Canada: Northstar Aerospace Settles With The Ministry Of The Environment For $4.75 million

Last Updated: November 16 2013
Article by Lana Finney and Sarah Willis

On October 28th, 2013 the Ministry of the Environment ("MOE") and the former directors and officers of Northstar Aerospace Canada ("Northstar") reached a $4.75 million settlement for the remediation of a property owned by Northstar in Cambridge, Ontario.

These settlement negotiations arose from a $15 million clean-up order against the former directors and officers made in 2012. This order signifies the high watermark of a trend by the MOE to use its statutory power to try to recover clean-up costs from those it perceives to be responsible for contamination, including shareholders, directors and investors.

Northstar's Financial Difficulties

In 2004, Northstar discovered contamination on its property in Cambridge, Ontario, and began voluntarily monitoring and remediating the site.

Concerned with Northstar's increasing financial difficulties, in 2012 the MOE issued two Director's Orders to Northstar: one requiring a formalized remediation plan, and the other requiring Northstar to post financial assurance. Shortly after, Northstar stopped its remediation efforts and applied for creditor protection under the Companies' Creditors Arrangement Act ("CCAA"). The CCAA court ordered a sale of virtually all of the companies' assets (except the contaminated site), and distributed the sale proceeds to the company's creditors.

Directors held Responsible

Not surprisingly, the MOE did not receive any funds arising from the sale of the assets, nor was any money set aside to address the clean-up of the contaminated property or the long-term monitoring obligations required to ensure that harmful vapours had not entered the basements neighbouring residences. As a result, in November, 2012 the MOE issued an order against Northstar's directors under sections 17 and 18 of the Environmental Protection Act ("EPA"), which grants the Director the authority to make orders against persons "responsible" for contamination. Section 18 specifically permits the MOE to issue orders to current and former owners, as well as those currently and formerly in management and control of the property or undertaking. In this case, the MOE took the position that the former directors and officers were in management and control of the undertaking because they were directors and officers during the period in which a mitigation strategy was developed with respect to the contamination. The MOE justified such an order because the directors and officers had failed to make provisions for continuing monitoring, investigation, and remediation, and such a failure was likely to endanger the health and safety of nearby residents. The Order required the directors to assume financial responsibility for the remediation at a total cost of around $15 million.

Northstar's directors appealed the Director's Order to the Environmental Review Tribunal ("ERT") and brought a motion to have the Ontario Superior Court of Justice assume jurisdiction over the appeal. The directors also sought a motion seeking a stay of the Director's Order pending the hearing of their appeal. The ERT dismissed the directors' motion and refused to grant the stay, despite the fact that any money the directors were to spend on remediation would likely not be recoverable if the ERT appeal was successful. The stay was refused on the basis of section 143 of the EPA, which provides that the ERT cannot grant a stay of an order to "monitor, record and report". This decision was upheld by Justice Sachs in the Divisional Court.

Over the following few months the directors paid out approximately $150,000 per month to comply with the orders. These payments were out-of-pocket as insurance coverage was denied on the basis that the order was for historical contamination. The day before the ERT appeal was to begin, the MOE and the directors reached a settlement agreement totalling $4.75 million - a $10 million discount from the original Director's Order. More details regarding the settlement are not yet available.

Lessons from Northstar

The orders against Northstar and its directors are significant for a couple of reasons. First, the orders came right on the heels of a recent Supreme Court of Canada decision in Newfoundland and Labrador v AbitibiBowater ("Abitibi"), which dealt with priority claims under the CCAA. In Abitibi, the SCC held that MOE clean-up orders will not be given priority status in bankruptcy and insolvency proceedings, leaving the MOE with little recourse for holding bankrupt companies responsible for contamination. In light of that decision, it is unsurprising that the MOE has begun exploring other avenues for recovering some of the clean-up costs arising from contaminated sites of bankrupt companies.

Secondly, it is significant that many of Northstar's directors had joined the company after the events leading to the contamination took place and remediation had begun. These apparently innocent directors are therefore being held liable for environmental contamination over which they had no control. However, one might argue that they exercised control in the timeframe leading up to the insolvency and could have taken steps to ensure Northstar's environmental obligations were met. The lack of concern over the fault of parties subject to MOE orders, however, is not limited to the Northstar situation. A recent decision by the Ontario Court of Appeal in Kawartha Lakes (City) v Environment, upheld an MOE order issued against an innocent landowner for contamination it did not cause on the basis that the EPA gave the MOE jurisdiction to issue an order against an innocent property owner when it is in the best interests of the environment.

The Northstar situation has on one hand, raised concerns about a possible chilling effect on business in Ontario, and on the other hand, generated discussions about the positive impact it may have on environmental protection efforts in the province. Either way, directors should ensure they have a full understanding of the potential liabilities of the companies with which they may be involved, and current directors should ensure contamination is carefully monitored and the necessary funds are set aside to look after future liabilities.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.