Canada: MOE Wins: Kawartha Lakes Must Pay

Last Updated: June 21 2012
Article by Dianne Saxe

The City of Kawartha Lakes has lost its appeal of the Ministry of the Environment cleanup order for a spill.Kawartha Lakes was the innocent victim of a domestic fuel oil spill. The homeowner's insurer started a cleanup, but abandoned the work when the policy was exhausted. The oil migrated through municipal sewers to the municipal lakefront. The Ministry then ordered the City to pay for the remaining cleanup of oil on municipal property. This was the first case in years to put a huge financial burden on a clearly innocent spill victim.

The City appealed the order, on the ground that it was an innocent victim of the spill, not a polluter, and that the cleanup Order should be directed to those actually at fault. The Environmental Review Tribunal, and now the Divisional Court, agreed that the City was in all respects innocent, and "had no responsibility whatsoever for the contamination" of its property.

Unfortunately for municipal taxpayers, the City's innocence was not relevant. The Director was entitled to focus the Order purely on having the spill cleaned up, for the protection of the natural environment. Issues of fault, fairness and compensation should be left to the civil courts, they said.

In making this finding, the court formally allowed the Ministry of the Environment to abandon the "fairness" doctrine most famously adopted in the Appletex case:

[26]      ...Appletex commented on the absence of legislative or policy guidance as to how provincial officers were to exercise their discretion under the Act.  Since Appletex, the Ministry has filled that vacuum by publishing a Compliance Policy (the "Compliance Policy") the stated purpose of which is "to provide guidance to Ministry staff in exercising their authorities under statutes administered by the Ministry of the Environment" (Compliance Policy, May 2007, page i.)

[27]      The Compliance Policy makes it clear that if there are two or more persons who can be named in an order under s. 157.1, it is not up to the provincial officer issuing the order to apportion liability as amongst the various orderees. Each orderee is generally considered to be jointly and severally liable under the order and it is to be left to the parties to sort out the apportionment of liability amongst themselves.

[28]       The Compliance Policy also contains a specific provision dealing with "victimized" or innocent owners. According to that provision, current owners, innocent or not, should be named in an order. If there are exceptional and unusual circumstances, the timing and the content of the work to be done by a victimized owner can be adjusted. As well, if no environmental purpose would be served by naming the owner in the order, they do not need to be named....

[72]   It is not the role of the decision-maker to allocate liability or make findings of fault or degrees of fault. People who are named in an order are held to be jointly and severally liable for the clean-up. If determining fault or degrees of fault as between one or more potential orderees is irrelevant to the exercise of a statutory decision-maker under s. 157.1, such a determination of fault becomes much more irrelevant when the parties against whom the findings of fault are sought are not even potential orderees under s. 157.1. In this case the City was seeking to have the Tribunal consider evidence about the fault of the fuel provider, fuel tank manufacturer, insurance company, insurance adjuster, and the MOE itself, none of which were potential orderees under s. 157.1 of the Act. A provincial officer can only make s. 157.1 orders against a "person who owns or who has management or control of an undertaking or property."

[73]      The Tribunal also considered the fact that the Compliance Policy does provide specific guidance where the statutory decision-maker is considering making an order against an innocent or "victimized" owner like the City. According to section 2 of the Compliance Policy, such an owner will not be relieved of liability. If an exceptional or unusual circumstance existed, the timing and content of such an order could vary (but not whether it should be made in the first place). The Compliance Policy does acknowledge that there may be a "rare" circumstance when an innocent owner should not be named in an order, that is, where no environmental purpose would be served (for example, "where an owner's property has been contaminated by a groundwater plume originating from a source of contamination on an adjacent property and the required cleanup must, in order to be effective, focus upon the adjacent property rather than the owner's.")  The case at bar does not involve such a rare circumstance.

Thus, innocent victims of contamination now have no defence against a Ministry cleanup order. They will be forced into the civil courts if they hope for any remedy, but they won't find one there if the polluter is gone, or broke, or if the victim can't afford litigation. And then there are the increased barriers to recovery for historic contamination, from cases such as Inco v. Smith.

This all makes it riskier than ever for a victim of pollution to tell the Ministry about it. Instead of helping the victim, the MOE may punish the victim with a cleanup order. And that's ok with the ERT and the Divisional Court.

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

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Dianne Saxe
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