Canada: No Fault Orders And The Potential Liability Of Realtors

The potential liability of a real estate brokerage for the cleanup of contamination at one of its listed properties has demonstrated, once again, the challenges faced by the Ontario Ministry of the Environment and Climate Change ("MOECC") in exercising judgement in the issuance of "no fault" compliance orders. It also begs the question of whether the Ontario Environmental Review Tribunal ("ERT") ought to revisit the tempering of no fault orders with a consideration of fairness.

An order issued to a real estate brokerage and its two directors in March 2015 has recently been revoked by the Director of the MOECC, and the proceedings dismissed by the ERT, on the basis that the Order was fully complied with by two other parties.1 A related order to pay costs and expenses issued by the Regional Municipality of Niagara ("Niagara") in September 2015 has also recently been revoked as against the brokerage and its directors.2 The twin revocations ended a year-long saga for the real estate brokerage, in which it was exposed to joint and several liability for both the characterization of a contaminated property in Fort Erie, Ontario and payment of over $3.6 million in off-site remediation costs incurred by Niagara.

The Facts

On March 9, 2015, the Fire Chief of the Town of Fort Erie was driving along Helena Street when he observed discoloured surface water in the roadside ditch, adjacent to a property on which Carvern Petrochemical Co. Ltd. ("Carvern") had operated a fuel additives manufacturing business until the previous October.3 The roadside ditch, known as the Kraft Drain, discharged to Lake Erie approximately three kilometres to the south.

The property has been owned since 1999 by 1350095 Ontario Limited ("1350095"). Edwin Robertson, the sole shareholder, director and officer of 1350095, is a resident of the U.K. Robertson inherited 1350095, and with it the property, after his father passed away in 2012.

Ten days after the Fire Chief's discovery, the MOECC issued a Director's Order under sections 17, 18 and 196 of the Environmental Protection Act 4(EPA) to 1350095, Robertson, Carvern, three Carvern officers and directors (including McQuiston, after whom the case is named), a chartered accountant who held a power of attorney from 1350095 for the purpose of selling the property, the real estate brokerage and its two officers and directors. The Order included requirements to identify on-site sources of contaminants which may discharge off-site; to retain a professional engineer or professional geoscientist to develop a plan to delineate contamination at and near the site, assess environmental impacts and recommend actions to restore the natural environment; and to implement the plan once accepted by the Director.

All named parties appealed the Order to the ERT. Several parties sought a stay of the Order and subsequently agreed with the Director to the terms of a partial stay and amendments to the Order that narrowed the scope of the site investigations and plan. 1350095 and Robinson then proceeded to comply with the Amended Order. In February 2016, the MOECC advised the ERT that it was satisfied that the Amended Order had been fully complied with. The ERT then dismissed all of the proceedings.

Immediately following the Fire Chief's discovery, Niagara proceeded with a cleanup of the Kraft Drain on the basis of section 100 of the EPA, which permits a municipality, where a pollutant is spilled, to do everything practicable to prevent, eliminate and ameliorate any adverse effects and to restore the natural environment. Niagara spent in excess of $3.6 million on the cleanup. On September 14, 2015, Niagara issued an order to pay costs and expenses under section 100.1 of the EPA to the same parties named in the original Director's Order, including the brokerage and its two directors. Once again, all named parties appealed the Order to the ERT.

In March 2016, after discussions with counsel for the real estate brokerage and the accountant, Niagara advised the ERT that there was no longer any basis for an order under section 100.1 to the brokerage, its two directors and the accountant, and gave notice that it intended to revoke the order to pay costs and expenses as against those parties. The ERT then dismissed the proceedings commenced by the brokerage and the accountant.

The Realtor's Role

The real estate brokerage had been retained to sell the property in August 2014. The property was listed on MLS until the listing expired at the end of February 2015. As is standard practice in the real estate brokerage industry, the brokerage held keys for the property, one of which was secured in a lock box on the property gate. Over the course of the six month listing, the brokerage became the de facto local contact for the property, as Robinson lived in the UK and the accountant's office was closer to Toronto. In November 2014, the brokerage was asked by the MOECC to provide access to the property for the purpose of investigating the potential presence of hazardous chemicals. Subsequently, the brokerage facilitated arrangements for the removal of chemicals from the property, although the accountant entered into the contracts with the waste contractor on behalf of 1350095. In order to move the chemicals off the property under waste manifest, the waste contractor needed a generator registered in the MOECC's Hazardous Waste Information Network (HWIN) registration system. Unbeknownst to the real estate brokerage, the contractor registered it as the generator, and signed the waste manifest on its behalf.

The Director's basis for naming the real estate brokerage in the Order was that it, "exercised care and control of the site", "is named in waste manifests as the generator of waste generated at the site" and "is a key-holder for the site." The basis for naming the two directors was that they were officers and directors of the real estate brokerage.

Management or Control Under Section 18 of the EPA

The Director's only legal basis for an order to the brokerage was that it had management or control of the undertaking or property. Section 18 of the EPA permits the Director to issue an order to "any person who owns or owned or who has had management or control of an undertaking or property."

The scope of "management or control" for the purpose of MOECC preventive orders has been the subject of a number of ERT decisions, including P&L Tire Recycling5, Montague6 and Appletex.7 The issue has most recently been dealt with by the ERT in Rocha8, in the context of adviser and lender liability. In Rocha, the ERT held that a combination of the appellant's decision-making role and his financial interest in the company was sufficient to support a conclusion that he was in management or control.

The Director's basis for concluding that the real estate brokerage was in management or control of an undertaking or property was threefold:

  • First, the Director claimed that it "exercised care and control of the site." The brokerage's rights with respect to the property were limited to those enunciated in a listing agreement in the standard OREA form. It was entitled to "show and permit prospective buyers to fully inspect the Property."
  • Second, the Director relied on the fact that the brokerage was named as the generator on the waste manifests. While this might be a compelling fact for the uninformed, the MOECC would have known that it was not, in fact, the generator of waste chemicals that had been sitting at the site for years, and that the most likely explanation for the brokerage appearing as the generator in the Hazardous Waste Information Network and on the manifests was that the waste contractor needed a generator to make the MOECC's own waste manifest system work. In any event, the MOECC could easily have asked before issuing the Director's Order.
  • Finally, the Director relied on the fact that the real estate brokerage held a key for the site. If the test for management or control is as minimal as possession of a key for a property, then every real estate brokerage in Ontario may need to reconsider its standard listing practices.

The real estate brokerage had nothing to do with the property before August 2014. It bore no responsibility for any of the site contamination. It did nothing to exacerbate the contamination during the listing period and, in fact, provided assistance to the MOECC and the site owner to have potential sources of contamination removed from the site. Given all of this, and the ERT case law on the meaning of "management or control" in sections 18 and 157.1 of the EPA, it is difficult to see how the MOECC could have ever concluded that the brokerage was potentially responsible and could be named in a section 18 order.

Control Under Section 100.1 of the EPA

To recover its costs and expenses to cleanup the Kraft Drain, Niagara had to utilize section 100.1 of the EPA, which permits the issuance of an order to "the owner of the pollutant" and "the person having control of the pollutant." Both of these terms are defined by the EPA to mean the owner or person having charge, management or control of the pollutant immediately before the first discharge.

Assuming that Niagara can ultimately satisfy the ERT there was in fact a "spill" on, prior to and/or after March 9, 2015, it is difficult to see how a real estate brokerage could ever be found to have had control of that spilled pollutant. The fact that the brokerage facilitated the removal of hazardous chemicals from the property, which if anything prevented a spill, would suggest the complete opposite.

Implications for Realtors

This case has obvious implications for the real estate brokerage industry. Realtors should exercise caution before taking a listing for a known contaminated property. The listing agreement for a contaminated property should include some form of indemnity for the realtor in the event of an MOECC cleanup order. In order to stay off the MOECC's radar, the realtor for a contaminated site may want to deflect any requests for access or other cooperation to the property owner.

Fairness and the Exercise of MOECC Discretion

This case is one in a series in which the MOECC has extended its regulatory reach under the guise of "management or control". Rather than letting its exercise of discretion be guided by its own Compliance Policy, or seemingly applying any fairness or reasonableness test at all, the MOECC's practice seems to be to name anyone and everyone it knows of who might have anything to do with a contaminated property, and then let the ERT sort it all out. The problem is that the ERT since Kawartha Lakes9 in 2010 has refused to apply any fairness factors, on the theory that the MOECC is exercising discretion in accordance with the Compliance Policy. As the ERT stated in Rocha in explaining its limited two-stage analytical approach, "the Tribunal first considers jurisdiction to make the orders and then whether the requirements of the orders are necessary or advisable."10

In addition to the implications for realtors discussed above, there are a number of general implications that flow from this developing practice:

  • Innocent orderees are forced to defend themselves before the ERT, incurring legal costs that they have extremely limited ability to recover, and for which they may not be insured.
  • As the primary defence will inevitably be the MOECC's jurisdiction to issue the order in the first place, (part one of the ERT's two-part test), it is likely that an increasing number of orderees will try to get out of the ERT proceeding early by bringing a motion for what is, in effect, summary judgement. This trend is already evident before the ERT, and has the potential to add further time delays to a process that is already very lengthy.
  • We may start to see applications for costs against the MOECC pursuant to the power afforded to all tribunals under section 17.1 of the Statutory Powers Procedure Act11, where the conduct of a party has been unreasonable, frivolous or vexatious, or a party has acted in bad faith.

The MOECC's inability to exercise the discretion that the ERT's current approach assumes also suggests that the ERT should consider revisiting application of the fairness factors that it applied between 1995 and 2010.


1 McQuiston v. Ontario (MOECC) (ERT Case Nos. 15-09 through 15-024

2 Nirula v. Commissioner of Public Works (R.M. Niagara) (ERT Case Nos. 15-096 to 15-102).

3 The property may also have been used for the manufacture of paint-based products in the 1960s and 1970s.

4 R.S.O. 1990, Chpt. E.19, as amended.

5 P&L Tire Recycling Inc. v. Director, MOE, [1991] OEAB No 21.

6 Montague v. Ontario (MOE), [2005] O.J. No. 868.

7 724597 Ontario Inc. (c.o.b. Appletex) v. Ontario (MOE), [1994] O.E.A.B. No. 17 affirmed in Re: 724597 Ontario Inc., 1995 CarswellOnt 977 (Ont. Div. Ct.).

8 Rocha v. Ontario (MOECC) (ERT Case No. 14-043).

9 Kawartha Lakes (City) v. Ontario (MOE), [2010] O.E.R.T.D. No. 32, (ERT); Kawartha Lakes (City) v. Ontario (MOE), [2012] ONSC 2709 (Div Ct.); and Kawartha Lakes (City) v. Ontario (MOE), [2013] O.J. No. 2096 (C.A.).

10 Supra, note 8 at 108.

11 R.S.O. 1990, Chpt. S.22.

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.

In association with
Related Topics
Related Articles
Related Video
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