Liability For Innocent Property Owners for Clean Up After a Spill, and Options for Cost Recovery
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.
* * 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.