30 LEXPERT MAGAZINE
|
SEPTEMBER
/
OCTOBER 2018
BIG SUITS
ing the ownership, management, operation
and use of E3, including the appointment of
NOVA as Operator. In August 1999, a mer-
ger between Dow and UCC was announced.
Concerned about the merger's impact on the
co-ownership of E3, NOVA's senior manage-
ment formed a working group to consider
options. e group produced a "wish list"
that included "minimize ethylene to Dow"
and "back Dow out of E3." In early 2001, E3
commenced commercial operations.
In 2006 Dow sued NOVA, alleging that
NOVA had failed to run E3 at full rates and
had taken for itself, by a non-contractual eth-
ane allocation scheme, part of Dow's share of
E3's ethylene production.
NOVA counterclaimed, arguing that by the
terms of one of the parties' agreements UCC
(and therefore Dow) was prohibited from
acquiring ethane in Western Canada for its
own plant.
JUSTICE ROMAINE'S DECISION
Following a trial that took place over much
of a year, Justice Romaine awarded Dow
US$1.06 billion in damages.
NOVA's counterclaim was dismissed. In
assessing Dow's claims, Justice Romaine
found no justification in the parties' agree-
ments for NOVA's ethane allocation scheme,
by which NOVA had claimed a shortage of
ethane, purported to ration ethane among
E3 and its own two plants, and then allocat-
ed the total ethylene production among the
three plants.
Noting that several witnesses had con-
ceded that NOVA had always had enough
ethane to run E3 at full capacity, she found
that NOVA's conduct amounted to conver-
sion and ruled that NOVA had failed to "act
honestly and in good faith and in accordance
with the provisions" of the agreements. She
found that NOVA "ran E3, not to optimize
production of Product, but to optimize
NOVA's profit and ... the entire Joffre Site."
Although NOVA had argued that vari-
ous mechanical difficulties had limited pro-
duction, Justice Romaine disagreed. NOVA
also argued that it had not acted with "gross
negligence" or "wilful misconduct," but the
judge found that NOVA's failure to run E3
to capacity and its conversion of Dow's E3
ethylene had been deliberate, or at best had
shown an "utter disregard for harmful, fore-
seeable and avoidable consequences."
e decision is believed to be the largest
award for damages in the history of Alberta.
Bennett Jones LLP acted as lead trial
counsel for Dow, with a team that included
Blair Yorke Slader, QC, April Grosse, Rus-
sell Kruger, Desislava Docheva and Ciara
Mackey, with assistance from Barry Crump
and Scott Tallman of Burnet, Duckworth
& Palmer LLP, and Randall Hofley, Kevin
MacDonald and Micah Wood of Blake,
Cassels & Graydon LLP.
NOVA was represented by William Kenny,
QC, Sean Kelly and Fergus Schappert of Mil-
ler omson LLP, Colin Feasby and Tamara
Prince of Osler, Hoskin & Harcourt LLP,
and Mary Comeau and Bryan Walker of Nor-
ton Rose Fulbright Canada LLP.
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