Canada: Insolvency v. Environmental Legislation - Still A Lot Of Clean Up To Do

The Supreme Court of Canada (the "SCC") released its decision in Newfoundland and Labrador v. AbitibiBowater Inc.1 today. As insolvency practitioners and environmental lawyers know, this case dealt fundamentally with the question of whether or not environmental remediation orders issued by a regulator pursuant to environmental legislation constitute "claims" subject to a stay and compromise inside a Companies' Creditors Arrangement Act ("CCAA") proceeding, with the collateral constitutional jurisdiction question. The short answer? A rather unsatisfactory, "It depends."

While this decision should be seen to definitively put the constitutional jurisdiction issue to rest – that this question is legitimately one that the CCAA court must answer – by holding that not all orders issued by regulatory bodies are monetary in nature (and, therefore, provable claims in an insolvency proceeding), but some may be – and it is up to the CCAA court to make this determination on consideration of the full factual matrix pertaining to the particular case – the SCC has essentially left this to be a litigated issue in each case.

In attempting to provide some guidance, the SCC held that there are three requirements that must be met for a regulatory order to be considered as a claim that can be compromised inside an insolvency proceeding: (1) there must be a debt, liability or obligation to a creditor; (2) the debt, liability or obligation must be incurred as of a specific time; and (3) it must be possible to attach a monetary value to the debt, liability or obligation. As to the third point, in the context of environmental protection orders, this means that there must be sufficient indications that the regulatory body that triggered the enforcement mechanism will ultimately perform remediation work and assert a monetary claim -- in other words "sufficient certainty" in this regard. Two of the nine judges dissented on this point as in their view such "sufficient certainty" in this case had not been adequately proven.2

The SCC's decision, however, still leaves most of the hard questions in this area unanswered. The one question it did squarely address was to make it clear that as soon as a regulator initiates enforcement mechanisms it becomes a creditor for the purposes of an insolvency proceeding. This should eliminate any future uncertainty on this point based on the argument that the obligations in question are not "owed" to the regulator per se. That said, the decision does not clearly address what is to happen with continuing environmental liability. If environmental damage occurred prior to the insolvency filing, then it meets the second test enumerated above. However, what happens to the obligation to remediate if the environmental damage is of a type that is continuing during the insolvency proceeding and will continue after it? There is no clear answer in this decision.

The other hanging hard question was touched upon by the two dissenting judges. Section 11.8 of the CCAA provides a claim for the costs of remedying any environmental condition or environmental damage affecting real property and provides the relevant government with a first ranking charge over such real property (and related contiguous real property) for such remediation costs. However, what if the remediation costs greatly exceed the value of the real property even after it is remediated? If there are no health and safety issues, the regulator may well choose not to actually incur any remediation costs. If this is the case, then the "sufficient certainty" test to incurring such costs cannot be met but leaves a debtor facing a continuing remediation order whether or not the debtor has chosen to abandon the property.

The majority in this case deferred to the trial judge's conclusions that there essentially was "sufficient certainty" that the regulator would incur such remediation costs. In doing so, this decision appears to support the feasibility of "quarantining" or otherwise abandoning environmentally damaged properties in insolvency proceedings given that two important factors in this case were the debtor's lack of control over the properties in question and its inability to complete any remediation due to timing and financial constraints. However, the facts of the case as outlined in the trial judge's decision also leave some doubt about the "sufficient certainty" conclusion given the stated possible remediation costs relative to the value of the underlying properties in question – an issue seized upon by the two dissenting judges.

Suffice it to say, this particularly critical issue in this area is not clearly dealt with in the CCAA and this SCC decision does not do much to clean it up.


1. 2012 SCC 67.

2. One of the dissenting judges (McLachlin C.J.) in fact supported a more onerous threshold of "likelihood approaching certainty" but held that not even the "sufficient certainty" standard had been met.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions