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Property owners often suffered damage when storm and sanitary sewers malfunction. Canadian municipalities are generally exempt from civil suits in nuisance relating to their sewers, due to special statutes adopted across the country. However, they can be successfully sued in negligence. Such suits are increasingly popular, especially because property owners are often unable to obtain insurance against sewage backups, especially if they have happened before.

In Pearson v. Fort Frances, the property owners successfully sued the town for negligence relating to a storm sewer built on an easement across their property by a subdivision developer.

In 2001, a sinkhole developed on the property following large storms; in 2002 their entire back yard slid into a ravine.

The Town argued that any harm the plaintiffs suffered falls under the tort of nuisance, which is statute barred under the Municipal Act. It further argued that any wrongful action or failure to act was an exercise of its discretionary power under the Municipal Act, and no cause of action lies against it. The Town also asserted that it was not responsible for the easement and its sewer, that the Town never formally acknowledged assumption of the subdivision.

The Court ruled that the Town had accepted the sewer by returning the security deposit to the developer, as well as by its subsequent work on the sewer. There was an actual break in the pipe, causing soil to be flushed out under the surface, and digging the trench for the pipe had weakened the ground.

Held: The Town was negligent. It had failed to recognize the pipe break in its 2001 inspection and to act decisively on that evidence. Ms. Pearson was awarded $232,500 plus prejudgment interest, representing the loss of value of the house due to the slide.

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