19 August 2010

The Expropriation Fiasco drags on

Danny Williams hasty, ill-considered and thus far unexplained expropriation of AbitibiBowater assets may well end up costing the people of Newfoundland and Labrador untold millions of dollars.

A healthy chunk of their loss will go to a raft of expensive Montreal lawyers Danny Williams is using to pursue legal action in Quebec courts.

Now that the Quebec appeal court refused to hear the government’s appeal of lower court decisions, the only place left is the Supreme Court of Canada.  Odds are against that court hearing the case simply because the provincial legal arguments are week and they have already been thoroughly demolished at the lower court level.

One must wonder why Williams persists.  His track record in court isn’t good.  Take Henley v. Cable Atlantic or Ruelokke v. Newfoundland and Labrador and the preposterous privative clause argument as good cases in point. 

You can then add the AbitibiBowater cases to the list. Anyone who takes the time to read the record of government’s actions in the whole bankruptcy can only shake their heads in disbelief at the amateurish actions.

Many of its actions has been as astonishingly lame as the government’s performance in that other Quebec legal action, the Regie appeals. One would scarcely believe that government’s lawyers did not call a single expert witness to support its case or refute Hydro-Quebec’s assertions but that is exactly what happened.

According to the Globe and Mail, [link above] the provincial government contends there are three issues that need the attention of the nine wise old owls in Ottawa.

Newfoundland said the case raises three specific issues: – ensuring consistency across the country by resolving a conflict between provincial environmental law and federal bankruptcy and insolvency law; – who should bear the cleanup costs when a company is attempting to restructure; – does the CCAA give a court power to remove all hurdles under provincial law that impair a company's ability to restructure.

Now your humble e-scribbler isn’t a lawyer but the answers to these questions seem fairly obvious.  They are obvious because AB is still on the hook.

The answers are in the Quebec court decisions: at no point has the company been relieved of any of its liabilities for clean-up of its properties in this province.  When AbitibiBowater set up the remaining properties in a holding company, the provincial government’s lawyers did not raise a single objection in court.  AB is still on the hook.  The liabilities have not been extinguished.

The Quebec court decisions are there in black and white.  The language is not complicated. One can only wonder why Williams persists in pursuing what is essentially a lost cause.

Perhaps, he carries on because of the intense embarrassment, the ignominy of such a massive mistake as the expropriation turned out to be.  As the Globe out it:

The province wants to force Abitibi to clean up five sites it ran between 1905 and 2008.

Unfortunately for Williams, he and his lawyers screwed up the expropriation. The provincial government now owns some of the most contaminated of the sites. His clever little scheme – seize the assets and leave the company with all the liabilities – blew up in his face.

And what must be especially galling is that Williams knows  the law is absolutely clear on this as well:  the liability flows to the new owners.  When Williams seized the property, he seized the pollution and the responsibility for cleaning it up.

If things go as they are likely to go, the SCC won’t waste time hearing the appeal. Unfortunately for the people of Newfoundland and Labrador, though, a quick end to the legal action only limits a small portion of the costs that will flow from Williams’ monumental shag-up. The final tally for that mess has yet to be calculated

- srbp -