Midwest Properties Ltd. v. Thordarson et al., 2015 ONCA 819

• Judge: Feldman, Hourigan and Benotto, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: June 01, 2015
• Jurisdiction: Ontario
• Citations: 2015 ONCA 819;(2015), 341 O.A.C. 168 (CA)

Midwest Prop. Ltd. v. Thordarson (2015), 341 O.A.C. 168 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. NO.039

Midwest Properties Ltd. (plaintiff/appellant) v. John Thordarson and Thorco Contracting Limited (defendants/respondents)

(C56758; 2015 ONCA 819)

Indexed As: Midwest Properties Ltd. v. Thordarson et al.

Ontario Court of Appeal

Feldman, Hourigan and Benotto, JJ.A.

November 27, 2015.

Summary:

Midwest Properties Ltd. and Thorco Contracting Ltd. owned adjoining properties in an industrial area of Toronto. Waste petroleum hydrocarbons (PHC) stored by Thorco on its property contaminated the soil and groundwater on its property. Groundwater flowed from Thorco's property into Midwest's property and contaminated Midwest's property with significant concentrations of PHC. Midwest sued Thorco and its owner, John Thordarson (defendants), alleging a breach of s. 99(2) of the Environmental Protection Act (EPA), nuisance and negligence.

The Ontario Superior Court, in a decision reported [2013] O.T.C. Uned. 775, dismissed the action. Midwest appealed.

The Ontario Court of Appeal allowed the appeal, set aside the judgment of the trial judge and substituted judgment against both defendants jointly and severally for $1,328,000 in damages under s. 99 of the EPA. Given that the defendants were liable in nuisance and negligence, the court also awarded Midwest $50,000 in punitive damages against each of the defendants.

Company Law - Topic 311

Nature of corporations - Lifting the corporate veil - One person company - [See Damage Awards - Topic 2030.9 and Pollution Control - Topic 9315 ].

Damage Awards - Topic 2030.9

Exemplary or punitive damages - Nuisance - Pollution - Waste petroleum hydrocarbons (PHC) stored by Thorco Contracting in violation of environmental protection legislation, contaminated the soil and groundwater on its property and a neighbouring property owned by Midwest - Midwest sued Thorco and its owner, Thordarson (defendants), alleging nuisance and negligence - The trial judge dismissed the tort claims on the basis that Midwest failed to prove damages - Midwest appealed - The Ontario Court of Appeal allowed the appeal - The trial judge erred in dismissing the tort claims on the basis that damage had not been established - There was uncontradicted evidence that supported a finding that damage had been suffered - The other elements of the torts were made out - Thordarson could not rely on the corporate veil principle to avoid personal liability for commission of these torts - Therefore Thorco and Thordarson were jointly and severally liable to Midwest - The court awarded punitive damages of $50,000 against each defendant - See paragraphs 90 to 116.

Pollution Control - Topic 4

General principles - General - Environmental legislation - Interpretation - [See first Pollution Control - Topic 9318 ].

Pollution Control - Topic 9315

Enforcement - General - Personal liability of corporate officers - Waste petroleum hydrocarbons (PHC) stored by Thorco Contracting contaminated the soil and groundwater on its property - The groundwater flowed onto adjoining property owned by Midwest, contaminating that property too - Midwest sued Thorco and its owner, Thordarson (defendants), seeking compensation under s. 99(2) of the Environmental Protection Act (EPA) - The Ontario Court of Appeal discussed the personal liability of company owners to pay compensation for pollution under s. 99(2) - The court found Thordarson jointly and severally liable with Thorco Contracting for damages under s. 99(2) - Thorco owned the PHC - Thorco was a small business whose day to day operations were controlled by Thordarson - Thordarson had "control" of the PHC for the purpose of s. 99(2) - See paragraphs 81 to 89.

Pollution Control - Topic 9317

Enforcement - General - Clean-up - Cost of - Liability for - [See all Pollution Control - Topic 9318 ].

Pollution Control - Topic 9318

Enforcement - Liability for compensation by owner or person controlling pollutant - A trial judge held that a remedy (i.e., compensation for pollution) under s. 99(2) of the Environmental Protection Act (EPA) was precluded where the Minister of the Environment had issued a remediation order - In that regard, the trial judge found that the EPA should not be interpreted in an "expansive manner" that might permit double recovery - The Ontario Court of Appeal held that the trial judge erred in her interpretation and application of the private right of action contained in s. 99(2) - The trial judge's interpretation of the section was inconsistent with the plain language and context of that provision; it undermined the legislative objective of establishing a distinct ground of liability for polluters - This was remedial legislation that should be construed purposively - It was important that courts not thwart the will of the Legislature by imposing additional requirements for compensation that were not contained in the statute - See paragraphs 42 to 55.

Pollution Control - Topic 9318

Enforcement - Liability for compensation by owner or person controlling pollutant - At issue was whether compensation for pollution awarded under s. 99(2) of the Environmental Protection Act (EPA) should be measured by the diminution in the value of the polluted property or the cost of remediation - The Ontario Court of Appeal held that awarding damages under s. 99(2) based on restoration cost was more consistent with the objectives of environmental protection and remediation that underlaid that provision - Restricting damages to the diminution in the value of property was contrary to the wording of the EPA, the trend in the common law to award restorative damages, the polluter pays principle, and the whole purpose of the enactment of Part X of the EPA - The court stated that "It would indeed be a remarkable result if legislation enacted to provide a new statutory cause of action to innocent parties who have suffered contamination of their property did not permit the party to recover the costs of remediating their property, given the EPA's broad and important goals of protecting and restoring the natural environment " - See paragraphs 56 to 70.

Pollution Control - Topic 9318

Enforcement - Liability for compensation by owner or person controlling pollutant - At issue was whether compensation for pollution under s. 99(2) of the Environmental Protection Act was dependent upon the establishment of actionable nuisance at common law, which required proof of physical injury to the land or substantial interference with the use or enjoyment of the land in order to claim damages - The Ontario Court of Appeal was not persuaded that proof of common law nuisance was a prerequisite to a claim under s. 99 - This new cause of action eliminated "in a stroke" such issues as intent, fault, duty of care, and foreseeability, and granted property owners a new and powerful tool to seek compensation - See paragraphs 71 to 76.

Pollution Control - Topic 9318

Enforcement - Liability for compensation by owner or person controlling pollutant - Waste petroleum hydrocarbons (PHC) stored by Thorco Contracting contaminated the soil and groundwater on its property - The groundwater flowed onto adjoining property owned by Midwest, contaminating that property too - Midwest sued Thorco and its owner, Thordarson (defendants), seeking compensation under s. 99(2) of the Environmental Protection Act - The Ontario Court of Appeal rejected an argument by the defendants that any damages awarded to Midwest should be measured by the diminution in the value of Midwest's property rather than by the cost of remediation - The court held that the future remediation costs for Midwest's property were recoverable and Midwest was entitled to judgment for the full amount of its estimated costs, being $1,328,000 - See paragraphs 56 to 80.

Torts - Topic 1270

Nuisance - Particular nuisances - Soil contamination - [See Damage Awards - Topic 2030.9 ].

Cases Noticed:

Mortgage Insurance Co. of Canada v. Innisfil Landfill Corp. (1996), 2 C.P.C.(4th) 143 (Ont. Gen. Div.), refd to. [para. 38].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 48].

R. v. Consolidated Maybrun Mines Ltd. et al., [1998] 1 S.C.R. 706; 225 N.R. 41; 108 O.A.C. 161, refd to. [para. 51].

Ontario (Minister of the Environment) v. Castonguay Blasting Ltd., [2013] 3 S.C.R. 323; 449 N.R. 266; 310 O.A.C. 1; 2013 SCC 52, refd to. [para. 51].

Hosking v. Phillips (1848), 154 E.R. 801; 3 Exch. Rep. 168 (Eng. Ex. Ct.), refd to. [para. 61].

Jens et al. v. Mannix Co. Ltd. (1978), 89 D.L.R.(3d) 351 (B.C.S.C.), refd to. [para. 61].

Home v. New Glasgow, [1954] 1 D.L.R. 832 (N.S.S.C.), refd to. [para. 61].

Tridan Developments Ltd. et al. v. Shell Canada Products Ltd., [2000] O.T.C. 429; 35 R.P.R.(3d) 141 (S.C.), affd. (2002), 154 O.A.C. 1; 57 O.R.(3d) 503 (C.A.), leave to appeal refused (2002), 303 N.R. 397; 177 O.A.C. 399, refd to. [para. 64].

Canadian Tire Real Estate Ltd. v. Huron Concrete Supply Ltd. (2014), 88 C.E.L.R.(3d) 93; 2014 ONSC 288, refd to. [para. 66].

Compagnie pétrolière Impériale ltée v. Québec (Ministre de l'Environnement), [2003] 2 S.C.R. 624; 310 N.R. 343; 2003 SCC 58, refd to. [para. 68].

Imperial Oil Ltd. v. Quebec (Minister of the Environment) - see Compagnie pétrolière Impériale ltée v. Québec (Ministre de l'Environnement).

Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al. (1995), 87 O.A.C. 129; 26 O.R.(3d) 481 (C.A.), refd to. [para. 83].

Bisson v. Brunette Holdings Ltd. (1993), 15 C.E.L.R.(N.S.) 201 (Ont. Gen. Div.), refd to. [para. 85].

United Canadian Malt Ltd. v. Outboard Marine Corp. of Canada Ltd. et al., [2000] O.T.C. 322; 48 O.R.(3d) 352 (Sup. Ct.), refd to. [para. 87].

Lord et al. v. Downer et al. (1999), 125 O.A.C. 168 (C.A.), refd to. [para. 90].

Smith v. Inco Ltd. (2011), 284 O.A.C. 13; 107 O.R.(3d) 321; 2011 ONCA 628, leave to appeal refused [2012] 1 S.C.R. xii; 435 N.R. 392; 300 O.A.C. 401, refd to. [para. 92].

Antrim Truck Centre Ltd. v. Ontario (Minister of Transportation), [2013] 1 S.C.R. 594; 441 N.R. 342; 301 O.A.C. 281; 2013 SCC 13, refd to. [para. 106].

Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114; 375 N.R. 81; 238 O.A.C. 130; 2008 SCC 27, refd to. [para. 108].

AGDA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 43 O.R.(3d) 101 (C.A.), refd to. [para. 113].

Sullivan and Sullivan Farms Ltd. v. Desrosiers et al. (1986), 76 N.B.R.(2d) 271; 192 A.P.R. 271, leave to appeal refused (1987), 80 N.R. 315; 79 N.B.R.(2d) 90; 201 A.P.R. 90 (S.C.C.), refd to. [para. 115].

Deumo v. Fitzpatrick (2008), 39 C.E.L.R.(3d) 299 (Ont. S.C.), refd to. [para. 118].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 21].

Statutes Noticed:

Environmental Protection Act, R.S.O. 1990, c. E-19, sect. 99(2) [para. 42].

Counsel:

Evert Van Woudenberg, for the appellant;

Frank Zechner and Christopher Du Vernet, for the respondents;

Sandra Nishikawa and Isabelle O'Connor, for the intervener Minister of the Environment and Climate Change.

This appeal was heard on June 1, 2015, before Feldman, Hourigan and Benotto, JJ.A., of the Ontario Court of Appeal. The following decision of the court was released on November 27, 2015, by Hourigan, J.A.