Ontario Superior Court of Justice has reaffirmed that buyers of
contaminated property cannot expect compensation from their
neighbour for the contamination that existed on the date of
In Midwest v. Thordarson (2013 ONSC 775),
Midwest claimed damages under the spills compensation provision in
s. 99 of the Environmental Protection Act (EPA),
nuisance and negligence, plus $100,000.
Since 1973, the defendants, Thorco Contracting Limited used
their property to store petroleum hydrocarbon waste. Some
contaminants (including free product) entered the soil and
groundwater and migrated into an adjacent property that Midwest
purchased (with only a Phase I Environmental Site Assessment) in
2007. Midwest's expert said that the contaminated groundwater
was continuing to flow into its property at the date of trial.
The Ministry of the Environment ordered Thorco to delineate and
remediate the contamination on Midwest's property. Midwest sued
Thorco for substantial damages anyway, including the cost of doing
the remediation itself. At the time of trial, neither party seems
to have remediated the contamination.
Thorco successfully argued that:
as the Ministry
had ordered Thorco to remediate the Midwest site, Midwest had
suffered no recoverable loss, and
Midwest did not
prove that that the level of contamination had worsened since 2007,
when Midwest acquired their property.
The court dismissed Midwest's lawsuit, with costs to
Section 99 EPA – Midwest did not show
evidence of actual loss in property value or any inability to use
the property for its business operations. The EPA cannot be
interpreted to allow the damages contemplated under s. 99 to
include remediation costs where the Ministry has already
ordered the responsible party to perform the remediation. If
the Court awarded a sum to Midwest for the proposed remediation and
the property were remediated as required by the Ministry order,
this would amount to double recovery arising from the same
No evidence was led to show the environmental state of the
property when it was purchased by Midwest. To succeed in nuisance,
Midwest would have to demonstrate that contamination levels have
increased since it purchased the contaminated property,
and that the defendants caused that further contamination:
 The parties agree that an actionable nuisance has been
defined as " ... causing physical injury to land or
substantially interfering with the use or enjoyment of land or an
interest in land, where, in the light of all the surrounding
circumstances, this injury or interference is held to be
 Midwest submits that an escape of hydrocarbons
contaminating its soil and water is a clear nuisance [Ball v.
Imperial Oil Resources Ltd., 2008 ABQB 765, paras. 117-118].
Similarly, the Defendants allowed a noxious substance to escape
onto its property, thereby damaging Midwest's land or
 With respect to this nuisance claim, the Defendants allege
that the Plaintiff failed to prove requisite damages, which is
similar to the argument made in respect to the EPA
 I agree with these submissions. There is no evidence that
Midwest acquired a property which was not already damaged (as there
is no evidence of the environmental state of the property when it
was acquired). The Plaintiff, therefore, cannot establish that any
chemical alteration in the soil and groundwater has occurred in its
property. The Plaintiff did not take action against the vendor of
the property, or the environmental company that did the Phase I
testing on the property.
 If Midwest purchased a contaminated property, it
must prove that there has been an increase in the contamination
level of property caused by the Defendants.
Negligence– Midwest failed to prove that
it suffered actual damage as a result of Thorco's breach of a
duty of care.
Punitive damages – The evidence did not
support any finding of malicious, oppressive and high-handed
misconduct that may trigger the award of punitive damages.
Midwest is very lucky indeed that the Ministry of the
Environment ordered Thorco to cleanup its property. Such orders are
by no means automatic, especially for careless purchasers, though
the presence of free product helps. And perhaps they won't buy
any other commercial properties based only on a Phase I ESA.
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