The Supreme Court of Canada has released its ruling in
Newfoundland and Labrador v. AbitibiBowater Inc.
AbitibiBowater Inc. ("Abitibi") operated in the
Province of Newfoundland and Labrador (the "Province")
for nearly a century. In a period of financial distress, Abitibi
closed its last paper mill in the Province and filed for insolvency
protection, obtaining a stay of proceedings under the
Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36
("CCAA") in 2008. While Abitibi was no longer present in
the Province, the environmental contamination at its former sites
The Province issued five clean up orders against Abitibi,
arguing that these environmental protection orders were not
"provable claims" that were compromisable under the CCAA
regime. The Court considered s. 11.8(9) of the CCAA which
"A claim against a debtor company for costs of remedying
any environmental condition or environmental damage affecting real
property of the company shall be a claim under this Act, whether
the condition arose or the damage occurred before or after the date
in which proceedings under this Act were commenced."
Writing for the majority, Justice Deschamps (now retired) found
that in this case the Province's environmental orders were of a
monetary nature. Deschamps J. outlines three requirements the
courts must consider to determine whether a claim is a
1. There must be a debt, a liability or an obligation to a
2. The debt, liability or obligation must be incurred as of a
specific time; and
3. A monetary value must be attachable to the debt, liability or
The Court also recognizes that environmental orders may not
always be considered a "provable claim" for the purposes
of the CCAA:
In the context of an environmental order...there must be
sufficient indications that the regulatory body that triggered the
enforcement mechanism will ultimately perform remediation work and
assert a monetary claim to have its costs reimbursed. If there is
sufficient certainty in this regard, the court will conclude that
the order can be subjected to the insolvency process.
In this case, Abitibi was a debtor of the Province because it
owed money for the clean-up of the property. These debts were
incurred before Abitibi's CCAA proceeding began, and the cost
to comply with the orders had a quantifiable monetary value. It was
"sufficiently certain" that the Province would perform
the remediation work and assert a monetary claim against Abitbi for
Abitibi's environmental clean-up obligations were not
extinguished by entering CCAA protection, but including the
Province's claims in the CCAA process simply "ensures that
the creditor's claim will be paid in accordance with insolvency
legislation." Further, Deschamps J. reasoned that if
Parliament wanted to give a Province automatic priority over an
insolvent company's assets to satisfy remediation costs, the
legislation would have provided it. Without such legislation,
orders of a monetary nature should be subject to the same claims
process as other unsecured creditors.
In this decision the majority and dissent both agree that not
all environmental orders will fit into the definition of a
"claim" under the CCAA regime. Going forward,
professionals (insolvency or otherwise) will find guidance in these
reasons for determining whether or not regulatory orders will be
subject to a stay of proceedings under the CCAA process.
Ontario's Ministry of the Environment and Climate Change continues to roll out its Climate Change Action Plan with its proposed GHG guide for projects that are subject to the province's Environmental Assessment Act.
The Imperial Oil refinery pled guilty to one offence for discharging a contaminant, coker stabilizer, thermocracked gas, into the natural environment causing an adverse effect and was fined $650,000...
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