Summary

38544

Resolute FP Canada Inc. v. Hydro-Québec, et al.

(Quebec) (Civil) (By Leave)

Keywords

Contracts - Contract — Assignment of contract — Whether there are restrictions on assignment of contracts under Quebec law — Standard of appellate intervention — Characterization and interpretation of contract — Tax — Charge — Hydro Québec Act, CQLR, c. H 5, ss. 16, 32 — Watercourses Act, CQLR, c. R 13, ss. 68, 69.3 — Whether Quebec Court of Appeal could reject trial judge’s interpretation and characterization of two contracts without identifying palpable and overriding error — Requirements for valid assignment of contract in Quebec civil law and effect of such assignment on parties’ rights and obligations — Whether State can truly tax its own property or whether it is not imposing tax but simply reallocating income.

Summary

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This litigation is between the applicant, Resolute FP Canada Inc. (“Resolute”), and the respondents, Hydro Québec and Gatineau Power Company (“Gatineau Power”). In November 2011, Hydro Québec sent Resolute an invoice for more than $3 million for electricity provided to its Gatineau mill. The invoice included three years of hydraulic charges that Hydro Québec had paid the State since 2008 pursuant to legislation. The initial power supply contract had been entered into in 1926 by Gatineau Power and Resolute’s predecessor, Canadian International Paper Company (“CIP”), for a term of 40 years, renewable for additional 10 year periods. In 1965, Gatineau Power continued to exist, but Hydro Québec acquired all of its shares by contract. The parties disagreed about the impact of the 1965 contract on the rights and obligations of the parties to the 1926 contact and about whether the 1965 contract had assigned the 1926 contract. Resolute eventually paid, under protest, the amount claimed by Hydro Québec and filed an action in the Superior Court seeking a declaratory judgment and reimbursement.