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Class actions for historic contamination: Sydney Tar Ponds and Smith v. Inco

The class action by neighbours of the notorious tar ponds in Sydney, Nova Scotia, is going ahead, although neighbours of Inco’s Port Colborne plant have lost theirs. 

The Sydney Steel plant was built in 1900, next to a creek flowing into the harbour.

Coke, made from local coal, fuelled the plant’s blast furnaces, and many coke ovens were built on land next door. Air emissions from both were hazardous to human health, and runoff from the coke ovens heavily contaminated the tidal flats, which became known as the tar ponds.

By the 1960’s, Sydney Steel was in deep trouble.  To save the jobs of steelworkers and coal miners, the Nova Scotia and federal governments took over the steel and coke works and operated them for 33 years, at the expense of taxpayers across the country. They remained both heavily polluting and unprofitable, and finally shut down in 2000.   Since then, the province and federal governments have committed another $400 million to a clean up. After a failed effort to incinerate the accumulated mess, much of it will now be entombed on site.

For seven years, neighbours of the site have been suing the federal and provincial governments in MacQueen v. Canada (Attorney General) for contamination from the tar ponds, the steel mill and the coke ovens. Their case became Nova Scotia’s first certified environmental class action in July 2011, when Mr. Justice John Murphy of the Supreme Court certified their claim. The neighbours allege that the two governments permitted emission of contaminants onto them, despite knowing of the health dangers involved.

 

The neighbours are seeking millions of dollars for remediation of their properties, as well as damages for nuisance and battery.  As well, they want ongoing medical monitoring, to identify health risks and illnesses resulting from their exposure to the contaminants, and to educate community and health professionals.  Of note, they are not seeking compensation for personal injury or property damage.

 

Justice Murphy issued a partial ruling in June 2010, indicating that he would certify the action as a class proceeding once the classes of plaintiffs were narrowed.   Ultimately, he certified two classes of claimants:

 

  • · a Property Owners’ Class, mainly current property owners in neighbourhoods within two kilometres of the mill, whose properties are contaminated with lead in concentrations that exceed Canadian Council of Ministers of the Environment (CCME) standards.  (The plaintiffs originally proposed a six kilometre boundary). The Court accepted expert evidence that lead levels in the soil in these neighbourhoods were reliable proxies for other contaminants emitted by Sydney Steel, including arsenic and polycyclic aromatic hydrocarbons; and
  • · a Residential Class, namely individuals who lived in the affected neighbourhoods for at least seven years (up from 2 years, as originally proposed by the plaintiffs).  The court accepted expert evidence that at least seven years’ exposure is required in order to assess the effects of chronic exposure to contaminants.

 

One aspect of the decision is novel: certification of the battery claim. Until now, Canadian courts have refused to certify class actions involving alleged damage to human health from chronic pollution. Instead of claiming that the pollution made them ill, the MacQueen plaintiffs therefore allege that they were illegally assaulted by the pollution, and seek medical monitoring instead of monetary damages.

 

However, their prospects of ultimate success sank when the leading Ontario environmental class action, Smith v. Inco, was dismissed by the Court of Appeal.  In that case, thousands of Port Colborne, Ontario property owners sued Inco, claiming compensation for alleged losses in their property values due to nickel oxide particles deposited during 66 years of refinery operations.

 

At trial, the Port Colborne neighbours had been awarded $36 million for nuisance and Rylands v. Fletcher (strict liability).  The trial judge had ruled that all nickel from Inco’s refinery in the soil became a nuisance if public concern about potential harm adversely impacted the properties’ market values years later. He also ruled that Inco was strictly liable, because its nickel refinery was a “non-natural” use of the refinery lands.

 

The Court of Appeal disagreed on every front. First, they held that Port Colborne property had not actually lost any value due to the nickel contamination, despite waves of public concern and disclosure by real estate agents. Second, they dramatically cut down the potential use of the popular environmental tort Rylands v. Fletcher, by limiting it to unexpected and unintended mishaps, not intentional emissions, and by ruling that operating a refinery in a properly zoned location was not a “non-natural” land use.

 

Third, they greatly reduced the scope of nuisance claims that are based on historic contamination. Although Inco admitted that the nickel was there, and had come from its refinery, there was no proof of any current health risk. Inco had complied with MOE’s order to clean up 25 homes with more than 8000 ppm of nickel in their soil. According to the MOE, the 8000 ppm benchmark was low enough to prevent any risk to health. How then, asked the court, could the mere presence of nickel below this level “damage” the affected properties? It did not matter that a 200 ppm benchmark applies to residential properties in the rest of the province. Thus, they threw out the $36 million award. And instead of receiving millions for legal costs, the neighbours and their lawyers must pay legal costs to Inco.

It’s not over until it’s over. The Port Colborne neighbours have sought leave to appeal to the Supreme Court of Canada, and MacQueen may someday end up there too. But meanwhile, class action lawyers across Canada have to take a closer look at whether class actions for historic contamination still make financial sense.

 

Dianne Saxe

Jackie Campbell

This article was originally published in Renew Canada

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