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On January 26, 2016, Siskinds LLP filed an Application for Leave to Appeal on behalf of John Thordarson and Thorco Contracting Limited (“Applicants”), seeking leave to appeal the Ontario Court of Appeal’s decision. The court awarded Midwest Properties Ltd. judgment against the Applicants, jointly and severally, for $1,328,000 in damages under s.99 of the Environmental Protection Act. The Court  also awarded punitive damages, following a finding that the Applicants had been liable to Midwest Properties Ltd. in both nuisance and negligence.

Midwest discovered after it purchased the property that it was contaminated and sued its neighbour Thorco and John Thordarson, Thorco’s principal, on three bases: (1) a breach of s.99(2) of the Environmental Protection Act (“EPA”); (2) nuisance, and (3) negligence.

At trial, Midwest lost on all claims, primarily, but not exclusively, on the basis that Midwest had suffered no damages. The trial judge also concluded that because the Ministry of the Environment had ordered the respondents to remediate the Midwest property, it could not also recover under s.99 of the EPA, so as to avoid “double recovery”.

The Court of Appeal’s decision, in reversing the trial decision, is significant in its implication for contaminated land law suits. The Applicants submitted the following in the leave application for the court’s consideration:

  1. This case raises a pressing and increasingly common concern for property owners across Canada. To what extent is a property owner liable to its neighbours for the alleged migration of historical contamination?
  2. The decision of the Court of Appeal for Ontario (“Court of Appeal”) has distorted important common law principles applicable to contaminated land disputes. It has also created liability for owners of property with historical contamination under section 99 of theEnvironmental Protection Act (“EPA”) beyond what the statute itself contemplates and where none previously existed.
  3. Without the intervention of this Honourable Court, the application of the Court of Appeal’s decision would result in indeterminate liability and uncertainty for owners of property with historical contamination. The implications of this decision are far-reaching and include:
    • A property owner is now liable pursuant to section 99 of the EPA for historical contamination where there has been no identifiable spill of pollutants, contrary to a plain reading and existing judicial interpretation of this section;
    • The ancient doctrine of caveat emptor has been overturned, such that the purchaser of a property can hold neighbouring property owners and vendors of contaminated property liable even where the purchaser knew, or ought to have known, of the contamination at the time of purchase;
    • An owner of a contaminated property is required to pay twice for the remediation of the same historical contamination: civilly, through payment of damages for restoration costs, and statutorily, through an administrative order for those same restoration costs; and
    • Damages awarded against a property owner for contaminating a neighbouring property will be calculated based on the cost of restoring that property as opposed to on the diminution in its value. This is so even absent proof of diminution in the value of the property and irrespective of whether there has been any attempt to mitigate damages.

The respondent and Ministry of the Environment and Climate Change, which participated as an intervener, have 30 days following the filing of an application for leave to appeal to respond.

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