The Ontario Court of Appeal has ruled that innocent landowners
can be subject to remediation orders even if they are not
responsible for the contamination. In doing so, the Court upheld
the Environmental Review Tribunal's finding that environmental
protection pursuant to the Ontario Environmental Protection
Act takes precedence over any concept of fairness based on the
traditional "polluter pays" principle.
In Kawartha Lakes (City) v. Ontario
(Environment), issued on May 10, 2013, the
central issue on appeal was whether the Ministry of the Environment
should appropriately consider "fairness" principles when
making a clean-up order under the Environmental Protection
Act (the Act). The case concerned a provincial officer's
order against the City of Kawartha Lakes (the City) to remediate
the adverse effects of a furnace oil spill. This spill originated
in the basement of a residential home, but eventually travelled
through municipal sewers to the municipal-owned lakefront. While
the private property owners – from whom the spill originated
– made an insurance claim, their funds ran out before the
City property could be fully remediated. All parties agreed that
the City bore no responsibility for the spill, but the MOE
nevertheless issued the order against the City, relying on s. 157.1
of the Act, which provides that "[a] provincial officer may
issue an order to any person who owns or who has management or
control of an undertaking or property" requiring that person
to take steps to "prevent or reduce the risk of a discharge of
a contaminant into the natural environment from the undertaking or
property" or "to prevent, decrease or eliminate an
adverse effect that may result from" the discharge or presence
of such a contaminant.
The City argued before the Tribunal that the Director's
order was contrary to the "polluter pays" principle,
which suggests that parties should only be liable for remedying the
contamination for which they are responsible. However, the Tribunal
relied on the MOE's Compliance Policy, which states that if
multiple individuals are named in a s. 157.1 order, each ordered
party is considered to be jointly and severally liable under the
order. The policy also specifies that current landowners, innocent
or not, should be named in an order. In light of these policy
guidelines, the Tribunal found that "the Act specifically
contemplated making innocent owners responsible for the cleanup and
prevention of contamination if to do so would promote the
fundamental purpose of the Act: to protect the environment."
For this reason, the Tribunal dismissed the City's appeal.
The primary substantive basis of appeal to the Divisional Court
was that the Tribunal erred in law by preventing the City from
calling evidence that spoke to the "fairness factors" in
support of its appeal. Previous jurisprudence had endorsed the
consideration of "fairness" in issuing orders, suggesting
that "innocent" non-polluters should not necessarily be
the subject of clean-up orders. In reviewing these previous
decisions, the Court found that the Director may take into
account any of the "fairness" factors in deciding whether
to make an order under s. 157.1, but neither case suggests that the
Director must take any of these factors into account.
The Court of Appeal was decisive in upholding the Divisional
Court decision, explaining that the case "turns entirely on
whether the evidence sought to be tendered by the appellant was
properly found to be irrelevant to the issue before the
Tribunal." The Court went on to agree with the Tribunal and
the Divisional Court that evidence regarding the fault of third
parties is irrelevant to whether the order against the City should
be revoked. The Court emphasized that the order was not premised on
a finding of fault, but on the need to serve the objective of the
legislation: "Evidence of the fault of others says nothing
about how the environment would be protected and the legislative
objective served if the Director's order were
This decision has significant implications for innocent
landowners in Ontario. When buying property, landowners must be
aware of the current and previous uses of all lands surrounding the
site and should consider whether they have proper indemnification
and whether their insurance coverage is adequate. There is clearly
potential peril associated with purchasing or even taking
possession of a contaminated site.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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