On May 5, 2016, the Supreme Court of British Columbia released
its decision in Domovitch v. Willows, 2016 BCSC 1068
(CanLII) in which the court allocated liability amongst a number of
"responsible persons" under the Contaminated Sites
provisions of the B.C. Environmental Management Act,
S.B.C. 2003, c. 53 (the "EMA").
Despite the reasons for judgment being pronounced orally, the
decision in Domovitch contains a rare, succinct and clear
treatment of a number of provisions in the EMA, including
the "innocent purchaser" exemption from liability and the
allocation of liability amongst responsible persons.
Innocent purchaser exemption
To be entitled to the "innocent purchaser" exemption
under the EMA, a party must establish that:
at the time of purchase:
a. the property was contaminated;
b. the purchaser had no reason to
know or suspect that the property was contaminated; and
c. the purchase undertook all
appropriate inquiries into the previous ownership and use of the
property and also undertook other investigations consistent with
good customary practice at that time in an effort to minimize
2. the purchaser did not transfer
title to any party without disclosing known contamination to the
3. the purchaser did not by any act
or omission cause or contribute to the contamination.
With respect to satisfying the requirements in 1(c) above
respecting appropriate inquiries, the Contaminated Site
Regulations require the court to consider:
any personal knowledge or experience of the purchaser
respecting contamination at the time of acquisition;
the relationship between the purchase price and the value of
the property uncontaminated;
commonly known or reasonably ascertainable information about
the property at the time of purchase; and
any obvious presence or indicators of contamination or the
feasibility of detecting such contamination by appropriate
inspection at the time of purchase.
Given the multiplicity of the requirements to establish
entitlement to the exemption, such exemptions are rarely
established and have generally been upheld in the context of
residential purchasers of properties contaminated by heating oil
from underground tanks. The only decision we are aware of that
addresses the exemption in an industrial context is in Workshop
Holdings, 2005 BCSC 631, which provides light guidance on the
application of the exemption in an industrial context.
In Domovitch, the plaintiff successfully relied on the
"innocent purchaser" exemption to avoid sharing the
liability for remediation costs. The critical facts held to entitle
the plaintiff to rely on the exemption were that, at the time of
the purchase, the plaintiff knew that there was an underground
storage tank but had received confirmation from the local fire
department that the tank had been decommissioned five years earlier
and that the tank had been rendered inert, and amended the purchase
agreement to include a warranty to that effect. Somewhat
surprisingly, the court held that this was sufficient to allow the
purchaser to establish that he had "no reason to suspect"
the property was a contaminated site. In doing so, the court relied
on a previous decision in Aldred v. Colbeck, 2010 BCSC 57
(CanLII) to similar effect.
Allocation of Liability
In Domovitch, as in most contaminated site decisions to
date, the court embarked on a rather simple crude allocation of
liability in which the court allocated liability amongst the
"responsible persons" based on the relative number of
years that each of them owned the property during the time that the
tanks were used for storing heating. In this regard, years or
ownership were used as a crude proxy for each parties contribution
to the contamination. This allocation was not adjusted for any
consideration of the fact that the tank likely discharged more
contamination during its later years of operation than during the
early years before corrosion had compromised the integrity of the
tanks. The simple basis used to allocate amongst responsible
persons may simply have been a function of the limited damages at
stake ($39,000). One day, the court will likely be asked to
consider and embark upon a more nuanced approach to allocation
taking into consideration all of the various allocation factors
articulated in the Contaminated Sites Regulation.
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