Putting the “New” in Nuisance: Nuisance Present Before Purchase May Prevent Post-Purchase Recovery

When your land is contaminated by a neighbour, proving that it happened may not always be enough. In Midwest v. Thordarson,2013 ONSC 775 the plaintiff Midwest Properties Ltd. (“Midwest”) purchased a property after obtaining a Phase I Environmental Assessment. Midwest never tested the property’s soil before purchasing it. However, when it later found out that it was contaminated, Midwest brought an action against Thorco Contracting Limited and John Thordarson (the owner of the adjacent property and its principal) (the “Defendants”) for breaching the Environmental Protection Act (the “EPA”) and for nuisance and negligence.

The Defendants used their property as a storage site for petroleum hydrocarbon waste since 1973 but argued at trial that the contamination  on Midwest’s property was not theirs. Pollak J. did not accept the Defendants’ argument that someone else caused the contamination on Midwest’s property.

With respect to the EPA claim against the Defendants, the Court found that since the Defendants were already being ordered to clean up pursuant to a Ministry of the Environment order under the EPA, Midwest was not entitled to also obtain damages for its own proposed remediation plan under section 99 of the EPA. Midwest was clearly “double-dipping” in this case by claiming the cost of a remediation plan when the Defendants had already been ordered to spend money to remediate. Further, it did not help that Midwest failed to introduce evidence of damages or losses arising from the Defendants’ contamination of its property.  This was also Midwest’s downfall with respect to its negligence claim.

The Court’s most interesting finding concerned Midwest’s claim that the Defendants’ contamination was a nuisance. The Court held  that Midwest could not be successful in this case because it could not show that the Defendants’ nuisance had occurred on the property after Midwest purchased it. To be successful in its nuisance claim, Midwest had to establish that the contamination had started or increased after it purchased the property. If the Defendants’ nuisance damage was already done when  Midwest took title, Midwest could not successfully claim against them for it later.

While some of the findings in Midwest clearly turned on the lack of evidence adduced by the plaintiff, the case also appears to underline the importance of establishing baseline conditions where nuisance is being alleged in the context of historical conditions. The means of establishing a baseline are generally more readily available in non-residential transactions.

New Timelines and Procedural Requirements Proposed for Fisheries Act Authorizations

On April 13, 2013, the federal government published in the Canada Gazette a proposed new regulation, the Application for Authorization under Paragraph 35(2)(b) of the Fisheries Act Regulations (the “Proposed Regulation”), under the Fisheries Act, R.S.C. 1985, c. F-14 (the “Act”). The Proposed Regulation would clarify the process and procedural requirements to obtain an authorization to alter, disrupt, or destroy fish habitat pursuant to s. 35(2)(b) of the Act, and would repeal the current procedure detailed in s. 58 and Schedules VI and VII of the Fishery (General) Regulation, SOR/93-53 (the “Regulation”).

The Proposed Regulation is part of the federal government’s efforts under “Canada’s Economic Action Plan” to eliminate duplication and delays in the current regulatory scheme for environmental review of major projects.

The information applicants for an authorization would be required to submit under the Proposed Regulation would be broadly similar to the information currently submitted. These requirements are described in Schedule I of the Proposed Regulation, and include:

  1. contact information of the applicant or authorized representative;
  2. a description of the proposed work, including its location;
  3. a description of the fish and fish habitat found at the location of the proposed work;
  4. a description of the likely effects of the proposed work on the fish and fish habitat;
  5. a description of the measures and standards that will be implemented to avoid or mitigate serious harm to fish;
  6. a quantitative description of the serious harm to fish that is likely to remain even after the implementation of the measures and standards to avoid or mitigate serious harm to fish;
  7. an offsetting plan in respect of serious harm to fish that is likely to remain after implementation of the measures described above; and
  8. an irrevocable letter of credit to cover the costs of implementing the offsetting plan submitted in support of the application.

A significant change is that under the Proposed Regulation these requirements would be mandatory, whereas currently most of this information (apart from the project description) is simply listed on the authorization application form as information that can be submitted and “will assist in assessing your application and help expedite its approval”. The practical impact of this change is likely to be slight, however, since applicants almost always provide such information in any event.

The other significant change is the establishment of statutory timelines for the processing of applications by the Ministry. The Proposed Regulation would impose the following notification requirements and deadlines on the Ministry:

  1. the Ministry must send a confirmation of receipt to the applicant indicating the date of receipt of the application;
  2. within 60 days or receipt of the application, the Ministry must notify the applicant whether the information received in  support of the application is complete or incomplete;
  3. steps 1 and 2 are repeated for each subsequent submission of outstanding information until the application is complete; and
  4. within 90 days of receiving a complete application, the Ministry must either issue the authorization or notify the applicant of the refusal to do so.

The 60 and 90 day deadlines would be subject to certain exceptions, such as where the applicant proposes changes to the work or where consultation is required before a decision regarding approval can be made. In such circumstances, however, the Ministry would be required to notify the applicant accordingly and again when the processing of the application is resumed.

On balance, the Proposed Regulation should be welcomed by project proponents. While the exception for consultation is likely to limit its overall effect, particularly with regard to some of the longest delays, it is certainly a step in the right direction and will in many cases streamline the planning and approval process.

The 30-day comment period on the Proposed Regulation has now expired. There is as yet no indication whether any changes to the text will be made as a result or when the Proposed Regulation will come into force.

Less than a Sure Thing: Reliance on the Advice of the Ministry of  Environment

The Court du Québec recently examined a case where a defendant attempted to rely on two defences commonly used in environmental cases, the due diligence defence and the “officially induced error” defence, in a context where the defendant had sought, and obtained, directions from the Ministry of Sustainable Development, Environment and Parks (the “Ministry”) before deciding on an appropriate course of action. In this case, the defendant failed, but the decision should be used as a reminder of what to do (and perhaps, what not to do) when requesting, and relying on, advice from Ministry representatives.

The facts of Directeur des poursuites criminelles et pénales v. Ville de Louiseville (2013 QCCQ 675 (CanLII)) are as follows: the City of Louiseville had  to undertake work in a zone that is flooded for a period of about 10 days each year. The City representative, being uncertain whether a certificate of authorization pursuant to the Environment Quality Act should be obtained for the work, called in an external consultant. The consultant was also uncertain, and it was decided that the consultant would call the Ministry to discuss the issue and obtain advice. Subsequently, the consultant had a brief telephone conversation with a Ministry representative, during which it was verbally confirmed that a permit was not required. This conclusion was unfortunately incorrect: a permit was required. The City was later charged with having carried out the work without having obtained the required permit.

As it often happens, the parties’ recollection of the key discussion differed: the judge believed the version of the Ministry representative, who maintained that the fact that the area was often flooded had not been discussed.

The reasons include many insightful comments with respect to the due diligence and officially induced error defences. Such comments should be borne in mind by businesses who intend to rely on informal discussions with Ministry representatives while making decisions potentially impacting their compliance with applicable laws.

With respect to the due diligence defence, the judge emphasized that the diligence required had to be appreciated in light of relevant circumstances, which included the professional experience of the City representative who made the decision not to apply for a permit. In this case, the City representative had been working at the City for close to 10 years. His doubts with respect to the potential requirement to obtain a permit were not cleared following a call to a consultant having 26 years of experience. Yet, the only precaution he took to clear that doubt was the short telephone conversation between the consultant and a Ministry representative. This, according to the judge, was not reasonable conduct: it would have been more prudent for the City to provide more information to the Ministry representatives, for example plans or other documentation, to ensure that the Ministry representative had all of the relevant information at hand in issuing its advice. The City could have, at a minimum, requested a written report from  the consultant.

With respect to the officially induced error defence, the judge found that the City could not succeed because the error it alleged was not, in light of the circumstances, “sincere”, again emphasizing that the City’s decision to rely on a simple telephone conversation was unreasonable, especially considering that the Ministry representative consulted did not specialize in water environment issues, but in municipal issues. This portion of the decision could be interpreted in the future to put the onus on businesses to determine the competence of their interlocutor at the Ministry. This would be an unwelcome development and will have to be monitored moving forward. In this case, the judge appeared to be also influenced by the fact that the consultant had decided to call that specific representative because he knew her from previous files, not because of her specific competence of the issue.

One of the overriding factors that finally appears to have influenced the judge was that despite their doubts, and considering their knowledge that the work was to be undertaken in a “sensitive” area, neither the City representative nor the consultant brought their specific doubts to the Ministry representative’s attention. The advice given by the Ministry representative was therefore based on an incomplete set of facts and could not be relied upon.

This decision is a reminder of how businesses should proceed in obtaining advice from Ministry representatives. A suggested list of steps to take when obtaining advice from the Ministry, especially to leave open a possible defence of officially induced error, is as follows:

  • Ask for the advice in writing;
  • Provide all relevant documentation to the Ministry;
  • If in doubt regarding specific issues, bring them to the Ministry’s attention;
  • Ensure that you have the right interlocutor at the Ministry – in doubt, discuss the issue specifically;
  • Ensure that you obtain the Ministry’s conclusion in writing, if possible. If not, document as much as possible.

Former Northstar Officers and Directors Challenge Moe Order

Former officers and directors of Northstar Aerospace Inc. and its subsidiary Northstar (Canada) Inc. (“Northstar”) have been ordered by the Ontario Ministry of the Environment (the “MOE”) to personally pay contamination clean-up costs associated with a former Northstar factory in Cambridge, Ontario. Twelve of the former directors and officers have appealed the MOE Order to the Environmental Review Tribunal.  They have also brought a motion in the Superior Court of Justice to have the MOE Order reviewed as part of Northstar’s insolvency proceedings instead. The MOE opposed the motion, which was heard on April 18, 2013. We are continuing to   monitor this case and will report further once the decision has been released.

Authors

F.F. (Rick) Coburn 
RCoburn@blg.com
416.367.6038

Luke Dineley 
LDineley@blg.com
604.640.4219

Other Authors

Timothy Bottomer
Aimee Collier

Expertise

Environmental
Environmental Law