Midwest purchased industrial property in 2007, next to an old
industrial site covered with tanks. It first obtained a Phase I
Environmental Site Assessment that, for unexplained reasons,
recommended not bothering with a Phase II. After purchase, it
turned out that Midwest had purchased a site heavily
contaminated with petroleum hydrocarbons which had migrated,
sometime in the previous 40 years, from the Thorco site next door.
Midwest's expert testified that migration of contaminated
groundwater was ongoing.
Midwest sued Thorco and Thorco's president, but (for
equally unexplained reasons) not the environment consultant that
had produced the over-optimistic Phase I ESA.
Midwest called evidence that conditions on the Thorco site were
very bad, and that there were large amounts of free product
floating on the groundwater under the Midwest site.
However, Thorco successfully argued at trial that:
As the Ministry had ordered Thorco to remediate the Midwest
site, and as the contamination was not interfering with
Midwest's use of its property, Midwest had suffered no
recoverable loss, and
Midwest could not prove that that the level of
contamination had worsened since 2007, when Midwest bought its
The court dismissed Midwest's lawsuit, with costs to Thorco.
Midwest appealed, seeking punitive damages and an order requiring
Thorco to pay $1.3 million for remediation of the Midwest site
and a protective barrier.
The case is important because of the widespread (but, I think,
mistaken) belief among some real estate solicitors and agents that
a buyer can (knowingly or negligently) buy previously
contaminated land and then sue the source of the contamination for
the cost of cleaning up that pre-existing contamination.
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