Copyright 2008, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Environmental Law, November 2008
On November 20, 2008, the Supreme Court of Canada released a much-anticipated decision in a class action suit brought by 2,000 "neighbours" of St. Lawrence Cement Inc. (SLC) for nuisances caused by dust, odours and noise emanating from its Beauport, Quebec plant during the 1990s. In its judgment, the Court set aside the decision of the Québec Court of Appeal and upheld the judgment of the trial court, finding that plaintiffs were entitled to invoke the nuisance provisions of the Civil Code of Québec (CCQ) as the basis of a class action suit, and furthermore, that these provisions create no-fault liability for those who expose their neighbours to disturbances that exceed the limits of normal inconveniences. The decision is important because it means that an action in nuisance can be successful even when the facility is operating under a special law, in compliance with applicable environmental statutes, and has exercised due diligence in dealing with environmental incidents.
SLC began operating its plant in the suburb of Québec City in 1955, under a special act of the National Assembly of Québec. That act included a provision requiring SLC, among other things, to " ... use the best known means to eliminate dust and smoke." Since 1993, pursuant to s. 12 of the Regulation respecting the application of the Environment Quality Act (Quebec), SLC was also required to ensure that "[a]ny equipment used or installed for the purpose of reducing the emission ... of contaminants into the environment shall at all times be in good working order and shall function optimally during production hours." Evidence brought at trial indicated that, over the years, SLC spent millions of dollars on equipment upgrades to meet regulatory requirements on opacity and particulates in air emissions from its cement kilns and clinker coolers at the plant, which closed down in 1997. It also showed that the equipment, which was highly effective, was also sensitive and required continuous maintenance. For example, one perforated dust collection bag could allow a large cloud of smoke to be released into the neighbourhood. Incidents of this kind occurred on a regular basis. Neighbours had to wash their houses and cars frequently. On occasion, the company paid for cleaning operations.
Under Article 1457 of the CCQ (fault-based civil liability), compliance with a statutory duty (in this case, s. 12) is an element to be considered by a court in determining whether someone has committed a fault. The Superior Court of Quebec agreed with SLC that it had used the best known means to control dust and smoke emissions and that it had been diligent in ensuring that equipment was repaired when malfunctions occurred. The trial court judge found no fault in SLC's actions. The Court of Appeal disagreed. It held that s. 12 does not establish an obligation of means (due diligence), but rather something more akin to an obligation of result (absolute liability). The Court of Appeal stated that on that basis, SLC should have shut down its plant immediately when air equipment malfunctioned, rather than continuing to operate in violation of s. 12. That amounted to a fault. The Court of Appeal also found fault with SLC's apparent lack of candour regarding the number of incidents of equipment malfunction. The Supreme Court reversed the Court of Appeal's judgment on these points, holding that the trial court's appreciation of the facts had been reasonable and its interpretation of s. 12 correct.
The Supreme Court also sided with the trial court on the question of SLC's liability toward its neighbours under the nuisance provisions of the CCQ. Article 976 of the CCQ provides that "[n]eighbours shall suffer the normal neighbourhood annoyances that are not beyond the limit of tolerance they owe each other, according to the nature or location of their land or local custom." The Supreme Court held that once the limits of neighbourly tolerance have been exceeded, compensation is owed to neighbours who have been unduly inconvenienced. In this case, the plaintiffs had asked for C$30-million. The Supreme Court restored the trial judge's award of C$15-million, which will result in individual awards ranging from C$1,000 to C$15,000. The Court of Appeal had held that Article 976 creates reciprocal obligations for neighbouring properties, not their owners; therefore the only remedy available under Article 976 was an action to have the offending structure removed or the offending activity cease (not damages). In addition, the Court of Appeal had also held that relief under Article 976 was only available to owners (not tenants) of immediately adjacent properties. Finally, because Article 976 created a "real action" – one property against another – and not a "personal action", the Court of Appeal concluded that it could not be used as the basis for a class action suit.
Thus, the Supreme Court of Canada has reversed the Quebec Court of Appeal on a fundamental question: can neighbourhood residents file and win a class action suit strictly on the basis of evidence that they have suffered inconveniences and that these inconveniences exceed tolerable limits? The Court of Appeal refused to interpret Article 976 as a vehicle for advancing environmental protection objectives, something it felt was best left to the government. The Supreme Court, on the other hand, underscored the fact that when the new Civil Code was adopted in 1994, Quebec's Minister of Justice acknowledged that Article 976 "[...] is based on judge-made law. Initially developing that case law on the basis of abuse of rights, the courts had gradually created specific legal rules for neighbourhood disturbances." Having pointed out that judges are behind the creation of this rule, the Supreme Court added that the rule is a proper vehicle for implementing environmental policy, and in particular, the "polluter pays" principle.
The Supreme Court of Canada has sent a strong signal to trial judges in Quebec – and the effects will be felt across the country – that they have a role to play in deciding whether disturbances caused by industrial facilities are excessive and entitle neighbours to compensation.
On compliance, though, the message to industry is somewhat less clear. It may be that absent explicit protection under a special law, complying with environmental regulations and acting with due diligence no longer affords protection against civil liability.
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