Canadian National Railway Co. et al. v. Director, Environmental Protection Act (Ont.) et al., (1991) 47 O.A.C. 47 (DC)

• Judge: Callaghan, C.J.O.C., Steele and Holland, JJ.
• Court: Ontario Court of Justice General Division (Canada)
• Case Date: May 03, 1991
• Jurisdiction: Ontario
• Citations: (1991), 47 O.A.C. 47 (DC)

CNR v. Env. Protection Act Director (1991), 47 O.A.C. 47 (DC)

MLB headnote and full text

Canadian National Railway Company and CN Transactions Inc. (appellants) v. the Director under the Environmental Protection Act, Abitibi-Price Inc. and Northern Wood Preservers Inc. (respondents)

The Director under the Environmental Protection Act, R.S.O. 1980, c. 141, as amended (appellant) v. Abitibi-Price Inc. (respondent)

Northern Wood Preservers Inc. (appellant) v. the Director under the Environmental Protection Act, Abitibi-Price Inc., Canadian National Railway Company and CN Transactions Inc. (respondents)

The Director under the Environmental Protection Act, R.S.O. 1980, as amended (appellant) v. Canadian National Railway, CN Transactions Inc. and Northern Wood Preservers Inc. (respondents)

(Nos. 1049/90; 1072/90; 1084/90; 196/91)

Indexed As: Canadian National Railway Co. et al. v. Director, Environmental Protection Act (Ont.) et al.

Ontario Court of Justice

Divisional Court

Callaghan, C.J.O.C., Steele and  Holland, JJ.

May 3, 1991.

Summary:

The Director under the Environmental Protection Act ordered Canadian National Railway Co. and CN Transactions Inc. (CN), Northern Wood Preservers Inc. (NWP) and Abitibi-Price Inc. to jointly submit a report to the Director. The report was to address the nature and extent of contamination of the sediment on the floor of the Thunder Bay Harbour adjacent to the NWP creosote wood preserving facility, and respecting soil and water contamination on the site as well as methods of remedying the situation. The companies appealed the order.

The Environmental Appeal Board allowed the appeals in part, to the extent of removing Abitibi from the order. The CN companies and NWP appealed their inclusion in the Director's order and the Director appealed the Board's decision removing Abitibi from the order.

The Ontario Divisional Court allowed the appeal by the CN companies and declared that the Director's order did not apply to those companies. The court dismissed NWP's appeal. The court also dismissed the Di­rector's appeal relating to Abitibi.

Constitutional Law - Topic 3905

Paramountcy of federal statutes - Interprovincial matters - Pollution control - General - Soil and water contamination were found on the site of a creosote wood preserving facility - Contamination of the sediment in the floor of a nearby harbour was also discovered - The Director under the Environmental Protection Act, pursuant to ss. 6, 17 and 113 of the Act, ordered four companies to file a report respecting environmental contamination and reme­diation - The companies argued that the Act and the order pertained to federal lands and shipping and, since the federal Parliament already legislated in these areas, the Act and order were inoperative under the paramountcy doctrine - The Ontario Divisional Court rejected the paramountcy argument - See paragraphs 53 to 58.

Constitutional Law - Topic 7300.2

Provincial jurisdiction - Property and civil rights - Regulatory statutes - Pollution control - Environmental contamination was discovered near a creosote wood preserving facility and in the sediment on the floor of a nearby harbour - The Direc­tor under the Environmental Protection Act issued an order pursuant to ss. 6, 17 and 113 of the Act requiring four companies to file a report respecting the contamination and remediation - The companies argued that the Act and the order were ultra vires the province because they dealt in part with federal public property or shipping and navigation - The Ontario Divisional Court rejected the constitutional argument - See paragraphs 40 to 52.

Pollution Control - Topic 3

General principles - Environmental legis­lation - Purpose - The Ontario Divisional Court stated that "the purpose of the [En­vironmental Protection] Act is to provide for the protection and conservation of the natural environment and should be liberal­ly construed" - See paragraph 18.

Pollution Control - Topic 4

General principles - Environmental legis­lation - Interpretation - [See Pollution Control - Topic 3 ].

Pollution Control - Topic 9310

Enforcement - Control or stop orders - [See Constitutional Law - Topic 3905 ].

Pollution Control - Topic 9310

Enforcement - Control or stop orders - [See Constitutional Law - Topic 7300.2 ].

Pollution Control - Topic 9310

Enforcement - Control or stop orders - CN owned land - CN leased the site to Abitibi, who operated a creosote wood preserving facility on the site - In 1982, Abitibi leased the site and sold the build­ings and structures to NWP who continued operating the facility - Abitibi took a mortgage back by way of sublease - En­vironmental contamination was discovered on and near the site - The Director under the Environmental Protection Act ordered the companies to prepare a report respect­ing the extent of contamination and reme­diation (Environmental Protection Act, ss. 6, 17, 113) - The Ontario Divisional Court held that the Director's order did not apply to CN (the owner), because CN was not in occupation, nor did it have the charge, management or control of the source of the contaminant - See paragraphs 18 to 25.

Pollution Control - Topic 9310

Enforcement - Control or stop orders - CN owned land - CN leased the site to Abitibi, who operated a creosote wood processing facility on the site - In 1982, Abitibi leased the site and sold the build­ings and structures to NWP who continued operating the facility - Abitibi took a mortgage back by way of sublease - En­vironmental contamination was discovered in and around the facility - The Director under the Environmental Protection Act ordered the companies to prepare a report respecting the contamination and reme­diation (Environmental Protection Act, ss. 6, 17, 113) - The Ontario Divisional Court affirmed that Abitibi was not subject to liability on the basis of being a former owner, even if it did contaminate the natu­ral environment during such prior owner­ship - See paragraphs 26 to 27.

Pollution Control - Topic 9310

Enforcement - Control or stop orders - CN owned land - CN leased the site to Abitibi, who operated a creosote wood processing facility on the site - In 1982 Abitibi leased the site and sold the build­ings and structures to NWP who continued operating the facility - Abitibi took a mortgage back by way of sublease - En­vironmental contamination was discovered in and around the facility - The Director under the Environmental Protection Act ordered the companies to prepare a report respecting contamination and remediation (Environmental Protection Act, ss. 6, 17, 113) - The Ontario Divisional Court held that Abitibi was not responsible as mort­gagee where Abitibi had taken no active steps to gain or obtain control over the property - The courts stated that Abitibi was not liable as mortgagee whether it had knowledge of the contamination or not - The court also discussed when a mortgagee might be liable under the Act - See para­graphs 28 to 34.

Pollution Control - Topic 9310

Enforcement - Control or stop orders - CN owned land - CN leased the site to Abitibi, who operated a creosote wood preserving facility on the site - In 1982 Abitibi leased the site and sold the build­ings and structures to NWP who continued operating the facility - Abitibi took a mortgage back by way of sublease - Soil and water contamination were discovered around the facility - The Director under the Environmental Protection Act ordered the companies to prepare a report respect­ing the contamination and remediation (Environmental Protection Act, ss. 6, 17, 113) - The Ontario Divisional Court held that NWP, as occupant of the soil, was responsible for its condition even if the condition resulted from a prior occupier's conduct - Therefore NWP was properly included in the Director's order - See paragraphs 35 to 39.

Pollution Control - Topic 9310

Enforcement - Control or stop orders - The Director under the Environmental Protection Act issued orders against four companies, requiring them to file a report on environmental contamination and reme­diation respecting a creosote wood pre­serv­ing facility - The order was affirmed by the Environmental Appeal Board - Two of the companies argued that the Board erred in not apportioning the responsibility - The Ontario Divisional Court held that the Board did not err in failing to appor­tion liability - See paragraphs 63 to 64.

Cases Noticed:

Re Rockcliffe Park Realty Ltd. and Direc­tor of the Ministry of the Environment et al. (1975), 10 O.R.(2d) 1, refd to. [para. 21].

R. v. Sault Ste. Marie (City), [1978] 2 S.C.R. 1299; 21 N.R. 295; 85 D.L.R.(3d) 161; 3 C.R.(3d) 30; 40 C.C.C.(2d) 353, not appld. [para. 25].

Wynne v. Dalby, 30 O.L.R. 67, refd to. [paras. 32, 38].

Sedleigh-Denfield v. O'Callaghan et al., [1940] A.P. 880, refd to. [para. 38].

R. v. TNT Canada Inc. (1986), 18 O.A.C. 133; 58 O.R.(2d) 410 (C.A.), refd to. [paras. 45, 47].

John Deere Plow Co. v. Wharton, [1915] A.C. 330, refd to. [para. 46].

Great West Saddlery Co. v. The King, [1921] 2 A.C. 91, refd to. [para. 46].

Montcalm Construction Inc. v. Minimum Wage Commission et al., [1979] 1 S.C.R. 754; 25 N.R. 1, refd to. [para. 48].

Hamilton Harbour Commissioners v. City of Hamilton et al. (1978), 21 O.R.(2d) 459 (C.A.), refd to. [para. 50].

Multiple Access Limited v. McCutcheon et al., [1982] 2 S.C.R. 161; 44 N.R. 181; 138 D.L.R.(3d) 1; 18 B.L.R. 138, refd to. [para. 56].

Bank of Montreal v. Hall, [1990] 1 S.C.R. 121; 104 N.R. 110; 82 Sask.R. 120, refd to. [para. 57].

Statutes Noticed:

Constitution Act, 1867, sect. 91(1A) [para. 43]; sect. 91(10) [paras. 43, 51]; sect. 92(13) [para. 44].

Environmental Protection Act, R.S.O. 1980, c. 141, sect. 1(1)(c) [paras. 17, 19]; sect. 1(1)(ca) [para. 17]; sect. 1(1)(k) [paras. 17, 19, 20, 22]; sect. 1(1)(m) [paras. 17, 24, 26, 33]; sect. 1(1)(p) [paras. 17, 19]; sect. 5(1) [paras. 17, 19]; sect. 6 [paras. 3, 17, 21, 24, 26, 59]; sect. 7 [paras. 17, 21]; sect. 12(1), sect. 13(1)(a), sect. 14(1)(a) [paras. 17, 19]; sect. 16 [paras. 17, 26]; sect. 17 [paras. 3, 17, 24, 26, 33]; sect. 17(1) [para. 17]; sect. 113 [paras. 3, 17, 24, 26, 33].

Harbour Commissions Act, Thunder Bay Operations Bylaw, sect. 13, sect. 15(1), sect. 29 [para. 54].

Ontario Harbours Agreement Act, S.O. 1962-63, c. 95, generally [para. 42].

Ontario Harbours Agreement Act, S.C. 1963, c. 39 [para. 42].

Thunder Bay Operations Bylaw - see Harbour Commissions Act.

Authors and Works Noticed:

Hogg, Peter W., Constitutional Law of Canada (1985), pp. 355-363 [para. 55]; 598 [para. 43].

La Forest, Water Law In Canada (1973), pp. 29, 182 [para. 51].

Counsel:

Thomas G. Heintzman, Q.C., and Catherine M. Patterson, for the appel­lants, Canadian National Railway and CN Transactions Inc.;

Robert M. Fishlock, for the appellant, Northern Wood Preservers Inc.;

Stanley D. Berger, for Director for Minis­try of Environment, respondent;

Laurence A. Pattillo, for Abitibi-Price Inc.;

R. Regenstreif, for the Attorney General of Ontario, intervenor.

This appeal was heard on April 8, 9 and 10, 1991, before Callaghan, C.J.O.C., Steele and Holland, JJ., of the Ontario Divisional Court. The following decision was released by the Court on May 3, 1991: