On October 7, 2011 the Ontario Court of Appeal released its
decision in Smith v. Inco Ltd, granting Inco's appeal and
overturning the trial court's award of damages under the
doctrine of strict liability, referred to as the Rylands v.
Fletcher rule, and for nuisance. As the first
environmental class action in a common law province in Canada, this
is a significant decision and it is expected that the plaintiff
will apply for leave to appeal to the Supreme Court of
The Trial Decision
The trial court awarded $36 million in damages to thousands of
Port Colborne residents who owned homes near a former nickel
refinery owned by Inco. The trial judge found that the
particulate matter released by the refinery and landing on the
surrounding properties had resulted in decreased property values to
the owners and that, as such, Inco was liable for nuisance and
violations of the strict liability rule in Rylands v.
Fletcher. Generally, a claim of nuisance is made out
where a party has unreasonably interfered with the use and
enjoyment of another person's land or interest in
land. Claims of strict liability involve two broad elements:
(1) the non-natural use of the land by the defendant; and (2) an
escape from the land of something likely to do mischief.
The Court of Appeal Decision
In respect of the claim of nuisance, the Court of Appeal
determined that while Inco may have interfered with the use of
property owned by members of the class, its interference had not,
in fact, been unreasonable as the plaintiff had not shown that the
presence of the particulate matter had resulted in "actual,
substantial, physical harm". At paragraph 67, the Court
In our view, actual, substantial, physical damage to the land in
the context of this case refers to nickel levels that at least
posed some risk to the health or wellbeing of the residents of
those properties. Evidence that the existence of the nickel
particles in the soil generated concerns about potential health
risks does not, in our view, amount to evidence that the presence
of the particles in the soil caused actual, substantial harm or
damage to the property. The claimants failed to establish
actual, substantial, physical damage to their properties as a
result of the nickel particles becoming part of the soil.
Without actual, substantial, physical harm, the nuisance claim as
framed by the claimants could not succeed.
This framing of the claim is important as it clarifies that
claims of nuisance relating to environmental contamination must be
grounded in proof of actual damage to the property or risk to human
health, and that simple contamination is not, in and of itself,
sufficient. This challenges some earlier Canadian decisions
which had indicated that the simple fact of contamination was
likely enough to ground a claim of nuisance as the contamination
itself was regarded as a type of physical damage.
On the issue of strict liability, the Court of Appeal observed
that the refinery's activities were not
'non-natural' and, as such, the Rylands v.
Fletcher rule doesn't apply. The Court clarifies
the application of this rule, limiting its use to situations where
there are unexpected and unintentional outcomes of activities that
should not have occurred in a particular location. The
expected and known results of legal business operations, such as
the Inco refinery, simply do not qualify according to the Court of
Of significance is the fact that this claim related only to
decreased property values as a result of the stigma of the
contamination. All properties had been remediated to the
standard determined by the Ministry of the Environment's
Community Based Risk Assessment as being safe for human health
(except where the property owner refused to permit the cleanup) and
there was no evidence of that the residual particulate matter posed
any increased risk to human health. As such, the assessment
of damages was also important as it related exclusively to property
values. The Court of Appeal observed that when property data
for Port Colborne and comparable municipalities was reviewed in its
entirety, there was insufficient evidence to conclude that the
residents forming the class had actually suffered decreased
property values as a result of the presence of the particulate
matter from the Inco refinery. As such, even if the claims of
nuisance and strict liability were upheld, no damages would be
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