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
Jacob R.W. Damstra
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
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
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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