Canada: Court Of Appeal For Ontario Overturns $36 Million Damages Award In Environmental Class Action

In a decision released today, the Court of Appeal for Ontario set aside a damages award made against Vale (formerly Inco Limited) in one of the largest-ever environmental class actions in Canada and awarded Vale $100,000 in costs for the appeal.


The appeal in Smith v. Inco Limited, 2011 ONCA 628 (not yet available on CanLii) stemmed from a judgment rendered after a three-month common issues trial in which Justice Henderson of the Superior Court of Justice held that the class had suffered a diminution in the value of their residential properties resulting from elevated levels of nickel in the soil and ordered Vale (Inco Ltd. was acquired by Vale in 2007) to pay an aggregate damage award of $36 million to a class comprised of over 7,000 homeowners whose properties in Port Colborne, Ontario are very close to the Vale refinery. ( Click here to access the blog post on Justice Henderson's decision).

Vale appealed Justice Henderson's finding that it was liable in private nuisance and under strict liability imposed by the rule set down in Rylands v. Fletcher as well as His Honour's finding that the claimants had established a diminution in the value of their properties and his assumption that the diminution was caused by the discharge of nickel particles onto the land.  Finally, Vale asked the Court to consider whether the trial judge had erred in finding that the class members' claims were not time barred under section 45(1)(g) of the Limitations Act.  


In analyzing the trial decision, the Court of Appeal noted that it was important to emphasize the exact nature of the claim advanced at trial – it was not about contamination in the sense that it was alleged that the nickel emissions posed a threat to human health or otherwise adversely affected the claimants' use of their properties, but rather that the claimants' property values had not increased at the same rate as comparable property values in other small cities located nearby and that this was caused by widespread public health concerns over the nickel deposits in the soil on their properties.

 Liability in private nuisance

In overturning the trial judge's finding that Vale was liable in private nuisance, the Court of Appeal focused on the claimants' argument that the nickel particles caused "physical injury" to their property by becoming part of the soil and the "subsequent adverse effect" of a decrease in the value of property. 

The Court held that it was an error for the trial judge to find that the nickel particles in the soil caused actual, substantial, physical damage to the claimants' lands because the claimants could not, nor did they attempt to, show that the nickel particles in the soil had any impact on their ability to use their properties for any purpose.   "In our view, a mere chemical alteration in the content of soil, without more, does not amount to physical harm or damage to the property."  The Court continued, "[t]o constitute physical harm or damage, a change in the chemical composition must be shown to have had some detrimental effect on the land itself or rights associated with the use of land." 

The Court said that it was not enough to show evidence that the existence of the nickel particles in the soil generated concerns about potential health risks because that did not amount to evidence that the presence of the particles caused actual, substantial harm or damage to the property.  Had the claimants' shown that the nickel levels in the properties posed a risk to health, they would have established that those particles caused actual, substantial and physical damage to their properties.  However, the claims advanced were not predicated on any actual risk to health or wellbeing arising from the particles in the soil and the claim, as framed, could not succeed.

Liability under Rylands v. Fletcher

The rule in Rylands v. Fletcher imposes strict liability for damages caused to a plaintiff's property by the escape from the defendant's property of a substance "likely to cause mischief."  In examining both the rule and the trial judge's decision, the Court of Appeal held that it did not accept that strict liability based exclusively on the "extra hazardous" nature of the defendant's conduct is or should be part of the common law in this province, and that even if it were the refinery was not shown to be an extra or "ultra hazardous" activity.   The Court stated:

Inco operated a refinery on its property.  The nickel emissions were part and parcel of that refinery operation and were not in any sense an independent use of the property.  The use of the property to which the Rylands v. Fletcher inquiry must be directed is its use as a refinery.  The nickel emissions are a feature or facet of the use of the property as a refinery.  The question must be – was the operation of the refinery at the time and place and in the manner that it was operated a non-natural use of Inco's property?

The trial judge had found that Inco's use of the property was non-natural because it brought nickel on to the property.  However, the Court of Appeal stated:

If the characterization of a use as a non-natural one was ever tied solely to whether the substance was found naturally on the property, it has long since ceased to depend on the answer to that single question.  It may be that something found naturally on the property cannot attract liability under Rylands v. Fletcher.  It is not, however, the law that anything that is not found naturally on the property can be subject to strict liability under Rylands v. Fletcher if it escapes and causes damage.

After a lengthy analysis of the rule and its application, the Court of Appeal held that the claimants did not discharge their onus of showing that the operation of the refinery was a non-natural use of the property and that they had not demonstrated that Inco's operation of its refinery for over 60 years presented "an exceptionally dangerous or mischievous thing" or that the circumstances were "extraordinary or unusual." The Court held that this failure on the part of the claimants was sufficient to find in Inco's (Vale's) favour on this ground of appeal.

Causation and the Limitation Period

Having ultimately held that the appeal must be allowed and the action dismissed as a result of the claimants' failure to establish liability under either private nuisance or the rule in Rylands v. Fletcher, or alternatively, and assuming the elements of either or both causes of action were made out, the claimants' failure to establish any damages, the Court held that it needed not address the causation issue or the limitation period argument. 

However, because the trial judge's analysis of the applicability of the limitation period had potential application to other class action claims in which limitation period defences are raised, the Court of Appeal found it prudent to examine his findings. 

At paragraph 111 of the trial decision, Justice Henderson said

Prior to1990, I find that most property owners would not have been aware, and ought not to have been aware, of the fact that nickel in the soil could affect the value of their properties.  Thus, the court must determine when the class knew or ought to have known that nickel in the soil could affect the values of their properties.

The trial judge had rejected Vale's argument that the claim was barred by the expiry of the relevant limitation period on the basis that it was well known prior to the fall of 2000 that here was a problem with nickel soil contamination in the area.

The Court of Appeal commented, 

Assuming the trial judge properly framed the question for the purpose of the Limitations Act analysis, his finding that "most property owners" would not have been aware of the potential effect of the nickel implicitly constitutes a finding that some would have been aware of the potential effect of the nickel. 

The Court went on to hold that class actions are procedural vehicles and if, as the trial judge found, the evidence didn't establish that all of the class members were aware of and ought not to have been aware of the material facts, then the application of the Limitations Act to the claims was an individual and not a common issue.  The Court found, "it was an error to treat the limitation period as running from the date when a majority, even an overwhelming majority, of the class members knew or ought to have known the material facts in issue."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Norton Rose Fulbright Canada LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions