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.
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.
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”)).
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.
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:
- Is there sufficient evidence on the s. 218 factors to grant an extension of the limitation period?
- 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”.
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:
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,
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.