I continue to be surprised by how many people knowingly
purchase a contaminated site, and regret it afterwards. Buy in
haste, repent at leisure?
Sometimes the purchaser of a
contaminated site is merely unlucky, or suffers from a change of
rules or approach by government regulators; sometimes I see
incompetence by purchasers' consultants, and/or lawyers. But
sometimes the problem is due to the purchasers themselves.
In 6038212 Canada Inc. v. 1230367 Ontario
Ltd., 2014 ONCA 415, a Mr. Yang (an experienced businessman and
PhD chemist) bought a commercial plaza. The property was
contaminated by tetrachloroethylene (perc) from a dry cleaners'
that had been operated by a former tenant. Chlorinated solvent
contamination of soil and groundwater is common at drycleaning
sites and can be astonishingly expensive to remediate.
At the time of the purchase, the vendor had three environmental
reports. A Phase I non-intrusive environmental site assessment
("ESA") concluded that there were no apparent
environmental concerns associated with the property. Two later
reports, based on subsurface drilling, had identified groundwater
contamination exceeding applicable
Ministry of the Environment criteria, and had provided a
preliminary budget for remediation of $100,000 to $150,000. Mr.
Yang negotiated a $200,000 reduction in the purchase price, and
rejected his lawyer's written advice to get a proper
environmental assessment of the property.
A few years later, a neighbouring property owner sued, claiming
damages for groundwater contamination. Mr. Yang then sued his
vendors and his own lawyer, claiming he had had no idea that the
Plaza was contaminated when he bought it.
Yang claimed that the vendor had breached a duty to
disclose the contamination. He also claimed that his lawyer had
been negligent in failing to request environmental
information from the vendor, and in failing to ensure that an
environmental warranty was included in the agreement of purchase
The trial court and the Ontario Court of Appeal threw out both
these claims, with costs. The court concluded that Mr. Yang had
known about the contamination, and that the seller had
provided Mr. Yang with all three environmental reports before
purchase. Mr. Yang had used that knowledge to obtain the $200,000
purchase price reduction, even though he had provided only the
Phase I report to his bank.
Mr. Yang's lawyer, Zheng Anderson, had not been
 ... The agreement of purchase and sale included a condition
permitting the purchaser to satisfy itself respecting the
environmental condition of the property, and included a requirement
that the vendor provide any existing environmental reports upon
request of the purchaser. Ms. Anderson testified that Mr. Yang had
undertaken to deal with the conditions in the agreement, and that
he had ultimately waived the conditions, including the
environmental condition. Ms. Anderson had the Phase I ESA report in
her files, which she could only have received from Mr. Yang, and
she confirmed that she had faxed this document to his lender, CIBC.
Prior to the closing, Mr. Yang signed a waiver/consent,
acknowledging that Ms. Anderson had specifically recommended
undertaking the environmental assessments as stated in the
agreement of purchase and sale, that it was his decision not to do
the assessments, and that he had instructed his lawyer not
to order any new environmental reports "as [he] already
received one which has been accepted by the mortgage company".
All of this is consistent with Ms. Anderson's evidence that Mr.
Yang had undertaken to address the environmental issues in relation
to the property himself, and that he had decided that no further
investigations were necessary.
 In these circumstances, the trial judge made no error in
finding that the respondent Anderson met the appropriate standard
of care. There was no error in the trial judge's rejection of
the opinion of the appellants' expert witness [Sybil
Johnson-Abbott] that she had breached the standard of care, which
depended on a number of assumptions that were not borne out by the
evidence. We would also reject the appellants' assertion that
the waiver/consent signed by Mr. Yang required Ms. Anderson to
specifically request environmental reports from the vendor, even in
the absence of any instructions from Mr. Yang. The evidence as a
whole fully supports the conclusion that Mr. Yang was
satisfied with the extent of his knowledge about the environmental
condition of the property, and, notwithstanding the advice of his
counsel, was unwilling to conduct any further
Bottom line: Having chosen to buy the contaminated
site without a thorough investigation, Mr. Yang had no one to
blame but himself.
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