFTA challenge.

    And again, you have to look at the repeated statements of the provincial government connecting the liabilities with compensation for the assets.

    If one reads the entire record, one can see many things. If one looks at just one bit and ignore the evidence even in that, one can reach the conclusions you reached.

  • W
    July 02, 2010 - 13:21

    ''He overlooks the fact that the original agreement with Abitibi's predecessor only grants resource rights while a mill is being operated here. ''

    Alright, then.

    In that case, if the resource rights were conditional on the mill, and would have expired, forfeited, escheated, whatever the term is that was used in the original arrangements for those rights, in the absence of a mill, and if Abitibi was planning to close the mill... then why on earth did We need to expropriate those rights?

  • Mark
    July 02, 2010 - 13:20

    ''Most importantly, Gascon either ignored or was unaware that the company was reportedly on the verge of selling its rights and assets to a third party.''

    Let me get this straight - in your learned view, a judge should take into consideration his awareness of what is reportedly happening, and give it equal weight to the evidence which is actually presented?

    That's total b.s.

    Judges should only be 'aware' of the evidence presented in their courtroom, nothing more and nothing less, and certainly not what may or may not be 'reportedly' elsewhere.

    Yours is quite a shocking view of how our legal system works, Peter. Shocking, but not surprising.

  • W
    July 02, 2010 - 13:18

    ''He overlooks the fact that the original agreement with Abitibi's predecessor only grants resource rights while a mill is being operated here. ''

    Alright, then.

    In that case, if the resource rights were conditional on the mill, and would have expired, forfeited, escheated, whatever the term is that was used in the original arrangements for those rights, in the absence of a mill, and if Abitibi was planning to close the mill... then why on earth did We need to expropriate those rights?

  • Ed
    July 02, 2010 - 13:18

    Okay, Bones. Let's take your assumptions and ask some simple questions:

    1. In a world where the paper industry is in decline, who would take the trees out of the province?

    2. What would they do with the trees, given the abundance of trees everywhere else? It's not like there is a fibre shortage in the world or anything.

    3. Why do you assume the provincial government you support would have rolled over and automatically issued a permit allowing some company to export the trees?

    4. If the Hydro assets wound up in the hands of a local company - like say Fortis - would you be as concerned about the prospect of profits leaving the province?

    5. If you are opposed to profits leaving the province, how do you feel about Canadian Helicopters and all the other companies not based here?

    6. Should Kruger be nationalised as well?

    Just asking.

  • W
    July 02, 2010 - 13:15

    Couldn't ''We'' just have easily expropriated from that imaginary third party? And why would we bother expropriating, since, as I previously noted, and you ignored, according to the talking points, those resource rights were dependent on the operation of a paper mill, and would have expired when the mill closed.

    Who is looking to ship ''fibre'' from Newfoundland to where? Is expropriation the only legal instrument by which this can be prevented, if it's adjudged to be a Bad Thing?

    And hydro profits? Is that what it is really all about? If so, then the legislation is one big colouring book....

    As for owning the resource, awesome! The government now owns something which would, if you believe the talking points, have reverted to the government anyway, and, as far as the timber rights are concerned, do not now, and never will again, generate a cent of public revenue. Good going, Danny!

  • John Smith
    July 02, 2010 - 13:10

    This judge should be mocked, he begs to be mocked, his court is a mockery. Quebec has a different set of rules than the rest of the country, they have different laws. Why is Quebec the home of organized crime in Canada? Because, of thier judicial system. They are biased towards the interests of Quebec, and Quebec based business. There is no chance to get a fair hearing in Quebec, it will never happen. The bottom line is that even if every court in Canada agreed with the province, AB would find a way to weasel out of it. That's what they do best.

  • Newfie
    July 01, 2010 - 20:20

    Once again we see NL being told that Quebec is one sided. The Williams government, although right in stating that they would have been left with the mess anyway, continues to be the great negotiators that they are: NOT VERY GOOD!

    You can't fight the law, that Williams himself is part of, with yelling and name calling. Unfortunately, the People of NL believe it is a great leader who has the biggest mouth, who APPEARS to be able to win the battles by bullying their way to the top. It saddens me to think so many are being MISLEAD by a few of OUR lawyers, now politicians (who are probably in the political field now due to the way they conducted themselves in the Courts). Canadian Law, although noticibly weak, still stands up to evidence and no amount of yelling and screaming will ever supercede evidence.

  • Bones
    July 01, 2010 - 20:19

    McLean: So they wouldn't be sold to a third party. You DO realize we would then we'd be fighting to stop that third party from taking what they would now consider their property? Wood fiber can be shipped away and hydro profits can easily go into another account, right? I know you're not dumb, I also know you think we are. Whatever your reasons, it matters not, we own that resource now,and we will own it forever. Dig away, lol

  • don
    July 01, 2010 - 20:16

    The ulterior motives and lame attempt to justify the unjustifiable by the Government of Newfoundland and Labrador are what cemented the Judge's decision in this case. There is a well respected understanding in legal circles that simply states that the party making the claim and causing the action in Court should have come to the process with CLEAN HANDS! That is not the case here. The Government of Newfoundland and Labrador did not have clean hands when it came to Court and no amount of scrubbing is ever going to change that! I suspect that Dictator Danny will try to appeal this ruling all the way to the Supreme Court of Canada. I also suspect that the final verdict will be against the Government of Newfoundland and Labrador. The appeal by the Government of Newfoundland and Labrador will be a colossal waste of time, effort and tax payer money! The Government of Newfoundland and Labrador expropriated Abitibi assets and contaminated liabilities whether it meant to or not. The Government of Newfoundland and Labrador must accept the consequences of such ill-advised and incompetent action!

  • Ed
    July 01, 2010 - 20:07

    Actually, Peter if you read the background material the judge had - it is available online - you get a much better sense of where he got his ideas from.

    He does raise questions about the nature of some of the information, such as efforts to attribute to Abitibi pollution done by others. Again, if you read the entire documentary record, the various problems he points to become readily apparent.

    If you then read the appeal documents submitted by the provincial government, you will noticed is is long on claims and short on evidence. One of the key things it omits is one of things which undoubtedly influenced Gascon: namely that the environment minister didn't issue clean-up orders with unrealistic timescales until after - well after - the expropriation.

    The environmental work was done by a company retained not by the department in the ordinary course of exercising its legal responsibilities but by the lawyers representing the provincial government in the NAFTA challenge.

    And again, you have to look at the repeated statements of the provincial government connecting the liabilities with compensation for the assets.

    If one reads the entire record, one can see many things. If one looks at just one bit and ignore the evidence even in that, one can reach the conclusions you reached.

  • W
    July 01, 2010 - 20:05

    ''He overlooks the fact that the original agreement with Abitibi's predecessor only grants resource rights while a mill is being operated here. ''

    Alright, then.

    In that case, if the resource rights were conditional on the mill, and would have expired, forfeited, escheated, whatever the term is that was used in the original arrangements for those rights, in the absence of a mill, and if Abitibi was planning to close the mill... then why on earth did We need to expropriate those rights?

  • Mark
    July 01, 2010 - 20:02

    ''Most importantly, Gascon either ignored or was unaware that the company was reportedly on the verge of selling its rights and assets to a third party.''

    Let me get this straight - in your learned view, a judge should take into consideration his awareness of what is reportedly happening, and give it equal weight to the evidence which is actually presented?

    That's total b.s.

    Judges should only be 'aware' of the evidence presented in their courtroom, nothing more and nothing less, and certainly not what may or may not be 'reportedly' elsewhere.

    Yours is quite a shocking view of how our legal system works, Peter. Shocking, but not surprising.

  • W
    July 01, 2010 - 20:00

    ''He overlooks the fact that the original agreement with Abitibi's predecessor only grants resource rights while a mill is being operated here. ''

    Alright, then.

    In that case, if the resource rights were conditional on the mill, and would have expired, forfeited, escheated, whatever the term is that was used in the original arrangements for those rights, in the absence of a mill, and if Abitibi was planning to close the mill... then why on earth did We need to expropriate those rights?

  • Ed
    July 01, 2010 - 20:00

    Okay, Bones. Let's take your assumptions and ask some simple questions:

    1. In a world where the paper industry is in decline, who would take the trees out of the province?

    2. What would they do with the trees, given the abundance of trees everywhere else? It's not like there is a fibre shortage in the world or anything.

    3. Why do you assume the provincial government you support would have rolled over and automatically issued a permit allowing some company to export the trees?

    4. If the Hydro assets wound up in the hands of a local company - like say Fortis - would you be as concerned about the prospect of profits leaving the province?

    5. If you are opposed to profits leaving the province, how do you feel about Canadian Helicopters and all the other companies not based here?

    6. Should Kruger be nationalised as well?

    Just asking.

  • W
    July 01, 2010 - 19:55

    Couldn't ''We'' just have easily expropriated from that imaginary third party? And why would we bother expropriating, since, as I previously noted, and you ignored, according to the talking points, those resource rights were dependent on the operation of a paper mill, and would have expired when the mill closed.

    Who is looking to ship ''fibre'' from Newfoundland to where? Is expropriation the only legal instrument by which this can be prevented, if it's adjudged to be a Bad Thing?

    And hydro profits? Is that what it is really all about? If so, then the legislation is one big colouring book....

    As for owning the resource, awesome! The government now owns something which would, if you believe the talking points, have reverted to the government anyway, and, as far as the timber rights are concerned, do not now, and never will again, generate a cent of public revenue. Good going, Danny!

  • John Smith
    July 01, 2010 - 19:46

    This judge should be mocked, he begs to be mocked, his court is a mockery. Quebec has a different set of rules than the rest of the country, they have different laws. Why is Quebec the home of organized crime in Canada? Because, of thier judicial system. They are biased towards the interests of Quebec, and Quebec based business. There is no chance to get a fair hearing in Quebec, it will never happen. The bottom line is that even if every court in Canada agreed with the province, AB would find a way to weasel out of it. That's what they do best.