Canada: Personal Liability To Pay Damages, Including Punitive, To A Neighbour For Environmental Contamination: A Warning From Midwest

The Court of Appeal's recent decision in Midwest Properties Ltd. v. Thordarson1 is now the leading authority in Ontario on a number of significant issues in environmental litigation. In this case comment we focus on the Court of Appeal's finding that the principal of the defendant corporation was personally liable for general and punitive damages arising from the contamination of the neighbouring land. 

You can read our analysis of Midwest with respect to liability under section 99(2) of the Environmental Protection Act2  here  and the scope of the damages award here.

The Facts

Midwest acquired a property in Toronto in 2007. Before purchasing the land, it obtained a Phase I environmental report based largely on a visual inspection of the property. The Phase I report did not recommend that Midwest should conduct more intrusive Phase II investigation of its property.

After purchasing the land, Midwest became interested in acquiring some, or all, of an adjoining property owned by Thorco Contracting Limited ("Thorco"). Thorco was in the business of servicing petroleum handling equipment and was owned and controlled by John Thordarson.  As part of its operations, Thorco had been storing waste oils on its property since the early 1970s.

In response to its expression of interest, Mr. Thordarson provided Midwest with environmental reports reviewing the condition of the Thorco property and allowed Midwest permission to access the property for further study. Midwest retained an environmental consultant who soon reported extensive petroleum hydrocarbon ("PHC") contamination on both the Thorco and Midwest properties.

As it turned out, although it had obtained MOE approval to store waste in the early 1980s, Thorco had been storing waste PHCs under improper conditions and far in excess of approved amounts. Over the years, the MOE had issued a number of orders requiring Thorco to remove the excess waste but Thorco had not fully complied with the orders. At trial, Mr. Thordarson's evidence was that he had not fully complied with the orders because he had not found a sufficiently economical way of disposing of the waste. Instead, the defendants stored the waste improperly and it escaped; migrating onto the Midwest land.

At trial, the Court concluded that the defendants were not liable because Midwest had not proven that it had suffered damages. In short, the trial judge's conclusion was that Midwest had acquired a contaminated property and it had not proven that it had suffered damages as a result of the contamination worsening after the purchase.  

The Court of Appeal reversed the trial judge's decision on both liability and damages. The Court held that Midwest was entitled to damages under section 99(2) of the EPA Midwest was awarded the estimated cost to remediate its property, over $1.3 million, against the defendants jointly and severally. In addition, the Court of Appeal found that the defendants' conduct warranted punitive damages and awarded Midwest punitive damages in the amounts of $50,000 against Thorco and $50,000 against Mr. Thordarson.

Mr. Thordarson's Personal Liability

The Court considered Mr. Thordarson's liability under section 99(2) of the EPA. That section establishes a right to compensation from "the owner of the pollutant and the person having control of the pollutant". The Act defines a "person having control of a pollutant" as "the person [...] having charge, management or control of a pollutant immediately before the first discharge of the pollutant". The Court made it clear that a person with control of a pollutant cannot rely on the fact that the substance may be owned by someone else in order to shield themselves from liability.

The assessment of whether an individual had sufficient "control of pollutant" so as to be personally liable depends on the factual circumstances of each case. In Midwest, however, Mr. Thordarson was in effective control of the day-to-day operations of the business. In particular, he was responsible for ensuring compliance with the MOE requirements and for storing the PHC on Thorco's property. Accordingly, the Court found that Mr. Thordarson had control of the PHC immediately before its discharge and was liable for the damages caused by its escape.

Similarly, although it did not quantify damages in nuisance and negligence because it would be subsumed in the compensatory damages awarded under the EPA, the Court held that Mr. Thordarson was liable for the contamination based on negligence and nuisance..  While it is trite law that a corporation is legally distinct from its shareholders, officers, directors or employees, there are some exceptions to the general proposition that individuals are protected from personal liability for wrongs caused by corporate acts or acts done in the interest of the corporation. The Court noted that in ADGA Systems International Ltd. v. Valcom3 it had held that employees, officers and directors will be found "personally liable for tortious conduct causing physical injury, property damage or a nuisance even when their actions are pursuant to the duties to the corporation".

In Midwest, the Court held that Mr. Thordarson effectively controlled the operations of Thorco and was "intimately and equally" involved in conduct which was both a nuisance and negligent.  Given his involvement in creating and maintaining the contamination, Mr. Thordarson was personally responsible for its consequences.

Finally, the Court found Mr. Thordarson was also personally liable for a $50,000.00 award of punitive damages. Punitive damages are very rarely awarded in civil actions in Canada. In this case, the Court found that punitive damages were warranted given the flagrant breach of the various MOE orders and the Court's conclusion that the defendants demonstrated utter indifference to the environmental condition of the Thorco property and surrounding areas. The punitive damages were awarded with the intent of punishing, deterring and denouncing the conduct of both Mr. Thordarson and Thorco.

Take Away Points

The Midwest decision is a warning for corporate officers, directors, and employees who may be in control of substances that have the potential to cause adverse effects. Prudent individuals will consider the potential consequences of a discharge and take all reasonable steps to prevent a spill. When faced with the discharge of a potential pollutant an individual ought to consider their potential personal liability, even when acting on behalf of a corporation.

Among other things, Midwest emphasizes that an individual does not always have to act beyond the scope of their employment in order to be exposed to personal liability; the question will be whether their individual conduct resulted in physical injuries, property damage or a nuisance. In Midwest, the Court of Appeal clearly embraced the "polluter pays" principle that underlies the EPA and did not accept that Mr. Thordarson could avoid personal liability for contamination by relying on the corporate veil.

Punitive damages like those awarded in Midwest are rare, but not unwarranted in the circumstances of the case. In awarding punitive damages, the Court emphasized the fact that the contamination had persisted for a long period of time and was "clearly driven by profit". The award of punitive damages effectively communicates that the Court is unwilling to condone behaviour, either by companies or individuals, that exhibit a blatant disregard for environmental obligations.


1 2015 ONCA 819 [Midwest].

2 R.S.O. 1990, c. E. 19 [EPA]

3 1999 OJ No 27

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions