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Canadian Pacific Railway (CPR) operated a train repair facility, known as the Ogden shops, since the early 1900s in a heavily industrialized area outside Calgary. Over the years, a residential area grew up around the shops. TCE was used as a degreaser in the shops from the mid-1950s to the mid- 1980s. In 1999, CPR discovered that TCE had contaminated the groundwater and migrated into parts of the adjacent residential community. It subsequently installed sub-slab depressurization systems under approximately 70 homes, where the TCE exceeded Health Canada thresholds. It did not provide any remediation at properties below those thresholds.

In 2006, CPR’s neighbours successfully certified a class action against it in negligence, nuisance, trespass and strict liability under Rylands v. Fletcher, based on the diminution in property value and loss of rental income. They did not claim damages for physical injury or health problems.

Early on, the neighbours conceded that the claim in trespass should be dismissed. In Windsor v Canadian Pacific Railway Ltd., 2014 ABCA 108, the Alberta courts struck out the claims in Rylands v. Fletcher for all class members and nuisance for those homes without sub-slab depressurization systems.

The claim in nuisance by class members without sub-slab depressurization systems

The case management judge granted CPR’s application and summarily dismissed the claim for nuisance by the class members without sub-slab depressurization systems in place. The case management judge concluded that any damage to these lands was trivial or nonexistent, and would not support a finding of nuisance. 

The claim in nuisance by class members with sub-slab depressurization systems in place

The case management judge declined to dismiss the claim for nuisance by the class members with sub-slab depressurization systems in place, because he concluded there was a triable issue whether CPR’s use of its land unreasonably interfered with the class members’ use of their lands. As described by the Court of Appeal:

“Even though any interference had been substantially mitigated by the sub-slab depressurization systems, there was still an argument that there was sufficient interference to support liability in nuisance. He concluded that there was some evidence of damage resulting from loss of enjoyment or quiet enjoyment of the class members’ lands, and from the very need for continuous mitigation.”

CPR appealed, arguing that there was no damage proven or that any damage was personal injury damage which had not been plead.

The Court of Appeal found that the case management judge’s reasons “appear to find that the very need to constantly mitigate the effects of the TCE through the sub-slab depressurization systems is itself a measurable form of non-trivial damage, and that the effect that the presence of TCE may have on the use and occupation of the lands (including health effects on the occupants) is further evidence of damage to the lands sufficient to preclude summary dismissal.”

The Court of Appeal continued:

“It follows that there was no error in law in the dismissal of the nuisance claim with respect to those properties without sub-slab depressurization systems, because that class of claimant had only shown nominal or trivial damages. However, there was also no error in allowing the claim by the owners of properties with sub-slab depressurization systems to proceed to trial, because the respondents had demonstrated a genuine issue requiring a trial with respect to damage to that category of lands. Whether the test in Antrim Truck Centre has been met will have to be determined at trial. Having brought forward sufficient evidence to deflect the summary dismissal application with respect to properties with sub-slab depressurization systems, the respondents are entitled to take those nuisance claims to trial with respect to all aspects of damage to the property pleaded in paragraph 15 of the statement of claim.”

The strict liability claim by all class members, under the doctrine in Rylands v Fletcher

To establish strict liability under Rylands v. Fletcher requires “an unusual use of the land”. In this case, there was no dispute that CPR used the lands to repair locomotives, a reasonable thing for a railway company to do, in an area zoned for this type of industrial use. There was no indication that the activity, or the use of TCE, was “special” or “extra hazardous”. The Court of Appeal found that the neighbours had failed to raise any genuine issue with regard to this part of the test.

The neighbours also failed to show that the TCE was “likely to do mischief if it escaped” – the second part of the Rylands v. Fletcher test. CPR disposed of the TCE in accordance with the best practices available at the time, and its use was not known to be harmful. When CPR learned about the risks of TCE, in about 1982, they stopped using the it. CPR’s evidence that it was not foreseeable that the migration of TCE would cause harm to neighbouring lands was uncontradicted.

The third part of the Rylands test requires that the nighbours show that the TCE “escpaed”. Again, they could not meet the test.

“Migration of the substance that is a normal and intended consequence of the activity on the defendant’s land is not sufficient…

“The record is uncontradicted that the disposal of the TCE in the present case was also not a result of any sort of accident or misadventure, but rather it was an intentional part of the operation of the locomotive shops…

“While by modern environmental standards this method of disposing of waste chemicals may seem surprising, the record is uncontradicted that at the time this was a part of the normal operations of the Ogden shops. The discharge of the substances into the settling pond, and the resultant migration of the TCE into the surrounding groundwater was a result (as in Inco) of deliberate conduct which was part of the repair process, and not as a result of any accident or misadventure. The respondents have failed to raise a genuine issue requiring a trial with respect to this part of the test.”

The neighbours also failed to meet the last part of the Rylands test – proof of damage – as there was no evidence of damage that was more than trivial or nominal (the same reason the claim in nuisance without sub-slab depressurization systems was dismissed).

What’s next?

The case will, presumably, proceed with regard to the claims in negligence for all class members (which CPR did not seek to have summarily dismissed) and nuisance for those class members with sub-slab depressurization systems.

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