No deal between Nova Scotia government and Northern Pulp

Nova Scotians won’t get an end to Northern Pulp’s legal saga for Christmas after all.

A prediction by monitor Ernst and Young late last month that mediation between the provincial government and the mill would result in either a deal or a resumption of legal proceedings by year’s end hasn’t come true.

On Tuesday, the British Columbia Supreme Court approved a request from the mill to extend its creditor protection until next June, as the court-ordered mediation continues.

“While it was anticipated that a conclusion would have been reached by this date, the Mediation Parties have continued to engage with the Mediator, and have not yet reached either an agreement or an impasse,” reads the document filed with the court by the monitor.

“The petitioners anticipate (by) early 2024 they will either (have) reached a mediated agreement or will be seeking alternatives to a mediated settlement, which includes litigation with the province.”

The mediation is confidential and there are no hints in the documents filed to seek the extension of creditor protection, which the provincial government did not oppose, as to what’s being considered.

However, there are some details about what happens if a deal falls through.

According to the monitor’s report, Northern Pulp would ask the British Columbia Supreme Court to overrule a bill passed by the Nova Scotia legislature in April 2022. Bill 143 amended the Boat Harbour Act to include language indemnifying the province and its officials from any liability to Northern Pulp over its closing Boat Harbour a decade early.

The bill went as far as to specify “For greater certainty, subsection (1) includes all claims and causes of action seeking damages and other relief as currently pleaded in the Supreme Court of Nova Scotia, Hfx. No. 511473, Northern Pulp Nova Scotia Corporation et al. v. The Attorney General of Nova Scotia.”

Northern Pulp would ask the court to allow it to restart that $450-million lawsuit against Nova Scotia for lost profits and damages, alleging a conspiracy by high-level government bureaucrats to force the mill’s closure by setting unachievable targets in the industrial approval process and then through timelines associated with the Boat Harbour Act.

According to the monitor’s report, Northern Pulp would use the following arguments in asking the court to remove the indemnity the province granted to itself in Bill 143:
“A – the Amendment breaches the Court’s stay of proceedings;
 B –  the Amendment conflicts with the operation of the stay and frustrates the remedial purpose of the CCAA;
 C – in passing the Amendment, the Province violated its duty of good faith under the CCAA; and
 D – the Amendment usurps the constitutionally protected judicial function of s.96 superior Courts.”

For its part, according to the monitor, the Nova Scotia government would seek to have any constitutional challenges to its legislative authority used in passing Bill 143 transferred across the country to the Nova Scotia Supreme Court. It would ask the Nova Scotia Supreme Court to throw out Northern Pulp’s lawsuit because of the legal indemnity the province granted itself in Bill 143.

The province, which is Northern Pulp’s largest creditor, would ask the British Columbia Supreme Court to foreclose and divvy up the mill’s assets — the largest of which is its 425,000 acres of woodland holdings.