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Last August, we reported on recent case law dealing with the difficult question of how to determine limitation periods in environmental claims. In the January 2017 Court of Appeal decision of Crombie Property Holdings Limited v. McColl-Frontenac Inc., the court overturned the trial court’s decision that the case was started too late on the basis of “palpable and overriding errors”. The court’s reasons included that the trial judge failed to look carefully at the factual circumstances of the plaintiff when determining when a plaintiff knew or ought to have known that it had a claim.

In this case, the plaintiff was in the midst of a transaction involving 22 properties, a fact which the trial judge did not mention in her reasons. The Court of Appeal took the view that a multi-property purchase with waiver of conditions was relevant to whether a reasonable person, after the waiver of conditions, would have sought out and obtained laboratory results that indicated an exceedance of regulatory standards prior to the time that it knew about the results. The Court of Appeal concluded that the plaintiff had acted reasonably in this scenario.

Another issue was whether having a suspicion of contamination was enough to start the limitation clock. The Court of Appeal concluded it was not. The trial judge took the view that the claims were “available and discoverable”, based on the suspicion, well before April 28, 2012, which was only 18 days before the plaintiff took title. The trial judge’s reasons seem to suggest that the limitation period may have started prior to ownership of the property. However, prior to owning a property, a plaintiff would have no standing to sue.

That issue aside, the Court of Appeal found that the trial judge had erred by equating a suspicion of contamination with actual knowledge of contamination. The Court of Appeal indicated that the subsurface testing, while confirming the plaintiff’s suspicions, was the mechanism by which the appellant acquired actual knowledge of the contamination. It also concluded that the trial judge adopted too low a threshold for discoverability and did not focus on what was necessary: when the plaintiff had actual knowledge of the elements of the claim. The Court of Appeal concluded “the fact that contamination was there to be discovered was of course not sufficient to start the limitations clock”.

The difficulty with this reasoning is that a plaintiff could have a suspicion of contamination that it does not investigate for a very long time – even years. In this case, while the plaintiff did act fairly quickly to confirm contamination, the plaintiff also knew prior to that that there was a “gas smell”. While a plaintiff may have good reason to believe the property may have contamination, if it simply chooses not to investigate, then is that enough to prevent a limitation period from beginning? And if so, for how long? We suggest that it is at least incumbent to act on the “mere suspicion” with diligence and know when your plan is to become an owner of suspect property.

Our advice, notwithstanding this case, continues to be that clients should conduct due diligence prior to purchase on the state of the property, including by conducting their own intrusive tests where warranted. This allows purchasers to make an informed decision as to whether they want to purchase contaminated land and all the risks associated with it.

In addition, it is always important, in the case of a limitations period, to act cautiously. The claim could have been started only 18 days earlier and this ought to have prevented any possibility of claiming that the matter was statute barred. It is very costly to defend a limitations argument on a summary judgment motion. At trial, the plaintiff was ordered to pay a total of $200,000 in costs to the defendants. While the decision was successfully appealed, that may not have been the case. On appeal, the plaintiff was awarded approximately $30,000 in its costs. More has certainly been spent by the parties than what the cost awards reflect.

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