The BC Supreme Court recently clarified several principles under
the Environmental Management Act relating to liability for
remediation costs for contaminated sites. In JI Properties Inc
v PPG Architectural Coatings Canada Inc, 2014 BCSC 1619, the Court ordered a former
landowner, who was also the historical polluter, to compensate the
current owner for $4.75 million in reclamation costs incurred to
remove contaminants caused by the former owner's industrial
activities. The case is significant not only due to the size of the
award, but also because it sends a strong signal that the Court
will interpret the Act in a manner which gives full effect to the
"polluter pays" principle.
In the reasons for judgment, the Court addressed a number of
issues that will provide guidance to parties involved in
contaminated sites, including the following:
The Act creates a unique statutory cause of action which
permits a cost recovery claim for remediation costs, even when such
costs are sustained over the span of several years. In particular,
the Court confirmed that the limitation period for a cost recovery
action under BC's old limitation legislation (in force prior to
June 1, 2013) does not begin to run until all remediation costs
have been incurred.
Prior owners of a contaminated site can protect themselves from
future liability through the Act's "Certificate of
Compliance" regime (demonstrating compliance with the
Act's remediation standards). However, the Act will not provide
immunity to prior owners who had undertaken remediation in the past
but which falls short of the Act's current standards. This
remains the case even when such remediation was performed in
consultation with government officials at the time and comfort
letters were provided. Liability under the Act is absolute and
When assessing whether remediation costs are reasonable, the
Act mandates that the agent responsible for conducting the clean-up
should give preference to alternatives that provide permanent
solutions. The participation of a qualified expert in determining
an appropriate reclamation program will be viewed as favorable
evidence of the reasonableness of clean-up expenses and,
conversely, the failure to consult with an expert may result in the
disallowance of certain costs.
Unless there is clear evidence that a property has increased in
value as a result of remediation undertaken by a landowner, the
Court will not be inclined to consider any set-off against
reclamation costs for increase in value to the property arising
from the remediation.
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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