Judge awards Domtar $2M in supplier dispute
A B.C. Supreme Court judge has awarded Domtar nearly $2 million to make up for illegal charges by a company which supplies raw materials to the Kamloops pulp mill.
In a 23-page written decision released today (Dec. 28), B.C. Supreme Court Justice Barbara Fisher ruled Univar Canada Ltd. is on the hook for $1,871,408.94 plus interest — the amount the company overcharged Domtar over a six-month period in 2008.
In 2006, the two companies entered into a contract for Univar to supply caustic soda to Domtar's Kamloops mill at a rate of $545 per tonne.
But, in July of 2008, with six months remaining in the deal, Univar began charging monthly rates ranging between $730 and $845 per tonne.
At the time, Univar said it was unable to continue to offer the materials at the agreed-upon rate. Domtar paid the new rates "under protest," according to the decision.
Univar attempted to invoke a "force majeure/excused performance" reasoning with the price change, claiming "conditions of the global caustic soda market" made them unable to abide by the terms of their contract with Domtar.
In her decision, Justice Fisher said Univar was out to make a buck off the record-high caustic soda prices of 2008 — regardless of the terms of the contract with Domtar.
"Univar sought to, and did, maximize the profits it was able to maintain in the Kamloops market without considering Domtar's position at all," she wrote.
"Univar could have been flexible given the evidence that its book of business would still have been profitable in 2008 without imposing higher prices on its restricted contract customers."
Domtar had also been seeking damages, but Fisher said the amount it was overcharged was sufficient given the circumstances.
Caustic soda, also known as lye, is a chemical base used in the production of pulp and paper, among other applications.