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Ten corporate officers and directors have paid $4.75 million to be released from the Northstar Canada cleanup order, even though the Ministry of the Environment admits that none of them were at fault for causing the contamination.  Some were not even on the Northstar Canada board. The Environmental Review Tribunal approved the settlement in Cambridge on Monday, October 28. The MOE will now take back responsibility for continuing the cleanup of the historic TCE plume that began in the 1960s. Here are the Northstar Directors Minutes of Settlement.

The directors had a good legal defence, but an impossible situation. They had to comply with the Order pending appeal, over $100,000/month, plus legal costs, out of their own pockets. They were unlikely to recover any of it, even if they won. Taking the case to the Supreme Court could take 5 years. Eventually they caved in, and paid the MOE $4.75 million more to release them from the Order.

The MOE claims that s.18 of the EPA authorizes cleanup orders to anyone who ever owned, managed or controlled an “undertaking or property”, directly or indirectly, regardless of fault or when the contamination occurred. The MOE claim stands on two main pillars:

  1. The Court of Appeal ruled, in Director v. Kawartha Lakes, that s. 18 Orders can require innocent owners to clean up contamination caused by others. The innocent owner was even forbidden to show who was at fault.
  2. The ERT has upheld s. 18 Orders against some directors who were at fault, directing minds of private companies who lacked due diligence when the environmental risk occurred. The ERT created a rebuttable presumption that such directors personally manage and control a corporation’s assets. However legally suspect that presumption may be, the results did look like “polluter pay”.

It was a huge leap to apply the same “logic” to Mr. Baker, an innocent independent director of a publicly traded parent company. But it it was a very profitable gambit for the MOE. And if fairness, innocence and fault are irrelevant to environmental liability, maybe it all makes sense.

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