Canada: Alberta Court Of Appeal Uses Class Action To Broaden Summary Judgment And Narrow Strict Liability

INTRODUCTION

On March 19, 2014, the Alberta Court of Appeal (Court) released its unanimous decision in Windsor v. Canadian Pacific Railway Ltd. The Court allowed the appeal in part, dismissing a class claim against Canadian Pacific Railway Ltd. (Railway). The Court of Appeal's decision broadens the availability of summary judgment in Alberta, including with respect to class proceedings, and limits the availability of the Rylands v. Fletcher doctrine giving rise to strict liability for the release of unnatural substances from land.

BACKGROUND

Beginning in the 1900s, the Railway operated a locomotive repair facility in an area now part of Calgary (Shop). From the mid-1950s to the mid-1980s, a degreasing solvent consisting primarily of trichloroethylene (TCE) was used at the Shop. The Railway later discovered migration of TCE into the groundwater underneath the Shop and portions of the now-surrounding residential community. To address the problem, the Railway installed sub-slab depressurization systems (SSD Systems) under approximately 70 properties where TCE levels exceeded Health Canada thresholds.

A class claim was commenced against the Railway for diminution in property value and loss of rental income based in negligence, nuisance, trespass, and strict liability under the doctrine in Rylands v. Fletcher, which makes defendants strictly liable for the unexpected and unintended escape of a hazardous substance from their property, preventing reliance on defences such as due diligence. Personal injury damages were not claimed in the class action and the claimants consented to dismissing the claims based in trespass.

APPLICATION AND CASE MANAGEMENT JUDGE'S DECISION

The Railway applied for summary dismissal of the claims in strict liability and nuisance, but not the claims in negligence.

The case management judge granted summary judgment dismissing the claims in nuisance by the class members who did not have SSD Systems installed, finding that any damage to their property was trivial or non-existent.

The case management judge declined to dismiss the claims based in strict liability and the claims for nuisance by the class members with SSD Systems installed. With respect to the strict liability doctrine in Rylands v. Fletcher, the case management judge found that the TCE "escaped" from the Railway's lands and that provable damage with respect to all class members was a possibility. With respect to the nuisance claims, the case management judge found that the potential provable damage from installation and operation of the SSD Systems, including vapour emissions, could support a claim in nuisance.

The decisions not to dismiss the strict liability claim by all class members and the nuisance claim by the class members with SSD Systems installed were appealed.

DECISION AND REASONING

The Court of Appeal granted the appeal with respect to the strict liability claims relying on the doctrine in Rylands v. Fletcher and dismissed the appeal respecting the nuisance claims by the property owners with SSD Systems installed.

Test for Summary Judgment

The Court of Appeal reviewed the test for summary judgment in light of the recent Supreme Court of Canada decision in Hryniak v. Mauldin, which interpreted and applied the recently modified summary judgment rule in Ontario.

Importantly, the Court found that the test for summary judgment, including in Alberta, is no longer whether it is "plain and obvious" that a claim must fail, but whether "there is a reasonable prospect that the claim will succeed." The Court referred to the trend to broaden the circumstances in which summary judgment is available in order to decrease the length and cost of litigation, resulting in improved access to justice. The new approach to summary judgment is to examine the record to assess whether a fair decision can be made without recourse to trial. The Court indicated that summary judgment is one tool to focus disputes and application judges should not hesitate to use it "when the record permits a fair and just adjudication."

Finding that one of the principles of class proceedings is providing affordable access to justice, the Court of Appeal found summary judgment to be equally available in class proceedings as in non-class proceedings.

Strict Liability Under Rylands v. Fletcher

While assessing the claims relying on the doctrine in Rylands v. Fletcher, the Court examined how courts in other jurisdictions have addressed strict liability when dangerous substances escape. The Court of Appeal considered the Ontario Court of Appeal's refusal to expand the rule as recently as 2011 in Smith v. Inco Limited (Inco). Finding Inco to be the leading Canadian authority on the doctrine, the Court found that to succeed under the Rylands v. Fletcher doctrine, a plaintiff would have to prove that:

  • the defendant made an "extraordinary," "special," or "extra-hazardous" use of its land, which assessment focuses on the overall use of the land (i.e., a locomotive repair facility) and not discrete components of the use (i.e., using TCE as a solvent);
  • the defendant brought something onto its land which could foreseeably cause mischief if it escaped;
  • the substance actually escaped; and
  • damage resulted to the plaintiff's land from the escaped substance.

Reviewing the requirements above, the Court found there was nothing unusual about the use of the lands to repair locomotives, noting that all railways must repair their rolling stock and that the land was always zoned for that type of use. There was nothing on the record to suggest that the repair of locomotives, or using TCE in the process, was "special" or "extra-hazardous."

The Court then read a knowledge requirement into the second requirement, requiring some contemporaneous foreseeability of the risk being undertaken by the party sought to be held liable. This requirement was not met because TCE, when it was used, was not known to possess its harmful qualities which later became known.

Respecting the third requirement, the Court found that an "escape" must result from an unintended mishap or accident; migration as a normal and intended consequence of the activity on the defendant's land is not sufficient to engage the rule. The Court of Appeal concluded that, based on the information provided, the process for the disposal of TCE which resulted in the migration was an intentional part of the operations at the Shop, so this branch of the test was not met.

Given that the record was sufficient to conclude that the first three branches of the test were not met, the appeal was allowed with respect to the strict liability claims, which were summarily dismissed.

Nuisance Claims by Property Owners with SSD Systems

The Court of Appeal refused to interfere with the case management judge's finding that there was sufficient evidence of non-trivial damage to properties with SSD Systems installed, including the need to constantly mitigate the effects of the TCE, that nuisance claims in respect of these properties could proceed to trial. Accordingly, this portion of the appeal was dismissed.

 ANALYSIS AND CONCLUSION

The decision and reasoning by the Court of Appeal is important as it advances the law with respect to summary judgment in Alberta. The Court of Appeal's confirmation that access to summary judgment is an important part of access to justice encourages masters and judges to broaden their use of summary judgment.

The Court of Appeal's analysis of the Rylands v. Fletcher doctrine narrows the circumstances in which the doctrine will be applied. Interestingly, the Court indicated that the doctrine is available only where the "escape" of a substance is unintended. Where the "escape" is part of the foreseeable consequences of an action, the principle giving rise to strict liability is unavailable. While this may seem incongruous, there are other legal rules which should provide for liability where the migration of a substance was intended or could be an anticipated result of an activity.

The focus on whether the overall use of the land is sufficient to engage the doctrine in Rylands v. Fletcher – rather than individual parts of the overall use – along with the foreseeability requirement that escape of the substance would likely cause mischief, greatly constrict the circumstances where the strict liability doctrine will be available. This is particularly so for prudent operations that are not themselves abnormal. The Court's narrowing of the principle ensures strict liability is only rarely available for the release of substances from land, increasing the ability of defendants to show that they used reasonable diligence to prevent the release of hazardous substances.

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.

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