HALIFAX – A Nova Scotia judge says an application to cancel a municipal tax deal for an idled Cape Breton paper mill can proceed.

Judge John Murphy says the mill’s prospective buyer, Pacific West Commercial Corp., can argue its case before the Nova Scotia Supreme Court in a hearing scheduled for Sept. 13.

Pacific West wants the court to terminate a May 2006 agreement between Richmond County and the plant’s former owner, Stora Enso.

The agreement, which was later set out in provincial legislation, fixed municipal tax rates paid by the NewPage Port Hawkesbury mill for a 10-year period.

The company contends it should pay about one-sixth of its current estimated tax bill of $2.5 million.

In a bid to head off the court proceeding, lawyers for Richmond County had argued that only the provincial legislature had the
authority to amend a tax arrangement set out in legislation.

Earlier today, the mill was given an extension of its creditor protection until Sept. 28 by the Nova Scotia Supreme Court.