Canada: Smith v Inco Appeal Application

Last Updated: December 29 2011
Article by Dianne Saxe

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:



(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

2 2

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.




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, [2008] 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), [2011] O.J. No.

2451, (C.A.) [Antrim]; Tock v. St. John's Metropolitan Area Bd., [1989] 2 S.C.R. 1181 [Tock]; St. Pierre v.

Ontario (Minister ofTransportation), [1987] 1 S.C.R. 906.

2 184

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]

3 1R5

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 [1928] S.C.R. 522 at 532; Fridm&n, The Law of Torts, Carswell: Canada (1989) vol. I,

p. 130.

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?



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, [1992] 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, [1926] 4 D.L.R. 1138 (S.C.); Godfrey v. Good Rich Refining Co., [1939] O.R. 106, affd [1940] O.R.

190 (C.A.); Culp v. East York (Township), [1956] O.R. 983, affd [1957] 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.

7 189

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.


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

ofthe MOE;

(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.

8 190

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

human health";

(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


Who Testified

On Causation

Dr. Thayer

Dr. Steele

Dr. Skaburskis

William Berkhout

Who Testified

On Damages

Robert Maughan

William Berkhout

Dr. Steele

Dr. Thayer

Troy Austrins

Dr. Skaburskis

Dr. Tomlinson


Who Testified

As To No Damages

David Atlin

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.


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


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.


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

para. 96).

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.



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, [1981] O.J. No. 3164 (H.C.), affirmed (1984) 49 O.R. (2d) 556

(C.A.), leave to appeal dismissed, [1987] 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., [1952] 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, [1997] 3 S.C.R. 213 at para. 42.

61 Can-For.

62 Tridan, at para. 10.

16 198

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., [1993] O.J. No. 1895 (Gen.Div.).

67 Cambridge Water Company v. Eastern Counties Leather pic, [1994] 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.

17 199

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., [1994] 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, [2001] N.B.J. No. 351

(N.B.Q.B) paras. 120- 121.

76 Tridan (S.C.J. level), para. 70.

18 200

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

statistical significance;

" 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

5~ .

89 Court of Appeal Reasons, paras. 144, 151 [Tab 3D]

20 202

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.


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.


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