The Alberta Court of Queen's Bench has recently had
opportunity to consider an infrequently invoked section of the
Environmental Protection and Enhancement Act
("EPEA"), which provides an exception to the
ultimate 10 year limitation period contained in the Limitations
In 1998 the Plaintiff Lakeview Village Professional Centre
Corporation ("Lakeview") purchased a commercial building
from Commonwealth Business Management Ltd.
("Commonwealth"). Lakeview was aware that from 1969 to
the mid-1980s the property had been utilized as a gas station by
Suncor Energy Inc. ("Suncor") and requested an
environmental assessment. Commonwealth commissioned a report that
found no evidence of significant contamination and determined that
no further investigation was required. In reliance on the
environmental assessment, Lakeview proceeded with the purchase.
In 2013 Lakeview received an offer to purchase the property and
commissioned a new environmental assessment. The second assessment
found contamination at a level that required substantial
remediation of the lands including the removal of piping, concrete
and soil. Lakeview spent $400,000 on remediation, with further
Lakeview sought to recoup its remediation costs and commenced an
action against Commonwealth and Suncor. In order to overcome the 10
year ultimate limitation period contained in the Limitations
Act (which would otherwise have operated to bar the action),
Lakeview applied to the court for an order pursuant to section 218
Section 218 permits a judge to extend a limitation period where
the basis for the proceeding is that the release of a substance
into the environment resulted in an adverse effect. Adverse effect
is defined by EPEA as impairment of or damage to the
environment, human health or safety or property. In exercising its
discretion, section 218 requires a judge to consider a number of
when the adverse effect occurred;
whether the adverse effect ought to have been discovered by the
claimant through the exercise of due diligence;
whether the defendant will be prejudiced from maintaining a
defence to the claim on the merits; and
any other relevant criteria.
Noting the paucity of case law considering section 218, the
court adopted the following two-step approach to determine whether
the limitation ought to be extended in the circumstances:
Is there sufficient evidence on the section 218 factors to
grant an extension of the limitation period?
If there is not enough evidence to make that determination, or
if there is sufficient evidence but an issue for trial could be
determined prematurely, has the claimant shown a good arguable case
for an extension? If so, the claimant is entitled to an extension
of the limitation period subject to a final determination of the
issue at trial.
Applying the two-step approach the court found that the time
frame involved was not so significant that it would be unfair to
allow the action to proceed against either Commonwealth or Suncor.
With respect to due diligence, the court rejected Suncor's
assertion that Lakeview should have commissioned its own
independent report when it purchased the property in 1998. The
court ruled that due diligence requires the claimant to take
reasonable steps in the circumstances and determined on a
preliminary basis that Lakeview had met this standard by requesting
the preparation of an environmental assessment. On balance, the
court concluded that the limitation period should be extended,
subject to a final determination of the issue at trial.
Because the two-step approach allows a court to conclude on a
preliminary basis (subject to a final determination of the issue at
trial) that the matter should proceed, there is risk that a
Plaintiff could successfully obtain an extension pursuant to
section 218 only to have the court rule at trial that the 10 year
ultimate limitation period ought not be extended. Obviously, this
level of uncertainty is undesirable for a party contemplating
litigation. It remains to be seen what constitutes "sufficient
evidence" to warrant an outright extension of the limitation
period as contemplated by the court.
Nevertheless, the decision does provide some important guidance
with respect to due diligence. Purchasers can take some solace from
this decision when they rely on environmental assessments
commissioned by vendors that are subsequently determined to have
Significantly, the court also rejected Commonwealth's
assertion that 218 was limited to parties that cause or contribute
to the contamination of lands. It is now clear that section 218 can
operate to extend the limitation period even against entities
(e.g., subsequent purchasers) not responsible for the creation of
an adverse effect.
Legal issues surrounding contaminated sites affects landowners, developers, realtors, as well as consultants and contractors working on the front lines. This webinar will provide a practical review of how the legislation is actually being used, recent court decisions, challenges with brownfield developments, and future changes.
Who Should Attend: This webinar will be of interest to developers, contractors, environmental and real estate consultants, realtors, owners or lessors of land which may be impacted, and municipalities.
Ontario's Ministry of the Environment and Climate Change continues to roll out its Climate Change Action Plan with its proposed GHG guide for projects that are subject to the province's Environmental Assessment Act.
The Imperial Oil refinery pled guilty to one offence for discharging a contaminant, coker stabilizer, thermocracked gas, into the natural environment causing an adverse effect and was fined $650,000...
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).