Remedies for Contaminated Property

Robert G. Grant, Q.C. Stewart McKelvey Stirling Scales

Prepared for Interconnections & Complexities of Environmental Law A joint presentation of the Continuing Legal Edl,lcation Society of

Nova Scotia and Dalhousie Law School January 28, 2000

Remedies for Contaminated Property

Introduction

The contamination of property may cause immediate loss and damage to property owners. It can result in significant statutory obligations for property owners. The potential for contamination to migrate to adjacent property compounds the property owners' concerns. This paper reviews owners' obligations, surveys remedies available to owners to obtain redress, and considers some issues relating to damages claimed in such remedies.

Obligations of Owners of Contaminated Property

The obligations imposed by the Environment Act, 1 upon owners of contaminated propertY' may affect both the scope of claim for redress and the measure of damages. 3

Upon discovering their real property to be contaminated, owners must consider first whether there has been a release of a substance for which they are a "person responsible", and whether accordingly they have an obligation to report the release immediately, take all necessary measures to prevent, reduce and remedy any adverse effect and to rehabilitate the environment. 4

It is not, strictly speaking, unlawful to own contaminated property. There is no legal obligation to investigate or report suspected contamination of property. The legal obligation to report to Nova Scotia Department of Environment only arises from specific incidents such as a discharge into the natural environment likely to cause an adverse effect and not permitted under a valid approval.

1 All references to the "Environment Act" are to the Environment Act, S.N.S. 1994-95, c. I.

21 use the term "contaminated property" to mean real property containing pollutants or substances which would tend to have an adverse effect upon the environment. Contaminated property is to be distinguished from "contaminated site" which refers to a site designated as a contaminated site by the Minister of the Environment pursuant to Part VIII of the Environment Act.

3Por a general description of the statutory regime pertaining to contaminated property in Nova Scotia see Chapter 9 written by Robert G. Grant and Meinhard Doelle in Contaminated Property in Canada, Carswell, 1996 Leonard J. Griffiths, Editor.

4Section 71 Environment Act; Section 3 (a)(k) Environment Act.

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In most circumstances, it is likely in property owners' best interests to identify whether a problem exists, formulate a plan to deal with the problem and communicate with Nova Scotia Department of Environment.

Property owners have to consider whether the contamination creates obligations under the Occupational Health and Safety Ad and whether it affects the property owners' own occupation and use of their property. The contamination may affect the value of the property and inhibit property owners from selling it in future. If the contamination causes or has the potential to cause damage to adjacent properties, the property owner has an obligation to abate the nuisance whether or not the property owner created the nuisance in the first place.6 Property owners may find themselves liable in negligence for failing to take reasonable steps to prevent contaminants from affecting other properties.

Property owners may avoid prosecution for contravention of the Environment Act by voluntarily providing the Nova Scotia Department of Environment with detailed information obtained through an environmental audit or environmental site assessment about non-compliance with the requirements of the Environment Act. To avoid prosecution, the property owners must comply with the terms of any agreement concluded with the minister for clean-up of the property or any ministerial order issued pursuant to Part XIII of the Environment Act".

Once notified that a property is contaminated, Nova Scotia Department of Environment generally operates in accordance with Guidelines for Management of Contaminated Sites in Nova Scotias. The guidelines outline the Department's intended approach to managing contaminated sites whether they are in fact designated by the Minister as a designated contaminated site or not. The guidelines provide for notification, site actions, the role of the regulator, mediation, remediation standards and requirements for the issuing of certificates of compliance.

The Minister ofthe Environment is empowered to order any person responsible for a release in contravention of the Act to carry out remediation of the contaminated area.9 This remediation must be carried out in accordance with directions given by the Minister and at the person's own

SS.N.S. 1996, c.7

6See, for example, Jones v. Mobil Oil Canada Ltd. 89 A. C. WS. (3M) 1099

'Section 70 Environment Act

SIssued March 27, 1996 by Nova Scotia Department of Environment in conjunction with the Minister's steering group for development of contaminated sites management process.

9Section 125 ofthe Environment Act.

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expense. If a person fails to comply with the order, the Minister may carry out the remediation and recover the costs from the property owner.

The Minister of the Environment has further authority to designate an area of the environment as a contaminated site. to Such a designation enables the Minister to make orders against "any person responsible for the contaminated site", which includes property owners, to remediate the site.

While the Minister of the Environment has discretion concerning the persons against whom such ministerial orders are issued 11, ministerial orders have tended to be directed towards the expedient remediation of the environment by imposing joint and several liability upon all persons responsible. Ministerial orders do not generally attempt to allocate in a summary fashion responsibility for the contamination in view of the degree of fault or contribution of each responsible person to the contamination.

In summary, owners of contaminated property have an array of obligations with respect to their contaminated property and may be faced with the prospect of ministerial orders requiring them to bear the costs of clean-up ofthe site to a stipulated standard.

Remedies

There are a number of well recognized causes of action which property owners may pursue in order to obtain redress for contaminated property. The principles governing common law causes of action are well established and repeated from case to case. Reported cases suggest that the outcome of trials frequently turns upon the particular facts of the cases and the circumstances giving rise to the claims. The results seem to be governed more by the findings of fact applied to established law rather than the exposition of new law.

In surveying available remedies, I have generally referred to more recent cases as examples of the types of claims which may be pursued.

toSection 87(1) of the Environment Act.

IISection 129 of the Environment Act.

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Injunctive Relief

The court has jurisdiction 12 to grant an interlocutory injunction to restrain threatened or continued contamination of property. 13 The court also has power to grant a pennanent injunction. Indeed, this fonn of relief is strongly favoured as a remedy for direct infringement of property rights particularly where founded upon nuisance or trespass. The granting of an injunction depends upon the court's equitable jurisdiction and so requires the court to take into account many factors in determining whether to exercise its discretion or award damages instead. 14

Contract

Breach of contract can be the foundation for a claim for damages as a result of contamination of property. The circumstances in which such a claim may be made are as varied as the circumstances in which the contamination may arise. Potential defendants include manufacturers of equipment, materials and products, suppliers, building contractors, engineers, environmental consultants and lawyers.

A considerable body of case law has evolved regarding contractual claims by purchasers against vendors of contaminated property. Often drawn into such disputes are the real estate agents and lawyers who have advised the purchaser.

The dictum caveat emptor still applies when the contamination was a patent defect in the property at the time of sale. IS Contamination will be considered a patent defect if the contamination is such that a purchaser would be likely to discover it upon inspecting the property with reasonable care. Vendors are not bound to call attention to patent defects in their property.

I2Judicature Act R.S.N.S. 1989, c. 240, Section 43(9).

13See, for example, Francklyn v. People's Heat and Light Co. (1989) 32 N.S.R. 44 (CA).

l4Robert J. Sharpe, Injunctions and Specific Performance (Canada Law Book, Looseleaf Edition 1999) page 4-1.

l5Tony's Broadloom & Floor Covering Ltd. v. NCM Canada Inc. 17 C.E.L.R. (N.S.) 22.

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There are circumstances in which vendors may be found liable to purchasers for failing to disclose contamination of property which amounts to a latent defect. 16 The purchaser must establish that the vendor knew ofthe contamination. 11

Where the vendor is aware of contamination amounting to a latent defect in the property, failure by the vendor to disclose this to a purchaser has rendered the vendor liable to the purchaser in damages. 18 The rationale for imposing liability upon the vendor in these circumstances is that failure to disclose the latent defect amounts to a fraud upon the purchaser.

An agreement of purchase and sale may contain warranties which survive closing and upon which a purchaser of contaminated property may rely to found a claim in damages against the vendor. 19 The inclusion of express warranties respecting the environmental condition of the purchased property is advisable in any circumstances where the purchaser is relying upon representations from the vendors.

The preferred position for perspective purchasers of contaminated property is not to purchase it in the first place. The best protection is an agreement of purchase and sale which permits the purchaser to retain consultants to conduct due diligence investigations of the property and to terminate the agreement ifnot satisfied with the results of these investigations.2°

Landlord-Tenant

Landlords may have claimed against their tenants for contamination which took place during their occupancy. In Westfair Foods Ltd. v. Domo Gasoline COrp.21, Morse J. of the Manitoba Court of Queen's Bench made the following statements with respect to the obligation of the tenant under lease:

16Tony's Broadloom & Floor Covering Ltd. v. NCM Canada Inc. 17 C.E.L.R. (N.S.) 22 at page 32.

17Heighington v. Ontario 19872 C.E.L.R. (N.S.) 93.

18Sevidal v. Chopra 2 C.E.L.R. (N.S.) 173.

19Sassy Investments Ltd. v. Minovitch 21 C.E.L.R. (N.S.) 126.

2°As in 1061590 Ontario Ltd. v. Ontario Jockey Club 16 C.E.L.R. (N.S.) 1

21 Westfair Foods Ltd. v. Domo Gasoline Corp. 29 C.E.L.R. (N.S.) 299, affirmed on appeal by the Manitoba Court of Appeal 1999 CarswellMan. 549 dated December 7,1999.

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Private law on the other hand in a case such as this, deals with the right of an owner (landlord) against its tenant, the right to have land restored to its original pres tine condition.

I do not believe that, in the absence of some specific agreement between the parties, such a right necessarily exists.

In my opinion, in the case of a commercial retail gasoline operation where a landlord must know of the likelihood of contamination of the soil arising merely from the day to day operation of the facility and where the landlord benejits jinancially from the sale of increased quantities of gasoline, a tenant, upon termination of the lease, should not, in the absence of a specific provision in the lease to the contrary, be required to restore the land to its original condition. Insofar as the landowner is concerned, it is sufficient, in my view, if the tenant restores the site to a condition which, evidence adduced, meets appropriate and reasonable standards of clean-up . .. 22

The issue in this case focused upon the standard to which the defendant was required to clean-up the premises upon tennination of the lease. It appears that the Court was prepared to find, in the absence of an express tenn of the lease, that the tenant was only liable to clean-up to a reasonable standard.

Trespass

A claim in trespass may be founded upon the physical invasion of a substance upon a property without the consent of the landowner. The trespassing substance need not be established as toxic or inherently dangerous.23

The migration oftoxic chemicals onto a landowner's property may amount to a trespass as much as the deliberate dumping of wood waste or fill on a landowner's property?4

22Westfair Foods Ltd. v. Domo Gasoline Corp. 29 G.E.L.R. (N.S.) 299, affirmed on appeal by the Manitoba Court of Appeal 1999 CarswellMan. 549 dated December 7, 1999 at page 308.

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23Mortgage Insurance Co. of Canada v. Innisjil Landlord Corp. 20 G.E.L.R. (N.S.) 37.

24Hide-Away Resort Ltd. v. Van der Wall 28 G.E.L.R. (N.S.) 272.

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Negligence

Property owners may seek damages to compensate them for contamination to their property through claims founded upon negligence. To succeed, the property owners must establish that the defendants owed them a duty of care and through their acts or omissions failed to take reasonable care to avoid causing reasonably foreseeable damages to the property owners.25

Adjacent property owners, building contractors, goveriunent departments, engineers, designers, consultants are among the many potential defendants against whom property owners may seek damages for negligence.

Another potential claim in negligence is against the manufacturer of goods and products for failure to warn of the dangers attendant upon the use of their products.26

Negligent misstatement may give rise to another potential remedy. To succeed the property owner must establish that advice was made in circumstances giving rise to a duty of care on the part of the advisor, which duty was breached.27 The duty may be avoided by an appropriately worded disclaimer. In one case, the court, upon this basis, dismissed a claim against an environmental consultant who had negligently prepared an environmental audit report.28

In an Ontario case, the Ministry of Environment was found liable for damages caused by its negligence in supervising and directing clean-up of a contaminated site.29 The Nova Scotia Department of Environment and its employees are protected against such claims while acting in good faith.30

25 Just v. British Columbia 64 D.L.R. (4th) 689 (SCC).

26See for example Siemens v. Pfizer C&G Inc. 1 CE.L.R. (N.S.) 154.

27Hedley Byrne & Co. v. Heller & Partners Ltd. [1963} 2 All. E.R. 573 (H.L.); Carman Construction Ltd. v. Canadian Pacific Railway Co. [I982} 1 S.CR. 958.

28Wolverine Tube (Canada) Inc. v. Noranda Metal Industries Ltd. (1994) 21 O.R. (3d) 264, Ontario Court General Division.

29 Bisson v. Brunette 15 CE.L.R. (N.S.) 201.

30Section 143 Environment Act.

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Rylands v. Fletcher

This case established the following principle:

The person who for his own purposes brings on his land and collects and keeps there anything likely to do mischief if it escapes, must keep it at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape. 31

To succeed a plaintiff must demonstrate that the defendant was engaged in a non-natural use of the land, that an escape occurred and that damage occurred as a result of the escape.32

Claims under Rylands v. Fletcher have been brought as a consequence of the escape of water from dams or pipes, pesticides, contaminated water, sewage, gasoline and hydrocarbons among many other issues.33

An advantage of this claim is that it imposes strict liability in the sense that it does not require the property owner to prove negligence on the part of the defendant.

The House of Lords has held that to be compensable, the damage which flows from the escape must have been reasonably foreseeable.34

Nuisance

The tort of nuisance has been described as follows:

The tort of private nuisance is in essence an interference with the use and enjoyment of land. Unlike trespass, it does not depend upon any physical invasion of the land or an interference with exclusive possession. The gist of the action is the interference with an occupier's interest in the beneficial use of his land. The forms of private nuisance are infinitely various and include an

31Rylands v. Fletcher (1866), L.R. 1 Ex 265 at page 279.

32Mortgage Insurance Co. of Canada v.lnnisfil Landfill Corp. 20 G.ELR. (N.S.) 37 at page 48-49.

33Bisson v. Burnette Holdings 15 G.E.L.R. 201, Metson v. R. W DeWolfe Ltd. 198043 N.S.R. (2d) 221.

34Cambridge Water Co. v. Eastern Counties Leather Pic. {1994} 1 All E.R. 62 (HL).

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assortment of interferences with use and enjoyment ranging from actual physical harm to land or property to personal discomfort, noise or inconvenience. The problem basic to the law of nuisance is one of reconciling conflicting claims - the claim to undisturbed use and enjoyment of land with a claim to freedom of action

35

Nuisance has been applied indiscriminately to everything from an alanning advertisement to a cockroach baked in a pie.36 In determining whether one person's use of a property constitutes a nuisance to another person, the Court must consider the nature of the locality, the severity of the hann, the sensitivity of the plaintiff and the utility of the defendant's conduct. 37

Where the defendant created a nuisance by creating a condition on his land which resulted in the nuisance, the defendant will be held strictly liable whether or not the defendant was negligent. If the defendants did not create the conditions giving rise to the nuisance, they will only be liable if as a result of their negligence, the nuisance continued.38

In Jones v. Mobil Oil Canada Ltd. 39, Romaine, J. found Mobil liable in nuisance for contamination to soil and groundwater from a covered up abandoned flare pit and consequent impacts upon a herd of cattle. In doing so, the Court stated:

In this case, Mobil ... created the condition on the land that lead to the nuisance. The question of whether or not there was misconduct or negligence involved in the creation of that condition should not affect the issue of liability under the tort of nuisance in these circumstances. Mobil bears strict liability for this nuisance, even though it quite properly proceeded to correct the situation when the nuisance

35Schenckv. Ontario (1981),11 C.E.L.R. 1 (Ont. H.C.)

36St. Pierre v. Ontario (Minister of Transportation & Communication) (1983), 43 o.R. (2d) 767 (affirmed (1987),39 D.L.R. 4th 10 SCC), at page 774.

37Mandrake Management Consultants Ltd. v. Toronto Transit Commission 11 C.E.L.R. (N.S.) 100.

38 A discussion of this confusing element of the law may be found in Jones v. Mobil Oil Canada Ltd. [1999] A.J No. 797 at paragraph 141-152 and in the notation by Dr. Lewis Klar to Carmel Holdings Ltd. v. Atkins and George H. Burnie Ltd. (1977), 2 C.C.L.T. 227 at page 230.

39Jones v. Mobil Oil Canada Ltd. [1999] A.J. No. 797

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became apparent. If it had not, its liability may have been compounded by negligence.4o

Riparian Rights

Property owners are entitled to the continuation of flow of water adjacent to their property in its natural quantity and quality - undiminished and unpolluted.41 Liability attaches to persons who unreasonably change either the quality or quantity ofthe water flow. Riparian actions are based upon property ownership and as such are not available to water users such as fisherman or others who have access to and use of the water but whose property is not adjacent to it.

Statutory Remedies

When a person is convicted of an offense under the Environment Act, the Court may as part of its sentence require the offender to take action it considers appropriate to remedy or prevent any adverse effect resulting from the acts or omissions that constituted the offence.42

A property owner similarly has a right of action against persons convicted of an offense under the Environment Act where he has suffered loss or damage as a result of the offence and the damage was a reasonably foreseeable consequence of the offense.43

The Canadian Environmental Protection Act contains a similar provision providing a person who has suffered a loss or damage as a result of an offense under the Act with a civil cause of action.44

40Jones v. Mobil Oil Canada Ltd. [1999J A.J. No. 797 at paragraph 149.

41Swaigen, J. Compensation of Pollution Victims in Canada (Supply and Services: Canada 1981).

42Section 166(1)(b) Environment Act

43Section 142 Environment Act.

44Canadian Environmental Protection Act S.C. 1988 c. 22, section 136.

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Contributory Negligence

Property owners seeking remedies for contamination of their property should be aware of the Contributory Negligence Act R.S.N.S. 1989 c.95.

In a British Columbia case, a plaintiff property owner was found to have been contributorily negligent and liable for 10 percent of the damages for failing to conduct an environmental assessment prior to purchasing the property as recommended by their solicitor.'s

Causation

In order to succeed in claims for damages founded upon breach of contract, nuisance, and negligence, property owners must establish that they have suffered actual damage caused by the defendant's breaches.

Many of the "toxic tort" types of claims have been for damages based upon the alleged propensity of certain chemicals or substances to cause health problems or create a risk of health problems. One is reminded of the debate 20 years or more ago regarding whether or not cigarette smoke was harmful to human health and the positions advanced by cigarette companies that, despite overwhelming statistical evidence to the contrary, cigarette smoke had not been shown to be harmful to humans because the mechanism through which the harm occurred had not been proven.

In Snell v. Farrelr6 the Supreme Court of Canada confirmed that causation at law need not be determined with scientific precision. Legal causation is essentially a practical question of fact which can be best answered by ordinary common sense rather than abstract metaphysical theory.

Justice Sopinka on behalf of the Court stated:

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The legal or ultimate burden remains with the plaintiff, but in the absence of evidence to the contrary adduced by the defendant, an inference of causation may be drawn although positive or scientific proof of causation has not been adduced.

It is not therefore essential that the medical experts provide a firm opinion supporting the plaintiff's theory of causation. Medical experts ordinarily

4SSassy Investments Ltd. v. Minovich 21 C.E.L.R. (N.S.) 126 at page 152-3, 155.

46Snell v. Farrell 1990 Carswell NB. 82 72 D.L.R. 4'h 289.

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determine causation in terms of certainties whereas a lesser standard is demanded by the law.47

These directions from the Supreme Court of Canada were relied upon by Justice Romaine of the Alberta Court of Queen's Bench in Jones v. Mobil Canada Ltd:8 In this case Justice Romaine found in favour of the plaintiff.

Justice Romaine stated the issue as follows:

Mr. Jones does not have to prove conclusively that exposure to contaminants or ingestion of them lead to symptoms suffered by the herd: the test is the balance of probabilities. There must be more than cOnjecture for an inference to be drawn in the absence of exact proof Such an inference must be reasonable. However, the inability of the experts to give a firm diagnosis, or to agree on a diagnosis is not fatal to such an inference. All the evidence must be considered in considering whether such an inference is reasonable.

Mr. Jones gave the evidence he was reasonably able to gather about the incidents and the extent of his herd's opportunities to be exposed to contamination. He kept extensive records, took many photographs and prepared his extensive narrative. He was persistent in his complaints, in his requestfor testing and his use of the facilities available to him to help him determine the problem. It was not financially possible for him to arrange autopsies of all the animals he felt necessary to cull ..

Despite the [evidence in support of theories put forward on the defendants} I am satisfied that it can be reasonably inferred that the chronic poor peiformance of his cattle was caused by or materially contributed to by exposure to and ingestion of oil and gas contaminants.49

It is apparent from the Jones v. Mobil case that the guidance provided by the Supreme Court in Snell v. Farrell will assist plaintiffs in overcoming the lack of scientific certainty in making out their cases upon the balance of convenience. The carefully prepared and cogent evidence supporting Jones' theory of causation illustrates the advisability of building a strong record to reduce the extent to which the Court has to stretch to draw reasonable inferences.

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47 1990 Carswell N.B. 82 at paragraphs 34-35.

48Jones v. Mobil Canada Ltd. [1999] A.J. No. 797.

49Jones v. Mobil Oil Canada [1999] A.J. No. 797 at paragraphs 168-175.

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DAMAGES

Special Damages

Property owners are entitled to special damages for out of pocket expenses they incurred as a result of being unable to use their contaminated property. 50 Special damages may also include the costs of renting premises, drilling a new well and replacing food, clothing, kitchen utensils that had to be disposed of because of contamination.51 Special damages may include compensation for mileage incurred in traveling to an alternative accommodation and meals eaten while away from home.52

A successful plaintiff property owner is also entitled to be compensated for any expenses incurred in restoring property to its previous condition. The award must be fair and reasonable bearing in mind the use to which the injured party will put the property. The Court will take into account the difference between a "meticulous restoration" and reasonable repairs. 53

Diminution or Restoration of the Property

The fundamental principle followed in fixing damages to property is that the injured parties should be placed in the same position they were in prior to the tortious conduct which caused the loss.54 This principle has been used to support two different approaches to damage evaluation. The first approach involved an appraisal of the diminution and value of the property in question. The second approach requires calculating the costs of restoring a damaged property to its original condition.

In detennining which of the two approaches to follow, courts have looked to the circumstance of each particular case. Courts will generally award an injured party an amount equal to the

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50Bisson v. Burnette Holdings Ltd 15 C.E.L.R. 201 at page 214.

51Newell v. R.E. Newell Fisheries Ltd. (J 982). 54 NS.R. (2d) 652 NS.S. C.

52Bisson v. Burnette Holdings Ltd. 15 C.E.L.R. (N.S.) 201.

53Bavelas v. Copley [1999] B.C.J. No. 955 at paragraph 163.

54Taylor v. Kings [1993] 8 W WR. 92 (B.C.C.A.).

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diminution in value of the property unless the injured party is able to show it is reasonable to restore the land and an intention to do SO.55

The reasonableness of a plaintiff's desire for restoration of the property, according to McGregor on Damages, 13th Edition (1972), page 713:

... will be judged in part by the advantages to him of reinstatement in relation to the extra costs to the defendant in having to pay damages for reinstatement rather than damages calculated by the diminution in value of the land . .. "

In one case, the plaintiff's house and land were saturated by crude oil which has escaped from the defendant's pipeline. The plaintiff's lot was one of the few large lots in town and the plaintiff had lived in the house for years and ran a museum on the back half of his lot. 56 In another case, a defendant land developer had encroached on the plaintiffs' property destroying trees and scarring the land. 57 In both these cases the plaintiffs were awarded damages sufficient to restore their property even though the amount exceeded the diminution in value of the land.

Under different circumstances, however, such as when a building has been totally destroyed and the owner has no particular attachment to that building, the courts have refused to order restoration costs and instead have awarded damages equal to the diminution in value of the property. 58

Standard for Remediation

In assessing the standard for remediation, the courts appear to have imposed a standard of reasonableness. The courts do not appear to be sympathetic to plaintiffs who insist upon a "meticulous restoration". Similarly, the courts appear unmoved by claims founded upon residual or minimal contamination for which there is no evidence ofloss or harm.

55Jens v. Mannix Co. (1978), 89 D.L.R. 3rd 351 (B. CS. C.), Patterson v. Municipal Contracting Ltd. (1991), 98 N.8.R. (2d) 259 (N.s.S.C.).

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56Jens v. Mannix Co. (1978), 89 D.L.R. 3rd 351 (B.CS.C.).

57Patterson v. Municipal Contracting (1991),98 N.S.R. (2d) 259 (N.S.S.C.).

58Bisson v. Burnette Holdings 15 CE.L.R. (N.S.( 201 (Ont. Gen. Div.).

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Wesifair Foods Ltd. v. Domo Gasoline Corp. is an excellent recent example of this judicial approach. 59 In this case, the judge had to consider whether a property owner had a claim against its tenants as a result of hydrocarbon contamination caused by long term use of the premises as a gas bar. The tenant had cleaned up the property to the Level III standard imposed by the Provincial Department of the Environment for commercial properties. The court determined that the highest and best use for this property was for commercial purposes.

The court noted that the property was not as clean as it would have been if remediated to a Level II or Level I standard. The trial judge then stated:

One might be pardoned for thinking that, from a common-sense point of view land, part of which is contaminated by gasoline, must be less valuable than uncontaminated land. But, on the evidence, this does not appear necessarily to be so . ... It is the market which decides the value of land. 60

After reviewing the evidence of expert appraisers regarding the market value of the land, the court concluded that is was not satisfied on the evidence that the value of the land had been reduced by reason of the residual contamination.

In the Wesifair Foods Ltd. v. Domo Gasoline Corp. the trial judge quoted with approval the following passage from the decision of the Ontario General Division in McGeek Enterprises Ltd. v. Shell Canada Ltd. :

In order to impose liability on the defendant, I would have to accept the proposition that the defendant was negligent in failing to remove any identifiable trace of gasoline from the property. To accomplish that end the defendant would have had to excavate the soil from the entire lot to a depth of at least 18 feet, a task which has already been identified as being enormously expensive, impractical and unnecessary for the safe use of the property. In my view, it would be wrong to accept the apparent standard established by the regulation as the standard against which the defendant's conduct is to be measured in determining civil liability. The standard is far too onerous. Civil liability should only be imposed in those circumstances where it is demonstrated that the conduct of the defendant has fallen short of the appropriate standard of reasonable conduct established by the evidence.

59Wesifair Foods Ltd. v. Domo Gasoline Corp. 29 C.E.L.R. (N.S.) 299 (Manitoba Court of Queen's Bench; affirmed on appeal by Manitoba Court of Appeal 1999 Carswell Man. 549.

6°Wesifair Foods Ltd. v. Domo Gasoline Corp. 29 C.E.L.R. 299 at page 314.

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A similar reasonableness approach can be detected in the decision of Justice Farley in Mortgage Insurance Co. o/Canada v. Innisfil Landfill COrp.61 This case does not address an award of damages. The issue is whether the plaintiffs should be granted leave to take action against a receiver manager of a landfill. Evidence established that a leachate plume had emanated from the site of the landfill. The Court noted the absence of any evidence that the leachate was creating any problem with neighboring property owners and refused leave to commence action based on the leachate plume.

In awarding restoration costs, the Courts have upon occasion taken into account the advantage that a complete restoration will provide to the plaintiff and made a deduction to account for this advantage.62

Economic Loss

Loss of profits as a result of a breach of contract may be recovered provided the loss arose naturally from the breach of contract or may reasonably be supposed to have been in contemplation of the parties to the contract at the time ofthe contract as a probable result of the breach.63

The courts have recognized claims founded upon torts for economic loss where the plaintiff has also suffered personal injury or property damage.64 Thus where a plaintiff gasoline station owner has to close operations for a period oftime to permit remediation, the court awarded compensation to cover loss of profitability during that time.6

'

For claims for economic loss alone based on tortious conduct, careful consideration should be given to the recent decision ofthe Supreme Court of Canada in Bow Valley Huskey (Bermuda) Ltd. v. Saint John Shipbuilding Ltd. 66.

61Mortgage Insurance Co. o/Canada v. Innisfil Landfill Corp 20 C.E.L.R. (N.S.) 37.

62Antorisa Investments v. Petro Canada Ltd. 29 C.E.L.R. 52 (Ontario Court 0/ Justice, General Division).

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63Hadley v. Baxendale (1854) 9 Ex. ch 341).

64Rivtow Marine v. Washington Ironworks (1973), 40 D.L.R. (3,d) 530 (S.C.C.).

6'Sassy Investments Ltd. v. Minovich 21 C.E.L.R. (N.S.) 126.

66Bow Valley Huskey (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997} 3 S.C.R.

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General Damages for Annoyance, Inconvenience and Discomfort

General damages have been awarded for annoyance, inconvenience, and discomfort but "such awards are notoriously small,,67,

The following chart illustrates the amount of general damages which plaintiffs have been granted as compensation for spills, private nuisances, and other forms of tortious damage to property,

Citation

Sturge et al v, Imperial Oil Limited (1971). Nfld, & PEIR 279 (New! S,C.)

Smith v. Richardson (1977). 23 NS.R. (2d) 407 (S.C.)

Jens v. Mannix Co. Ltd. (1978).89 D.L.R. (3d) 351 (B. C.S. C.)

Gill v. Irving Oil (1980). 30 Nfld &PEIR 306 (Nfld. S.C.)

Downey v. Irving Oil Ltd. (1980).28 Nfld. & PEIR 69 (New! Dist. Ct.)

Newell and Newell v. R.E. Newell Fisheries Limited (1982). 54 NS.R. (2d) 652 (S.c.)

Relevant Facts

gasoline damaged the plaintiffs' lawn and driveway, fumes permeate the plaintiffs' house in spring when the weather is wet

plaintiffs' well and plumbing contaminated; oil on plaintiffs' grass caused it to tum brown and mossy

odour from the spill rendered the plaintiffs' home unlivable for months; the plaintiffs moved back into the house and endured the odour; the house needed to be tom down

fumes entered on to the plaintiff's land, but gas did not; family had difficulty sleeping, had to leave the home for hours at a time, and could not have guests; the fumes remained for 3/4 of a summer

oil soaked the plaintiff's property, rendering it temporarily unlivable and a fire hazard

plaintiffs' well was contaminated by gasoline, plaintiffs forced to move out of their house for three months

General Damages Awarded

$1,500

$1,500

$3,000

$3,600

$1,000

$5,000

67M.D. Faiesta, H.B. Kohn, R. Kligman, J. Swaigen, Environmental Harm: Civil Actions and Compensation (Toronto: Butterworths Canada. 1996) atpage 290.

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Marriot v. Carson's the defendant's negligent use of explosives $3,000 Construction Limited (1983) damaged the plaintitrs house and shop; 56 NS.R. (2d) 665 (S.CT.D.) plaintiff could not afford to repair shop

which was rendered unusuable; plaintiff became very irritable

Edwards and Edwards v. the plaintiffs suffered hardship, strain, and $2,000 Boulderwood Development worry when they had to move their house Company (1983),58 NS.R. to a new lot after their foundation settled (2d) 288 (S. C T.D.)

Hatch v. Pye (1983), 59 smoke from the defendants chimney left $1,000 NS.R. (2d) 170 (S.CT.D.) the plaintitrs home "dirty and smelling of

wood smoke"

Adams v. Provincial Grain the defendant's grain drying and storage $15,000 Commission (N.S.) (1990),97 facility was responsible for the emission of NS.R. (2d) 410 (S.C.T.D.) dust, which affected the plaintitrs air

quality

Bisson v. Brunette Holdings plaintiffs temporarily evacuated from Mr. Bisson: Ltd. (1993), 15 CE.L.R. home; negligence by defendant in $3,500 (N.s.) 201 (ant. Gen. Div.) remediation lead to permanent evacuation; Mrs. Bisson:

plaintiffs had to commute from their $7,500 cottage to work, plaintiffs had to go into debt because oflost rental income; Mrs. Bisson suffered stress related shingles

As is apparent from this chart, practitioners will be well advised to caution clients submitting claims of this variety from harbouring heightened expectations.

Emotional Distress

In Heighington v. Ontario68 , R.E. Holland J. stated:

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It seems clearly foreseeable that, if someone through negligent conduct permits a residence to be built on soil contaminated by radioactivity, a person occupying such a residence without knowledge of the contamination will suffer emotional distress on hearing of the contamination.

68Heighington v. Ontario 2 C.E.L.R. (N.S.) 93 at page 112-4

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The breach of contract cases apply foreseeability tests but do not require that there be organic damage or recognizable psychiatric illness.

Justice R.E. Holland concluded that in order to succeed in a claim for damages for mental distress as a result of tortious, the plaintiff would have to demonstrate a recognizable psychiatric illness. Stress, strain, upset and anxiety were determined not compensable in negligence.

Punitive Damages

Punitive damages are awarded in tort claims not to compensate the plaintiff but to punish the defendant in circumstances where the defendant has shown a flagrant disregard for the plaintiff's rights. The award of damages are intended as a deterrent to prevent others from profiting in their tortious actions.

Perhaps because of the deliberate nature of the action giving rise to the tort, claims in trespass have tended to attract punitive award.69

Closing

As noted earlier, the outcome of cases in which remedies are sought to contaminated property depended upon the facts particular to the case. Reported cases often contain lengthy detailed findings of fact. The cases tend to demonstrate a lengthy time frame from the initial contamination to the conclusion of the litigation. Perhaps because of the importance ofthe factual details surrounding each claim or the technical nature of the claims, particularly in establishing causation, the case reports are unfortunately littered with examples of excessively costly litigation. This may be fueled in part by the sometimes staggering costs of remediation or unreasonable expectations of the litigants. One suspects that the final judicial pronouncement will come as a pyrrhic victory.

Practitioners faced with advancing or defending claims for damages related to contaminated property have the challenge of counseling clients respecting realistic outcomes for the litigation. Settlements, as always, are to be encouraged where they can provide a swift and reasonable remedy. What is reasonable must be measured against the known or likely extent and severity of damage of contamination to the property. Practitioners must manage these issues effectively, master the facts surrounding the case and develop a theory of the case as soon as they are retained

69Bavelas v. Copley [1999] B.J.CJ. No. 955 (B. CS. C.), Hide-Away Resort Ltd. v. Vanderwall 28 CE.L.R. (N.S.) 272.

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as it is critical to providing reliable advice respecting a reasonable settlement or, failing settlement, effective representation in litigation.

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