Tag Archives: gas

EPEA v. Limitations Act: Test Set By Alberta Court For Extending Limitation For Environmental Claims

The Alberta Court of Queen’s Bench has set the “test” to be followed in s. 218 applications pursuant to the Environmental Protection and Enhancement Act, R.S.A. 2000, c. E-12 (“EPEA”) in its May 19, 2016 decision in Lakeview Village Professional Centre Corporation v Suncor Energy Inc, et al 2016 ABQB 288.

Background

The plaintiff had purchased lands in the Lakeview subdivision of Calgary in 1998. The plaintiff was aware that a gas station was formerly on the site. This raised concerns of potential contamination of the lands; however, an initial environmental assessment found no significant contamination.

A number of years later, in 2013, the plaintiff received an offer to purchase the lands, prompting another environmental assessment. This assessment found contamination at a level that required remediation of the lands, including the removal of piping, concrete and soil. The plaintiff has spent approximately $400,000 on remediation to date, with further costs expected.

The Action

As a result of these remediation costs, the plaintiff wishes to recoup some or all of these costs from former owners of the lands, including the successor of the gas station operator and the vendor of the lands who commissioned the first environmental assessment (Suncor and Commonwealth Business Management Ltd. (“Commonwealth”)).

The Problem

Normally, the Plaintiff’s action would be out of time under the Limitations Act, R.S.A. 2000, c. L-12, as the contamination / sale of land occurred well past the 10-year ultimate limitation period. However, there is a provision in EPEA that permits a judge to extend the limitation period in some cases.

The Law

Section 218 of EPEA provides that a judge may extend a limitation period where the basis for the action arises out of a “release of a substance into the environment”. The purpose of this extension is that sometimes, contamination may not be identified for several years.

Where an application is made, s. 218 does identify a list of things for a judge to consider: (a) when the alleged adverse effect occurred; (b) whether the alleged adverse effect ought to have been discovered by the claimant had the claimant exercised due diligence in ascertaining the presence of the alleged adverse effect, and whether the claimant exercised such due diligence; (c) whether extending the limitation period would prejudice the proposed defendant’s ability to maintain a defence to the claim on the merits; (d) any other criteria the court considers to be relevant.

However, there was little in the way of case law on this issue, and there was no “test” to guide the court in considering these types of applications. In particular, does a court decide conclusively in these applications whether the limitation period should, or should not be extended? Or, can the court make a preliminary determination giving plaintiffs the green light to go ahead to trial, where the limitation argument may surface again?

The New Test

Ultimately, Justice Martin created a two-step approach for use in s. 218 applications:

  1. Is there sufficient evidence on the s. 218 factors to grant an extension of the limitation period?
  2. If there is not enough evidence to make that determination, or if there is sufficient evidence but an issue for trial could be determined prematurely, has the claimant shown a good arguable case for an extension? If so, the claimant is entitled to an extension of the limitation period subject to a final determination of the issue at trial.

The court reasoned that this approach respects the purpose of s. 218 while acknowledging the legitimate interest of a claimant to know whether to spend further resources on their claim. It also allows the court to extend the limitation period for obviously meritorious s. 218 cases or to weed out cases that are attempting to “abuse the system”.

The Decision

Lakeview was successful in its application and may now proceed with a claim against Suncor and Commonwealth.

The court found that the “adverse effect” may have been as early as 1969, through to as late as 2013, and that this time frame is “not so long ago that it would be unfair to allow the action to proceed against either party”.

Further, the court determined (on a preliminary basis only) that Lakeview had exercised due diligence when purchasing the property from Commonwealth. Lakeview had made it a condition of its purchase that Commonwealth provide information on the environmental status of the property. Commonwealth had commissioned its own environmental assessment which concluded that there was no evidence of significant contamination and no further investigation would be warranted.

The court found no prejudice to Suncor or Commonwealth as neither had presented any evidence that an extension to the limitation period would prejudice their ability to maintain a defence on the merits.

Finally, Commonwealth had attempted to argue that s. 218 only applied to parties that had caused or contributed to the contamination of the lands and as it was only an owner of lands (between Suncor and Lakeview), s. 218 did not apply.

The court, however, found that the wording of s. 218 is broad. Its opening paragraph refers to civil proceedings “where the basis for the proceeding is an alleged adverse effect”. The basis of Lakeview’s action is determining liability from the fallout of an alleged adverse effect. In addition, EPEA also contemplates the liability of a former owner for remediation in its definition of “persons responsible” for a contaminated site:

SECTION 107
Interpretation and application

107 (1) In this Part,

(c) “person responsible for the contaminated site” means

(i) a person responsible for the substance that is in, on or under the contaminated site,

(ii) any other person who the Director considers caused or contributed to the release of the substance into the environment,

(iii) the owner of the contaminated site,

(iv) any previous owner of the contaminated site who was the owner at any time when the substance was in, on or under the contaminated site,


[Emphasis added]

As such, the court found that this case was one contemplated by s. 218, where the harmful effects of contamination were not evident for a number of years, due diligence was shown, and there was no prejudice to the defendants. Accordingly, the court extended the limitation period for Lakeview’s claim and has allowed this matter to proceed to trial.

James Early

Treating the Symptom, not the Cause

On February 11, 2014 the federal government tabled the 2014 – 2015 federal budget. In addition, Finance Minister, Jim Flaherty, announced a federal plan to create a National Disaster Mitigation Program where, over a period of five years, the government would contribute $200,000,000.00.

This follows on from my post, yesterday, where I commented on the $1,700,000,000.00 damage caused by the June 2013 Alberta floods. What I did not mention was that, as the flood waters receded in Alberta, torrential downpours in Ontario caused flood damage in Toronto estimated to be in the region of $940,000,000.00 and that, according to the Insurance Bureau of Canada, bad weather in 2013 cost Canadian insurers approximately $3.2 billion (yes, that’s $3,200,000,000.00).

In fact, the Insurance Bureau of Canada reported that the 2013 losses came in the wake of four straight years of natural disasters where losses exceeded $1 billion.

The $200,000,000.00 investment announced by the government is to “support mitigation measures, such as infrastructure to control floods that can reduce the impact of severe natural disasters.” In addition, the government will consult with the insurance industry on how best to create a national approach to residential flood insurance.

Adaptation and preparedness for future natural disasters is a positive step taken by the government. It equates, though, to addressing the symptoms of climate change and not the causes.

On that issue, the government is falling behind. While Environment Canada suggests that “significant progress” is being made on Copenhagen Accord targets, the truth is that in its own report, entitled “Canada’s Emissions Trends”, it acknowledges that emissions, by 2020, are projected to be 122 megatonnes higher than the target set by the Accord.

Perhaps the government’s announcement of the National Disaster Mitigation Program is an attempt to cushion the blow of another failure to live up to an international treaty on emissions reductions?

By James Early.

Climate Change in Canada’s Courts?

In a recent article, the BBC reported that the United Kingdom Met Office’s chief scientist, Dame Julia Slingo, believes that climate change is likely to be a factor in extreme weather. She said: “…all the evidence suggests there is a link to climate change,” and continued “there is no evidence to counter the basic premise that a warmer world will lead to more intense daily and hourly rain events.” This comes on the heels of some of the worst flooding in recorded history in the United Kingdom.

Closer to home, the floods that ravaged Calgary and Southern Alberta in June 2013, caused at least $1.7 billion (yes, that’s $1,700,000,000.00) in damage and losses making it the most costly Canadian natural disaster on record.

To date, however, climate change litigation has not made a significant appearance in the Courts of this country. The same cannot be said for the United States.

In the U.S., an increasing number of climate change related cases are being advanced at the State and Federal level, with mixed success. Generally, at this early stage of climate litigation, the claims have been unsuccessful. They are, however, requiring targeted defendants to pay significant sums in defence costs.

It must be remembered, also, that tobacco and asbestos litigation took some time to develop before actions became successful. Increased scientific knowledge went hand-in-hand with the increasing success of tobacco and asbestos litigation. Perhaps it is only a matter of time before the generally accepted climate science is accepted in court in game-changing climate change litigation.

The first American climate change case was not commenced until 2004. In American Electric Power Co. v Connecticut (“AEP”) the plaintiffs pursued nuisance claims against American Electric Power Co. and sought an injunction limiting greenhouse gas emissions. The plaintiffs were ultimately unsuccessful. Before long, however, several other climate-change related claims were filed.

As it relates to natural disasters, a notable case stemmed from the aftermath of Hurricane Katrina. In Comer v Murphy Oil USA, Inc., (“Comer”) the plaintiffs were a number of property owners who claimed against a variety of oil and chemical companies, amongst others, for damage caused to their properties as a result of the business activities of the defendants. The court noted a “sharp difference of opinion in the scientific community concerning the causes of global warming” and foresaw evidentiary problems for the plaintiffs.

Of course, subsequent IPCC reports have established that there is an increasing consensus amongst the scientific community on this issue.

In Comer, the plaintiffs’ claims were based upon demonstrable changes in the Earth’s climate as a result of the defendants’ greenhouse gas emissions. For technical reasons, and without getting into the science of climate change (and its evidentiary hurdles), the court dismissed the plaintiffs’ claim.

It can surely be only a matter of time before a significant legal challenge is brought in Canadian courts on the issue of climate change. One could argue that there are 1.7 billion reasons to explore that possibility in the coming months.

In the meantime, we keep our eyes to the south to wait for the next development in this emerging area of law.

By James Early.

Duty to Consult Works Both Ways

Fort McKay sees it’s fair share of oil and gas development. The Fort McKay First Nation (“FMFN”) is currently seeking judicial review of decisions made by the Minister of Environment and Sustainable Resource Development (“ESRD”) involving consultation and approvals pertaining to a project advanced by Prosper Petroleum Ltd.

Unfortunately, during the ‘informal’ consultation process, FMFN failed to provide a large number of, what it now says are, relevant records to ESRD.

In a preliminary application, FMFN argued that ESRD should produce a further and better record of specific documents or, in the alternative, the Court should allow the filing of an Affidavit which contained ‘voluminous’ records.

FMFN suggested that even though it did not provide documentation during the consultation process, it had produced documentation in relation to prior projects and, as such, ESRD had a duty to inform itself about the scope of the decision it must make and as a part of this process, had a duty to decide whether it had sufficient information to make that decision.

The Alberta Court of Queen’s Bench noted that the duty to consult has two parts. Not only is the Crown obligated to consult, but there is a reciprocal onus on the first nation to make their concerns known. FMFN is not permitted to remain silent and rely upon the Crown’s duty to inform itself. FMFN failed in its onus to cooperate with ESRD.

The Court also struck the Affidavit that FMFN had hoped would be admitted into evidence for the judicial review. A judicial review application is not a trial de novo on the issues, and further evidence should not be permitted on a judicial review unless it is relevant.

It did not help FMFN’s case that the electronic exhibits to the Affidavit contained sub-folders in sub-folders, documents that would not open, and other blank documents that were “helpfully labelled “Blank Document””.

The lesson? Where there is a consultation process, the first nation being consulted must engage in that process, as the duty to consult is not a one-way street.

For the full text of the decision, see: Fort McKay First Nation v ESRD et al, 2014 ABQB 32 (CanLII).

By James Early.