Ontario courts rule against victims of off-site contamination (again)

Property development is a risky business. However those risks increase considerably when redeveloping a "Brownfield" site. Beyond dealing with on-site remediation costs, if pollutants have migrated to a neighbouring property, there is the potential for costly regulatory clean-up orders and civil lawsuits. 

Not surprisingly off-site liability concerns are often a significant stumbling block to Brownfield redeveloped. After all what developer would purchase a property with known clean-up costs on-site, but unknown off-site liabilities?

However two recent court rulings in Ontario cases involving off-site contamination, resulted in decisions going against the innocent property owners, whose sites were contaminated by the activities occurring on nearby sites. While it is unlikely that these cases will result in more Brownfields being redeveloped in the province they have caught the attention of many in the industry.

1. In October 2011 the Ontario Court of Appeal overturned an earlier decision by the Ontario Superior Court in Smith vs Inco Limited, which had awarded $36,000,000 in damages to 7000 property owners in Port Colborne, Ontario, due to soil contamination caused by nickel particles emitted from Inco’s refinery. (see my blog post from October 18, 2011)

Kawartha Lakes, Ontario

2. In June 2012 the Ontario Divisional Court upheld a Ministry of Environment (MOE) order requiring the City of Kawartha Lakes to clean-up city owned property contaminated by a residential homeowner's furnace oil spill. The MOE's order deemed that protecting the environment took precedent over the innocent victim's (the City's) rights. (see Dianne Saxe's blog for an excellent analysis)

Environmental Liability in Ontario Steps Backward

Ontario’s environmental industry is still processing a startling decision on a massive property contamination case made earlier this month.

On October 7, 2011 the Ontario Court of Appeal overturned a July 2010 decision by the Ontario Superior Court in Smith vs Inco Limited[1]. The 2010 decision awarded $36,000,000 in damages to 7000 property owners in Port Colborne, Ontario, due to soil contamination caused by nickel particles emitted from Inco’s refinery, over a 66 year period up to 1985. It was speculated that the original July 2010 decision would open the door in Canada (or at least Ontario) to American-style environmental class-action lawsuits popularized in movies like: Erin Brockovich starring Julia Roberts, and Civil Action with John Travolta.

In the Court’s decision it said that the case failed to prove that Inco’s refinery dust negatively impacted the values of the properties or the owner’s ability to use their properties.  The Court also found that the case did not show that the contamination posed a risk to the health or safety of residents.

The implications of this decision are potentially far-reaching when you consider so many industrial activities operate near residential areas.

There are several layers of irony in this story.

1.   Smelting is a “Potentially Contaminating Activity” highlighted by the Ministry of Environment (MOE) earlier this year in amendments to Ontario’s Brownfield legislation, O. Reg 153/04. Legislation that is designed to protect human health and the health of our environment.

2.   The pollutant in question, nickel refinery dust, is considered a human carcinogen by the US EPA, and EPA cites health studies from Port Colborne to support their conclusions! “Evidence of carcinogenicity includes a consistency of findings across different countries (Clydach, Wales; Copper Cliff, Ontario; Port Colborne, Ontario; Kristiansand, Norway; and Huntington, WV)”[2]

Inco (now owned by Vale Ltd.) is however not gloating over what must be viewed as a huge victory. The company's website has no posted announcements on the case.

[1] www.ontariocourts.on.ca/decisions/2011/2011ONCA0628.htm

[2] www.epa.gov/iris/subst/0272.htm

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