Mill tax deal can be cancelled: judge

Ryan Van Horne
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[Halifax, NS] — Richmond County has lost Round 1, but could still win the fight if it delivers a knock-out punch in Round 2.

Supreme Court of Nova Scotia Justice John D. Murphy ruled Tuesday (Aug. 28) that the taxation deal between Richmond County and the Stora Enso mill — which was enshrined in provincial legislation in 2006 — is a deal that can be cancelled by the mill’s new owner, Pacific West Commercial Corp., and its parent company, Stern Partners Inc.

“In short, I’ve concluded that the agreement can retain its fundamental character as an agreement without contradicting the (Companies’ Creditors Arrangement) Act,” Murphy said in delivering his oral decision Tuesday.

Pacific West lawyer Gavin MacDonald had argued the Stora Enso Taxation Act should be considered an “agreement” under the Companies’ Creditors Arrangement Act and can be cancelled unilaterally by Stern. The letter of intent between Stora Enso and Richmond County is “enabled, rather than legislated by the act.”

Richmond County’s lawyer Bruce Clarke had argued that since the deal was enacted by provincial legislation, it is more than just an agreement and cannot be cancelled under the Companies’ Creditors Arrangement Act.

“What is an agreement is not defined by the (Companies’ Creditors Arrangement Act) and that makes everyone’s job here more difficult,” Murphy said. “This legislation does not require it to tax in a certain way. It authorizes it to do follow the letter of intent and so it falls within the range of agreements set out by (Companies’ Creditors Arrangement Act).”

Victor David, Richmond County deputy warden, downplayed Tuesday’s decision, saying it was merely a “procedural issue” that determined where the battle will be fought.

David said that with almost $2 million at stake for the county, it has to continue to negotiate with Stern to get a fair deal for taxpayers, but added they will be ready to argue in court in Sept. 13.

“I would prefer that we work out a deal,” David said. “We have had three bouts of negotiation, but negotiations are going backwards.”

The county’s position is that the deal would represent a tremendous hardship for the county and its residents and cannot be cancelled under a different clause of the Companies’ Creditors Arrangement Act.

David said that if Stern is able to wiggle out of the tax deal, the county would have to raise taxes by 20 per cent to keep the programs and services it provides.

“We want our residents to able to live and have a comfortable life,” David said. “There’s enough taxation in this province.”

Richmond County chief administrative officer Warren Olsen said increasing taxes that much would be a burden for the county’s aging population and said the the tax cut Stern is seeking is unrealistic.

“We don’t agree with their assertion on where the value of the mill is, given all the money that’s being invested in there,” Olsen said.

In defending the county’s decision to go to court, Olsen said: “NewPage filed the application to break the tax agreement, not us. In the absence of fair negotiations, we had no choice but to defend the best interests of Richmond County.”

Richmond MLA Michel Samson said there’s no question the citizens of Richmond County want the mill to reopen and provide the 300 or so jobs.

“But at the end of the day, the citizens have reached a point where they’re saying ‘Enough is enough,’” Samson said.

Stern has asked for — and received — enough money from the province, he said, and to now ask for more concessions from the citizens of Richmond County is too much, he said.

“Don’t forget that in 2006 when this agreement was reached, Stora Enso was paying $6 million in taxes and it was lowered to $2.6 million,” Samson said. “There’s no question that the people of Richmond were very reasonable in the past. They’re prepared to be reasonable now, but Stern has to be prepared to be reasonable, too.”

Cape Breton Post

 

 

Organizations: Stora Enso, Supreme Court, Pacific West Commercial Stern Partners

Geographic location: Richmond, Cape Breton

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