The Court of Appeal for Ontario’s recent decision in Huang v. Fraser Hillary’s Limited, 2018 ONCA 527 creates interesting and important implications for the tort of nuisance in the context of environmental contamination as well as for the statutory tort under section 99 of the Environmental Protection Act, RSO 1990, c E.19 (“EPA”). It also underscores the growing importance of the “polluter pays” principle in the prosecution of environmental torts.

Briefly, Fraser Hillary’s Limited (“Fraser Hillary”) is a corporation that operates a dry-cleaning business on a commercial property it owns in Ottawa. Eddie Huang is an individual who owns two adjacent properties. David Hillary is an individual (and principal of Fraser Hillary) who owns a residential property abutting the property owned by Fraser Hillary, but not those owned by Mr. Huang.

From 1960 until 1974, Fraser Hillary used, stored, and disposed of organic solvents required for its dry-cleaning business on its property. It did so in accordance with practices that were considered acceptable at the time. These practices resulted in multiple spills of the solvents, which flowed onto, and contaminated, Mr. Huang’s properties. These spilled ceased in 1974, when Fraser Hillary adopted new practices.

Mr. Huang sued both Fraser Hillary and Mr. Hillary for liability in a variety of environmental torts, including the statutory tort under under section 99 of the EPA. The Superior Court of Justice allowed Mr. Huang’s claim in part, dismissing the claims against Mr. Hillary but allowing Mr. Huang’s claims in nuisance and under s.99 against Fraser Hillary. It ordered damages against Fraser Hillary exceeding $1.8 million for the remediation of Mr. Huang’s properties.

In its appeal, Fraser Hillary argued that the lower court erred in its finding of nuisance because the harm to Mr. Huang’s properties had not been reasonably foreseeable.

The Court was unwilling to find that foreseeability of harm forms part of the tort of nuisance in Canadian law, although it acknowledged the divergence in British law on this point, as well as the fact that the law of nuisance may be evolving in Canada. Going further, the Court failed to acknowledge any policy imperative for recognizing foreseeability as part of the tort, noting that nuisance is a “useful tool in the prosecution of environmental claims” (para 23) and linking its broad interpretation to the polluter pays principle.

On the other hand, the Court refused Mr. Huang’s appeal with respect to nuisance on the part of David Hillary, whose property was an upgradient, though indirect, source of pollution to the Huang properties. The Court found no causation and no link between Mr. Hillary’s inaction in responding to the migrating contamination and any unreasonable interference with Huang’s use and enjoyment of his properties.

Perhaps most interestingly, the Court declined to overturn the lower court’s finding on the retrospective application of Part X of the EPA. Although the spills on the Fraser Hillary property had ended more than 10 years before the enactment of Part X of the EPA, the Court found that those provisions of the EPA nonetheless applied to Fraser Hillary’s actions in this instance.

The Court found that the lower court had not, in fact, retrospectively applied Part X because “[t]ime does not freeze in 1974 for the purposes of liability under s. 99(2)” (para 31). Even if no spills occurred subsequent to the enactment of Part X, the Court that reasoned that Fraser Hillary had an ongoing obligation under s. 93 of the EPA to remediate. Since this remediation never occurred, Fraser Hillary was liable to Mr. Huang under s. 99(2)(a)(i) and (ii).

This is an interesting finding and, given the relative dearth of judicial guidance on the application of section 99, will no doubt exert considerable influence over future contaminated land litigation.

That said, it is not immediately evident on the face of the text that liability under s. 99(2)(a)(i) and (ii) of the EPA is linked to s.93. Section 93 creates a duty for any person owning or having control over a spilled pollutant causing an adverse effect to prevent, eliminate, and ameliorate the adverse effect and restore the natural environment.

Sub-paragraph 99(2)(a)(i) allows for the collection of compensation from a person in control of or owning a pollutant that is spilled and causes or is likely to cause an adverse effect. There is no obvious connection between this provision and the duty imposed by section 93.

Meanwhile, s. 99(2)(a)(ii) permits compensation for loss related to damage arising from the “carrying out of or attempting to carry out a duty” imposed under Part X. Is a person who fails to remediate “carrying out … or attempting to carry out a duty” under section 93? Or, were s. 99(2)(a)(i) and (ii) intended to create a right of action against any persons who cause damage while carrying out remediation activities required to carry out under s.93?

Moreover, the Court was not clear about how it arrived at the conclusion that the lower court had not retrospectively applied Part X. Even if s. 93 creates an ongoing obligation to remediate spills that occurred prior to Part X’s enactment, it is not clear that the event triggering the duty established under s.93—namely, a “spill”—occurred. A spill is an discharge event defined under Part X, that, among other criteria, “is abnormal in quality or quantity in light of all the circumstances of the discharge.” If the discharges in question were the result of the operation of a dry-cleaning business conforming with accepted practices at the time can they be considered “abnormal”?

It is uncertain whether there will be an application for leave to appeal to the Supreme Court of Canada. The chances for a successful leave application are similarly unclear, particularly in light of the Supreme Court’s recent reluctance to review the Court of Appeal’s interpretation of s. 99 of the EPA in Midwest Properties Ltd. v. Thordarson, 2015 ONCA 819.

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Manning Environmental Law is a Canadian law firm based in Toronto, Ontario. Our practice is focussed on environmental law, energy law and aboriginal law. 

Paul Manning is a certified specialist in environmental law. He has been named as one of the World’s Leading Environmental Lawyers and one of the World’s Leading Climate Change Lawyers by Who’s Who Legal.

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