Canada: Section 99(2) Of Ontario Environmental Protection Act Is A Powerful Remedial Tool To Seek Compensation For Historical Spills: Huang v. Fraser Hillary's Limited, 2017 ONSC 1500

Last Updated: June 14 2017
Article by Jacob R.W. Damstra

The Ontario Superior Court of Justice recently considered and applied s. 99(2) of Ontario's Environmental Protection Act, R.S.O. 1990, c. E.19 ("EPA") to find liability and award damages for historical contamination caused by the spill and migration of solvents used in dry-cleaning from 1960-1974. Following the recent leading decision on s. 99 in Midwest Properties Ltd. v. Thordarson,1 Justice Roger's decision in Huang v. Fraser Hillary's Limited2 provides clarity to the interpretation and application of this section which provides a civil cause of action between private parties, irrespective of fault or negligence, for the spill of a pollutant.

Specifically, and significantly, in Huang, Roger J. held that the right to compensation provided for in s. 99(2) of the EPA applies to spills that occurred prior to the "Spills Bill" amendment to the EPA (which contains the statutory right of compensation) coming into force in 1985. Although Huang dismissed the plaintiff's claims in negligence, trespass, and Rylands v. Fletcher,3 the decision signals that the statutory right to compensation contained in s. 99(2) of the EPA will continue to be interpreted broadly and provide a powerful tool for plaintiffs seeking compensation for contaminated sites.

FACTS

Eddy Huang purchased two adjacent properties in Ottawa in 1978 intending to develop them in the future. Mr. Huang's properties neighboured Fraser Hillary's Limited (FHL), a dry cleaning business that had been in operation since 1960. On approaching his bank to obtain a mortgage to develop the properties, the mortgage specialist required Mr. Huang to obtain a Phase I Environmental Assessment on his properties. The Phase I ESA revealed likely presence of contamination by tetrachloroethylene ("PCE" or "PERC") and trichloroethylene ("TCE") – chemicals found primarily in dry cleaning solvents. A subsequent Phase II ESA recommended excavating and disposing of the contaminated soil or the installation of a barrier system. Due to the contamination, Mr. Huang's bank would not advance any funds for development or renew his existing mortgage.

Mr. Huang brought a claim for damages against FHL and David Hillary, the president and sole director of FHL and owner of an adjacent residential property, seeking significant damages for remedial and related expert expenses for the soil and groundwater contamination. Mr. Huang alleged five potential causes of action: (1) nuisance; (2) negligence; (3) liability under s. 99(2) of the EPA; (4) trespass; and (5) strict liability under the doctrine of Rylands v. Fletcher.

FHL did not dispute that its dry cleaning solvents contaminated Mr. Huang's properties between 1960 and 1974, but denied liability on a number of grounds relating to each of the causes of action advanced. Neither of the defendants called any evidence.

While the Huang decision provides an excellent analysis the various environmental pollution causes of action raised by Mr. Huang, the jurisprudential significance of Roger J.'s reasons is found in his analysis of the application of s. 99 of the EPA to spills that occurred prior to 1985.

SECTION 99(2) OF THE EPA

Section 99(2) of the EPA creates a civil cause of action which allows any person to seek compensation for losses or damages incurred as a result of, among other things, the spill of a pollutant, from the owner of the pollutant and the person having control of the pollutant. Both the "owner of the pollutant" and the "person having control of the pollutant" are defined in s. 91(1) as the owner or person having control "immediately before the first discharge of the pollutant". A "spill" is a discharge (meaning emission, deposit, leakage, addition, or otherwise) (a) into the natural environment, (b) from or out of a structure, vehicle or other container, (c) that is abnormal in quality or quantity in light of all the circumstances of the discharge: ss. 1(1) and 91(1).

Justice Roger found that FHL's dumping of PCE and TCE into the soil and groundwater from 1960 to 1974 constituted a spill according to the definitions in Part X of the EPA and therefore could attract liability under s. 99(2). At the time the spills were happening, however, there was no statutory right to compensation for private individuals as Part X of the EPA, which included s. 99(2), did not come into force in Ontario until 1985.

FHL argued, therefore, that it could not be held liable for spills pre-dating the coming into force of the section as legislation is presumed not to have retrospective effect. Justice Roger rejected this argument and made three important determinations with respect to the application of s. 99(2) to spills occurring prior to 1985:

  1. Applying s. 99(2) to the circumstances of this case did not constitute a retrospective application. Rather, even where the spills occurred prior to 1985, to apply the section was prospective "as it enables such a right to compensation at this time or in the future for loss or damage incurred as a direct result of such spills."4
  2. The presumption against retrospective application was inapplicable given that the provision is designed to protect the public: "The purpose of the EPA is to "provide for the protection and conservation of the natural environment" and "[t]he intent of the legislator, by enacting s. 99(2), is that innocent parties be entitled to compensation directly from the polluter."5
  3. In the alternative, if the presumption against retroactivity applied, it was rebutted by the clear intent of the legislator. Interpreting the EPA purposively, the right to compensation provided by s. 99(2) is "a present right and not a right to prospectively adjust some earlier action or earlier compensation" and the clear intent of the legislator was to not limit compensation to discharges occurring after the coming into force of Part X of the EPA.6

In the end, Justice Roger held FHL liable under s. 99(2) of the EPA as the owner and person having control of the pollutant immediately before the first discharge and awarded Mr. Huang $1,632,500 for remediation costs and $201,726.21 for expert costs.

TAKEAWAYS

Huang presents an expansive interpretation of s. 99(2), following the lead of the Court of Appeal in Midwest. Both of these cases have signalled that the section is intended to provide "any person a new and powerful tool to seek compensation from the owner of the pollutant and the persons having control of the pollutant without any requirement of intent, fault, duty of care, or foreseeability."7

That said, there are built in restrictions on the application of the section found in the definitions of "spill" and "owner" or "person having control" of the pollutant:

  • With respect to spills, the court held that the flow of pollutants from the source property onto neighbouring properties is not a "spill" as defined by the EPA because the pollutants were already in the natural environment and not discharged from or out a structure, vehicle or other container.
  • With respect to being the owner or person having control of the pollutant, the court dismissed the action against FHL's principal and neighbouring property owner David Hillary because the evidence established that Hillary, both in his capacity as sole shareholder, director and officer of FHL and in his capacity as an adjacent homeowner, was never the owner of the pollutant or the person having control of the pollutant at the time of its first discharge.

Although these determinations are largely driven by the particular facts of this case, courts will need to continue to clarify the application of and restrictions contained within s. 99(2).

Finally, a likely result of Huang will be an increase in plaintiffs seeking damages for loss or damage incurred from spills of pollutants which occurred prior to 1985. Presumably the courts will need to grapple with discoverability of such contamination, but the Court of Appeal for Ontario has started to provide guidance on the issue of discoverability of environmental contamination in the recent Crombie Property Holdings case.8

Footnotes

1 Midwest Properties Ltd. v. Thordarson, 2015 ONCA 819, 128 O.R. (3d) 81 ["Midwest"].

2 Huang v. Fraser Hillary's Limited, 2017 ONSC 1500, additional reasons at 2017 ONSC 1836 ["Huang"].

3 Justice Roger did hold the defendant liable in nuisance, as the interference with Huang's use or enjoyment of property was both substantial – because the contamination exceeded MOECC standards, was ongoing, had the potential to further contaminate adjacent properties, and rendered Huang unable to redevelop his properties unless they were remediated – and unreasonable as — in addition to the reasons outlined above — MOECC testimony established that ongoing contamination would likely prevent Huang from obtaining a risk assessment for his properties and FHL's response to the contamination was unreasonable since the company failed to conduct remediation work on the properties, despite repeated requests from the MOECC to do so.

4 Huang, at para. 84.

5 Huang, at paras. 96-97.

6 Huang, at para. 99.

7 Huang, at para. 97; Midwest, at paras. 70 and 73.

8 Crombie Property Holdings Limited v. McColl-Frontenac Inc. (Texaco Canada Limited), 2017 ONCA 16.

www.lerners.ca

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
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.