Domtar Wins Against ABB

Domtar Inc. instituted an action before the Quebec Superior Court against Combustion Engineering Canada Inc., predecessor of ABB Inc., and Alstom Canada Inc. Combustion Engineering had designed, manufactured and installed a chemical recovery boiler at Domtar’s Windsor mill. Cracks developed in the tubes of the recovery boiler’s superheater. Domtar replaced the superheater and sued ABB as manufacturer and Alstom as the assignee of ABB’s debts, for the cost of replacing the superheater and for substantial business interruption losses. In this action, Domtar also sued Chubb Insurance Company of Canada under the terms of a performance bond issued in favour of Domtar. ABB and Alstom in turn sued Domtar to recover the cost of certain repairs. They also sued GAN Canada Insurance Company under the terms of a wrap-up liability insurance policy claiming defence costs in the principal action, as well as indemnification for any award against them in the principal action.

On July 4, 2003, Justice Allan Hilton granted Domtar’s action, awarding it damages representing the cost of replacing the superheater and substantial business interruption losses. The court also granted ABB and Alstom’s action against Domtar, but added that amount to the award in favour of Domtar in the principal action. The court dismissed ABB’s third-party action against GAN. Domtar’s total award exceeds, with interest and costs, $33 million. The judgment in the principal action and related judgments have been appealed.

Domtar was represented by Olivier Kott, Gregory Bordan, André Legrand and Nathalie Weizmann of Ogilvy Renault. Alstom Canada, ABB and Chubb Insurance Company of Canada were represented by Ian Rose, Robert Mason, Jean Bélanger and Janet Oh of Lavery, de Billy. Sylvain Lussier of Desjardins Ducharme Stein Monast acted for ABB and Alstom Canada in the action against GAN, which was represented by Ron Silverson and François Joubert of Gasco Goodhue in Montreal.