Canada: Limitation Periods In Contaminated Land Cases: Ontario Court Of Appeal Provides Some Answers But Leaves More Questions For Environmental Lawyers And Their Clients

On January 11, 2017, the Ontario Court of Appeal issued its decision in Crombie v. McColl-Frontenac Inc. We had previously commented on the decision of the motions court that granted summary judgment in the matter. The OCA reversed the motions court decision. In doing so, and as so often happens, it answered some of the questions raised by the lower court decision, opened up some new questions and left some longstanding questions unanswered.

A quick recap of the facts

The plaintiff, Crombie, was in the midst of purchasing a property. Phase I information available to Crombie from the early days of the transaction disclosed that a neighbouring property was a gas station that had been decommissioned some years before. A Record of Site Condition had been obtained for the former gas station property confirming the property had been remediated to standards applicable at the time. Crombie also had older Phase II information for the property being considered for purchase, indicating the property had some petroleum hydrocarbon contamination that complied with the site condition standards applicable at the time of the report. The standards had since changed and Crombie was advised by his consultants that a new Phase II report would be required to determine whether the proposed Crombie Property met the currently applicable standards.

Crombie commissioned a new Phase II but decided to go firm on the purchase before a new Phase II report was issued.

Crombie claimed to have found out the site exceeded the applicable standards after going firm on the deal and sued the neighbour and former owner and operator claiming both negligence and continuing negligence.

The Defendants were successful at first instance in obtaining summary judgment. The motions court found that Mr. Crombie had actual knowledge of the contamination more than two years before the claim was issued. The motions court also granted summary judgment on the continuing tort claim thus bringing all of Crombie's claims to an end.

The Court of Appeal decision

The Court of Appeal reversed the motions court decision on the grounds that two palpable errors of law had been made by the motions court. First, the court concluded that "it was a palpable and overriding error for the motion judge to equate knowledge of potential contamination with knowledge of actual contamination". Secondly, the court found that it was also a "palpable and overriding error for the motion judge to fail to take into consideration the multi-party transaction and Crombie's waiver of conditions, in her assessment of what Crombie knew or ought to have known about hydrocarbon contamination at the property two years before it commenced its action."

Commentary

One key area of disagreement between the motions court and the Court of Appeal was on whether or not Crombie had actual knowledge of the Phase II results before April of 2012. The motions court found that he had and made what amounts to a finding of credibility against Crombie on this point. The Court of Appeal disagreed.

It is not productive to argue over which court made the correct finding of fact on the evidence before it. Courts will of course differ on such facts but the very disagreement does highlight an area of frailty in a summary judgment procedure that tries to evaluate questions of credibility in the context of affidavit evidence on a motion. More important, however, are the implications of how the Court of Appeal chose to deal with the underlying legal principles including the ones it elected to make no comment upon.

Did Crombie Have a Cause of Action at all?

A longstanding principle of law, referred to by the Latin maxim "Volenti non fit injuria" is that if someone willingly places themselves in a position where harm might result, knowing that some degree of harm might result, they are not able to bring a claim against the other party in tort. Neither the motions court nor the Court of Appeal decision contains any discussion of this principle and its implications for Crombie's claim. If, as found by the motions court, Crombie knew or should have known of the contamination before going firm, then was he not voluntarily assuming the risk of such contamination in deciding to buy the property anyway? Conversely, if one accepts the Court of Appeal's finding that Crombie decided to go firm after ordering a Phase II report but before becoming aware of the results, did Crombie, in doing so, not therefore voluntarily assume the risk that the results of the Phase II might be unfavourable? Under either scenario, has not Crombie voluntarily assumed the risk the property would be contaminated? If so, then why does the principle of Volenti non fit injuria not act as an absolute bar to Crombie's right to assert a claim in the first place?

Since the issue was not touched upon by either court, one assumes the principle might still be open to argument at trial.

Is there a different standard of transactional due diligence for multi-property purchases?

Much emphasis was placed by the Court of Appeal on the failure of the lower court to take into account the "context" of the acquisition by Crombie in establishing what was reasonable for him to have known under the circumstances. In particular, the Court of Appeal found it was significant that the property in question was one of 22 being acquired and criticised the lower court for not taking this into consideration:

"The problem with this reasoning is that it ignores completely the circumstances of the multi-property transaction Crombie was involved in, the due diligence process and the waiver of conditions. Nowhere in her reasons did the motion judge refer to the fact that Crombie was involved in purchasing 22 properties. This was part of the context in which Crombie's knowledge ought to have been assessed, and the failure to mention such circumstances was an important omission. Further, although the motion judge referred to March 9, 2012...as the date when Crombie waived conditions and proceeded with the purchase of the property (later she referred to this as a waiver of the "environmental condition"), she did not factor Crombie's waiver of conditions into her assessment of its conduct."

The implications of this approach could prove to be rather far-reaching in the context of an analysis of what constitutes due diligence in the context of purchase of land and possible other fields as well. Is the court suggesting that a purchaser of multiple properties is to be held to a lower standard of care in conducting due diligence on properties being acquired than a purchaser of a single property? If this is part of the "context" to be taken into account in assessing constructive knowledge (and therefore due diligence), where does it end? Would such reasoning serve to suggest that a large corporation with hundreds of employees is to be held to a lower standard of care in exercising its health and safety due diligence obligations than an employer of, say, only six people? Is this an invitation to start down a slope that leads to willful blindness on the part of purchasers of real estate portfolios? Put bluntly, should how busy someone chooses to make themselves be relevant to the due diligence they are expected to exercise?

Has the standard for establishing constructive knowledge been raised?

In parsing through the Court of Appeal's reasoning on the issue of constructive knowledge, it might be useful to revisit an older decision of the same court involving the purchase of land – a 1996 decision often referred to as 'Tony's Broadloom". In that case, the purchaser elected not to make various environmental inquiries before closing but brought an action against the vendor upon discovering contamination post-closing. In Tony's Broadloom, the Ontario Court of Appeal made the following finding:

"A reasonable inspection of the property, reasonable inquiries of the respondents, and reasonable inquiries of the local and provincial authorities would have put the appellants on notice of the existence of the contaminant. Indeed, had the appellants pursued the taking of soil samples with reasonable diligence after the respondents had permitted them to take those samples, they would have learned of the existence of the contaminant before closing. Instead, the appellants chose not to disclose their intended use of the property and to take no steps to satisfy themselves that the property could be used for that purpose."

While there are a number of special rules that apply in the context of a dispute between a vendor and purchaser of land that do not apply to a dispute between a purchaser and a neighbour, one would expect the principles of constructive knowledge in the context of a real estate acquisition to be consistent regardless of whether the buying plaintiff is suing the vendor or a neighbour.

Yet Tony's Broadloom appears to suggest a much more liberal test for imputing knowledge than that applied in Crombie. It is remains to be seen whether Crombie is the beginning of a trend requiring a much higher standard for finding constructive knowledge in the context of the purchase of contaminated lands.

Who has the onus of proof of a continuing tort on a summary judgment motion?

While the Court of Appeal chose not to comment on the question of the onus of proof in continuing tort cases, it did refer, without any comment, to the decision in Sanzone v. Schechter from earlier in 2016 as having been cited to it by the Plaintiff. That decision is consistent with the view that, absent any evidence by either party on a point pleaded in the claim, summary judgment should not be granted against the plaintiff on that point. Such a result is contrary to the finding made by the motions judge but, as explained in our earlier commentary on the motions decision, appears to be consistent with first principles and the principle that a party bringing forward a properly made pleading is entitled to a trial unless challenged by appropriate evidence.

Conclusion

The Court of Appeal's decision in McColl v. Frontenac is the latest word on the question of the discoverability of an environmental claim in the context of the purchase of land. Trite though it may be to say so, it is unlikely to be the last.

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 Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.