Canadian Lawyer InHouse

MARCH/APRIL 2019 18 INHOUSE A central aspect of the upcoming case before the Supreme Court is whether the indemnity clause agreed to by Ontario in the 1985 agreement applied only to third- party claims against two companies or to so-called "direct" claims stemming from the costs of subsequent environmental or- ders by the province. Also, if an indemnity is in effect for a corporate property owner, the Supreme Court is being asked to clarify what happens to this protection if there is a transfer of control and a provincial gov- ernment invokes its environmental powers against any entity that was ever attached to the land. Adding to the somewhat complicated factual history in this dispute is that judges at every level in the litigation have dis- agreed on the application of the contractual interpretation template set out by the Su- preme Court less than fi ve years ago in Sat- tva Capital Corp. v. Creston Moly Corp. In some ways, the issues in the case in- voke basic principles of contract law. "It TIMELINE Resolute FP Canada et al v. Ontario 1960s Dryden Paper Company Ltd. operates a pulp and paper mill in Dryden in northwestern Ontario. To generate a supply of the chemicals needed to bleach paper, it sets up a mercury cathode chlor-alkali plant nearby. Untreated mercury waste is released into two rivers, leading to health problems by residents on two nearby reserves, the closure of the commercial fi shery and a decline in tourism. 1971 Dryden Paper constructs a waste disposal site to bury mercury-contaminated waste from the chlor-alkali plant. 1976 Dryden Paper amalgamates with a subsidiary to form Reed Ltd. 1977 Reed is sued by two First Nations bands for damages as a result of the mercury contamination (Grassy Narrows litigation). 1978 The Ontario Ministry of the Environment issues two certifi cates requiring Reed to maintain water monitoring program at the waste disposal site. 1979 Great Lakes Forest Products Ltd. agrees to buy the pulp and paper operation from Reed. A deal is reached with the Ontario government where it limits the liability of two companies to $15 million for the environmental damages caused previously. Great Lakes agrees to spend $200 million to modernize the facility. 1985 The Grassy Narrows litigation is settled. A memorandum of agreement is entered into by the federal government, Ontario, the two First Nations bands, Reed and Great Lakes. The two companies agree to pay $11.75 million in the settlement. Ontario agrees to indemnify the companies for any damages, costs or expenses from any claim, action or proceeding, statutory or otherwise, that existed in 1979 and is asserted at a later date. The indemnity is valid "without limitation as to time," the agreement states. 1990 The Environmental Protection Act in Ontario is amended to allowed the province to issues orders against former owners of sites or entities that had management or control of property. 1993 After amalgamating with other companies, the successor corporation of Reed is dissolved. ou s . o e from e r m e from 19 19 (Gr (Gr 1 w 1979 97 The deal also required Great Lakes to spend a signifi cant amount of money to upgrade and modernize the plant.

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