Canada: Soil Remediation: Smell Test Stands Up In Court

Last Updated: July 16 2012
Article by Dianne Saxe and Jackie Campbell

The latest decision in the Horvath saga has upheld the "smell test" in delineating home furnace oil contamination for remediation.

The B.C. Supreme Court decided A Speedy Solutions Oil Tank Removal Inc. v. Horvath Estate, one of a series of cases triggered by a leaking home oil tank which interfered with the sale of the home.

Ms. Savage, the executrix of her mother's estate, received quotes from two contractors for removal of the tank. One company insisted on an environmental consultant. The other, Speedy Solutions, told her that an environmental consultant was only needed if contamination was found.

The estate contracted with Speedy to remove the tank. When the soil surrounding the tank did prove to be contaminated, the estate entered into a second contract with Speedy to remove the contaminated soil at a cost of $4900 for the first 10 tons and $450 per ton thereafter, plus $2000 for an "environmentalist" (environmental consultant), and the cost of labour and supplies to remove/replace objects in the way of removing the soil.

A few days after excavation began, Speedy told Ms. Savage that the contamination had migrated onto neighbouring property. She wanted to stop the job and get a second opinion, but Speedy advised that both properties could be red-flagged if the job stopped, and that it could cost as much as $15,000 a day to suspend the work. Nor could Speedy guarantee that it could keep the trucks they had hired to finish the work. Ultimately Speedy removed 481 tons of soil from the two properties, using a "sight and smell" test to delineate the contamination.

Speedy invoiced $2152 for tank removal and over $206,000 for soil removal (which included a 20% volume discount and no charge for backfill). The estate felt it had been overcharged, and that proper delineation of the contamination would have reduced the cost.

When the estate failed to pay, Speedy deleted the discounts and presented an invoice for nearly $263,000. When Ms. Savage asked for the consultant's report, to confirm that the cleanup was complete, Speedy told her she must first pay their full invoice. Speedy then sued the estate for this amount plus interest.

Speedy was awarded $196,161.75, plus interest and costs:

[101] In this case, Noah relied on sight and smell in determining the extent of the excavation. That he did so carefully and accurately is evidenced by the difference in the samples obtained by Mr. Hall on December 8, 2009, and Mr. Seewald on December 9, 2009. On December 9, 2009, Noah, with some accuracy, was able to determine the end of the contamination.

[102] While sight and smell is not determinative, it is evidence that can be used in conjunction with laboratory samples to determine that a property is contaminated. ... there are practical limits to sampling. There is a cost to sampling and a time factor to get the results analyzed and returned. As the contamination begins to reach an end, it is not practical to shut down the work while each scoop of soil is analysed. Even on a rush basis, it can take up to 24 hours to do a soil analysis.

[103] The Soil Removal Contract was based on payment for removal of contaminated soil... 481 tons of soil was removed. ..not all of the soil that was removed was contaminated. It is impossible to fully segregate the clean and contaminated soil. ... 10 to 20% of the Overburden on all jobs becomes mixed in with the contaminated soil. ... while I accept Noah's evidence of the steps he took to determine the boundaries of the contamination, I cannot assume that he was able with finite accuracy to stop digging at the exact boundaries of the contamination. Undoubtedly, some uncontaminated soil was removed while the boundaries were established.

[104] In Eastgate, Stinson J. faced a similar problem of how to do justice between the parties where the contractor had relied on a "smell test" to determine whether removed soil was contaminated. In Eastgate, the situation was more egregious in that there was no sampling done during the course of removal. In this case, the Hall sampling gives some comfort to the accuracy of Noah's smell test.

[105] In the January 29 Invoice, Speedy discounted the soil removal by 20% and discounted the backfill in its entirety. While Speedy was not legally obliged to offer a volume discount, it was only entitled to charge for the removal of contaminated soil.

[106] In all of the circumstances of this case, taking into account the potential uncertainties as to the breadth and depth of the contamination, the acknowledged removal of some Overburden, and Jill's obligation to remove the contaminated soil on both properties, I find that Speedy is entitled to judgment ... The discounts in the January 29 Invoice reasonably reflect the amount of uncontaminated soil removed..

The Estate's expert, who had experience on large development projects, testified that best practice would have been to dig test holes before excavation (at a cost of $5000 to $8000) to delineate the contamination. She also concluded that Speedy's charges were excessive. The court rejected her evidence:

[88] ...I do not accept Ms. Gerencher's evidence concerning what a reasonable cost for such work would be. Her opinion was based on quotations received in the context of major commercial remediation projects. Those projects are in no way comparable in size and scope. The only comparable quotation came from Action. That quotation was not significantly different from Speedy's.

[89] I do not accept Ms. Gerencher's evidence that Speedy should have dug a number of test holes at a cost of $5,000 to $8,000 to determine the boundaries of the contamination. The cost would not justify whatever advantage might be gained by knowing in advance the parameters of the excavation. While such testing may be common practise in commercial operations, it would not be practicable in regard to work taking place in the restricted confines of a residential yard.

Bottom line: the contractor's rough and ready "smell test" approach to the remediation stood up in court, largely because it was somewhat confirmed by independent soil sampling. The Horvath property was eventually cleaned up and sold, and the remediation contractor got mostly paid. But the experience must have been devastating to the Horvath family, and to their mother's estate.

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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