Northern Pulp files lawsuit against N.S. government for damages, lost profits

Northern Pulp is suing the Province of Nova Scotia for potentially hundreds of millions of dollars related to the early end of its lease to use Boat Harbour to treat effluent, and the subsequent shutdown of the mill.

In papers filed in Nova Scotia Supreme Court on Thursday, the company alleges it and its affiliates had lost more than $100 million as of June 30 of this year and losses are expected to exceed $450 million in aggregate.

In claims yet to be tested in court, Northern Pulp saysefforts by the provincial government to "evade or breach obligations" resulted in the mill being forced to shut down in January 2020.

The company alleges this was a direct result of the province ending the lease to use Boat Harbour to treat effluent from the mill 10 years sooner than permitted by the lease, and not dealing openly and fairly with the company as it attempted to find a suitable replacement option.

According to the allegations in the document, Northern Pulp has an indemnity agreement with the province that it inherited when it bought the mill in 2008. The government first signed that agreement in 1995.

Among other things, the agreement indemnifies the company against lost profits and consequential damages related to premature loss of use of Boat Harbour.

Boat Harbour Act timelines too tight

The former Liberal government passed the Boat Harbour Act in 2015, which called for the former tidal estuary to stop receiving mill effluent by the end of January 2020.

Northern Pulp alleges the creation of theact, along with various actions by the government, were done with the intention of essentially forcing the mill out of business while trying to limit the province's liability to the company and its liability in legal action it's facing from Pictou Landing First Nation the community that neighbours Boat Harbour.

The company alleges senior government officials engaged in an effort intended to make it almost impossible for the mill to meet necessary requirements for approval of a replacement effluent treatment facility.

What's more, Northern Pulp alleges the timelines established to achieve that work were unrealistic and created without sufficient consultation with the company.

Further delays were experienced when field work required was interrupted by protesters, and when the province had to conduct consultation with Pictou Landing First Nation regarding financial agreements with the company.

As the deadline for the Boat Harbour Act approached, according to the court document, company officials began petitioning the province for an extension to use Boat Harbour so that operations at the mill would not be interrupted. According to the lawsuit, those assurances were received from the highest-ranking members of government.

Assurances from government officials

In May 2016, senior officials with the mill and its parent company first met with then premier Stephen McNeil

"During the meeting Premier McNeil advised that the province wanted the mill to succeed and continue operating well into the future. While he acknowledged the [Boat Harbour Act] had created problems for the mill, he advised that the province would honour its agreements with [Northern Pulp]."

As the deadline for the act to come into force got closer, the company struggled to get approval from the Environment Department for its proposed replacement effluent treatment facility. Twice the company would be told by the environment minister of the day that there was insufficient information to make a decision.

But even as it became obvious there was no way for a replacement site to be ready to meet the deadline in the Boat Harbour Act, the company alleges it was still being told not to worry.

Company submitted new plan

In its claim, the company alleges it was advised in the fall of 2019 "directly and indirectly by senior officials and representatives of the province including [then deputy minister] Duff Montgomerie and [then finance minister and deputy premier] Karen Casey that 'things would work out' and that [Northern Pulp] should not prepare to shut down the mill or issue lay-off notices to its employees."

Ultimately, however, there would be no extension for the company to use Boat Harbour.

On Dec. 19, 2019, then environment minister Gordon Wilson ruled that the company's submitted focus report was insufficient for him to determine whether or not to grant an environmental approval for the work.

The next day, McNeil announced the company would get no extension and the terms of the Boat Harbour Act would be honoured. The mill shut down operations the next month, laying off all but a handful of employees, and subsequently went into creditor protection.

The company recently submitted a new plan to the provincial government for a replacement effluent treatment facility.

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