Kirk Baert has kindly permitted us to post his Application to the Supreme Court of Canada for leave to appeal the Ontario Court of Appeal's decision in Smith v. Inco. This was the first environmental contamination class action in Canada tried on its merits. The Appeal Court's decision on liability has substantially narrowed environmental causes of action against historic polluters, especially nuisance and Rylands v. Fletcher.
I agree with Baert that the case presents issues of national and public importance, including:
1. the scope and limits on environmental damages;
2. the threshold for tort liability in the context of historic contamination;
3. whether contamination and concomitant property devaluation constitutes physical damage to land; and
4. whether the stigma attaching to private contaminated lands is compensable based on a regulatory level or pristine levels.
He therefore proposes to raise the following issues:
(i) what is the threshold effect for liability in nuisance in the context of environmental pollution or contamination?
(ii) should the notion of "non-natural" usage of land continue to occupy a place in a common law strict liability analysis?
(iii) should the common law be subordinate to the environmental statutory standard for liability for contamination? and
(iv) is stigma a recognizable head of damage to land in Canadian law?
Unfortunately for the Port Colborne plaintiffs, the Court of Appeal decided against them on damages as well as on liability, and not because of the question whether "stigma" is a recognizable head of damage. Instead, the court ruled that the $36 million award, at trial, was entirely explained by the improper inclusion of a particular group of mostly vacant lots in the Port Colborne property value calculation.
It would be surprising for the Supreme Court to give leave, to argue liability, if the plaintiffs suffered no compensable damages in any event. In a sense, all the other important and surprising portions of the appeal judgment on liability are merely obiter (i.e. unnecessary, and therefore not binding), if the court of appeal was correct on damages. We could therefore have a long wait before the Supreme Court decides Baert's questions.
Here is the application, in PDF and text:
NOTICE OF APPLICATION FOR LEAVE TO APPEAL
(ELLEN SMITH, APPLICANT)
(Pursuant to Section 40 of the Supreme Court Act and
Rule 25 of the Rules of the Supreme Court of Canada)
TAKE NOTICE that Ellen Smith hereby applies for leave to appeal to the Court, pursuant to
sections 40 and 43 of the Supreme Court Act, R.S.C. 1985, c. S-26 as amended, from the
judgment of the Court of Appeal for Ontario, Court File No. C52491, made the ih day of
October 2011, and for any further or other order that the Court may deem appropriate.
AND FURTHER TAKE NOTICE that this application for leave is made on the following
grounds, that the case presents issues of national and public importance, including:
that the case presents issues of national and public importance, including:
1. this is the first environmental contamination class action in Canada to be heard
and tried on its merits, thereby having precedential significance nationwide
regarding the scope and limits on environmental damages;
2. the threshold for tort liability in the context of contamination and the level at
which chemical airborne emissions or soil depositions become actionable by a
private property owner;
3. there are conflicting appellate decisions in. Canada on the issue of whether
contamination and concomitant property devaluation constitutes physical damage
to land, and a strong judgment at the trial court level;
4. the case presents an ideal and needed opportunity for the Court to reappraise what
continues to be the unsettled question of whether the stigma attaching to private
contaminated lands is compensable based on a regulatory level or pristine levels,
which has far-reaching implications for all individuals and businesses across
5. the case also raises the important and novel questions with respect to the interface
between property law, tort law and environmental law;
6. as a result, this proposed appeal raises the following issues:
(i) what is the threshold effect for liability in nuisance in the context of
environmental pollution or contamination?
(ii) should the notion of "non-natural" usage of land continue to occupy a
place in a common law strict liability analysis?
(iii) should the common law be subordinate to the environmental statutory
standard for liability for contamination?
(iv) is stigma a recognizable head of damage to land in Canadian law?
7. the determination of these issues will have an impact on the administration of
justice throughout Canada.
PART I- STATEMENT OF FACTS
I. This test case is a juridical triangulation of three discrete areas of law into a single
nationally important case, with a class actions overlay. The three primary areas of law: property
torts and environmental law. It is a unique opportunity for Canada's highest court to lay down
guiding principles for all of Canada in an increasingly litigious area, thereby providing more
certainty to litigants and reducing litigation overall.
2. This trigometric property/torts/environmental test permits this Honourable Court to
determine at what legal threshold do chemical emissions become actionable by landowners at
common law. Is actual injury to health a necessary prerequisite for liability in nuisance; do
'ordinary' industrial activities no longer constitute non-natural uses of land. At what point along
the juridical richter scale are owners of regulated smokestacks that release chemicals into the air
immune from the very basic principles of property, tort and environmental law. What is most
interesting is how those principles intersect and interplay: where is the boundary between these
three separate areas of law.
3. Against the backdrop of a contaminated community and a complicated environmental
regime, provincially and federally, Canadians need a clear answer: what is actionable in the
context of chemical depositions on private lands? The jurisprudence of this Court and provincial
appellate courts concerning property torts has largely been confined to amenity nuisance and the
availability of statutory authority defences, 1 rather than actionable levels of chemical pollution,
which until now remain unchartered territory.
4. This Court's clarification of whether human health is the new actionable threshold for
contamination and final resolution as to the corr-ect meaning of "non-natural" use is required to
provide landowners, regulators and industrial actors across Canada with certainty around their
1 St Lawrence Cement Inc. v. Barrette,  3 S.C.R. 392 [St. Lawrence]; Susan Heyes Inc. v. Vancouver (City),
2011 B.C.C.A. 77 [Heyes]; Antrim Truck Centre Ltd. v. Ontario (Minister of Transportation),  O.J. No.
2451, (C.A.) [Antrim]; Tock v. St. John's Metropolitan Area Bd.,  2 S.C.R. 1181 [Tock]; St. Pierre v.
Ontario (Minister ofTransportation),  1 S.C.R. 906.
obligations and liabilities. What is the appropriate threshold for actionable nuisance or strict
liability in the context of contaminated lands? What should become of the entrenched
triangulation of environmental no-fault liability, the inviolability of personal property and the
polluter pays principle?2
5. . Canadian homeowners, residents, industry, regulators and appellate courts really do need
certainty on the following key issues:
(i) the threshold effect for liability m nuisance m the context of
environmental or contamination;
(ii) the requirements for a "non-natural" use ofland;
(iii) whether environmental statutory regimes are a complete code of liability;
(iv) whether property devaluation should be a recognized claim in nuisance.
First Toxic Tort Test Case to be Heard by this Court- Opportunity to Provide Principles
Respecting Class Action Trials and Environmental Law to Curtail Unnecessary Litigation
6. The leading authorities in this area do not involve the toxic tort claims as advanced here.
This test provides a unique opportunity to fix the boundaries of rights and obligations
surrounding the historic contamination of private lands. At what point should the effects of
chemical emissions be visited upon residential landowners without compensation if the effect of
those depositions impacts the disposition of that property? Where are these lines properly drawn
between residential and corporate neighbours in this modem era of environmental stewardship?
7. This test case concerns residential lands in Port Colbome, Ontario which were
contaminated by nickel oxide depositions emitted by !nco's refinery, a pollutant classified by the
federal government as a group one-carcinogenic toxic substance.3 Once Ontario's Ministry of the
Environment ("MOE") discovered the true extent and levels of Inco's nickel depositions, Port
Colborne became the subject of extreme environmental scrutiny, risk assessments, scientific
testing, regulatory intervention, unprecedented media publicity and health studies lasting almost
2 St Lawrence Cement; Imperial Oil Ltd v. Quebec, 2003 SCC 58; British Columbia v. Canadian Forest Products
Ltd., [2004) 2 S.C.R 74 [Can-For].
3 Court of Appeal Reasons (Certification) para.6 [Tab 5B]; Court of Appeal Reasons, paras. 8, 26 [Tab 3D]
ten years. 4 The discovery of nickel contamination led Inco itself to commission the most
extensive health study ever conducted in Canada and the MOE to issue a draft control order
against Inco. 5 As a result, Port Colborne's real estate market was stigmatized and devalued.6
Following a forty-five (45) day common issues trial, the trial judge granted judgment in favour
of the 7,900 applicant class members in the aggregate amount of $36 million for damages
sustained to the value of their homes as a result of the nickel contamination.7
Admitted Nickel Contamination & Proven Devaluation, Yet No Liability on Appeal
8. Even though Inco (a) admitted to being the source of the nickel contamination;8 (b)
commissioned and conducted extensive health studies; (c) participated in a decade-long
Community Based Risk Assessment program;9 (d) undertook a property devaluation study;Io (e)
retained an environmental consultant to sample water, soils, air, vegetables, I I and (f) was ordered
by the MOE to remediate a number of properties, the Court of Appeal below overturned the trial
judgment. Is this an appropriate interpretation of private property law for Canadians?
9. Despite (a) Port Colborne being the MOE's most important file in the months that
followed the contamination discovery; I2 (b) the unprecedented soil sampling program by
government officials;I3 (c) the distribution by the public health department of precautions to
reduce exposure to nickel;I4 (d) Health Canada's public challenge of the risk exposure levels
proposed;15 (e) health studies by international experts;I6 (f) obligatory contamination
acknowledgement clauses in agreements for purchase and sale; 17 and (g) the prevailing time of
great public uncertainty and concern, the Court of Appeal below refuses to see any effect
4 Trial Reasons, paras. 142, 146, 150, 159, 163, 170,206,207,214 [Tab 3A]
5 Trial Reasons, paras. 180- 181 [Tab 3A]
6 In the Rodney Street Area alone, the trial judge found a drop in the average value from $60,333 to $37,025 as of
September 2000, measured by a statistical confidence interval of99%: Trial Reasons, para. 323 [Tab 3A]
7 Trial Reasons, paras. 283 -286, 294-298, 30 I – 302, 305- 306, 320, 321 -325 [Tab 3A]
8 Consent to Judgment on common issues (a) and (b), Order of Trial Judge, October 14, 2009 [Tab 38]
9 Trial Reasons, 150- 155, 186 [Tab 3A]
10 Exhibit 4, Tab 686, p. 4 [Tab 5F]; Request to Admit & (Inco response) (excerpts), Q. 100, 102, 107- I 10 [Tab 5C]
11 Request to Admit, (Inco response), Q. 91, 97, 174 [Tab 5C]; Exhibit 4, Tab 441 [Tab 5F]
12 McLaughlin, pp. 1475- 1477 [Tab 5E]
13 Trial Reasons, paras. 159, 182,219 [Tab 3A]; McLaughlin, pp. 1398- 1401 [Tab 5E]
14 Tria!Reasons,paras.l60, 162-168,173, 179,184, 185,211,212,213,219[Tab3A]
15 Exhibit 4, Tab 706 [Tab 5F]; Smith evidence, p. 76 [Tab 5E]
16 McLaughlin evidence, p. 1430 [Tab 5E]
17 Trial Reasons, paras. 112- I 15, 148, 149 [Tab 3A]; Berkhout evidence, pp.757-758 [Tab 5E]
4 1 86
whatsoever of chemical depositions on these lands. The result is to visit Inca's environmental
costs upon the class' lands. How should tort law respond in this situation? Is property valuation
worthy of protection?
10. Until this decision, Canadian nuisance law was premised on the assumption that pollution
of another's lands is "always unlawful and in itself constitutes a nuisance". 18 However, on
appeal, Inco was neither required to pay the costs of cleaning the lands or the damages for
devaluation to residential homeowners, on the grounds that the applicant could not show she
suffered actual personal injury19 and because Inca's industrial refinery was deemed a 'natural'
use of land in a residential neighbourhood.
11. What legal components should comprise a residential landowner's claim for damages for
the escape of foreign substances deemed "chemicals of concern,"20
- by both the regulator and
polluter – posing potential health risks requiring further science, investigation, testing and
study,21 thereby making the lands 'risky' ,22 stigmatized and less valuable? Bottom line: where is
the balance between industrial profits and public/private safety?
Does The Decision Below Eviscerate Tort Protection for Residential Landowners?
12. Canada's national court can now definitively settle whether contamination per se
constitutes a sufficient harm in nuisance. If the purpose of nuisance is to shield property owners
against unreasonable interferences, should it be confined to protecting only against personal
injury? The gravamen of a nuisance action is vindication of personal interest in land23
, an interest
which must include a per se protection from foreign chemical emanations. Moreover, if the
18 Groat v. City of Edmonton  S.C.R. 522 at 532; Fridm&n, The Law of Torts, Carswell: Canada (1989) vol. I,
19 Court of Appeal Reasons, at para. 57: "it was incumbent on the claimants to show that the nickel particles caused
actual harm to health". [Tab 3D]
20 Exhibit 4, Tab 47, JWEL's (Inca's Consultant) Presentation to Port Colbome residents, October 26, 2000,
concerning Human Health Risk Assessment, chemicals of concern assessment, toxicity assessment, toxicity
parameters, exposure assessment, ecological assessment, hazards assessment and calculation of risk [Tab 5F]
21 McLaughlin (MOE) evidence, pg. 1400 "there was a great degree of anxiety in the community, understandably,
and there was not a desire to wait for four or five years for the health risk assessment from the CBRA to be
completed."[Tab 5E]; Trial Reasons, paras. 170, 206- 2I4, 220 [Tab 3A]
22 Skaburskis evidence p. II 02: "since I'm risk adverse, I will consider the contaminated property Jess
interesting ... there would be this element of fear and concern ... the aversion to things I don't know." [Tab 5E]
23 Report on Damages for Environmental Harm, Ontario Law Refonn Commission (1990), p. 17.
proper nuisance test rests on the effect-on land of a defendant's conduct, should the law approach
harm only from the perspective of damage to the person who owns the land? This Court can now
determine whether it is desirable to relegate the law of nuisance to trifling inconveniences,
leaving liability for intangible pollutants (those causing the most serious damage to land) so
narrowed that liability for the effects of chemical deposition no longer exist at common law.
13. If environmental considerations are "one of the major challenges of our time",24 should
there be a gap where amenity nuisances are actionable yet pollutant nuisances are not without
injury to health? Diminution of value to land has long been recognized as a foreseeable
recoverable loss, or actionable effect, of nuisance,25 consistent with the indirect harm or
consequential injury essence of nuisance. 26
14. Rylands has been considered by this Court only twice since 1950.27 The law in this
respect requires modem clarification: can the refining of precious metals or substances ever
constitute a 'natural' use of land? As noted by the appeal court below, appellate courts have
similarly paid no attention to the details of the Rylands rule. 28 Have the 'changing patterns of
existence' taken the law of Rylands so far that any legal activity is ipso facto a 'natural' use of
land? If the activity is regulated and legal pursuant to statute, ought it also, by definition,
constitute 'natural' use?
B. BACKGROUND FACTS NOT IN DISPUTE – CONTRARY LEGAL TESTS
APPLIED TO THE SAME FACTS
15. The Court of Appeal below accepted the following basic facts as found at trial:
(a) !nco's refinery emitted nickel for 66 years;
(b) during that time, nickel, primarily in the form of nickel oxide, made its way
into the soil ofthe claimants' properties;
24 Friends of the Oldman River Society v. Canada,  1 S.C.R. 3 at para. 1.
25 Tridan Developments Ltd v. Shell Canada Products Ltd. (2002) 57 O.R. (3d) 503 (C.A.) [Tridan]; Butt v.
Oshawa,  4 D.L.R. 1138 (S.C.); Godfrey v. Good Rich Refining Co.,  O.R. 106, affd  O.R.
190 (C.A.); Culp v. East York (Township),  O.R. 983, affd  O.W.N. 515 (C.A.).
26 Linden & Feldthusen, Canadian Tort Law, (8t11
) at 568.
27 Rylands v. Fletcher (1868), L.R. 3 H.L. 330 [Rylands]; Crown Diamond Paint Co. v. Acadia Holding Realty Ltd,
[ 1952] 2 S.C.R. 161 (S.C.C.); Tack.
28 Court of Appeal Reasons, para. 70 [Tab 3D]
6 1 88
(c) before 2000, there were no significant public health concerns associated
with the nickel levels. in the soil; and
(d) from early 2000 and beyond, MOE soil sampling revealed higher levels of
nickel than had been previously recorded, causing widespread concern about
potential health effects, becoming a matter of widespread public concern
and controversy. 29
16. Based on the trial judge's thorough review of the evidence,30 the Court of Appeal also
accepted the trial judge's factual finding that, "[b]y the fall of 2000, because of the public
disclosures, I find that the public mood was one of extreme concern about nickel levels in the
soil that could affect everything from vegetation to human health to real estate values."31
Consistent with the then prevailing test for an actionable nuisance, the main liability question at
trial was whether In co's admitted interferences to property were unreasonable in light of all the
what effect did the admitted contamination and the connected events have on the
class members' lands, based on the right to exclude chemical emanations from
entering one's land and the evidence of resulting damage to its value?
17. The liability question on appeal was completely the converse. Breaking with well-settled
authority, the Court of Appeal examined the effect of !nco's conduct through an opposite
juridical lens. To speak plainly, it took a juridical pair of binoculars and instead of using them for
their intended purpose, turned them around so everything would appear far away – anything
major, important or serious turned into a mere speck:
what physical effect, if any, did the nickel have on the individual landowning persons
and did Inco comply with relevant laws and regulations?
18. Fundamentally, these are irreconcilable means by which to analyze property torts or the
effect of physical injury, and chemical deposition to lands. Far beyond the parties here,
Canadians generally have an interest in the legal clarification of these torts. Laws concerning
private property reflect important social values and its sanctity. In this case, the tort law
sanctioned by the Court of Appeal has far-reaching environmental implications by effectively
29 Court of Appeal Reasons, paras. 26-29 [Tab 3D]
3° Court of Appeal Reasons, para. 28 [Tab 3D]; Trial Reasons, paras. 120-220 [Tab 3A]
31 Trial Reasons, para. 220 [Tab 3A]; Court of Appeal Reasons, paras. 28-29 [Tab 3D]
32 Tock at 1191.
subsuming nuisance and Rylands causes of action within a statutory regulatory regime. Should
these bases of civil common law liability for environmental damage caused by industrial
operations across Canada be eliminated? Without further guidance from Canada's Highest
Court, the uncertainty surrounding industry's environmental obligations will be exponentially
extended. It will have to be dealt with eventually. Better to deal with it now.
C. THE TRIAL JUDGMENT FOLLOWING THE 45 DAY TRIAL
19. The applicant below, at trial, tendered the evidence of eleven (11) witnesses, while Inco
tendered the evidence of one (1) witness in the defence of its case.33 Following the conclusion of
this lengthy common issues trial,34 including !nco's consent to judgment for the nickel
depositions themselves,35 the trial judge found in favour of the applicant in nuisance- a question
- and Rylands, awarding $36 million in damages to the class on the following basis:
(a) nickel particles, primarily in the form of nickel oxide, were emitted by !nco onto
the class members' land, causing themprimafacie physical damage;
(b) the accumulation of a foreign substance on a property owner's land that causes a
loss in value or sensible injury is material;
(c) it is for the court and not the MOE to determine whether the nickel
contamination is material as the MOE does not set the standard for civil liability
but merely a standard for mandatory clean up – the elimination of the effect of
nickel contamination on property values was not a consideration in the decision
(d) the severity of the damage, the extent of the damages, the number of residents
affected, the residential character of the neighbourhood and the fact that Inco
emitted nickel as a byproduct of a profit-oriented business, outweighed the
utility of In co's operations;
(e) !nco created a non-natural use of its land when it brought nickel onto the land
for the purposes of refining, thereby emitting nickel which were not naturally on
33 Schedule "C", Witnesses at Trial [Tab 5D]
34 The trial judge heard 45 days of oral testimony, observed II witnesses tendered by the Applicant, including 7
damages experts, 1 witness tendered by lnco, admitted 97 exhibits of over 27,000 pages in all, made 25
evidentiary rulings and was presented with hundreds of pages of written argument at the close of trial.
35 Common Issues: "6(A) Inco is responsible for the vast majority of nickel depositions on the class members' lands;
6(B) Inco is responsible for the vast majority of contamination in the Rodney Street Area.", Order of Trial Judge,
October 14, 2009 [Tab 3B]
36 Heyes, para. 48.
the land or in the air above creating a non-ordinary use of the land;
(f) Rylands liability is imposed where a party makes a non-natural use of its land,
the accumulated matter escapes and causes damage to its neighbours; and
(g) reasonable use of land for a lawful commercial purpose is not necessarily a
defence to a Rylands claim.37
20. In so doing, the trial judge made important findings of fact on causation and damages or
the effects oflnco's operations:
(a) "government a,uthorities were very visible in the RSA from September 20,
2000 until at least the spring of 2002 ... [when] the MOE conducted several
rounds of soil samplings and from time to time the MOE and the PHD
delivered information sheets or fact sheets to the property owners ... there was a
distinct public concern as to the effects of elevated nickel levels in the soil on
(b) "the MOE and the PHD believed that there was an immediate need to assess
the human health risk for those who lived in the RSA ... and listed many
precautions that the residents should take to reduce exposure to
nickel..indicat[ing] that there was a concern as to human health";
(c) "the public asked pointed questions .... about whether it was safe to eat garden
fruits and vegetables; questions about the safety of well water; concern about
whether residents in RSA had to move out of their homes ... this was a time of
great uncertainty and great concern";
(d) "there was an independent health study commissioned . . . [including] a ten
page questionnaire that was sent to every household ... [and] the East Side
Community Health Study ... [which] did air sampling at schools and soil
sampling at schoolyards, daycare centres and beached. Public health nurses and
inspectors went door to door. .. ";
(e) "after February 2000 any reasonable member of the public would logically
have concluded that the problems with nickel in the soil may affect property
values . . . this concern was raised as one of the original components of the
CBRA and was corroborated by the fact that the local real estate agents started
to require written vendor disclosures and insert clauses into
agreements .... regarding nickel contamination";
(f) expert evidence showed "that if there was an announcement of contamination
the public would be unsure of what was there, unsure of the health risk, unsure
37 Trial Reasons, paras. 76, 88, 89, 86, 87, 83, 53, 54, 48, respectively [Tab 3A]
9 1 91
of the effect on property values and unsure of the future ... the only way a
potential buyer would purchase the property would be at a discount ... the
public disclosure of contamination was the start of a negative price
(g) "there was a strong message from government authorities that the public
should be extremely concerned about nickel soil contamination ... that would
have a negative effect on housing prices ... a downward drop in property values
commencing in 2000 is supported by the evidence of Tomlinson,
... Skaburskis, and ... Teranet ASP data";
(h) "I accept Steele's testimony of a general downward trend in sales volumes and
sales prices ... [and] sales prices and sales volumes ... dipped in the year 2000
and continued to dip throughout 2001, 2002 and 2003″;
(i) "Dr. Tomlinson [based on MPAC data] concluded that the value of all of the
residential property in Port Colborne is approximately $48 million less than it
would have been if property values ... had kept pace with property values in
Weiland from 1999 to 2008″.38
21. These conclusions on damages were based upon the following evidence39
D. THE COURT OF APPEAL JUDGMENT
As To No Damages
22. On the basis of these same facts, the Court of Appeal decided to re-write first year torts
and property law, by holding:
(a) chemical alteration of soil, measurable through scientific means does not
constitute harm to private property;
(b) to show the chemical alteration caused damage, the class must show that
the nickel caused actual harm to the health of the landowners;
38 Trial Reasons, paras. 156, 158, 159, 160, 163, 165, 170 179, 182, 184, 185,218,265,266,272,274,283,284,
285, 286, respectively [Tab 3A]
39 See Schedule "C", Witnesses at Trial, for witnesses' qualifications [Tab 50]
10 19 2
(c) a potential risk to health cannot be proven by evidence of years of
thorough scientific investigation by independent experts and regulators or
being the subject of the most extensive community health study in Canada,
becoming a matter of widespread public concern and controversy ;
(d) the meaning of Rylands "non-natural" use is vexing, uncertain and vague;
(e) the operation of a refinery done in accordance with regulatory regimes
cannot present a risk to its neighbours;
(f) the distinction between natural and non-natural use must be made by
reference to _planning legislation and governmental regulations rather than
the origin of the substance at issue; and
(g) a pre-requisite to Rylands liability is that the operation presented
exceptional danger. 40 [emphasis added]
(i) Are Chemical Depositions or Soil Contamination Physical Damage to Land?
23. Despite the evidence that the class' lands had suffered a quantifiable loss to their value as
a result of the discovered contamination, 41 the Court of Appeal held that chemical depositions
were minimal, trifling and non-actionable interferences with the class' residential lands. Should
acknowledged pollution be deemed a reasonable intrusion to be borne by neighbours, the price of
membership in the larger community? While there is no doubt that neither the common law nor
statute protect against minimal or insignificant environmental or property impairments or
intrusions, are the effects imposed here properly characterized as trifling or reasonable? The
bright line of actionability can now be conclusively drawn by this Court.
(ii) Is Persona/Injury An Appropriate Threshold for Actionable Nuisance?
24. The court's infusion of nuisance with proof of harm to health fundamentally alters the
law of nuisance which "does not provide a remedy for a personal injury".42 If amenity nuisance
liability flows from proof of noise, odours or dust, yet nuisances arising from pollution require
4° Court of Appeal Reasons, paras., 55, 56, 67, 70, 79, 97, 103, respectively [Tab 3D]
41 The damaging effect was borne out by expert evidence of(i) stigma reduction of3.5% ($45,974, 189); (ii) costs of
remediating the lands, $60,000 per property ($22,000,000 for the Rodney street area alone); (iii) MPAC tax
assessments of 5.9%, $6, I 00 per property ($48,000,000): Thayer, pp. I 003-1004 [Tab 5E], Exhibit 82, Tab 3,
[Tab SF]; Austrin, p. 1875 [Tab 5E]; Tomlinson, pp. I 691 – 1707 [Tab 5E]; Trial Reasons, paras. 265-278, 283 -
298 [Tab 3A]
42 Street, The Law of Torts ( 41
h, 1968) p. 229; F.H. Newark, "The Boundaries of Nuisance", 65 L.Q.R. 480 (1949) p.
II ] 9 3
proof of damage to health, this Honourable Court ought to explicitly opine so. Canadians can
benefit from such a clarification from their Highest Court: should liability in nuisance be
presumptively stricter when it comes to physical injury to land?
(iii) Should Lawful Industry Be Immune from Strict Liability For Their Chemical Escapes?
25. Can the emission of chemicals in substantial quantities, albeit legal, ever constitute
"natural" use as coined by the appeal court? Should industry that otherwise complies with
legislative requirements and regulations only be strictly liable for exceptional dangers rather than
for all the damages which are the natural consequences of their products' escape?43 Rylands
specifically held that "though the act was in itself lawful, yet if the doing of it occasions an
injury to any one, the person injured has a right of action".44 Conversely, the Court of Appeal
determined that "[p ]Ianning legislation and other government regulations controlling when and
how activities can be carried out will be relevant considerations in assessing whether a particular
use is a non-natural use". 45 Whether strict liability doctrine in Rylands is no longer applicable to
ordinary emissions from industrial operations is a question deserving consideration of this Court.
PART II- QUESTIONS IN ISSUE
26. The primary question to be resolved on this Application is whether the following issues,
reflected in the decision of the Court of Appeal for Ontario, raise questions of national or public
(i) what is the threshold effect for liability in nuisance in the context of
environmental pollution of contamination?
(ii) should the notion of "non-natural" usage of land continue to occupy a
place in a common law strict liability analysis?
(iii) should Canadian jurisprudence defer to environmental statutory
regulation for liability for contamination?
(iv) is stigma a recognizable damage to land in Canadian law?
43 Tridan, para. 12.
44 Rylands at 336.
45 Court of Appeal Reasons, para. 97 [Tab 3D]
12 1 9 4
PART III- STATEMENT OF ARGUMENT
27. The issues raised on this test case squarely confront the triangulation between the special
nature of real property, the extent of liability of an admitted polluter and the impact of
contamination on residential communities in Canada. It poses an unparalleled opportunity for
Canada's national Court to lay down guiding principles on what the boundaries ought to be when
these areas of law collide.
A. MATTER OF NATIONAL IMPORTANCE
First Occasion to Consider Environmental Toxic Tort Common Law Liability
28. The very purpose of private property torts is common across Canada: to ensure that
Canadian landowners are not subjected to the unreasonable effects of their neighbours, including
the ability to seek redress for chemicals deposited onto their residential lands by industrial actors.
Accordingly, the liability which may accrue at common law is of primary import to all
landowners in Canada, not just the 7,900 members ofthis class proceeding.
Conflicting Appellate Jurisprudence Between B.C., Ontario, Quebec and New Brunswick
29. The national importance of this case is further reflected in the conflicting appellate case
law of Heyes, Tridan, Antrim, Berendsen, St. Lawrence Cement and Cousins. 46 It would be of
tremendous assistance for this Honourable Court to resolve the general inconsistencies left
behind by Cousins, Berendsen (where leave to appeal to this Court was granted, but both settled
prior to the hearing of the trial appeals) and Tridan. The specific points of departure between
these appellate cases and the decision below are fivefold: (i) the actionable threshold in nuisance
when contamination is alleged,47 (ii) whether adherence to statutory standards immunizes a
defendant from liability,48 (iii) whether diminished property value is physical damage to land,49
46 Berends en v. Ontario, [2009) O.J. No. 510 I (C. A.), leave to appeal to SCC granted and withdrawn January 2011;
Cousins v. McColl-Frontenac Inc., [2006) N.B.J. No. 504 (Q.B.), 2007 NBCA 83, leave to appeal granted at
[2007) S.C.C.A. No. 598, discontinued, July 8, 2008. S.C.C. Bulletin, 2008, p. 1116.
47 Court of Appeal Reasons, para. 57 requires injury to health [Tab 3D); Cousins requires chemical deposits per se
(paras. 6- I 2); Tridan acknowledges damage for anything but pristine levels (para. 12).
48 Neither St. Lawrence Cement (para. 98), Heyes (para. 1 06), nor Tridan (para. 12) absolve liability for adherence to
statutory standards while Berendsen (paras. 81- 82) and Court of Appeal Reasons, paras. 97, 100 [Tab 3D) hold
that regulatory or statutory compliance is a factor in determining liability.
49 Neither Antrim nor Heyes draws a clear distinction between whether loss of value falls within the damage to
property branch of nuisance or the interference use component, a critical determination as to whether balancing
13 1 9 5
(iv) whether removal of stigma requires remediation to regulatory levels or a pristine state/0 and
(v) the correct approach to quantifying environmental damages.51 In many respects, these issues
are interconnected: individually and jointly they raise profound questions for Canadians - where
should the line be drawn in environmental tort litigation?
30. By insisting on personal injury as a prerequisite for liability, the Court of Appeal made an
irreconcilable distinction with its holding in Berendsen: "[p ]roperty owners do not know what
they are getting; under the Environmental Protection Act, they own and are responsible for what
it put on their properties, and regardless of whether what they received has the potential to harm
human or animal health, it is perceived as a contaminant".52 While the Cousins decision
grounded liability on a seemingly per se basis, Antrim suggests physical injury is necessary yet
Tridan recognizes damage from any chemical levels but pristine.
31. Is it appropriate for Canadian private property law to now reject the notion that harm that
can arise from breaching the fundamental value of an "individual to the enjoyment of property
and the right not be deprived thereof, or any interest therein"53
, including the ability to dispose of
it freely? This Court can now give guidance on whether the traditional prevailing meaning of
nuisance as an unreasonable interference with land either by "physical damage to the land, ... or
other similar right, or injury to health"54 has been abolished in Canada. A definitive
interpretation of what constitutes physical damage to property, in the context of chemical
emissions, and the appropriate interplay between property torts and environmental legislation
would render much needed guidance.
32. The Court of Appeal also created a material alteration in the law by finding chemical
levels below regulated standards cannot constitute damage. The same court in Tridan came to the
applies. The Court in Antrim even specifically opined that "jurisprudence discloses disagreement on this issue" (at
50 Tridan (paras. 12, 16, 17) holds that stigma exists even below regulated pollutant levels while Smith (para. 61)
holds that no effect on property can inure where levels are below regulated levels.
51 Cousins (para. 16) awarded lost investment income damages; Tridan (paras. II, 12) awarded damages for costs of
remediation to a pristine state; Court of Appeal Reasons [Tab 3D] found no damage to value at all .
52 Berendsen, at para. 65.
53 Harrison v. Carswell, [I 976] 2 S.C.R. 200 at p. 12 (QL).
54 Linden & Feldthusen, Canadian Tort Law (81
" ed) at 568.
14 19 6
opposite conclusion, finding that an innocent neighbour whose property is contaminated is
entitled to the cost of remediation to a pristine condition. By doing so, Tridan acknowledged the
stigma and damage that ensues from a chemical presence that is nevertheless below regulated
levels, confirming the irrelevance of statutory guidelines to common law liability. Can
ministerial guidelines now serve more than a mere administrative purpose?55
All Canadian Homeowners and Industry Are Affected
33. . No other set of facts has so squarely engaged this Court's role in the ordering of
competing property interests against the backdrop of a modem community. The private property
interests of businesses and those who live in proximity to industrial operations must be
reconciled. Given the tens of thousands of Canadians who live in close proximity to industrial
business, and the thousands of corporations which carry on business in residential
neighbourhoods, this appeal is the test case on which this Court can now opine on the priority of
these interests – what degree of contamination or land interference must be tolerated and by
whom? Industrial actors themselves need to know the levels of contamination for which they are
liable and landowners need to know the levels of which they are obliged, as a matter of law, to
tolerate, if for no other reason than to curtail litigation in this area.
B. GIVEN THIS IS A TEST CASE, DID THE COURT OF APPEAL FOUND ITS
DECISION ON THE APPROPRIATE LEGAL PRINCIPLES?
Should Property Tort Liability Be Fundamentally Configured in the Environmental
34. How are common law property torts to be applied to a refinery carrying on business in a
residential neighbourhood, in the face of a comprehensive statutory environmental scheme.
Should Canadian law continue to reject the balancing of interests, or notions of "splendid
isolation" coined below, when physical damage to land has occurred?56 The notion that
neighbours ought to tolerate reasonable discomforts necessary to legitimate and free exercise of
trade has not traditionally applied "to circumstances the immediate result of which is sensible
55 Perry v. Ontario (1997), 33 O.R. (3d) 705; Williams v. Canada (1997), 147 D.L.R. (4111
) 93 (F.C.A.).
56 Schenck eta/. v. The Queen in right of Ontario,  O.J. No. 3164 (H.C.), affirmed (1984) 49 O.R. (2d) 556
(C.A.), leave to appeal dismissed,  2 S.C.R. 289.
injury to the value of the property"57
" Guidance from Canada's highest judicial authority is
required to decide whether chemical depositions constitute physical damage to land.
35. For over a century – until the appeal decision below – it has been unclear whether
personal injury is even actionable under nuisance theory58
, let alone a threshold requirement.
Recovery in nuisance for personal injuries has been rejected because it is a tort to land, a doctrine
that protects sacrosanct interests incidental to property ownership. 59 Even Canadian
environmental statutory regimes permit intervention whether or not human health is threatened,
having "specifically excluded both direct and indirect danger to human health as preconditions
for the application"60 of their statutory provisions.
36. Relying on personal injury as a threshold effect of nuisance is further inconsistent with
the need for the law to develop in a manner that gives effect to the fundamental value and
importance of environmental protection generally. 61 Is there a Canadian private property right
which recognizes a property owner's entitlement to stave off emanation of foreign chemical
substances- without physical injury- onto their lands? Should there be? The Court of Appeal's
unprecedented test for nuisance that damage to value of real property is not a detrimental effect
on the rights associated with that land and its requirement to show the chemicals caused actual
harm to health is so novel it finds no support in judicial authority – should this remain the
prevailing law of Canada?
Should Common Law Liability be Conflated with Environmental Statutory Regulation?
37. While statutory remedies were never meant to disturb or displace landholders' common
law claims, 62 the effect of the decision below is to simply infuse the common law liability test
with the regulatory level, leaving homeowners with no tort remedies. Where torts such as
nuisance and Rylands are purely effects based, what is the relevance of statutory compliance at
57 St. Helen's Smelting Co. v. Tipping Co, (1865), II H.L.C. 642 at 650; Russell Transport Ltd. v. Ontario Malleable
Iron Co.,  O.R. 621 (H.C.J.) at 628.
58 Linden & Fe1dthusen, Canadian Tort Law (8th ed), at 570.
59 Street, Law ofTorts (4th 1968) at 229.
60 R. v. Hydro-Quebec,  3 S.C.R. 213 at para. 42.
62 Tridan, at para. 10.
all? There is no question that nuisance is concerned with a "type of harm suffered, rather than a
kind of conduct that is forbidden"63
. Does harm not logically ensue regardless of statutory
compliance? Appellate courts have consistently disregarded legislative compliance as a factor in
liability as the "most carefully designed industrial plant operated with the greatest care may well
be or cause a nuisance, if ... smoke, fumes or noise invade the right of enjoyment".64 However,
the appeal decision creates new common law immunity for industrial operations who participate
in contamination, despite the lack of any such statutory immunity in environmental protection
statutes. Is a fundamental re-ordering of Canadian property and environmental law appropriate?
38. Lawful activities concerning innocuous substances have been deemed to constitute "nonnatural"
usages, such as the creation of a water reservoir or operation of a mine.65 Traditionally,
the accumulation of any unremarkable product ( eg. water, fill, silt), in extraordinary quantities,
could constitute "non-natural" use:66 "the storage of substantial quantities of chemicals on
industrial premises should be regarded as an almost classic case of non-natural use". 67
39. The "non-natural" element of Rylands has consistently been the most troublesome aspect
of this tort,68obscured even further by the "exceptional danger" element referred to below. There
remains no authoritative test to determine whether a use is "non-natural" causing lower courts to
struggle with how to apply this component of the tort, with various factors receiving varying
forms of emphasis from different judges at different times69
: "what is a non-natural use? It must
be conceded that, at this point in time, there is no clear answer. . .. even after almost a century
and a quarter, the non-natural use requirement remains as vague as ever. 70 [emphasis added]
40. Did the original Rylands rule impose strict liability for damages consequent to an escape
of an unnatural dangerous product or for an escape of a product associated with the non-natural
63 Linden & Feldthusen, Canadian Tort Law, (8t11
) at 559.
64 Royal Anne Hotel Co. Ltd. v. Village of Ashcroft, [ 1979] B.C.J. No. 2068 (B.C.C.A.); Tack at 1196.
65 Rylands; Hodgkinson v. Ennor (1863) 4 B. & S. 229; Backhouse v. Bonomi (1858) El. Bl. & El. 622.
66 Gertsen v. Metropolitan Toronto (1973), 2 O.R. (2d) I (H.C.J.); Chu v. North Vancouver(1982), 139 D.L.R. (3d)
201 (B.C.S.C.); Ontario Ltd. v. Weal/ & Cullen Nurseries Ltd.,  O.J. No. 1895 (Gen.Div.).
67 Cambridge Water Company v. Eastern Counties Leather pic,  2 A.C. 264 (H.L.).
68 Lewis N. Klar, Tort Law (4th) (Toronto: Thomson Canada Limited, 2008) at 622.
69 P. Osborne, The Law ofTorts, (Toronto: Irwin Law Inc., 2011) at 344.
70 Lewis N. Klar, Tort Law (4th)(Toronto: Thomson Canada Limited, 2008) at 626.
use of land? The distinction between these two interpretations is rife in Canadian jurisprudence
and has given rise to a certain critical obscurity that has bedeviled the rule ever since. 71
41. Intervention by this Court will clarify – once and for all – whether nuisance and Rylands
ought to remain vibrant torts in the age of increased environmental regulation because "the
legislative system remains imperfect, leaving a complementary role for the private nuisance
" Should Parliament and Provincial Legislatures become the only source of authority in
this arena? As this Court has expressly stated, "the fact that the operation of a given [legal]
system will inevitably visit random damage on certain unfortunate individuals ... does not tell us
why those individuals should be responsible for paying that damage."73
42. Are statutory regimes a substitute for tort law? Can they supplant common law and
provide appropriate compensation in all environmental cases? The conflation of the common
law and environmental statutory regimes not only effectively abolishes civil remedies for
landowners but is otherwise inconsistent with this Court's jurisprudence: "a nuisance may be
created even where the activity complained of is otherwise lawfu1."74 Canadian courts have
recognized that varying degrees of contamination may nevertheless persist, albeit below present
day regulated target levels, which still affect property values of those lands, particularly when
well-known in the community and to prospective purchasers. 75 Is it possible for damages to be
eliminated by remediation to regulatory standards?76
Is the Preservation of Property Value a Legally Cognizable Interest? Should it Be?
43. The decision below imposes significant challenges in obtaining compensation for stigma
damages, a once established concept in Canadian law as a "market imposed penalty that can
affect a property known to be contaminated, a property once contaminated and now clean or a
71 Burnie Port Authority v. General Jones Pty. Ltd.,  H.C.A. 13 (H. C. Aust).
72 Linden & Feldthusen, Canadian Tort Law, (8′") at 561, relying on Elder, "Environmental Protection through the
Common Law", (1973), 12 U.W.O.L. Rev. 107.
73 Tock, at 1199.
74 St. Lawrence Cement, paras. 77, 98.
75 Tridan (S.C.J. level), at paras. 61, 68, 70; Beers v. Jacques Whitford Environment,  N.B.J. No. 351
(N.B.Q.B) paras. 120- 121.
76 Tridan (S.C.J. level), para. 70.
neighbouring one that is contaminated."77 Should property depreciation arising from
contamination form a cognizable nuisance claim? Stigma is an important environmental concept
because stigma damages in and of themselves constitute a legal recognition that damage may
inure to properties as a result of chemical levels that are nevertheless below regulated targets. 78
44. The refusal to accept uncontradicted evidence that stigma attaches to sites or properties
which are contaminated and investigated for health effects by regulators, thereby creating
uncertainty in the minds of potential purchasers, 79 leaves little space for the recognition of stigma
damages in the future. Expert witnesses established a clear connection between this uncertainty
or risk and resultant diminution in market value,80 by reliance on tax assessments, sales volumes,
local real estate practice and media coverage. It has been long acknowledged that polluted
properties can be of either inherently less value than prior to the contamination: such a reduction
in value is a recognizable head of damage which entitles an owner to damages for the residual
reduction in value.81 'Stigma' is a means of recognizing that given the choice between two
properties, one pristine and one that has contaminants but satisfies the regulatory levels, a willing
and informed purchaser will prefer the one without any contaminants, thereby devaluing the fair
market value price ofthe other.82
45. This has a profound policy effect: without accountability for such effects on residential
lands, those types of properties will remain contaminated and even possibly abandoned once
their values depress beyond a certain threshold. Neither result reflects Canadian legal principles
or values at large. A fundamental question with future impacts: can lands be left unremediated
and thereby stigmatized, without restitution to owners? Is this consistent with the overarching
public interest, particularly given that real property is a finite resource?
77 Office of the Chief Appraiser, Public Works & Government Services Canada, "Valuation Guidelines – I C4
Environmental Impacts", at 5.7.
78 K. Van Rensburg, "Deconstructing Tridan: A Litigator's Perspective", (2006) 24 Advocates' Soc. J. No. 4, 16,
paras. 34- 36.
79 Trial Reasons, paras. 265-272 [Tab 3A]
80 Trial Reasons, paras. 205-220, 265-278 [Tab 3A]
81 S.M. Waddams, The Law of Damages (2″d) (Canada Law Book: Toronto) at pp. I -II 0, Ill.
82Terms for contaminated sites subject to varying forms of stigma include: (i) diminution in value, (ii) environmental
contamination, (iii) environmental risk, (iv) environmental stigma, (v) impaired value, (vi) remediation costs.
19 2 0 I
.W hen is it Appropriate for Appellate Courts in Canada to Rely on Evidence -not Before the
Trial Judge nor Appeal Court to Completely Set Aside a Damages Award?
46. Summary of damages evidence at trial:
" the applicant tendered the evidence of six (6) experts83 in support of its
mass valuation of property damages theories;
" the applicant relied on four damage quantification theories: (a) real
property price point data sets, (b) statistical analyses, (c) economic theory
and (d) remediation costs;84
" the applicant tendered four (4) expert witnesses regarding the underlying
basis of each mass valuation model, its veracity, scope, robustness and
" Inco relied on one method of valuation (MLS); tendered one witness at
4 7. The appeal Reasons below are bereft of any consideration of the totality of this evidence
which occupied approximately 35 days of the 45 day trial. The Court of Appeal found one data
set relied upon by the trial judge as "flawed"85 yet ignored the fact that the trial judge also
recognized errors in the data but relied on uncontradicted expert statistical evidence that
supported aggregate property devaluation of more than $33 million86
. Of further note, is the
disregard of uncontradicted expert evidence regarding stigma, depressed sales volumes and
prices and that residents were having difficulty either obtaining financing or selling lands, much
of the market having been 'blacklisted' by financial institutions.87 Instead, the appeal court
examined only one technical aspect of the MP AC damages evidence and relied upon an MPAC
expert that was never tendered by In co at trial, 88 Frank Clayton, to justify its damages reversal. 89
83 Tomlinson, Maughan, Steele, Skaburskis, Thayer, Austrins, see Schedule "C", Witness at Trial [Tab 50]
84 Schedule "E", Damages Chart [Tab 50]
85 Court of Appeal Reasons, para. 122 [Tab 30]
86 Trial Reasons, paras. 236-244, 301 – 306 [Tab 3A]
87 Trial Reasons, paras. 265- 276 (Tab 3A] Berkhout, pp. 745- 748, 753- 760 [Tab 5E); Exhibit 30 [Tab 5F]
88 The trial judge explicitly ruled, which was never appealed by In co, that "if [In co J wishes to rely on passages from
the (Clayton] report, he [Inco] has to produce a witness": Reasons for Decision, December 3, 2009, p. 1749. [Tab
89 Court of Appeal Reasons, paras. 144, 151 [Tab 3D]
48. What is the ability of Appellate courts in Canada to interfere with damages calculations
carefully considered and calibrated by a trial judge hearing weeks of damages testimony? As a
matter of appropriate appellate review, this Court ought not sanction the vacation of a significant
damage award on the basis of information not tendered at trial. This raises the recurring and
important issue of when it is appropriate for an appellate court to make factual findings, assess
experts' credibility or otherwise re-try a case on appeal – does the failure to interfere with such
appellate behaviour not cast a larger shadow on the proper administration of justice generally?
Conclusion: Now's the Time
49. Now is the time for Canada's highest court to use a juridical pair of binoculars- the way
they were intended, not backwards per the Court of Appeal, but with foresight for future casesto
examine this triangulated intersection of three key areas of Canadian law: torts, property and
environmental. Canadian law – and Canadians generally (both industrial actors as well as their
neighbours) – will be enriched by knowing the answers.
PARTS IV AND V- COSTS AND ORDER SOUGHT
50. That the application for leave to appeal the judgment of the Court of Appeal below, made
October 7, 2011, be allowed, with costs in any event.
ALL OF WHICH IS RESPECTFULLY SUBMITTED
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