Canada: Kawartha Lakes Appeal Heard By Court Of Appeal

Last Updated: May 10 2013
Article by Dianne Saxe

The City of Kawartha Lakes has appealed to the Ontario Court of Appeal from a Ministry of the Environment Order, which imposed cleanup liability on the City for contamination it did not cause. The City argues that the MOE should have imposed those cleanup costs on the polluters, meaning either those who caused the spill, or were negligent in cleaning it up, or the province itself for its lax regulation of the oil tank and/or of the original polluter's cleanup. The City says the s. 157.1 order against it was unfair and contrary to the polluter pays principle. They argue that the Environmental Review Tribunal and Divisional Court were wrong in preventing the City from calling evidence about those at fault for the contamination. This prevented them from trying to persuade the Tribunal that the Order against the City should be revoked in favour of a cleanup order against those at fault.

The province responded that it is entitled, at its discretion, to impose such liability on non-polluters who are without fault of any kind. The province says that its duty to protect the environment requires this power, and that it properly exercised its discretion to do so in this case. (The MOE had already issued a cleanup order to the Gendrons, based on their contravention of the EPA. The Gendrons had exhausted their insurance coverage, and had announced their intention to stop their cleanup.) The province argues that the Legislature deliberately intended to authorize no fault orders to the innocent, and that those who receive such orders are free to seek compensation in other ways. (Whether or not such "other ways" really work in practice.)

Here are the City of Kawartha Lakes' factum, the MOE Director's Factum, and the Gendrons' factum, the homeowners whose oil tank was the source of the original spill.

One of the key issues argued was whether the MOE Director must consider the polluter pays principle when issuing cleanup orders to innocent non-polluters. The MOE says its officers apply its Compliance Policy and its Statement of Environmental Values when choosing whether to issue no-fault orders to non-polluters, but should not consider the polluter pay principle when actually issuing such orders. Fairness to an innocent non-polluter is, they say, only one of many factors they must balance, and not the most important one.

The appeal was argued yesterday before a panel of Justices Rosenberg, Goudge, and Tulloch. Their decision was reserved.

The Gendrons strongly support the Ministry's attempt to impose liability on the City. A separate lawsuit is ongoing in which the City seeks to recover its cleanup costs from:

  • the Gendron's, [the homeowners];
  • Thompson Fuels [the fuel supplier];
  • Her Majesty the Queen [the Minister of Environment];
  • TSSA, [the province's Technical Standards and Safety Authority];
  • DL Services [the remediation contractor retained by Farmers and/or Pepper to remediate the spill at the Gendron property];
  • Pepper [the insurance adjuster retained by Farmers to provide adjusting services in connection with the spill];
  • Farmers [the Gendron's insurers]; and,
  • Granby [the fuel tank manufacturer].

A summary judgment motion by the defendants was dismissed, except that the City's statutory claim under Part X of the EPA was dismissed. The court ruled that none of Farmers, Pepper or DLS could be considered the "owner of the pollutant" or a person with "control" of the pollutant, because none of them had anything to do with the oil before it was spilled.

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Dianne Saxe
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