Lynn Dramnitzki, Author at

By Lynn Dramnitzki 2015/08/31

Print This Article

The Environmental Protection Act provides that the Ministry of the Environment (Ministry) may issue orders to prevent or reduce the risk of a discharge of a contaminant into the natural environment and/or to prevent, decrease or eliminate an adverse effect that may result from the presence of or discharge of a contaminant in, on or under the property.  The Environmental Protection Act provides that Orders can be made against anyone who owns, owned or who has or had management or control of an undertaking, property or source of discharge of a contaminant into the environment which has an adverse effect on the environment.  Failure to comply with a Ministry Order can result in criminal sanctions for failure to comply.

In 2013, the Ontario Court of Appeal in Kawartha Lakes (City) v. Ontario (Director, Ministry of the Environment) held that the provisions with respect to Orders issued pursuant to the Environmental Protection Act are “no-fault,” and accordingly, a party is required to comply with a Ministry of the Environment Order issued against them even if they are innocent in respect of any discharge of contamination onto their property.

The Ministry of the Environment takes a very broad interpretation with respect to who it considers to have or have had ownership and control of an undertaking, property or discharge of a contaminant into the environment.

In Baker v. Ontario (Ministry of the Environment), the Ministry of the Environment issued orders against former officers and directors of Northstar Aerospace Canada and its U.S. parent company personally, Northstar Aerospace Inc., to continue to pay for the clean-up of its property in Cambridge, Ontario after Northstar Canada and Northstar Aerospace filed for creditor protection and Northstar Canada made an Assignment in Bankruptcy. Northstar Canada owned lands in Cambridge, Ontario and operated a factory which built helicopters on the property from 1974 to 2009.   In the early 2000s, it was found that Trichloroethylene was migrating off of the Cambridge property onto neighbouring properties.  Starting in 2004, Northstar Canada, with the assistance of Northstar Aerospace, voluntarily undertook a clean-up, monitoring and reporting program (the “remediation program”) with respect to the migration of the contaminant off of its property.  In 2009, Northstar Canada and Northstar Aerospace, who were experiencing financial difficulties, closed the Cambridge facility; however, they continued with the environmental program.  In early 2012, the Ministry of the Environment became concerned about the financial viability of Northstar Canada and in April 2012 they issued Orders against both Northstar Canada and Northstar Aerospace to continue the remediation programs it had voluntarily undertaken to that point.  In June 2012, it issued an Order requiring both Northstar Canada and Northstar Aerospace to provide $10 million in financial assurances.  After the June 2012 Order was

issued, both companies, who did not have the financial resources to comply with the June 2012 Order, sought protection from creditors and in August 2012, Northstar Canada made an Assignment in Bankruptcy.  All of the directors and officers resigned in favour of the court-appointed monitor in June 2012.  In August 2012, the Ministry of the Environment took over responsibility for payment of the costs of the remediation program.  In November 2012, the Ministry of the Environment issued Orders against all of the former officers and directors of both Northstar Canada and Northstar Aerospace, including directors and officers who had been appointed after 2009, when the Cambridge plant was closed, and directors and officers who did not have any authority with respect to the Cambridge facility or the environmental issues at that property. The Ministry’s rationale was that the new directors had exercised management and control by causing the companies to seek creditor protection in June 2012. The directors and officers immediately appealed the Order to the Environmental Review Tribunal (the “ERT”) and asked for a stay of the Order pending the appeal.  The ERT refused to grant a stay and the Ontario Superior Court of Justice refused to deal with the matter.  As a result of the refusal of the ERT to grant a stay pending the appeal, the directors and officers were required to continue to comply with the Order to continue the remediation at a cost of $150,000.00 per month.  The remediation  costs were not recoverable even if it was ultimately found that the Ministry of the Environment had improperly issued the Order.  Given the ongoing costs of complying with the Order, and the high costs of litigation, the directors ultimately agreed to settle the matter by paying approximately $4 million towards the cost of the remediation of the property.  As the matter settled, no tribunal or court decision was made with respect to the personal liability of the officers and directors.

Recently, the Ministry of the Environment has issued an Order in the case of a discharge of contaminants that ran into the local drainage system from a former petrochemical plant in Fort Erie, Ontario.  The Order was issued not only against the corporation who owned the property, but also its former director (now deceased), its current director (his son who inherited the company) and the petrochemical company which operated a business at the site between 1974 and 2014 and its directors and officers. It also included the accountant who held the Power of Attorney for the purpose of selling the property, and the real estate brokerage company and its officers and directors who were retained to sell the property.  The rationale given for making the Order against the real estate brokerage and its directors is that they maintained a lockbox on the property and had arranged for a waste management company to attend at the property.  The Order is currently under appeal to the Environmental Review Tribunal, and it is not yet known what the result of the appeal will be.  News reports indicate that the costs of clean-up are approximately $45,000.00 per week.

These two recent cases demonstrate the Ministry of the Environment is casting a wide net when making Orders in respect of discharges of contaminants into the environment, and until the Environmental Review Tribunal or Court determines whether such Orders are valid, it should be assumed that the Ministry of the Environment will continue to make such Orders. The financial consequences of such orders are devastating. Anyone purchasing or dealing with any property or business should be extremely cautious and exercise thorough due diligence with respect to environmental risks associated with any property or business before taking on any role which might be deemed to give them ownership, management or control of that property or business.

Print This Article

Lynn Dramnitzki is a lawyer at SorbaraLaw and has defended her clients’ interests in matters involving environmental, property, and personal injury law. She has also assisted in matters involving municipal governance, planning and zoning, land assembly and by-law enforcement.

Print this article

A recent decision of the Ontario Court of Appeal, Kawartha Lakes (City) v. Ontario (Environment), confirmed that property owners are responsible for cleaning up their property and preventing further contamination in the event of a spill, even though such property owners may be completely innocent.  This case demonstrates that the Ontario Ministry of the Environment (MOE) has the power (and is willing to use it), to make such orders as it deems necessary to ensure that prevention and cleanup is undertaken as quickly as possible.

The potential sources of contamination are numerous and may include not only noxious chemicals, but any substance that may have an adverse effect on the environment.  A recent Supreme Court of Canada decision found that fly rock from a road construction site was properly considered contamination.

In the City of Kawartha Lakes case, the contaminant was spilled heating oil.  The owners of property adjacent to storm sewers and a road allowance owned by the City of Kawartha Lakes (the “City”) had heating oil delivered to their property.  Several hundred litres of oil leaked into the basement of their home and subsequently spread onto nearby property owned by the City.  A cleanup order was issued to the homeowners; however, after they had exhausted their financial resources, including insurance, the contamination on the City’s property had not been dealt with and there was concern that the heating oil would spread further.  The MOE issued an order requiring the City to clean up its property and prevent further discharge of the contaminant.  In appealing the order, the City attempted to present evidence proving they were not at fault for the spill.  The Ontario Court of Appeal upheld the lower court decision, refusing to hear such evidence on the grounds that who was at fault was not relevant to the requirement that the City clean up its land.  The Court of Appeal, in fact, acknowledged that the City was an innocent party.  Nevertheless, it stated that because the primary purpose of the Environmental Protection Act (“EPA”) is to protect and conserve the natural environment, who is at fault is not relevant in the pursuit of that objective.

It is now clear that the MOE wields broad powers to order both public and private property owners to clean up and remediate property that they own or occupy, and to prevent further contamination regardless of who is at fault.  The MOE will issue orders against all affected parties. Costs for MOE-ordered clean up and prevention can quickly run into hundreds of thousands or millions of dollars and can devastate innocent property owners and businesses faced with such orders.  Fortunately, there may be some ways for innocent parties to mitigate their costs.

In many cases, the MOE will order the owner and/or the controller of the pollutant to undertake or pay for the cleanup of all properties affected by the spill.  There are also possible claims pursuant to the EPA and at common law, which may be available to innocent property owners to seek compensation from the parties to blame for the spill.   Further, in cases where the owner and/or controller of the pollutant is not known or is insolvent, the EPA provides for innocent property owners to seek limited reimbursement from the Ontario Government.  The Ontario Government may then seek recovery of those costs from the owner or controller of the pollutant.

The final determination of who is to blame for the contamination and therefore responsible for the cost of the cleanup must be resolved among the parties.  Often a civil court action is required to distribute responsibility among the parties.

Property owners and businesses should regularly investigate whether environmentally risky activities are conducted on adjacent property.  If potentially contaminating materials are present on a property, the owners should carefully guard against those materials escaping onto their own property, or onto neighbouring property.  Finally, given the willingness of the MOE to order remediation without considering fault, prudent owners or occupiers of property should regularly review their insurance coverage to determine whether they would be able to survive an MOE clean up and prevention order in the event of a serious contamination event. 

Article written by: Lynn Dramnitzki
Print this article

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

Municipal, Land Use and Development – Lynn Dramnitzki

Recovering No-Fault Clean Up Costs Post Kawartha Lakes

A recent decision of the Ontario Court of Appeal, Kawartha Lakes (City) v. Ontario (Environment), 2013 ONCA 310, may result in significant unanticipated expenses for municipalities that are ordered to clean up and remediate municipal lands contaminated through no fault of their own. This decision clarifies that property owners, including municipalities, are responsible for cleaning up their property and preventing further contamination in the event of a spill, even though such a property owner may be completely innocent. The Ontario Ministry of the Environment (“MOE”) has the power and the willingness to make such orders as it deems necessary to ensure that prevention and cleanup is undertaken. Clean up and remediation costs incurred by municipalities in response to such MOE orders have the potential to devastate municipal budgets and reserves. Read more… 

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

Municipal, Land Use, and Development – David Sunday and Lynn Dramnitzki

Municipalities are finding it increasingly difficult to fund the growing cost of local services and other municipal operations. Financial support from other orders of government is limited, while increases in property taxes often face stiff resistance from the electorate. While certain municipalities have been given special powers to assess and collect tax other than just property taxes, most municipalities must rely on property taxes as their principal means of funding many of the services they provide. Read more…

* * This article is intended only to inform or educate. It is not legal advice.  Be sure to contact a lawyer to obtain legal advice on any specific matter.

Originally published in Municipal WorldApril 2014.


WEBSITE © SORBARALAW