“Mr. Speaker ... the judge, who is the Honourable Gascogne, or whatever he is, Gascon or whatever he is, the Great Gatsby or whatever his name is, anyway, at the end of the day in the Quebec Court, is obviously not too ... the honourable judge in Quebec obviously has no time for Newfoundland and Labrador, and what he has done has gone beyond his constitutional competence.
“Because if you read the appeal, which was filed by the government of Newfoundland and Labrador, he did not have the statutory or constitutional competence to do what he did, and he made palpable and overriding errors of fact. You can rely on him if you want to. I would not.”
That’s then premier Danny Williams in the House of Assembly in May 2010, belittling a Quebec judge for a ruling that said the Newfoundland government could not push its environmental claims for tens of millions of dollar against Abitibi ahead of other creditors.
The provincial government had argued that, when it came to environmental claims, the province wasn’t acting as an ordinary creditor — and it reviewed scores of former Abitibi sites across the island, coming up with more than $100 million in claims.
Williams might not have relied on that Quebec judge, but Friday, the Supreme Court of Canada did, ruling that when environmental claims can be put in a dollar amount, they constitute financial claims, and that the province had to get in line with every other creditor.
The court ruled seven to two on the issue, arguing that if the environmental claims took precedence, the financial responsibility would essentially be shifted from the polluter — in this case, Abitibi — to its creditors, who would take a substantial financial hit for cleaning up someone else’s mess. In other words, third-party creditors would be responsible for the costs.
A snippet of the judge writing for the majority of the panel makes the logic pretty clear: “As deferential as courts may be to regulatory bodies’ actions, they must apply the general rules. … The broad approach serves not only to ensure fairness between creditors, but also to allow the debtor to make as fresh a start as possible after a proposal or an arrangement is approved.”
That’s especially so because the province’s demands were not made in isolation: “The seizure of Abitibi’s assets by the province, the cancellation of all outstanding water and hydroelectric contracts between Abitibi and the province, the cancellation of pending legal proceedings by Abitibi in which it sought the reimbursement of several hundreds of thousands of dollars, and the denial of any compensation for the seized assets and of legal redress are inescapable background facts in the judge’s review,” the majority of judges said.
Now, this is not to say that the province wasn’t justified in trying to recoup cleanup costs from Abitibi. The problem is, perhaps, that they should have been seeking those cleanup costs long before Abitibi went into bankruptcy protection. The sites involved include a whole host of grandfathered wood sites that had been closed years before — and presumably should have been cleaned up long ago, too. There is no doubt that the government could have enforced its environmental cleanup orders if those orders had been fully issued before Abitibi sought court protection from its creditors. Regardless, the end result is the same. The honourable Gascogne or Gascon or Great Gatsby, it turns out, was on the right path.
The government of this province wasn’t.