The directors had a good legal defence, but an impossible
situation. They had to comply with the Order pending appeal, over
$100,000/month, plus legal costs, out of their own pockets. They
were unlikely to recover any of it, even if they won. Taking the
case to the Supreme Court could take 5 years. Eventually they caved
in, and paid the MOE $4.75 million more to release them from the
The MOE claims that s.18 of the EPA authorizes cleanup orders to
anyone who ever owned, managed or controlled an
"undertaking or property", directly or indirectly,
regardless of fault or when the contamination occurred. The MOE
claim stands on two main pillars:
The Court of Appeal ruled, in Director v. Kawartha
Lakes, that s. 18 Orders can require innocent owners to clean
up contamination caused by others. The innocent owner was even
forbidden to show who was at fault.
The ERT has upheld s. 18 Orders against some directors who
were at fault, directing minds of private companies who
lacked due diligence when the environmental risk occurred. The ERT
created a rebuttable presumption that such directors personally
manage and control a corporation's assets. However legally
suspect that presumption may be, the results did look like
It was a huge leap to apply the same "logic" to Mr.
Baker, an innocent independent director of a publicly traded parent
company. But it it was a very profitable gambit for the MOE. And if
fairness, innocence and fault are irrelevant to environmental
liability, maybe it all makes sense.
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Ontario's Ministry of the Environment and Climate Change continues to roll out its Climate Change Action Plan with its proposed GHG guide for projects that are subject to the province's Environmental Assessment Act.
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