THE SIX-MINUTE · Michael Hebert, Beament Hebert Nicholson LLP. 11:18 a.m. – 11:26 a.m....

chair

Donna Shier, C.S. Willms & Shier Environmental Lawyers LLP

October 4, 2017

THE SIX-MINUTE Environmental Lawyer 2017

*CLE17-0100201-A-PUB*

DISCLAIMER: This work appears as part of The Law Society of Upper Canada’s initiatives in Continuing Professional Development (CPD). It provides information and various opinions to help legal professionals maintain and enhance their competence. It does not, however, represent or embody any official position of, or statement by, the Society, except where specifically indicated; nor does it attempt to set forth definitive practice standards or to provide legal advice. Precedents and other material contained herein should be used prudently, as nothing in the work relieves readers of their responsibility to assess the material in light of their own professional experience. No warranty is made with regards to this work. The Society can accept no responsibility for any errors or omissions, and expressly disclaims any such responsibility.

© 2017 All Rights Reserved

This compilation of collective works is copyrighted by The Law Society of Upper Canada. The individual documents remain the property of the original authors or their assignees.

The Law Society of Upper Canada 130 Queen Street West, Toronto, ON M5H 2N6Phone: 416-947-3315 or 1-800-668-7380 Ext. 3315Fax: 416-947-3991 E-mail: [email protected] www.lsuc.on.ca

Library and Archives Canada Cataloguing in Publication

The Six-Minute Environmental Lawyer 2017

ISBN 978-1-77094-827-4 (Hardcopy) ISBN 978-1-77094-828-1 (PDF)

Chair: Donna Shier, C.S., Willms & Shier Environmental Lawyers LLP

October 4, 2017 9:00 a.m. to 12:00 p.m.

Total CPD Hours = 3 h Substantive

The Law Society of Upper Canada Donald Lamont Learning Centre

130 Queen Street West Toronto, ON

SKU: CLE17-0100200-A-REG

Agenda

9:00 a.m. – 9:05 a.m. Welcome and Opening Remarks

Donna Shier, C.S., Willms & Shier Environmental Lawyers LLP

9:05 a.m. – 9:13 a.m. What Does it Take to Discover a Cause of Action for

Contaminated Land? (A discussion of the recent Court of Appeal decision in Crombie)

Lana Finney, C.S., DLA Piper (Canada) LLP

9:13 a.m. – 9:21 a.m. Recent Court Decisions on Quantification of Environmental

Damages Julia Schatz, Bennett Jones LLP


9:21 a.m. – 9:29 a.m. ERT Procedural Issues: MOECC Jurisdiction to Order Off-Site

Work Rosalind Cooper, C.S., Fasken Martineau DuMoulin LLP 9:29 a.m. – 9:37 a.m. ERT Procedural Issues: Notices of Allegation and Their Use in Appeals Matthew Gardner, Willms & Shier Environmental Lawyers LLP 9:37 a.m. – 9:53 a.m. ERT Procedural Issues: Preliminary Motions Seeking Revocation

of the Instrument Under Appeal

Danielle Meuleman, Crown Counsel, Legal Services Branch, Ministry of the Environment and Climate Change (MOECC), Ministry of the Attorney General

John Tidball, C.S., Miller Thomson LLP 9:53 a.m. – 10:01 a.m. ERT Procedural Issues: Motions for Review (Reconsideration) Jerry DeMarco, Environmental Review Tribunal, Environment and

Land Tribunals Ontario 10:01 a.m. – 10:09 a.m. ERT Costs Awards Harry Dahme, C.S., Gowling WLG (Canada) LLP 10:09 a.m. – 10:15 a.m. Question and Answer Session 10:15 a.m. – 10:30 a.m. Networking and Coffee Break 10:30 a.m. – 10:38 a.m. No Take-Backs: Waste Ownership and Liability Transfer Under

the EPA Richard Butler, Willms & Shier Environmental Lawyers LLP

10:38 a.m. – 10:46 a.m. Renewable Energy Approval Applications and Serious Harm to Health

Konstantine Stavrakos, Town of Caledon

10:46 a.m. – 10:54 a.m. Management of Excess Soil

Katherine Koven, Counsel, Legal Services Branch, Ministry of the Environment and Climate Change (MOECC), Ministry of the Attorney General

10:54 a.m. – 11:02 a.m. Expropriating Contaminated Lands

Frank Sperduti, Borden Ladner Gervais LLP

11:02 a.m. – 11:10 a.m. Recent Cases: Sorbram v Litwack

Tamara Farber, C.S., Miller Thomson LLP

11:10 a.m. – 11:18 a.m. Huang v. Fraser Hillary’s Ltd: How Far from Smith v. Inco Have We Come?

Michael Hebert, Beament Hebert Nicholson LLP

11:18 a.m. – 11:26 a.m. Indigenous Consultation on Environmental Approvals

Susan Morgan, Counsel, Legal Services Branch, Environment and Climate Change (MOECC), Ministry of the Attorney General

11:26 a.m. – 11:42 a.m. Cap and Trade in Post Auction Ontario Travis Allan, DeMarco Allan LLP

Patrick Hamilton, Counsel, Legal Services Branch, Ministry of the Environment and Climate Change (MOECC), Ministry of the Attorney General

11:42 a.m. – 12:00 p.m. Question and Answer Session 12:00 p.m. Program Ends

Chair: Donna Shier, C.S., Willms & Shier Environmental Lawyers LLP

October 4, 2017 Total CPD Hours = 3 h Substantive

SKU: CLE17-0100200-A-REG

TABLE OF CONTENTS

TAB 1 What Does it Take to Discover a Cause of Action for Contaminated Land? (A discussion of the recent Court of Appeal decision in Crombie) …………………….……………… 1 – 1 to 1 – 6

Lana Finney, C.S., DLA Piper (Canada) LLP Scott Falls, Summer Student, DLA Piper (Canada) LLP

TAB 2 Recent Court Decisions on Quantification of

Environmental Damages ………………………………………………………… 2 – 1 to 2 – 6 Julia Schatz, Bennett Jones LLP Venetia Whiting, Bennett Jones LLP TAB 3 MOECC Jurisdiction to Order Off-Site Work .……….…………………… 3 – 1 to 3 – 9 Rosalind Cooper, C.S., Fasken Martineau DuMoulin LLP


TAB 4 Notices of Allegation: An Exercise in Mandatory but Limited Utility ………………………………………………………………… 4 – 1 to 4 – 9

Matthew Gardner, Willms & Shier Environmental Lawyers LLP Erin Garbett (Student-at-Law), Willms & Shier Environmental Lawyers LLP

TAB 5 ERT Procedural Issues: Preliminary Motions Seeking Revocation of the Instrument Under Appeal ………………… 5 – 1 to 5 – 64

Danielle Meuleman, Crown Counsel, Legal Services Branch Environment and Climate Change (MOECC) Ministry of the Attorney General

John Tidball, C.S., Miller Thomson LLP

TAB 6 ERT Procedural Issues: Motions for Review (Reconsideration) …………………………………………………………. 6 – 1 to 6 – 12

Rachel McPherson-Duncan, B.A., M.E.S., J.D. Articling Student, Environment and Land Tribunals Ontario

Jerry DeMarco, Environmental Review Tribunal, Environment and Land Tribunals Ontario

TAB 7 Environmental Review Tribunal Costs Awards …………..… 7 – 1 to 7 – 11

Harry Dahme, C.S., Gowling WLG (Canada) LLP

TAB 8 No Take-Backs: Waste Ownership and Liability Transfer Under the EPA ……………………………………………………………… 8 – 1 to 8 – 10

Richard Butler, Willms & Shier Environmental Lawyers LLP

TAB 9 Proving Harm: How the REA Health Test was met in Wiggins v. Ontario (Ministry of the Environment and Climate Change) …………………………………………………………….. 9 – 1 to 9 – 15

Konstantine Stavrakos, Town of Caledon

TAB 10 Excess Soil Management: Proposed Regime ………………..……….…… 10 – 1 to 10 – 4

Katherine Koven, Counsel, Legal Services Branch Environment and Climate Change (MOECC) Ministry of the Attorney General

TAB 11 Expropriating Contaminated Lands …………………………………………… 11 – 1 to 11 – 9

Frank Sperduti, Borden Ladner Gervais LLP Christel Higgs, Borden Ladner Gervais LLP

TAB 12 Recent Cases: Sorbram v Litwack ……………………………………………….. 12 – 1 to 12 – 6

Tamara Farber, C.S., Miller Thomson LLP

TAB 13 Huang v. Fraser Hillary’s Ltd: How Far from Smith v. Inco Have We Come? ………………….…… 13 – 1 to 13 – 61

Michael Hebert, Beament Hebert Nicholson LLP

TAB 14 Consultation with Indigenous Communities on Environmental Approvals ………………………………………………………. 14 – 1 to 14 – 6

Susan Morgan, Counsel, Legal Services Branch, Environment and Climate Change (MOECC), Ministry of the Attorney General

TAB 15 Auctions, Offsets and Linkage: an Ontario Cap-and-Trade Update ……………………………………………….…………….. 15 – 1 to 15 – 5

Travis Allan, DeMarco Allan LLP Cary Ferguson, DeMarco Allan LLP Jonathan McGillivray, DeMarco Allan LLP

TAB 16 Cap and Trade in Post Auction Ontario ………………………………….. 16 – 1 to 16 – 27

Patrick Hamilton, Counsel, Legal Services Branch, Ministry of the Environment and Climate Change (MOECC) Ministry of the Attorney General

TAB 1

What Does it Take to Discover a Cause of Action for Contaminated

Land? (A discussion of the recent Court of Appeal decision in Crombie)

Lana Finney, C.S.,

Scott Falls, Summer Student DLA Piper (Canada) LLP

October 4, 2017


What Does It Take to Discover a Cause of Action for Contaminated Land?

(A discussion of the recent Court of Appeal decision in Crombie)

By: Lana Finney, DLA Piper (Canada) LLP, Partner, and Certified Specialist in Environmental Law, and Scott Falls, Summer Student

Overview In Crombie Property Holdings Limited v. McColl-Frontenac Inc. (Texaco Canada Limited)1, the Ontario Court of Appeal addressed the important legal question of when an action for contaminated land becomes discoverable by a potential plaintiff. The Court’s ruling has attracted a lot of attention from environmental law practitioners across the Province, as the ruling has significant implications for the principle of discovery in future environmental cases. This paper offers a critical assessment of the Court’s reasoning in Crombie, and discusses why the ruling could be problematic for future cases dealing with the issue of discovery.2 Facts The appellant purchased the Crombie Property (the “Property”) in 2012 as part of a large commercial real estate transaction involving multiple commercial properties. Abutting the Property was a property owned by the defendant, Dimtsis Dentistry Professional Corporation (the “Dimtsis Property”). The Dimtsis Property had previously housed a gasoline service station, which had been decommissioned in 2004 and a Record of Site Condition subsequently filed.3 Prior to completing the purchase, Crombie hired Stantec Consulting Ltd. (“Stantec”), an environmental consulting firm, to complete an environmental assessment of the Property.4 Stantec completed a Phase I ESA in February, 2012, which included a review of five historic environmental reports on the Property carried out between 2003 and 2005, which Stantec obtained from Crombie.5 Among the reports was a 2005 Pinchin Report, which was summarized in Stantec’s Phase I report.6 Stantec noted that the results of the Pinchin Report showed petroleum hydrocarbon levels that, although they did not exceed 2005 standards, would by 2012 standards constitute environmental contamination, although not directly comparable due to changes in analytical methods. 7 Stantec subsequently

1 Crombie Property Holdings Limited v McColl-Frontenac Inc (Texaco Canada Limited), 2017 ONCA 16, 406 DLR (4th) 252 [Crombie Appeal] 2 The author of this paper was counsel for several of the defendants in relation to the summary judgment motion and appeal to the Court of Appeal. The views expressed herein are solely those of the author in her personal capacity and do not reflect those of her clients. 3 Supra, note 1, at para 7. 4 Ibid at para 8. 5 Ibid at para 9. 6 Ibid at para 11. 7 Ibid.

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recommended to Crombie that a Phase II ESA be carried out to test for both VOC and petroleum hydrocarbon contamination.8 On March 8, 2012, Crombie waived all conditions on the transaction, including the environmental conditions, such that it was obligated to proceed with the purchase of the Property.9 A Phase 2 investigation was commenced by Stantec shortly thereafter. Crombie instructed Stantec to analyze the samples only for VOCs and not petroleum hydrocarbons. On March 14, 2012, while drilling boreholes, Stantec detected petroleum hydrocarbon odours and discussed these findings with Crombie.10 Crombie instructed Stantec to expand the analysis of soil and ground water samples to include petroleum hydrocarbons. Certificates of analysis dated March 23, 2012 for ground water, and March 30, 2012 for soil, were prepared by the lab. These results showed exceedances for petroleum hydrocarbons. 11 The record does not disclose whether these test results were shared with Crombie prior to its closing of the transaction and purchase of the Property on April 10, 2012. A draft Phase II report was delivered to Crombie on May 9, 2012, showing petroleum hydrocarbon contamination of the soil and groundwater from samples obtained in March 2012.12 The final Phase II report was given to Crombie on September 17, 2012.13 Crombie commenced its action against the respondents on April 28, 2014.14 The statement of claim alleges that Crombie discovered its cause of action upon receipt of the final Phase II report on September 17, 2012.15 Judicial Process In the court of first instance, Justice Wright found that the plaintiff’s claims “were readily available and discoverable well before April 28, 2012.”16 Justice Wright went on to state that, on the totality of the evidence, the claim was discoverable by March 9, 2012, based on the “compilation of the material that was presented to [the plaintiff] that armed them with sufficient knowledge at that moment to move forward with a claim. All the testing that followed simply confirmed their suspicions about what had already been reported on.”17 Even if the action was not discovered by March 9, 2012, Justice Wright found that the action certainly ought to have been discovered by March 30, 2012. She concluded that the most critical revelations of the Phase II report – namely the drilling and soil sample results

8 Ibid at para 12. 9 Crombie Property Holdings Ltd v McColl-Frontenac Inc, 2015 ONSC 6560 at para 29, 259 ACWS (3d) 208 [Crombie ONSC]. 10 Ibid. 11 Ibid. 12 Ibid. 13 Ibid. 14 Crombie Appeal at para 17. 15 Statement of claim, paragraphs 15 and 16. 16 Crombie ONSC at para 27. 17 Ibid at para 31.

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– were made available to Crombie by March 30, 2012.18 In the alternative, she found that Crombie ought to have known of the results and they did not exercise due diligence if they failed to obtain them as it is at this point that a reasonable person acting diligently would have discovered the action. Certainty, as Justice Wright stated, is not the threshold for discoverability.19 Rather, a claim is discovered within the context of the Limitations Act, 2002 (the “Act”),

when the party with the claim first knew, or reasonably ought to have known, that damage occurred, which was caused or contributed to by an act or omission by a person against who the claim is made, and a proceeding would be an appropriate means to remedy it.20

The culmination of all the information Crombie had at its disposal before actually receiving the Phase II report was sufficient to trigger discovery; a reasonable person acting diligently would have, in Crombie’s situation, discovered the action. On appeal, Justice van Rensburg writing for the Ontario Court of Appeal reversed the court below. The Court of Appeal found that the motion judge had made the error of “equating the suspicion of contamination with actual knowledge of contamination”.21 The Court concluded that any information Crombie had by early March 2012 was only historical in nature and did not give Crombie the requisite knowledge that the property was currently contaminated.22 Though the material available to Crombie triggered a duty of due diligence to investigate the matter further, it did not impute “actual knowledge” of the action.23 Crombie subsequently met its due diligence obligation by ordering further testing as per Stantec’s recommendation, and it was only after the results of the subsurface testing were confirmed that Crombie had “actual knowledge”, and therefore when the action first became discoverable.24 Furthermore, the Court of Appeal found that the motion judge had failed to consider the fact that Crombie was in the process of purchasing a total of 22 properties at the time the environmental testing was being conducted.25 Citing Longo, the Court of Appeal stated that when considering whether a plaintiff was reasonably diligent under s. 5 of the Limitations Act, 2002, the court must consider the particular circumstances of the plaintiff in the analysis.26 The Court consequently found that failing to consider the volume of properties being purchased by Crombie constituted a palpable and overriding error on the part of the motion judge.27

18 Ibid at para 32. 19 Ibid at para 39. 20 Ibid. 21 Crombie Appeal at paras 39-43. 22 Ibid at para 41. 23 Ibid at para 42. 24 Ibid. 25 Ibid at para 49. 26 Ibid at para 51. 27 Ibid at para 53.

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Ultimately, the Court of Appeal concluded that the evidence before Crombie was insufficient to give Crombie “actual knowledge” of contamination, and therefore the damage was not discovered within the meaning of s. 5(1)(a) of the Limitations Act, 2002 until after April 28, 2012. Furthermore, the Court found that while the materials available to Crombie may have triggered a due diligence obligation under s. 5(1)(b) of the Act, Crombie acted sufficiently reasonably in order to discharge that duty. Totality of Evidence The Court’s finding is problematic for a number of reasons. First, it seems to discount the totality of evidence that was available to Crombie before April 28, 2012. I agree that a Phase I report alone is normally insufficient to trigger discoverability absent a discussion of actual site conditions; however, Crombie was privy to substantially more information than is given in a regular Phase I report. Most notably, Crombie had access to five historic environmental reports, including the 2005 Pinchin Report, which Stantec noted contained results that demonstrated conditions that when compared to the current Ontario standards would demonstrate exceedances. Not only was there historic evidence that showed the property had contained contaminants that would exceed the current Ontario standards, but Stantec advised Crombie that on March 14, 2012, petroleum hydrocarbon odours were detected on the Property. The existence of these odours, which are indicative of the presence of petroleum hydrocarbons in the subsurface, and Crombie’s knowledge of them, were not at all addressed by the Court, despite being a significant indicator of contamination that put Crombie beyond merely “suspecting” that the property was contaminated. Although the odours are referenced by the Court of Appeal in the recitation of the facts, their significance to the motion judge, and their relevance to the discoverability issue, is completely ignored. Selective Evaluation of Evidence The Court of Appeal put a significant emphasis on the number of properties being acquired by Crombie when assessing whether Crombie acted reasonably with respect to the discovery of environmental contamination. Justice van Rensburg railed against Justice Wright’s reasoning, stating that it “ignores completely the circumstances of the multi-property transaction Crombie was involved in” and that this made up “part of the context in which Crombie’s knowledge ought to have been assessed”.28 While the nature of the transaction certainly should have been taken into account when assessing the reasonableness of Crombie’s actions, the Court inexplicably considered only the volume of the properties in the transaction and not the sophistication of Crombie. It is true that Crombie was acquiring 21 other properties at the time it was also purchasing the Property. However, Crombie is a highly sophisticated party, owning millions of square feet of commercial real estate property, and works closely with major Canadian retailers. As a sophisticated real estate investment company that has been involved in many similar transactions in the past, and is familiar with the environmental assessment process for such 28 Ibid at para 49.

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properties, the Court should have considered Crombie’s experience and expertise in commercial property transactions when assessing whether or not it acted reasonably. By failing to do so, the Court left the analysis incomplete; it only considered the nature of the transaction itself, and not the parties involved in the transaction. The ruling has the effect of setting up a double standard for property purchasers: with more sophisticated parties engaged in larger transactions having to do less in order to act reasonably, whereas individuals purchasing one property may have to go to much greater lengths in order to be found to be acting reasonably in their efforts to discover a cause of action. The Court’s ruling is also confusing with respect to the value of “historic” versus “current” environmental information in discovering a claim. The Court of Appeal dismisses the significance of the previous environmental reports available to Crombie as being “historical” while simultaneously accepting the results of the Phase II report concluding that the property is contaminated. However, by the time the action is commenced, the evidence upon which Crombie relied at the motion to say it discovered its cause of action is two years old. Justice van Rensburg does not provide any support for why she arbitrarily seems to dismiss evidence from 2005 proving exceedances above current standards, while accepting results from 2012, other than to reference the change in analytical procedures. The Court’s ruling leaves open the question of how historic evidence of contamination will be treated in future cases, and how “old” a report must be for it to be discounted as not triggering discoverability. Distorting the Reasonableness Standard Aside from considering the volume of properties involved in the transaction, the Court of Appeal also put significant weight on Crombie waiving the environmental conditions when the Court assessed whether Crombie was acting reasonably. Because Crombie had waived the environmental conditions on March 8, 2012 in the purchase of the property, the Court concluded that there was no longer urgency in determining whether the property was contaminated. Consequently, the Court found that the Motion Judge should have considered this as a contextual factor in her assessment of Crombie’s reasonableness. The effect of this finding, though, is to ultimately allow even the most sophisticated parties to shirk their duty of due diligence by allowing them to delay discovering an action. The Court’s ruling suggests that it is within the realm of acting reasonably for a party to have historic information and current data that indicate there is environmental contamination, yet not have to act with any sense of urgency in confirming those suspicions through further testing. This seems to contradict the reasonable person standard, as a potential plaintiff could theoretically extend the timeframe of discovery by waiving environmental conditions, even in the face of evidence suggesting the property is contaminated. The implications of the Court’s finding regarding the reasonableness of Crombie’s actions are also rather troublesome. Essentially, the Court held that even if there is a historic evidence of subsurface contamination that, when paired with a Phase I report and current observations of odours, demonstrates the likely possibility that a property is contaminated, without a Phase II report, a reasonable person acting diligently would not discover the

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action. This has the effect of virtually eliminating the reasonable person standard under s. 5(1)(b) of the Act, as once an injured party has received a Phase II report showing contamination, they have necessarily discovered the damage under s. 5(1)(a) of the Act. Conclusion From the foregoing analysis, it is clear that the Court of Appeal’s ruling in Crombie presents challenges for assessing similar cases going forward. At a fundamental level, the Court’s reasoning at times arbitrarily discards, discounts, and favours certain evidence without real explanation. More concerning, however, are the implications that the ruling may have on future cases, in that it distorts the reasonableness standard under s. 5(1)(b) of the Limitations Act, 2002, and seems to imply that an expert report is necessary in order to trigger discovery of an action under s. 5(1)(a) of the Act, which runs counter to other decisions of the Court of Appeal in non-environmental cases. The effect is essentially to ease the due diligence requirements for plaintiffs in discovering an environmental claim, which may put future defendants at a substantial disadvantage in disputes when discovery is at issue.

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TAB 2

Recent Court Decisions on Quantification of Environmental Damages

Julia Schatz Venetia Whiting

Bennett Jones LLP

October 4, 2017


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Recent Court Decisions on Quantification of Environmental Damages Julia Schatz and Venetia Whiting – Bennett Jones LLP

October 2017

The Debate

• Quantifying damages in the environmental context is challenging – contamination is rarely static and environmental resources are more difficult to value than private goods.

• The traditional method used by courts in assessing environmental damages has been the

diminution in a property’s market value. Experts value the property before and after the contamination and courts award the difference to the plaintiff.

• An alternative method is to quantify damages based on the cost of a property’s remediation. This approach is applied whether or not remediation has already been completed - though courts will require different evidence concerning the remediation in each scenario. The “reasonableness” of the remediation is always a factor.

• Diminution and remediation are often presented in contrast to one another, generally preferred by

defendants and plaintiffs respectively (some exceptions exist, including in Tridan, below). Costs of remediation are often higher than those based on diminution in value. Remediation costs best ensure that the plaintiff’s property could be returned to the same position it was in before the contamination (if the plaintiff undertakes the remediation) and is thus understood to better align with the “polluter pays principle” as well as the stated purpose of the Environmental Protection Act (EPA) – to provide for the protection and conservation of the natural environment. Defendants claim remediation costs to be unreasonable when no apparent economic damage has been suffered by the plaintiffs or where remediation to “pristine” conditions is sought.

• Despite this apparent tension, courts regularly consider both approaches when quantifying damages, though remediation damages are central in s. 99 EPA cases. The shift in favour of remediation has emerged gradually in the jurisprudence, beginning with the Ontario Court of Appeal’s 2002 Tridan decision and reinforced in the 2015 Midwest decision. Other cases provide further examples.

Tridan Developments Ltd v. Shell Canada Products Ltd, [2002] OJ No 1 (ONCA)

• In 2000, Tridan Developments successfully sued Shell Canada for damages resulting from the leaking of gas from a Shell gas station onto Tridan’s neighbouring property. The trial judge awarded damages for remediation to a pristine level, loss of property value due to stigma, and business interruption loss. No damages were awarded for the plaintiff's executives' time and inconvenience in dealing with the contamination.

• On appeal, Carthy JA upheld the remediation damages, but rejected the stigma claim as “there is

no stigma loss at the pristine cleanup level”. Diminution in value damages were thus unnecessary and double recovery was a non-issue. The court found that damages to compensate for future remediation to levels well above (then) MOECC guidelines would solve both the contamination and diminution in value associated with previous contamination.

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https://www.canlii.org/en/on/onca/doc/2002/2002canlii20789/2002canlii20789.html?resultIndex=3

https://www.canlii.org/en/on/onca/doc/2002/2002canlii20789/2002canlii20789.html?resultIndex=3

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• The plaintiff’s future remediation costs were found reasonable due to the quality of their evidence, including their environmental assessments and the thoroughness of their remediation plan.

• The Court of Appeal held there was no basis for a mandatory injunction requiring Shell to remediate its property, so instead the court required Shell to pay $85,000 to Tridan for a barrier to prevent ongoing contamination.

• Tridan is an early example of the application of the remediation approach to quantifying damages while still considering diminution in value concepts such as stigma. Quoting Rylands v Fletcher, the court found that only full remediation costs would hold the defendant liable for all the damage which was the natural consequence of its nuisance, and thus in this case diminution in value damages were unnecessary.

Midwest Properties Ltd v. Thordarson, 2015 ONCA 819

• Fifteen years after the Tridan judgment, Midwest Properties sued Thordarson and his company, Thorco, under both tort law and s. 99 of the EPA for the escape of hydrocarbons from the defendants' property onto Midwest’s property over a 20 year period. The trial judge dismissed Midwest’s claims on the grounds of failure to prove damages as no remediation had been conducted, no decrease in property value had been shown and Midwest had been able to continue to operate its business with no business losses having been suffered. In addition, the court noted that there would be double recovery as the MOECC had already ordered Thordarson and Thorco to clean-up the property several times.

• The Court of Appeal reversed the decision, awarding Midwest $1.3 million in remediation

damages under s. 99. Thordarson and Thorco did not lead positive evidence of the costs of remediation – they just criticized the costs proposed by Midwest. Hourigan JA held that the trial judge’s interpretation of double recovery undermined the legislative objectives of the EPA, as defendants must not be permitted to use MOECC orders as a shield from liability if they have taken no action to fulfill their obligations. Remediation of the environment is the priority.

• The court dismissed the defendants’ argument that damages should be quantified using diminution in value, citing Tridan and the Law Reform Commission's Report on Damages for Environmental Harm as authority. It was held that the "restoration approach" is superior as restricting damages to diminution in value is contrary to: (i) the wording of the EPA, (ii) the growing trend in the common law to award remediation damages, (iii) the polluter pays principle, and (iv) the entire purpose of enacting s. 99.

• The court reviewed whether the nuisance and negligence claims should have been dismissed in order to assess the punitive damages claim. It held that there were provable damages in the form of diminution in value of the property due to the contamination and potential health risks from the volatile hydrocarbons and nuisance and negligence were made out. It further held that punitive damages of $50,000, against each of Thorco and Thordarson, were appropriate based on the defendants' conduct – namely, its non-compliance with the MOECC orders and certificates of approval, and Thorco's "utter indifference to the environmental condition of its property and surrounding areas", which conduct continued for decades and was "clearly driven by profit".

• The Midwest decision is a strong and recent example of the preference for remediation damages in the context of contamination. However, the court based most of its analysis of damage

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https://www.canlii.org/en/on/onca/doc/2015/2015onca819/2015onca819.html?resultIndex=1

https://archive.org/details/reportondamagesf00onta

https://archive.org/details/reportondamagesf00onta

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quantification on the purpose, history, and interpretation of s. 99 and the EPA. The decision may not be applicable to cases brought under common law heads of damage such as nuisance and negligence, but is strong precedent for the remediation approach to environmental damages in the context of the EPA's statutory cause of action.

Other Recent Quantification of Damages Cases

Canadian Tire Real Estate Ltd v. Huron Concrete Supply Ltd, 2014 ONSC 288 • The plaintiffs sought damages for remediation to restore the property to its pre-existing

condition, full recovery of legal and other professional costs and expenses to address contamination and diminution in property value on the basis of negligence, nuisance, Rylands v. Fletcher, trespass and breaches of EPA, OWRA, TSSA and Liquid Fuel Handling Code. The court ordered compensation for future remediation only ($3.6 million), without a discussion of diminution in value. Out of pocket expenses related to the preparation of the remediation plan were also compensated, including interim remediation projects, site investigations, and monitoring ($1.1 million – although a small amount for "litigation support" was rejected). The court rejected the defendant's argument that the future remediation damages were speculative only as there was no certainty they would be spent on remediation. The defendant did not put forward evidence to challenge the cost estimate of the plaintiff.

SEP Holdings Ltd v Cambridge (City), 2014 ONCA 907

• The Court of Appeal upheld the trial judge’s decision to dismiss the plaintiff’s claim for damages. The quantum of damages was the sole issue at trial as liability was admitted. At trial, SEP sought, amongst other things, remediation damages to a pristine condition or the cost of the stigma value, compensation for increased mortgage financing, business interruption loss and increased construction costs due to the delay in construction, as a result of excess salt levels in the groundwater beneath its property caused by the City of Cambridge’s salt storage facility next door.

• The trial judge dismissed the claim because no damages were proven and the Court of Appeal held that it was not the court's role to speculate on what damages may have been proven with proper theories and credible evidence. SEP had not decided on a project for the property (but had put evidence before the court about its losses for a development it decided not to pursue – the "phantom project"), and thus could not prove any losses suffered. The Court of Appeal noted that SEP did not put any evidence forward about a loss due to delay in being able to proceed with the development or for stigma damages.

• The trial judge accepted the City of Cambridge’s defence that its Site Specific Risk Assessment (SSRA) found that the elevated levels of salt in the groundwater below SEP’s property did not pose any significant risks, as the groundwater would not be used for drinking purposes in any of SEP’s proposed plans for the property. The SSRA was accepted by the MOECC. The Court of Appeal was also persuaded by this defence, as the SSRA proved that the plaintiff could very well have gone ahead with the development it had proposed at the time and no damages would have been suffered. Thus, the plaintiff did not properly mitigate its damages.

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https://www.canlii.org/en/on/onsc/doc/2014/2014onsc288/2014onsc288.html?resultIndex=1

https://www.canlii.org/en/on/onca/doc/2014/2014onca907/2014onca907.html?resultIndex=1

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Dobora Properties Ltd v Arnone, 2016 ONSC 3599

• The plaintiff claimed costs of completed remediation and loss of property value due to the sale of the property for undervalue, as well as several other categories of damages in a solicitor's negligence claim. Liability was admitted. The court awarded all remediation damages claimed, but dismissed the claim for loss of property value, holding that, as per Tridan, stigma damages are only appropriate where expert appraisal evidence supports that conclusion. In this case, the plaintiff did not provide opinion evidence to show the property’s value had diminished at the time of sale due to the fact it had been previously contaminated (and an MPAC assessment is not sufficient as evidence for the assessment of loss of property value). The Court did note the importance of this discussion, however, and in circumstances where expert evidence verified the stigma, loss in property value damages would be appropriate.

Huang v Fraser Hillary’s Ltd, 2017 ONSC 1500

• The plaintiff sought remediation damages, engineering costs, and an order requiring the

defendant to remediate its own property – the source zone. The court dismissed the request for a remediation order of the source zone, as this fell within the ambit of the MOECC as regulator and remediating the entire source zone was unreasonable. The court accepted the concept of a barrier between the properties to prevent further contamination. The court also declined the plaintiff's request for an indemnification order, on the basis that it was "premature and hypothetical" with no evidence that any third parties would have a claim against the plaintiff. The plaintiff presented various remedial strategies, leaving the court to consider which was the most reasonable. The plaintiff was awarded approximately $1.6 million in remediation damages and $200,000 for costs incurred in preparing the remedial strategies, for nuisance and under s. 99 of the EPA. Huang is currently under appeal.

Gendron v Thompson Fuels, 2017 ONSC 4009 • Remediation damages were ordered without a discussion of diminution in property value, as

remediation had already been completed. The court’s analysis revolved around the reasonableness of the remediation costs, including whether demolition of the house, replacement of the house, excavation of the entire site, off-site remediation and the use of advanced technology were reasonable. The MOECC played an important role in helping to establish what was reasonable. In this case, the demolition and rebuilding of the home and the off-site remediation were considered to be reasonable. The only exception was the 16% administrative fee added to one of the contractor costs. Also, the damages claimed for excavation, hauling, and disposing of contaminated soil were reduced by 50% in order to meet the reasonableness test.

The Debate Revisited

• Recent case law suggests that the tension between remediation and diminution in value remains. Despite a growing trend toward remediation damages, diminution in value continues to be relevant in many circumstances.

• Contamination may be capable of being remediated, but to varying standards and degrees.

There can be residual uncertainty and risk post-remediation which translates into loss of

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WSLEGAL\071042\00009\18521986

5

value. Imposing a choice on plaintiffs between damages for diminution in value and remediation costs threatens to undercompensate plaintiffs for their actual losses.

• On the other hand, requiring defendants to pay for remediation not yet undertaken, as was

the case in Midwest, threatens to unjustly enrich plaintiffs for losses not yet, if ever, incurred. Defendants may be concerned about paying twice if an outstanding MOECC order exists at the time a court order is issued against them. This was considered in Midwest, where the ONCA dismissed the double recovery claim on the grounds that the defendants had made no attempts to fulfill the MOECC orders and the MOECC, as intervener on the appeal, agreed to withdraw its outstanding orders if the court found in favour of the plaintiff.

• When applied properly, remediation and diminution can coexist and complement each other,

ensuring that plaintiffs receive full compensation for their full damages and without allowing for double recovery. Remediation ensures that the public interest in a healthy environment is addressed, while compensation for lost property value ensures that any loss above and beyond the contamination itself is addressed.

• Not every case will necessitate the use of both approaches (Gendron), or even a discussion

of them (Canadian Tire), but Tridan and Dobora illustrate the importance of considering diminution in property value to ensure the plaintiff is returned to its former state. This consideration can result in a higher award of damages for remediation to a pristine level, ensuring property value is a non-issue post-remediation (Tridan), or an award of diminution in value damages on top of remediation costs to offset any loss in value despite remedial efforts (Dobora). This may occur in cases where remediating to pristine or even generic standards is not possible, or where stigma may remain after remediation to generic standards.

• As set out below, how the approaches will be applied by the courts depends on the

reasonableness of the damages established by the evidence (or not, SEP). What Does This Mean for Your Clients?

• In the environmental context, the damages analysis turns on expert evidence. Such evidence is necessary to prove damages. Whether arguing for diminution in value or remediation, contamination and real estate valuation experts are required, and the persuasiveness, thoroughness, and above all, reasonableness of their conclusions is often what convinces a court (Gendron).

• A client may seek remediation costs for contamination, but if no remediation plan has been prepared and no experts consulted as to cost, the court has no guidance as to the appropriate award. Intensive remediation is unlikely to be supported by a court without strong supporting expert evidence (Huang).

• In either instance of seeking reimbursement for remediation costs already incurred or

proposed future costs, clients should provide the court with expert evidence that supports the reasonableness of the remediation, including the options that have been considered, the detailed plan going forward, the timeline and costs of such plan and the rationale as to why the chosen plan is the most appropriate course to take.

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6

• If seeking diminution in value damages, an expert who can speak to quantification of loss in property value – usually an individual experienced in property appraisal - is necessary.

• Defendants should also be aware of the importance of putting forward expert evidence to

demonstrate the unreasonableness of the plaintiff’s conducted remediation or future remediation plan or the lack of environmental damage suffered by the plaintiff, including a lack of stigma or loss in property value. Courts expect defendants to lead positive evidence on remediation costs. In Midwest, the defendants did not lead their own evidence on the proposed remediation costs, choosing instead to simply challenge the reasonableness of the plaintiff’s remediation proposal. Such an approach brought criticism from the court.

• Risk assessments will play into the assessment of the reasonableness of the damages sought.

In Huang, the court accepted the MOECC's employee's evidence that the MOECC would be unlikely to approve a risk assessment for a site which had free product present. In that case, the court accepted that remediation to generic residential standards was necessary, and the defendant was liable for the costs of remediation to those standards.

• In SEP Holdings, the existence of an approved risk assessment provided a useful defence for

the defendant against remediation damages – as it helped to demonstrate that there was really no damage suffered by the plaintiff because the only risk presented by the contamination was to drinking water – and no one was going to be drinking the water.

• A final consideration is the quality of the expert evidence. In Canadian Tire, the defendant’s

expert evidence on groundwater flow was not given due consideration by the court because the expert relied on only one collection of data. The court accepted the evidence of the plaintiff’s experts, who relied on data taken at different times of the year, with comprehensive measurements taken in accordance with standard practice.

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TAB 3

MOECC Jurisdiction to Order Off-Site Work

Rosalind Cooper, C.S. Fasken Martineau DuMoulin LLP

October 4, 2017


MOECC Jurisdiction to Order Off-Site Work

Rosalind H. Cooper

Fasken Martineau DuMoulin LLP

The Scope of Preventative Orders

Section 18 of the Ontario Environmental Protection Act (“EPA”) permits

the Director of the Ministry of the Environment and Climate Change (“MOECC”) to

issue an order requiring parties to undertake certain work, including delineation of

contamination. Most environmental lawyers are aware of the scope of parties against

whom such orders may be imposed, and there are several decisions from the

Environmental Review Tribunal (“Tribunal”) that provide guidance on what factors the

Tribunal will consider in determining whether a party has control over contamination or

the property on which contamination is found. The nature of the activities that the

Director can require an orderee to undertake is also clearly set out in Section 18 of the

EPA.

However, there has for some time been uncertainty as to whether Section

18 of the EPA permits the Director to order a party to conduct those activities on third

party property. While the issue has been raised as a ground of appeal in several appeals

before the Tribunal, it has never been argued for a variety of reasons, including that the

appeals have been resolved or otherwise withdrawn. Recently, however, the issue was

argued in the context of a jurisdictional motion, and the Tribunal’s decision, dated

September 17, 2017, provides the Tribunal’s perspective on this question.

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Background

The case, Hamilton Beach Brands Canada Inc. v. Ontario (Environment

and Climate Change)1 involved four orderees (“Orderees”), all of whom were named in

an order (“Order”) issued by the Director as persons who own or owned or who have or

had management or control of a property. The property (“Property”) was formerly the

site of a small-appliance manufacturing business and was contaminated by chlorinated

solvents (“Contaminants”).

The Order alleged that Contamination had migrated from the Property to

other residential, commercial and institutional properties (“Off-Site Properties”) and

required delineation at those Off-Site Properties, as well as indoor air quality sampling.

There were no requirements in the order pertaining to work to be conducted on the

Property.

Jurisdictional Motion

The Orderees collectively brought a jurisdictional motion to challenge the

ability of the Director to issue an order requiring activities to be undertaken on Off-Site

Properties, as opposed to on the Property. The arguments made by the Orderees and by

the Director are discussed below, as is the reasoning of the Tribunal.

The Tribunal held that a Director does has jurisdiction to make an order

under Section 18 of the EPA requiring a person who owns or owned or who has or had

management or control of an undertaking or property that is contaminated to delineate

contamination that has migrated to off-site properties. Interestingly, the Tribunal noted

that the decision did not deal with the Director’s discretion and the specific requirements

of the Order, which were considered matters for the full hearing. The Tribunal also did

not deal with other future orders relating to remediation which may be issued by the

Director in connection with the Contamination at Off-Site Properties.

1 At the time of submission of this paper, the decision of the Tribunal had not yet been appealed, but

the appeal period had not yet expired.

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The Facts

For the purposes of the motion, the following facts were accepted by the

Tribunal and repeated here:

• From 1948 to 1985, H.J. McFarland Construction Company Limited owned the

Property. Through a series of amalgamations, Carillion is the successor

corporation.

• Between 1962 and 1975, Proctor-Silex Limited was a tenant of the Property and

operated a small appliance manufacturing business. This was the period during

which the property was contaminated.

• After 1975, all manufacturing at the property ceased. Proctor-Silex Limited

continued to use the Property for warehousing and distribution until 1982.

• Since 1983, Hamilton Beach Brands Canada Inc. (“HBBC”) or its predecessor

has been the tenant of the Property. In that year, HBBC purchased the assets of

Proctor-Silex Limited, including the lease. HBBC continued the warehousing

and distribution operation at the Property.

• From April 1985 to December 2014, Mr. DiRocco owned the Property. In

December 2014, he transferred ownership of the Property to a numbered

company, which he owns and controls.

• In 2008, HBBC employees noticed a substance seeping through the floor of a

building on the Property. Subsequent investigations determined that the property

and some neighbouring properties have Contamination.

• In October 2014, the MOECC issued a draft order requiring the Orderees to

develop a work plan to assess groundwater, surface water and soil Contamination

on the Property and at Off-Site Properties and the Orderees voluntarily complied

with the draft order, and the MOECC approved a final work plan in April 2015.

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• Between April 2015 and July 2016, the Orderees voluntarily performed air,

groundwater and soil testing on the Property and certain Off-Site Properties with

MOECC’s input and approval.

• On March 30, 2016, the MOECC requested a delineation work plan for the Off-

Site Properties, which was submitted on May 3, 2016. In July 2016, the MOECC

requested that the work plan include additional delineation measures.

• In February 2017, the MOECC conducted indoor air monitoring at nine of the

Off-Site Properties.

• The Order under appeal, dated April 12, 2017, requires submission and

implementation of a work plan to investigate and delineate soil vapour,

groundwater and surface water impacts on the Off-Site Properties.

• The Order does not require investigation and delineation of Contamination on the

Property or that any action be taken with respect to the Property.

• Part 3 of the Order refers to Contamination of the Property and the possibility of

continuing migration of the Contamination to the Off-Site Properties.

Section 18 of the Environmental Protection Act

Section 18 of the EPA is reproduced below:

Order by Director re preventive measures

18 (1) The Director, in the circumstances mentioned in subsection (2), by a written order may require a person who owns or owned or who has or had management or control of an undertaking or property to do any one or more of the following:

1. To have available at all times, or during such periods of time as are specified in the order, the equipment, material and personnel specified in the order at the locations specified in the order.

2. To obtain, construct and install or modify the devices, equipment and facilities specified in the order at the locations and in the manner specified in the order.

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3. To implement procedures specified in the order.

4. To take all steps necessary so that procedures specified in the order will be implemented in the event that a contaminant is discharged into the natural environment from the undertaking or property.

5. To monitor and record the presence or discharge of a contaminant specified in the order and to report thereon to the Director.

6. To study and to report to the Director on,

i. the presence or discharge of a contaminant specified in the order,

ii. the effects of the presence or discharge of a contaminant specified in the order,

iii. measures to control the presence or discharge of a contaminant specified in the order,

iv. the natural environment into which a contaminant specified in the order may be discharged.

7. To develop and implement plans to,

i. reduce the amount of a contaminant that is discharged into the natural environment,

ii. prevent or reduce the risk of a spill of a pollutant within the meaning of Part X, or

iii. prevent, decrease or eliminate any adverse effects that result or may result from a spill of a pollutant within the meaning of Part X or from any other discharge of a contaminant into the natural environment, including,

A. plans to notify the Ministry, other public authorities and members of the public who may be affected by a discharge, and

B. plans to ensure that appropriate equipment, material and personnel are available to respond to a discharge.

8. To amend a plan developed under paragraph 7 or section 91.1 in the manner specified in the order.

Grounds for Order

(2) The Director may make an order under this section if the Director is of the opinion, on reasonable and probable grounds, that the requirements specified in the order are necessary or advisable so as,

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(a) to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or

(b) to prevent, decrease or eliminate an adverse effect that may result from,

(i) the discharge of a contaminant from the undertaking, or

(ii) the presence or discharge of a contaminant in, on or under the property.

Arguments Advanced by Orderees

The Orderees argued that orders under Section 18 of the EPA are

protective and preventative in nature, and intended to deal with future events or

circumstances in order to prevent harm or further harm before it occurs. They pointed to

the words “risk” and “prevent” found in Section 18(2)(a) and argued these words

supported this intent. The Orderees argued that the phrase “adverse effect” in Section

18(2)(b) refers to a future event that is related to the potential off-site migration of

contamination at the time the order is made, and that the work required must be on-site

work only to address the risk of that adverse effect. The Orderees submitted that, because

the Order under appeal dealt with assessing harm that has already occurred or “historic

contamination” on the Off-Site Properties, the Order was beyond the jurisdiction of the

Director.

The Orderees also referred to Section 17 of the EPA which provides for

remedial orders and is fault-based, addresses past discharges, and can require that action

be taken on both a source property and off-site properties. The Orderees argued that the

intent of Section 18 could not have been to place an innocent owner of property in a

worse position than a person at fault, namely, the “polluter” because that would be “an

absurd result and cannot reflect the intent of the legislature.”

From a policy perspective, the Orderees submitted that there was no gap

created in the protection of the natural environmental by this interpretation in that the

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Director could make a Section 18 order against the Orderees to do work on the Property

and against other persons to implement a work plan on the Off-Site Properties. As an

example of such an approach, they cited Kawartha Lakes (City) v. Ontario (Director,

Ministry of the Environment), 2013 ONCA 310 (“Kawartha Lakes”).

Director’s Submissions

The Director argued that Section 18 of the EPA permits the Director to

require work to prevent, decrease or eliminate any adverse effect that may result from

contamination that has been identified. The preventative nature of the order was that it

sought to prevent an existing adverse effect from being exacerbated or to prevent the

contamination from causing further or additional adverse effects and that delineation is a

necessary first step to preventing, decreasing or eliminating an adverse effect.

The Director referenced the words “decrease” and “eliminate” in Section

18(2)(b) and argued that Section 18 applies to existing situations. The Director submitted

that: “An order under s. 18 can require a person to address on-site and off-site effects that

result from a discharge that occurred on the source property in the past, as well as the

continued presence and migration of the contaminants over time.”

The Director argued that contamination is not bound by property lines and

it would be artificial to limit the Director’s jurisdiction to only address on-site

contamination and that would not protect and conserve the natural environment. The

Director further submitted that Section 18 was sufficiently specific and did not create an

indeterminate amount of liability and that the Orderees’ narrow “interpretation imposes

an incoherent scheme, and results in a self-defeating operation of the Act.”

The Director argued that the Tribunal should adopt a purposive analysis

that favours interpretations that promote the purpose of the EPA and that it would be

“inconsistent with the purposes of the EPA to interpret Section 18 as authorizing the

Director to require control measures to be carried out only on the Site.”

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Tribunal’s Decision

1. Whether the Adverse Effect must be a Future Event or Circumstance

The Tribunal held that the words “decrease or eliminate” appearing in

Section 18 demonstrate that the Director can make an order requiring a person to deal

with an existing and ongoing adverse effect, and not just a future adverse effect. The

Tribunal stated that it would be internally inconsistent to interpret the grounds for a

Section 18 order more narrowly than the list of items that can be required in such an

order. The Tribunal held that this interpretation “recognizes that an adverse effect that

may result from contamination is frequently an ongoing situation and not a single or static

event or circumstance”.

The Tribunal referred to the purpose of the EPA, as set out in Section 3(1),

which is to provide for the protection and conservation of the natural environment and

found that the Orderees’ submission that the purpose and scope of Section 18 overrides

the purpose of the EPA was at odds with the leading authorities. The Tribunal held that

a broad interpretation of the wording of Section 18(2)(b) in the context of Section 18 as

a whole is harmonious with the scheme and object of the EPA and the intention of

Parliament.

2. Whether the Adverse Effect must be related to the Potential Off-Site Migration

of a Contaminant that is on an Orderee’s Property at the time the Order is Made

The Tribunal found that contamination and adverse effects are not

constrained by the boundaries of a property, either on an initial discharge or because of

migration, and that the adverse effect does not have to be related to the potential off-site

migration of a contaminant, nor must the contaminant be on an orderees’ property at the

time the order is made, although there must be some nexus with an orderee’s property.

Interestingly, the Tribunal held that the Director’s argument that the

orderees could have prevented the migration of the contamination off-site, or had the

opportunity of doing so was not relevant to an interpretation of Section 18(2) and also

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not supported by any evidence, but that it may be relevant to the exercise of the Director’s

discretion under Section 18(1), which was not at issue in the motion.

3. Whether the Order may Require Work only On-Site but not Off-Site, to Address

the Risk of an Adverse Effect

The Tribunal held that the list of requirements that can be ordered under

Section 18(1) includes off-site work and cited as an example Section 18(1)6.iv. which

requires one to “study and to report to the Director on the natural environment into which

a contaminant specified in the order may be discharged.”

What Next?

The Tribunal concluded that:

1. the Director has jurisdiction to make an order regarding existing, ongoing and

future adverse effects;

2. the adverse effect does not have to be related to the potential off-site migration of

a contaminant, nor must the contaminant be on an orderees’ property at the time

the order is made; and

3. a Section 18 order may require work on-site and off-site to address an adverse

effect.

Unless appealed and overturned, the Tribunal’s decision means that

environmental lawyers must advise their clients that the Tribunal has now adjudicated on

the issue and concluded that off-site work may be required under Section 18 of the EPA

and that this argument is no longer available as a possible means to avoid liability for

off-site work.

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TAB 4

Notices of Allegation: An Exercise in Mandatory but Limited

Utility

Matthew Gardner Erin Garbett (Student-at-Law)

Willms & Shier Environmental Lawyers LLP

October 4, 2017


Notices of Allegation: An Exercise in Mandatory but Limited Utility

Author: Matt Gardner, with the assistance of Erin Garbett (Student-at-Law)

The Environmental Review Tribunal’s (“ERT”) Rules of Practice and Practice Directions (the

“Rules”) include a procedure for those involved in an ERT appeal, known as a “Notice of

Allegation”.

The Rules not only permit, but arguably compel, a “Party” to an ERT appeal who knows the acts

or omissions of a person who is not a Party, a Participant or a Presenter to file and serve a

Notice of Allegation.

It is tempting to compare an ERT Notice of Allegation to a third party claim in the civil litigation

context.

In a civil action, a defendant may issue a third party claim against a non-party, either as a direct

claim or for contribution and indemnity, or both. Similarly, a party to an appeal before the ERT

may be tempted to bring non-parties who may be responsible for environmental issues into a

proceeding that gives rise to the appeal.

With the exception of a single narrow circumstance, the ERT has in two recent cases firmly

rejected the proposition that a Notice of Allegation is akin to a third party claim.

In Rubin v. Ontario (Environment and Climate Change)1 and Technical Standards and Safety

Authority v Kawartha Lakes,2 the ERT confirmed the limited role that Notices of Allegation can

play in ERT proceedings. The ERT concluded that Notices of Allegation are not intended to be

used to answer questions of fault or responsibility. Instead, Notices of Allegation must be used

to fulfill the purposes of the Environmental Protection Act3 (EPA), that is protection of the

natural environment.

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Notices of Allegation are not a Means of Apportioning Liability

Notices of Allegation are governed by sections 84 and 85 of the ERT Rules:4

84. A Party who requests that the Tribunal vary, revoke or provide other relief

from the decision under appeal because of the alleged acts or omissions of a

person who is not a Party to the appeal shall, if the acts or omissions of that

person are known to the Party at the commencement of the proceeding,

prepare a notice of allegation…

85. A Party who, during the course of a proceeding, requests that the Tribunal

vary, revoke or provide other relief from the decision under appeal because of

the alleged acts or omissions of a person who is not a Party to the appeal shall,

within 5 days of learning of the person’s acts or omissions, serve that person and

the Parties with a notice of allegation and file the notice with the Tribunal

together with proof of service…

Read plainly, ERT Rules 84 and 85 might lead a party to believe that it will be able to share

liability with others through the issuance of a Notice of Allegation.

Because Notices of Allegation are mandatory (the Party shall prepare a notice of allegation if

the acts or omissions of that person are known to the Party), one might assume that Notices of

Allegation are important mechanisms specifically designed to assist the ERT in making a

decisions. In earlier cases, this assumption may have been correct.

The ERT had, in the past, been willing to look beyond the Director’s Order and suggest that the

Director amend its Order to name additional parties. For example, in 724597 Ontario Ltd., Re

(also known as “Appletex”),5 the Environmental Appeal Board (the ERT’s predecessor)

confirmed that it not only had jurisdiction but was also willing to “suggest to the Ministry

Director that if the other person’s liability is available, an order against that person should be

considered”.6

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The ERT has moved away from making this kind of recommendation in recent years. While

factors such as the degree of the orderee’s contribution to the environmental problem were

relevant at the time of Appletex7 (often described as “fairness factors”), the ERT has since

shifted focus. In Kawartha Lakes (City) v Ontario (Director, Ministry of the Environment)

(Kawartha Lakes v Ontario),8 the ERT confirmed that first and foremost, the ERT must uphold

the purposes of the EPA.9

This new approach was confirmed in Rubin, where the ERT referenced Kawartha Lakes v

Ontario and held that the ERT is not focused on “ensuring that every possible orderee is listed

on every order”.10 Looking to the EPA’s purpose, the ERT in Rubin further held:11

“The focus of any Tribunal recommendation would be on the Director taking

whatever steps should be taken from an environmental protection perspective,

not from the perspective of allocating liability among orderees and potential

new orderees”.

If an orderee believes that another party should share in responsibility to complete the ordered

work, the orderee must turn to a different forum – civil litigation according to the ERT in TSSA v

Kawartha Lakes and in Rubin. In Rubin, the ERT noted that civil actions include the discovery

process, loser-pays costs awards and other specific costs rules such as those relating to offers to

settle, saying: 12

“Questions of financial liability and relative degrees of fault or responsibility are

best left to civil litigation, which has attributes of a system better suited for that

purpose”.

This approach raises the concern that the ERT renders a decision based on only some of the

facts and with only some of the persons responsible present.

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Standing in the Ministry Director’s Shoes

Pursuant to the EPA, s. 145.2, during a hearing, the ERT may: 13

“confirm, alter or revoke the action of the Director that is the subject-matter of

the hearing and may by order direct the Director to take such action as the

Tribunal considers the Director should take in accordance with this Act and the

regulations, and, for such purposes, the Tribunal may substitute its opinion for

that of the Director”.

Based on this broad discretion, it has long been held that in appeals of Director’s Orders, for

example, the ERT “stands in the shoes of the Director”.14 What it means to stand in the

Ministry Director’s shoes appears to have changed.

In Appletex, the Board concluded that it could “take any steps the Director could have taken,

including not issuing an order at all”.15 This approach was echoed in Montague, where the

reviewing Court held that standing in the Director’s shoes allowed the ERT to “exercise its own

independent discretion as to whether or not an order should be issued”.16

The ERT’s decision in Kawartha Lakes v Ontario signalled a change in approach. The ERT held

that, “[a] detailed inquiry into fault would prejudice the ability of the ERT…to deal with

environmental problems in a prompt and efficient manner and would offer no corresponding

benefit to the purposes of the environmental legislation”.17

The ERT followed this reasoning in Rubin, where it stated that instead of addressing perceived

unfairness to appellants, “today there is an increased emphasis on the purposes of the

legislation as a primary source of guidance for the exercise of discretion by the Tribunal and the

Director”.18 In Rubin, the ERT concluded that it should not “permanently borrow the Director’s

shoes and effectively become the ongoing regulator of first instance”.19

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The ERT now assumes that the Ministry Director has completed a thorough investigation before

deciding to issue an Order. Noting the Ministry Director’s “significant legislative powers, staff

and resources”,20 the Tribunal in Rubin found that the Ministry Director’s investigations will

normally be more efficient and comprehensive than an appeal hearing.

While the ERT’s approach in appeals of orders will depend on the circumstances of each case,

the ERT will not “play an ongoing role in place of the regulator”.21 Moving forward, it is clear

that the ERT will rarely be interested in conducting an investigation into the conduct of others

not named in an Order.

The Test – What is Relevant to the ERT’s Decision

Given that the ERT has said it is unwilling to allocate liability between orderees, order additional

parties, or order the Director to order additional parties, what will the ERT do when faced with

a Notice of Allegation?

Although “the ERT's jurisdiction under section 145.2 of the EPA is not limited to an assessment

of the reasonableness of the Director's decision”,22 the ERT is primarily concerned with

ensuring that those actually named in an Order are properly named.

Focusing on the purposes of the EPA, the ERT will resolve:23

1 whether the orderee was properly ordered under the relevant legislation, and

2 whether the Ministry Director’s decision to order the orderee will ensure that the

environment is protected.

The Statutory Powers Procedure Act,24 ss. 15(1), 25, and 25.01, provide that the ERT has the

authority to control its own process and may admit evidence that is relevant to the

proceeding’s subject matter.

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In an appeal of Kawartha Lakes v Ontario, the reviewing Court held that the ERT is entitled to

“make rulings that certain evidence is irrelevant”.25 When considering whether or not to issue

a Notice of Allegation, an orderee must consider whether or not the ERT would find evidence

regarding a non-orderee relevant.

It now seems that what will be relevant to the ERT in making its decision is tied to its review of

the Director’s decision to order the orderee. Relevant evidence will either demonstrate that

(i) the orderee was not properly ordered under the EPA, and/or (ii) different or additional

measures are needed to protect the environment. It will be important to keep in mind that the

ERT is not making a decision at first instance. It is reviewing a decision. Rather than

determining whether the Director ordered all liable parties, or that the Director ordered all the

correct parties, the ERT will determine whether the Director appropriately ordered the

appellant.

Narrow Exception – Exculpatory Evidence

The ERT left the door open to one narrow circumstance in which a Party may bring a Notice of

Allegation against a non-party akin to a third party claim. Citing TSSA v Kawartha Lakes (which

involved an appeal of a municipal cost recovery Order), the ERT in Rubin confirmed:26

“The Notice of Allegation process is useful where inquiring into the conduct of a

third party will assist in adjudicating whether the named orderee/appellant

should be granted relief from the order. See, for example, the discussion of

exculpatory evidence (vis-à-vis the orderee/appellant) relating to a third party in

Technical Standards and Safety Authority v. Kawartha Lakes (City), [2016]

O.E.R.T.D. No. I at para. 81”.

In Rubin, again citing TSSA v Kawartha Lakes, the ERT confirmed that “evidence about others

that exculpates the appellant may be relevant”.27

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In TSSA v Kawartha Lakes, the ERT confirmed:28

“Evidence that indicates additional potential orderees could have been named is

not relevant, but evidence that indicates that another person was in control and

therefore the appellant orderee was not in control may be relevant. For

example, in certain fact situations, a party may seek to call evidence that says

orderee X could not have been in control of the pollutant because orderee X did

not commit the act that demonstrates control, but that it was actually person Y

who committed the acts that demonstrate control”.

Interestingly, the decision in TSSA v Kawartha Lakes arose from an appeal of a municipal cost

recovery Order, not an appeal of a Director’s Order. Unlike in appeals of Director’s Orders,

where the ERT is conducting a new hearing and is entitled to review any evidence, an appeal of

a municipal cost recovery Order only permits the ERT to consider a limited range of evidence.

Notwithstanding, the ERT in Rubin still followed the reasoning laid out in TSSA v Kawartha

Lakes.

If an orderee is properly liable under the order-making provision, it now seems irrelevant that

there may be additional parties who are also liable. What the ERT is interested in, however, is

the possibility that other parties may be liable instead of the orderee.

Conclusions

To date, the ERT has specifically declined to decide whether it has jurisdiction to add parties to

a Director’s Order. In Rubin, the ERT left the door open, stating that its “approach to its role

will depend on the circumstances of each case”29 and that it “does not completely foreclose a

scenario where it will consider a request by an appellant for relief in the form of adding new

orderees”.30

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In recent years, the MOECC has embraced a “cast a wide net” approach to naming orderees. In

recent decisions, the MOECC has issued orders against corporate directors and officers,

accountants with a power of attorney to sell a property, listing brokers31 and financial

advisors.32

Now that the ERT is no longer focussed on fairness,33 those appealing an Order would hope that

Notices of Allegation might assist to apportion responsibility. However, Notices of Allegation

now seem to have limited utility. Third parties are not even required to respond to Notices of

Allegation.

In Rubin, the ERT specifically focused on the need to maintain an efficient and effective

process.34 Efficiency at the ERT may come at the expense of protracted and expensive civil

proceedings.

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APPENDIX A

1 [2016] OERTD No 20 (Ont ERT) [Rubin]. 2 [2016] OERTD No 8 (Ont ERT) [TSSA v Kawartha]. 3 RSO 1990 c E 19 [EPA]. 4 Environment and Land Tribunals Ontario, “Rules of Practice and Practice Directions of the Environmental Review Tribunal” dated September 12, 2016. 5 [1994] OEAB No 17 (Ont ERT) [Appletex]. 6 Ibid, Appendix 1 – Ruling On Jurisdiction Over Third Parties. 7 Ibid. 8 [2009] OERTD No 59 (Ont ERT) [Kawartha Lakes v Ontario]. 9 Ibid, at para 69. 10 Rubin, supra note 1, at para 47. 11 Ibid, at para 45. 12 Ibid, at para 53. 13 EPA, supra note 3, s 145.2 14 Montague v Ontario (Director, Ministry of the Environment), [2005] OJ No 868 (Ont Div Ct), at para 24 [Montague]. 15 Appletex, supra note 5, at para 128. 16 Montague, supra note 14, at para 24. 17 Kawartha Lakes v Ontario, supra note 8, at para 77. 18 Rubin, supra note 1, at para 83. 19 Rubin, supra note 1, at para 73. 20 Ibid, at para 71. 21 Ibid, at para 73. 22 Kawartha Lakes v Ontario, supra note 8, at para 69. 23 Rubin, supra note 1, at para 73. 24 RSO 1990 c S 22, ss 15(1), 25 & 25.01. 25 Kawartha Lakes (City) v Ontario (Director, Ministry of the Environment), 2012 ONSC 2708, at para 56. 26 Rubin, supra note 1, at para 52. 27 Ibid, at para 90. 28 TSSA v Kawartha Lakes, supra note 2, at para 81. 29 Rubin, supra, note 1, at para 71. 30 Ibid, at para 77. 31 McQuistion v Ontario (MOECC), 2015 CanLII 28335 (Ont ERT). 32 Rocha v Director (Ministry of the Environment), 2014 CarswellOnt 13113 (Ont ERT). 33 Kawartha Lakes (City) v Ontario (Environment), 2013 ONCA 310 (Ont CA). 34 Rubin, supra note 1, at para 84.

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TAB 5

ERT Procedural Issues: Preliminary Motions Seeking Revocation

of the Instrument Under Appeal

Danielle Meuleman, Crown Counsel, Legal Services Branch

Environment and Climate Change (MOECC) Ministry of the Attorney General

John Tidball, C.S., Miller Thomson LLP

October 4, 2017


APPEARANCES: Parties Counsel Director, Ministry of the Environment and Climate Change

Danielle Meuleman

Regional Municipality of Peel

Marc McAree, Richard Butler and Robert Woon

Participants City of Toronto Graham Rempe

Ontario Waste Management Association

John Tidball

Environmental Review Tribunal Tribunal de l’environnement

ISSUE DATE: December 01, 2016 CASE NO.: 15-169

PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended Appellants: See Appendix 1 – Appellant List Respondent: Director, Ministry of the Environment and Climate

Change Subject of appeal: Order for removal of waste ash from site Reference No.: 6411-9M2G78 Property Address/Description: 23449 Woodbine Avenue Municipality: Town of Georgina Upper Tier: Regional Municipality of York ERT Case No.: 15-169 ERT Case Name: Keswick Presbyterian Church v. Ontario

(Environment and Climate Change) Heard: In writing

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ORDER DELIVERED BY JERRY V. DEMARCO REASONS

Background

[1] This order of the Environmental Review Tribunal (“Tribunal”) addresses a motion

requesting a review (reconsideration) of an earlier order of the Tribunal. The motion is

brought by a Director of the Ministry of the Environment and Climate Change

(“MOECC”) in respect of the Tribunal’s order in Keswick Presbyterian Church v. Ontario

(Environment and Climate Change), [2016] O.E.R.T.D. No. 41 (“Revocation Order”).

The Revocation Order granted a motion by the Regional Municipality of Peel (“Peel”) to

have Director’s Order No. 6411-9M2G78 (“2015 Director’s Order”) revoked as against it

and allowed Peel’s appeal.

[2] The revocation motion was heard by a two-member panel of the Tribunal

(“Motion Panel”) on August 12, 2016, following which the Revocation Order was issued

on September 13, 2016. The circumstances giving rise to this motion date back several

years. Some of the key background events, as described in the Revocation Order, are

set out below.

[3] In March 2009, the MOECC issued Certificate of Approval No. 6601-7P4J7C

(now an Environmental Compliance Approval) to Greenpath Inc. (“Greenpath”) for a

waste disposal site located at 121 Watline Avenue in Mississauga, Ontario (“Watline

Site”) authorizing the processing of waste ash from Peel’s Algonquin Power Energy

from Waste Facility.

[4] In 2009, the Keswick Presbyterian Church (“Church”) constructed a new building,

driveway and parking lot on a property located at 23449 Woodbine Avenue, Georgina in

the Regional Municipality of York (“Keswick Church Site”). The MOECC alleges that fill

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deposited on the Keswick Church Site during construction was unprocessed waste ash

from the Watline Site, delivered by Antonio Cruz.

[5] The 2015 Director’s Order, which replaced an earlier Director’s order, was issued

on November 9, 2015 to Donald Constable, Greenpath Eco Group Inc., Greenpath Inc.

and Mark Lawrence (“Greenpath Parties”), Peel and the Church, requiring them to take

a number of steps, including removing the waste from the Keswick Church Site. The

Greenpath Parties, Peel and the Church appealed the 2015 Director’s Order.

[6] Peel filed a preliminary motion to revoke the 2015 Director’s Order as against it.

The Motion Panel granted Peel’s motion and allowed Peel’s appeal in its Revocation

Order, which the Director has now requested be reviewed.

[7] For the reasons set out below, the Tribunal concludes that it is not advisable to

review the Motion Panel’s Revocation Order and dismisses the Director’s motion.

Relevant Legislation and Rules

[8] Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”)

Power to review 21.2(1) A tribunal may, if it considers it advisable and if its rules made under section 25.1 deal with the matter, review all or part of its own decision or order, and may confirm, vary, suspend or cancel the decision or order.

Tribunal Rules of Practice

REVIEW OF ORDERS AND DECISIONS (RECONSIDERATION)

235. A Party may request a review of an order or decision. 236. Notwithstanding Rule 98, a Party making a request under Rule 235 shall serve and file a Notice of Motion and all supporting material within 30 days of the date of the making of the order or decision that is the subject of the request, except in the case of orders and decisions made under the Environmental Bill of Rights, 1993, in which case the request must be made within ten days.

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237. Notwithstanding Rule 99, a Party who wishes to respond to a motion to review shall serve and file its submissions and all supporting material within ten days of the serving of the Notice of Motion and all supporting material under Rule 236. 238. In deciding whether it is advisable to review all or part of its order or decision, the Tribunal may consider any relevant circumstances including:

(a) whether the Tribunal acted outside its jurisdiction; (b) whether there is a material error of law or fact such that the

Tribunal would likely have reached a different decision but for that error;

(c) whether there is new evidence admissible under the conditions of Rule 234;

(d) the extent to which any person or any other Party has relied on the order or decision;

(e) whether the order or decision is under appeal or is the subject of a judicial review application; and

(f) whether the public interest in finality of orders and decisions is outweighed by the prejudice to the requester.

239. The Tribunal may grant the motion in whole or in part, based on the material filed and/or the record from the original Hearing, and may make procedural directions for the review. 240. The panel who issued the original order or decision shall not hear the motion to review, but may hear the review itself if so designated by the Chair. 241. The panel who heard the motion to review shall not conduct the review.

242. Following the review Hearing, the Tribunal may confirm, vary, suspend, or cancel the order or decision under review in whole or in part.

Issue

[9] The issue is whether it is advisable to grant the Director’s motion to review the

Motion Panel’s Revocation Order.

Discussion

Overview of the Parties’ Submissions

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[10] The Director requests a review of the Revocation Order. Peel, supported by the

City of Toronto (“Toronto”) and the Ontario Waste Management Association (“OWMA”),

opposes the Director’s motion.

Director’s Submissions

[11] The Director submits that the Motion Panel erred in law and fact in revoking the

2015 Director’s Order on a preliminary basis prior to a full hearing into the merits of

Peel’s appeal, and requests that the Tribunal order a review of the Revocation Order

and convene a telephone conference call to discuss next steps.

[12] Under Rule 238(b), the Director argues that the Motion Panel made a material

error of law by failing to provide adequate and cogent reasons to explain the application

of s. 42(5) of the Environmental Protection Act (“EPA”) to the Director’s order-making

powers under s. 18 and s. 43 of the EPA, and material errors of mixed law and fact in

finding that Peel did not permit the deposit of waste at the Keswick Church Site.

[13] The Director argues that the Revocation Order conflates the Director’s

jurisdiction under s. 43(a) and s. 43(c) at times, making the Motion Panel’s reasoning

confusing and unclear. The Director alleges that the Motion Panel muddled the

relevance of Hansard excerpts from 1981, when s. 42 was added to the EPA, and 1998,

when s. 43 was amended.

[14] Further, the Director takes issue with the Revocation Order’s reasons not

discussing the application of s. 42(5) to s. 43(c) of the EPA in the context of its finding

that Peel did not “permit” a prohibited act and that a full hearing is not needed to

determine this issue. The Director submits that the Motion Panel relied on facts that

were contested in making the finding about whether Peel “ought to have known” that

Greenpath was unable to handle the quantity of waste ash at the Watline Site and

whether it thereby “permitted” the deposit of waste at the Keswick Church Site. The

Director also submits that the Motion Panel made material errors of mixed law and fact

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by relying on facts that are inaccurate and/or lack adequate explanation in coming to the

conclusion that Peel did not “permit” a prohibited act. Additionally, the Director argues

that the Motion Panel improperly overlooked the legal analysis of the meaning of

“permit” as set out in the Supreme Court of Canada’s decision in R. v. Sault Ste. Marie,

[1978] 2 S.C.R. 1299 (“Sault Ste. Marie”).

[15] The Director argues that these material errors of law and fact are such that the

Motion Panel would likely have reached a different decision, specifically, a denial of

Peel’s motion to revoke the 2015 Director’s Order.

[16] Regarding Rule 238(d) and the extent to which others have relied on the

Revocation Order, the Director submits that the other orderees are affected by the

Revocation Order removing Peel from the 2015 Director’s Order because it is a joint

and several liability order.

[17] Regarding Rule 238(e), the Director submits that, in this case, a review by the

Tribunal of the Revocation Order is more appropriate than an appeal or judicial review.

The Director would need to file separate appeals with the Divisional Court and the

Minister in order to address both the allegations of material errors of law and of mixed

law and fact. These routes of appeal would be more costly, less efficient and more time

consuming than a review by the Tribunal, which has expertise in the interpretation of the

EPA and would be able to address both legal and factual errors collectively.

[18] The Director submits that, under Rule 238(f), the public interest in favour of

granting a review of the Revocation Order outweighs any interest in finality of the order

since it was issued on a preliminary motion and a full hearing has not yet taken place.

Further, the Director argues that the Motion Panel’s legal and factual errors are

particularly significant in this context where the Tribunal was interpreting key statutory

provisions for the first time.

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Peel’s Submissions

[19] Peel submits that the Director is attempting to re-litigate Peel’s motion to revoke

the 2015 Director’s Order and has failed to identify any errors of law or fact by the

Motion Panel that warrant review of the Revocation Order. Peel requests that the

Tribunal dismiss the Director’s motion with costs.

[20] Peel argues that the Director has failed to meet the high threshold on a motion to

review on the basis of Rule 238(b), which requires that the Director establish: (i) that a

material error of law or fact occurred, and (ii) that the error would have caused the

Tribunal to likely reach a different decision but for the error.

[21] Peel submits that a motion to review is not an opportunity to re-argue the initial

motion. Peel argues that a review will not be granted simply because a different

outcome could have been reached by another panel of the Tribunal. Rather, in

considering a motion for leave to review, the Tribunal may review the record to

determine whether the original panel made a material error such that the Tribunal would

likely have reached a different decision but for the error.

[22] Peel submits that the Revocation Order includes reasons that are logical,

reasoned, supportable and comprehensive, and that the ruling was based on a

thorough consideration of the detailed written factual record (including affidavits and

cross-examination transcripts), facta, legal submissions and books of authorities. Peel

notes that the Motion Panel adopted and applied principles of statutory interpretation,

referred to all of the Hansard evidence filed, and considered the practical implications of

different statutory interpretations in explaining the reasoning underlying the Revocation

Order.

[23] Peel argues that many of the Director’s complaints underlying her motion are

made moot by the Motion Panel’s finding that s. 42 of the EPA provides statutory

protection for waste generators from subsequent liability and restricts the Director’s

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order-making power. Peel notes that the Motion Panel’s reasons specifically address

the issue of the Director’s lack of jurisdiction to have issued the 2015 Director’s Order

against Peel under the EPA.

[24] Peel submits that the Director has failed to provide convincing submissions about

why the alleged insufficiency of reasons constitutes a material error in law that would

have caused the Tribunal to likely have reached a different decision.

[25] Peel submits that the Director has mischaracterized the Revocation Order by

suggesting that the Motion Panel found that the Director’s jurisdiction was a genuine

issue to be determined but that it could be done without a full hearing of all the

evidence. Rather, Peel argues, the Motion Panel found that the issue did not require a

full hearing on the merits of the appeal because there was ample undisputed evidence

to determine key questions of law on the motion to revoke.

[26] Peel alleges that the Director has changed her position on whether certain facts

were uncontested and that her current position that the facts relied upon were contested

contradicts her submissions from the motion for revocation that most of the essential

facts were not in dispute. Peel also questions the Director’s allegations about the

findings in the Revocation Order being unsubstantiated given her failure to file affidavit

evidence during the motion to revoke.

[27] Peel argues that, in addition to the Rule 238(b) criterion, the other criteria set out

in Rule 238 support dismissal of the Director’s motion for leave to review. Regarding

Rule 238(d), Peel submits that the respective appeals brought by the other orderees to

the 2015 Director’s Order (none of whom took a position on Peel’s motion to revoke) are

not affected by the Revocation Order. Peel argues that the liability of the Greenpath

Parties and the Church is unaffected by Peel’s removal as an orderee to the 2015

Director’s Order given the Motion Panel’s findings about the two distinct deposits of

waste, the latter of which Peel had no knowledge of and played no role in.

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[28] Regarding Rule 238(e), Peel argues that the threshold test for granting leave to

review is stringent given the Director’s rights of appeal, which she elected not to

exercise.

[29] Lastly, Peel argues that the public interest in the finality of orders outweighs any

prejudice to the Director under Rule 238(f). Peel indicates that the Director’s

interpretation of her order-making powers relative to s. 42(5) of the EPA constitutes a

fundamental and inappropriate change in the regulatory scheme and that the waste

industry is relying on the finality of the Revocation Order in rejecting the Director’s

interpretation and affirming the industry’s established understanding of the legal

framework for waste disposal.

Toronto’s Submissions

[30] Toronto takes the position that the Revocation Order is free of material error and

that a review is not advisable. It argues that the Motion Panel recognized in the

Revocation Order the accepted understanding in the waste industry that s. 42(5) of the

EPA provides a statutory waiver that cannot be overridden by s. 43(a). Toronto argues

that the regulatory scheme for waste disposal rewards good actors through the s. 42(5)

waiver of liability for ownership of waste on delivery to an approved site, and punishes

bad actors with orders such as through s. 18 or s. 43.

[31] Toronto argues that a reversal of the Revocation Order, as argued by the

Director, would introduce uncertainty and unpredictability into the waste industry, which

relies on the statutory waiver provided by s. 42(5).

[32] Toronto further argues that a summary decision was appropriate in the

circumstances, especially since the Director provided no evidence of Peel’s culpability

or failure to exercise due diligence, or any basis for an order against Peel under either

s. 18 or s. 43 of the EPA.

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OWMA’s Submissions

[33] OWMA supports Peel’s position that the Director's submissions do not satisfy the

high threshold required to grant a review of the Motion Panel’s Revocation Order.

OWMA submits that the public interest in the finality of the Revocation Order, which

confirms the waste industry’s longstanding interpretation of the EPA, outweighs any

prejudice to the Director.

[34] With respect to the adequacy of the Motion Panel’s reasons, OWMA submits that

the reasons provided in the Revocation Order are clear about the application of the

protection under EPA s. 42(5) to the Director's order-making powers such that owners

of waste are relieved from future liability under s. 18 and s. 43 once waste is delivered

to and accepted by the operator of an approved waste disposal site.

[35] With respect to the Director’s allegations of material errors of mixed law and fact

in the Motion Panel’s reasons, OWMA submits that the evidence in the record was more

than sufficient to support the Motion Panel’s findings, and that despite the Director’s

allegations in requesting a review, the parties agreed in their submissions on the

revocation motion that the majority of essential facts were undisputed.

Analysis and Findings

The Review Rules in General

[36] There is no disagreement among the parties as to the approach that governs a

motion to review, which was recently summarized in Concerned Citizens of Brant v.

Ontario (Environment and Climate Change), [2016] O.E.R.T.D. No. 26 (“Concerned

Citizens of Brant”) at paras. 67-68:

As with other situations involving the exercise of discretion under its Rules, the Tribunal is guided by the wording of the applicable Rules and the overall purposes of the Rules and the relevant legislation… As set

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out in Baker, at paras. 15-19, the Tribunal’s power to order a review is a discretionary power to be used only rarely:

Under the Rules, review of a decision is a two-step process. The first step is a determination of whether a review is “advisable.” It is only if the answer to this question is yes that the second step, the review itself, is conducted… The Rules give the Tribunal broad discretion to determine when a review is advisable. In making this determination, Rule 230 [now 238] states that the Tribunal “may consider any relevant circumstances,” including the six listed criteria. In Trent Talbot, the Tribunal held that this list is not exhaustive and that the “first three criteria generally set out examples of possible grounds for when the Tribunal may exercise its authority to grant a review, and the last three criteria set out examples of the circumstances weighing against a review” (para. 37). The role of the Tribunal here is not to assess whether the decision is “correct”, but to determine

whether there were errors that meet the criteria set out in Rule [230] [now 238], so as to warrant a review. The review process should not be used as an opportunity for a party to reargue the case. A panel hearing a motion to review should refrain from granting a review simply because a different outcome could have been reached by another panel of the Tribunal. (Trent Talbot, para. 41).

This means that the Tribunal should not re-weigh the evidence to see if a different decision could have been reached, but should review the record and the submitted material only with a view to determining whether the original panel made a material error that warrants a review in the circumstances.

In Trent Talbot, the Tribunal determined that “the power to review should only be exercised in exceptional circumstances under the criteria set out in Rule [230] [now 238]” (para. 43). This high threshold test for review acknowledges the importance of the finality of Tribunal decisions.

As noted in Miller, at para. 18, “any number of reasonable outcomes might be under consideration in a proceeding”. Therefore, the review motion panel should not find that a review is advisable simply because it would have reached a different decision. It is not the role of the panel hearing a review motion to merely substitute its decision for that of the original panel and grant a review hearing too readily. Rather, the power to review should only be used in exceptional circumstances.

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Rules 238(a) and (c): Jurisdiction and New Evidence

[37] The Director does not rely on Rules 238(a) or (c). Therefore, these two Rules

will not enter into the Tribunal’s analysis of whether it is advisable to review the

Revocation Order.

Rule 238(b): Material Error of Law or Fact

[38] Rule 238(b) addresses “whether there is a material error of law or fact such that

the Tribunal would likely have reached a different decision but for that error”.

(i) The Revocation Order’s Treatment of the Motion to Revoke Test

[39] The Director does not take issue with the Motion Panel’s articulation of the

appropriate test to be used in a motion to revoke an order. The Tribunal agrees that

there is no error in the Motion Panel’s analysis set out in Issue 1 of the Revocation

Order (“The Test on a Motion to Revoke a Director’s Order”).

(ii) The Revocation Order’s Interpretation of the Relevant Sections of the EPA

[40] The Director takes issue with the Motion Panel’s analysis of the relevant sections

of the EPA. In particular, the Director states that the Motion Panel failed “to provide

adequate and cogent reasons that allow the parties to understand what the scope of the

application of s. 42(5) is to s. 43 and s. 18”.

[41] In the relevant parts of the Revocation Order, the Motion Panel sets out two sub-

issues. The first sub-issue examines the Director’s jurisdiction to issue the 2015

Director’s Order to Peel under s. 43 in light of s. 42(5). The second sub-issue examines

the Director’s jurisdiction under s. 18.

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[42] The Tribunal turns first to the Director’s argument that the Motion Panel conflated

some aspects of its reasons regarding the relevant sections of the EPA.

[43] In organizing the reasons the way it did (i.e., according to two specifically worded

sub-issues relating to the Director’s jurisdiction to issue an order against Peel), the

Motion Panel was clearly aware that several different sections of the EPA were

involved. The organization of the issues by the Motion Panel demonstrates that it was

aware that there were different aspects to Peel’s argument that the Director lacked

jurisdiction.

[44] The Tribunal finds that the fact that some parts of the Motion Panel’s reasons

relate to the interpretation of more than one section of the EPA makes sense in light of

the factual and legal circumstances of this case. Addressing related legal arguments

together does not necessarily involve a conflation of arguments. For example, the sub-

heading in the Revocation Order preceding para. 28 is titled “Sub-Issue 2(i): Whether

the Director has jurisdiction under s. 43(a) or (c) of the EPA to issue the 2015 Director’s

Order”. The Motion Panel elected to address both relevant subsections of s. 43 in one

sub-issue and then addressed s. 18 as a separate sub-issue. In sub-issue 2(i) of the

Revocation Order, it is clear that the Motion Panel was careful in addressing s. 43 as a

whole in paras. 28, 40, 43, 45, 46, 49, 50, and 52; s. 43(a) specifically in para. 44; and

s. 43(c) specifically in paras. 32, 39, and 56. There are also instances where

references to s. 43 are made in the analysis of the interplay of s. 18 and s. 42 because

Peel argued that s. 42 affected the Director’s jurisdiction to issue orders under both s.

18 and s. 43 (see para. 71). As well, the reasons for sub-issue 2(i) are incorporated by

reference in the analysis of sub-issue 2(ii) regarding whether the Director had

jurisdiction to issue an order against Peel under EPA s. 18 (see para. 70).

[45] The Tribunal finds that the Motion Panel understood what sections of the EPA

were at issue. The Motion Panel also understood how some submissions of the parties

affected one or more of those sections or subsections. The fact that both relevant

subsections in s. 43 were dealt with as a whole in many instances in the Revocation

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Order simply illustrates that the Motion Panel was aware that it was dealing with

interrelated issues. The Tribunal finds that for some parts of the Revocation Order, it

made analytical sense for the Motion Panel to deal with s. 43 as a whole, and in some

instances it was appropriate to deal with the subsections of s. 43 separately. The

Tribunal finds that there was no conflation of the relevant provisions of the EPA by the

Motion Panel.

[46] The Tribunal now turns to the Director’s argument regarding how the Revocation

Order addressed the scope of protection offered by EPA s. 42(5). It is evident from the

Revocation Order and the parties’ submissions on this motion that the interpretation and

application of s. 42(5) is a central part of the analysis of whether the Director had

jurisdiction to issue an order against Peel. The Director asserts that the Revocation

Order addresses a new issue (i.e., the interpretation of s. 42(5)) that will have an

important impact on the MOECC’s scope for issuing future clean-up orders. The

Tribunal agrees with the Director that the Motion Panel’s reasons may have implications

on future fact scenarios like the one present here (see Concerned Citizens of Brant at

para. 172). It is also clear that the Motion Panel was aware of the significance of the

legal questions raised in the revocation motion.

[47] It is apparent that the parties debated the meaning of s. 42(5) of the EPA and its

application to the circumstances of this case in the revocation motion. The Revocation

Order sets out a number of reasons for the Motion Panel’s conclusion that s. 42(5)

provides protection for Peel and that such protection is not limited to “civil liability” but

also “regulatory liability”. In engaging in what it described as a “logical and

straightforward reading of s. 42” (para. 49 of the Revocation Order), the Motion Panel

carefully reviewed the wording of the relevant sections according to the relevant

principles of statutory interpretation, and also considered the parties’ submissions

respecting Hansard and the practical impact of the Director’s interpretation of s. 42(5)

on the waste management system in Ontario.

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[48] The Director takes particular issue with the parts of the Motion Panel’s reasons

regarding the Hansard excerpts. The Tribunal finds that the Hansard excerpts, although

reviewed and analyzed by the Motion Panel in the Revocation Order, were not essential

to the statutory interpretation exercise in determining the revocation motion. In

considering this motion requesting a review of the Revocation Order, the Tribunal finds

that the statements in the Hansard excerpts are too general to have any significant

effect on the interpretation of s. 42(5). The Tribunal finds that any alleged errors in the

Motion Panel’s analysis of the Hansard excerpts are not ones that would likely have

changed the result of the legal analysis. Indeed, the opening part of the Motion Panel’s

analysis of s. 42 does not refer to Hansard as being determinative. Rather it focuses on

a “logical and straightforward reading of s. 42” (para. 49 of the Revocation Order). The

Motion Panel then goes on to look at s. 42 and s. 43 in the larger statutory context (i.e.,

Part V of the EPA) at para. 50 of the Revocation Order. Following that analysis, the

Motion Panel analyzes the provisions in light of the principle of statutory interpretation

that statutes are to be read harmoniously to avoid conflict (para. 51 of the Revocation

Order). Only after those steps in the statutory interpretation exercise does the Motion

Panel look at the Hansard excerpts and the consultation arguments raised by the

parties.

[49] It is noteworthy that the Motion Panel begins its analysis of the Hansard excerpts

in para. 52 of the Revocation Order with a statement that its interpretation is “reflected”

in the Hansard excerpts. In other words, the Motion Panel has reached an earlier

interpretation based on its statutory interpretation analysis in paras. 49-51 and simply

notes that its interpretation is “reflected” in the Hansard excerpts. Therefore, to the

extent that the Director argues that the Motion Panel made errors in the relatively brief

references to Hansard in the Revocation Order, the Tribunal finds that the Hansard

references were not central to the Motion Panel’s conclusion. Put another way, as

argued by Toronto, the Hansard references were not “material” to the result of the

revocation motion. The Tribunal finds that the Motion Panel would likely have reached

the same “logical and straightforward reading of s. 42” even if the parties had not

submitted the Hansard excerpts for consideration by the Motion Panel.

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16 15-169

[50] The Tribunal, on this motion, is examining whether the Motion Panel committed

an error of law that was of such a nature that a different decision would likely have been

reached but for the alleged error. The Tribunal finds that the Hansard references did

not change the Motion Panel’s “logical and straightforward reading” of s. 42, its

“harmonious” analysis of the relevant EPA sections or its interpretation of the sections in

light of the Part V context, and thus the Director has not shown that a different decision

would likely have resulted from a different approach to the Hansard excerpts.

[51] The Director’s submissions also focus on what it regards as failings in some

aspects of the Motion Panel’s reasons. Looking at the reasons as a whole and the legal

conclusions reached by the Motion Panel, the Tribunal sees no error of law that would

likely have changed the decision. The Motion Panel’s conclusions on the interplay

among the three sections of the EPA (including the two relevant subsections of s. 43)

and the protections from liability that s. 42 affords are supportable based on the wording

of the statute. Section 42 was clearly included in the EPA to provide some legal

protections and the Motion Panel gave effect to that section in carrying out an analysis

of the interplay between s. 18, s. 42 and s. 43. The Motion Panel reasonably concluded

that s. 42 provided protection to Peel based on the wording of the statute and the

circumstances of this case, which involved two separate deposits of material (paras. 48-

49 of the Revocation Order).

[52] The Tribunal also agrees with the submissions of Peel and the participants that

the changes to the waste management system that would flow from the Director’s

proposed approach in this case could be addressed through proper public consultation

and any necessary legislative amendments (paras. 54-55 of the Revocation Order).

The Tribunal finds that the Motion Panel made no legal error in the interpretation of the

legislation as it currently stands.

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17 15-169

[53] The Motion Panel was dealing with one of the Tribunal’s home statutes and

received extensive submissions on the statutory interpretation questions raised by the

parties. On the questions of law at issue in this motion (i.e., those involving s. 18, s. 42

and s. 43 of the EPA), the Director has not provided a convincing argument to show that

the Motion Panel’s conclusions contain errors that fit within the wording of Rule 238(b).

(iii) The Alleged Errors of Mixed Law and Fact in the Revocation Order

[54] The Director takes issue with the “uncontested facts” upon which the Motion

Panel relied, as well as the application of those facts to words in the statute such as

“permit”. The Director disagrees with some of the factual conclusions reached by the

Motion Panel and alleges that the Motion Panel failed to discuss key evidence. The

Director states that the Motion Panel “found that it could determine the issue without a

full hearing and yet proceeded to consider and weigh, at least to some extent, factual

evidence”.

[55] Peel relies on Concerned Citizens of Brant at para. 116 in arguing for deference

to the Motion Panel’s conclusions:

…one Tribunal panel reviewing a decision of another Tribunal panel under Rule 235 should consider the motion to review in a manner that offers considerable deference to the original panel, which examined the evidence and submissions in depth. This deferential approach is reflected in the wording of the Rules and the relevant case law…

[56] The Tribunal finds that the Motion Panel had sufficient evidence to dispose of the

motion at a preliminary stage. In this regard, the Motion Panel noted at para. 56:

Although the Director argues that further evidence is needed to make this finding, the Tribunal finds that the uncontested facts before the Tribunal on this motion are sufficient to dispose of this argument. The facts are discussed throughout these reasons, but in particular, there is no dispute that Peel had no knowledge of, and played no role in, the deposit of waste at the Keswick Church Site, that Peel’s deposits of waste at the Watline Site complied with Greenpath’s ECA, and that the contract between Peel and Greenpath required compliance with the law, including the EPA and Greenpath’s ECA.

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18 15-169

[57] The Tribunal finds that there was no error by the Motion Panel when it decided

that it had sufficient evidence to determine the preliminary issues presented to it. This

approach is permitted in a motion to revoke, which shares similarities with a summary

judgment motion in civil litigation (paras. 12-22 of the Revocation Order).

[58] On the motion, it was clear that Peel wanted to have the 2015 Director’s Order

revoked summarily and was relying on certain facts to do so. The onus was on the

parties to bring forward whatever evidence they thought to be relevant (which in this

case included affidavits and cross-examination transcripts) and it was open to the

Motion Panel to make consequent factual findings (see: Hryniak v. Mauldin, [2014] 1

S.C.R. 87). The Tribunal finds that the Motion Panel carefully considered the law and

facts that were presented and reached various legal and factual conclusions that were

open to it. The Tribunal finds that, in essence, the Director is attempting to re-argue her

case on the revocation motion by bringing this motion requesting a review of the

Revocation Order (see Concerned Citizens of Brant at paras. 67-68). The Tribunal

finds that the Director’s argument seeking a review does not reach the standard set out

in Rule 238(b).

[59] The final aspect of the Director’s challenge to the Revocation Order under Rule

238(b) focuses on the Motion Panel’s finding that Peel did not “permit” the deposit of

waste at the Keswick Church Site. The Director states that the Motion Panel came to its

conclusion on this aspect of the parties’ arguments “with no discussion of the legal

analysis of the test/definition of “permit” in these circumstances”. The Director argues

that the Motion Panel improperly overlooked the seminal Sault Ste. Marie case in this

regard.

[60] It is evident from the reasons for the Revocation Order that this was not a

situation where there was “no discussion” of this issue. To illustrate this, the Tribunal

simply points to paras. 56-59 of the Revocation Order, which state:

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19 15-169

With respect to s. 43(c), the facts as agreed to by the Parties do not support a finding that Peel “permitted” a prohibited activity (i.e., the deposit of waste at the Keswick Church Site)... The Director relies on R. v. Sault Ste. Marie, [1978] 2 S.C.R. 1299 (“Sault Ste. Marie”) as support for the position that Peel permitted the disposal of waste, and draws a parallel with this case in that Sault Ste. Marie involved municipal liability for waste. However, the Tribunal finds that Sault Ste. Marie does not establish that Peel has any responsibility for the waste deposited on the Keswick Church Site in this case. Key distinguishing features are that: Sault Ste Marie dealt with a single transfer of waste, rather than involving a second transfer unbeknownst to the municipality, as in this case; in Sault Ste. Marie, the waste was deposited by a contractor in the course of a contract with the municipality; Sault Ste. Marie dealt with responsibility under the Ontario Water Resources Act rather than the EPA, and as such there was no consideration of s. 43(5) of the EPA or a valid ECA at the site of first deposit. In para. 71 of Sault Ste. Marie, the Supreme Court comments that a “municipality cannot slough off responsibility by contracting out the work. It is in a position to control those whom it hires to carry out garbage disposal operations and to supervise the activity, either through provisions of the contract or by municipal by-laws. It fails to do so at is peril.” In this case, however, Peel did not “slough off responsibility by contracting out work”; it complied with the EPA and disposed of its waste in accordance with the law. The Tribunal finds that there is no basis on which Peel could be found to have “permitted” the transfer of waste by Greenpath to the Keswick Church Site.

[61] The Motion Panel clearly discussed the “permitting” question in light of Sault Ste.

Marie and reached a conclusion. The Director may not agree with the Motion Panel’s

analysis but this is not a case where there was “no discussion” of an important issue.

As above, the Motion Panel was in a position to apply the relevant facts, including the

two separate waste deposits, to the concept of “permitting” and reach factual and legal

conclusions. This aspect of the Director’s argument, though framed as a failure by the

Motion Panel to discuss an important issue, is also an attempt to re-argue matters that

were addressed in the Revocation Order.

[62] Looking at the Motion Panel’s reasons as a whole, the Tribunal concludes under

Rule 238(b) that the Director has failed to show that the Motion Panel made any

material legal errors or material errors of mixed law and fact that would likely have

changed the result.

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20 15-169

Rules 238(d) to (f)

[63] Given that the Director has not been successful on its grounds favouring a review

under Rule 238(b), it is not necessary in these circumstances to address the criteria in

Rules 238(d) to (f) that could weigh against a review.

Overall Conclusion Regarding Rule 238

[64] The Tribunal concludes that it is not advisable to review the Revocation Order

and dismisses the Director’s motion requesting a review.

Costs

[65] Peel seeks costs for this motion to review. Rule 227 applies to costs requests in

respect of motions. As with Rule 225, the Tribunal can only consider awarding costs in

proceedings to which s. 17.1 of the SPPA applies (including this motion) where there is

unreasonable, frivolous, vexatious or bad faith conduct. The Revocation Order involved

a novel legal issue and included an important analysis of several sections of the EPA

that may have relevance in other fact situations. Though this motion to review the

Revocation Order was unsuccessful, the Director’s actions in bringing the motion do not

rise to the categories of improper conduct covered by s. 17.1 of the SPPA and the

Tribunal’s Rules. The Tribunal finds that the Director recognized the importance of the

novel issues addressed in the Revocation Order and acted reasonably in seeking a

review. No costs are awarded.

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21 15-169

ORDER

[66] The motion requesting a review is dismissed.

Motion Dismissed

“Jerry V. DeMarco”

JERRY V. DEMARCO ASSOCIATE CHAIR

Appendix 1 – Appellant List

If there is an attachment referred to in this document, please visit www.elto.gov.on.ca to view the attachment in PDF format.

Environmental Review Tribunal

A constituent tribunal of Environment and Land Tribunals Ontario Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

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22 15-169

Appendix 1

Appellant List

Appellant Name File No.

Keswick Presbyterian Church 15-169 Donald Constable 15-170 Mark Lawrence 15-171 Greenpath Inc. 15-172 Greenpath Eco Group Inc. 15-173 Regional Municipality of Peel 15-174

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APPEARANCES: Parties Counsel Region of Peel

Marc McAree and Richard Butler

Director, Ministry of the Environment and Climate Change

Danielle Meuleman and Katie Clements

Keswick Presbyterian Church Patrick Welsh Participants City of Toronto Graham Rempe, Alison Mintoff, and

Persia Etemadi (student-at-law)


ISSUE DATE: September 13, 2016 CASE NO.: 15-169

PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c.E.19, as amended Appellants: See Appendix 1 – Appellant List Respondent: Director, Ministry of the Environment and Climate


(Environment and Climate Change) Heard: August 12, 2016 in Toronto, Ontario

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2 15-169 Ontario Waste Management Association

John Tidball and Nivi Ramaswamy

ORDER DELIVERED BY HEATHER GIBBS AND BRUCE KRUSHELNICKI

REASONS

Background

[1] This order relates to a motion by the Regional Municipality of Peel (“Peel”) to

have Director’s Order No. 6411-9M2G78 (the “2015 Director’s Order”) revoked as

against Peel.

[2] In March of 2009, the Ministry of the Environment and Climate Change (the

“MOECC”) issued Certificate of Approval No. 6601-7P4J7C (the “CofA”) for a waste

disposal site located at 121 Watline Avenue in Mississauga, Ontario (the “Watline Site”)

to Greenpath Inc. (“Greenpath”). The CofA, now an Environmental Compliance

Approval (“ECA”), authorized use of the Watline Site for the processing of waste ash

provided by Peel from its Algonquin Power Energy from Waste Facility.

[3] In 2009, the Keswick Presbyterian Church (the “Church”) constructed a new

building, driveway and parking lot on a property located at 23449 Woodbine Avenue,

Georgina in the Regional Municipality of York (the “Keswick Church Site”). The

MOECC alleges that fill deposited on the Keswick Church Site during construction was

unprocessed waste ash from the Watline Site, delivered by Antonio Cruz.

[4] The 2015 Director’s Order was issued on November 9, 2015 to Donald

Constable, Greenpath Eco Group Inc., Greenpath Inc. and Mark Lawrence (the

“Greenpath Parties”), Peel, and the Church, to take a number of steps including

removing the waste.

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3 15-169 [5] Peel, the Greenpath Parties and the Church appealed the 2015 Director’s Order.

Further background to this matter can be found in an order of the Environmental Review

Tribunal (the “Tribunal”) in this proceeding dated April 14, 2016.

[6] The 2015 Director’s Order is similar to Director’s Order No. 6726-8YAN85-1,

issued to the same parties and ordering the same actions, on August 13, 2013 (the

“2013 Director’s Order”). That order was appealed to the Tribunal by the parties to this

proceeding; those appeals were referred to as Tribunal File Nos. 13-110 to 13-115. The

only substantive change between the 2013 Director’s Order and the 2015 Director’s

Order is that the latter includes reference to the Director’s power to issue orders under

s. 43 of the Environmental Protection Act (the “EPA”).

[7] In an order dated November 13, 2015, the Tribunal ordered that a motion brought

by Peel to revoke the 2013 Director’s Order as against it be heard separate from, and

prior to, the appeals on the merits. In addition, the Tribunal ordered that disclosure of

documents for the appeals on the merits should take place prior to Peel’s motion.

Following the issuance of the 2015 Director’s Order, the Tribunal issued a decision

revoking the 2013 Director’s Order and dismissing that proceeding. Peel subsequently

filed a motion to revoke the 2015 Director’s Order as against it. The City of Toronto (the

“City”) and the Ontario Waste Management Association (the “OWMA”) were granted

participant status and filed materials supporting Peel’s motion. The Greenpath Parties

and the Church took no position on Peel’s motion, and have filed no materials. The

motion was heard on August 12, 2016.

[8] Peel’s position on the motion is that there is no genuine issue requiring a

hearing, and that, as a “previous owner” of waste that was lawfully deposited at a waste

receiver in accordance with a valid ECA, the Director has no jurisdiction to issue the

2015 Director’s Order against it by operation of s. 42(1) and 42(5) of the EPA.

[9] The Director’s position is that there is a genuine issue for hearing and the motion

to revoke at this stage should therefore be dismissed; in addition, the Director argues

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4 15-169 that she has jurisdiction to issue the 2015 Director’s Order to Peel on three bases: (i)

pursuant to s. 43(a) of the EPA as a person who had ownership of the waste; (ii)

pursuant to s. 43(c) of the EPA as a person who the Director reasonably believes

engaged in an activity prohibited by s. 40 and/or s. 41 of the EPA as a person who

caused, permitted or arranged the deposit of waste ash at the Keswick Church Site; and

(iii) pursuant to s. 18 of the EPA as a person who had control of an “undertaking” (i.e.,

the deposit of waste at the Keswick Church Site).

Issues

[10] In this case, the issues to be determined are:

1. the test to be applied by the Tribunal on a motion to revoke a Director’s

Order;

2. whether there is a serious issue requiring a hearing regarding the Director’s

jurisdiction to issue the 2015 Director’s Order to Peel:

(i) under s. 43 of the EPA despite application of the statutory waiver in s.

42(5) of the EPA; and

(ii) under s. 18 of the EPA as a person who had control of the undertaking of

depositing waste without a permit.


[11] The relevant legislation and Tribunal’s Rules of Practice (“Rules”) are found in

Appendix 2.

Discussion, Analysis and Findings

Issue 1: The Test on a Motion to Revoke a Director’s Order

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5 15-169 [12] The Tribunal’s jurisdiction to revoke a Director’s Order on a motion prior to the

full hearing derives from its statutory authority to confirm, alter or revoke the action of

the Director under s. 145.2 of the EPA. In addition, the Tribunal has statutory authority

under the Statutory Powers Procedure Act (the “SPPA”) to control its own process and

procedures, including preliminary motions.

[13] The Director cited s. 4.6 of the SPPA in her submissions, which provides the

Tribunal with jurisdiction to dismiss a proceeding without a hearing if the proceeding is

frivolous, vexatious or is commenced in bad faith, relates to matters that are outside the

jurisdiction of the Tribunal, or some aspect of the statutory requirements for bringing the

proceeding has not been met. This section does not apply, however, as a decision by

the Tribunal to revoke the 2015 Director’s Order at this stage is pursuant to a motion by

a party, after the Tribunal has heard full argument and received affidavit evidence. Rule

111 of the Tribunal’s Rules addresses motions by a party to dismiss an appeal, which is

analogous.

[14] The Tribunal has not enacted any specific rule to guide its decision making

process on a motion by an appellant seeking to have a statutory instrument that is

under appeal revoked without the benefit of a full hearing into the merits of the appeal.

As noted by the parties, however, the Tribunal has articulated the principles in its prior

case law that borrow from the test for summary judgment in a civil proceeding set out in

Rule 20 of the Rules of Civil Procedure, in assessing motions to revoke an instrument

before a full hearing has occurred.

[15] Both the Director and Peel refer to two cases by the Environmental Appeal Board

(the “Board”, predecessor to the Tribunal): Caltex Petroleum Inc. v. Ontario (Director,

Ministry of Environment and Energy), 1994 CarswellOnt 5698 at paras. 43-44 (“Caltex”),

and Colonia Life Insurance Co., Re, 1995 CarswellOnt 1947 at paras. 7-11 (“Colonia

Life”). The Board concluded in those cases that the relief sought on a motion to revoke

a Director’s Order without the benefit of a full hearing is akin to seeking summary

judgment in civil proceedings.

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6 15-169

[16] The Director lists a number of more recent Tribunal cases that rely on Caltex and

Colonia Life, and cites paras. 23-24 from Ultramar Ltd. v. Ontario (Director, Ministry of

the Environment), 2008 CarswellOnt 8219 (“Ultramar Ltd.”), where the Tribunal

explained the test as follows:

The Tribunal accepts the Director’s submission that the Tribunal should grant a motion for revocation of the Director’s Orders prior to the main Hearing of the appeal, only in the clearest case, and only where there is truly no genuine issue to be determined on appeal. This is the test enunciated and applied in Caltex by the Environmental Appeal Board which found that the requested relief was analogous to summary judgement under the Rules of Civil Procedure. The test in Caltex was followed in Colonia Life, a case in which the Environmental Appeal Board was asked to revoke a Director’s Order issued under the EPA. Colonia Life restated some principles that apply to the “genuine issue” test as set out in Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Ont. S.C.J.), including: the onus is always on the moving party to show that there is no genuine issue for a Hearing; a Panel hearing a preliminary motion to dismiss a proceeding or revoke a Director’s order should not assume the role of the Hearing Panel by adjudicating factual issues; and a factual issue must relate to a material fact.

[17] The parties agree that on a motion to revoke a statutory instrument, the onus is

on the moving party to establish that there is no genuine issue requiring a hearing.

[18] In 2010, the test under Rule 20 of the Rules of Civil Procedure was amended

from “no genuine issue for trial” to “no genuine issue requiring a trial.” Peel submits that

as a result of the amendment, courts are now permitted to use additional fact-finding

powers on motions for summary judgment. Peel refers to the Supreme Court of

Canada case of Hryniak v. Mauldin, [2014] 1 SCR 87 (“Hryniak”), which considered the

new test on summary judgment motions. Peel submits the purpose of the new rule, as

described in Hryniak at paras. 34-39, is to expand the scope of summary judgment

motions to increase their use and improve access to justice by determining whether

there is a genuine issue at an earlier stage in a proceeding.

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7 15-169 [19] The Director submits that there are significant differences between a civil action

involving two private parties brought before the Superior Court of Justice, and appeals

of statutory instruments heard in the administrate proceedings before the Tribunal. The

Director submits that administrative hearings before the Tribunal are already designed

to be a more accessible, efficient process than the Superior Court system, with relaxed

rules of evidence and greater flexibility to control its own process. The Director argues

that any expansion to the Tribunal’s current test of “no genuine issue for trial” is likely to

increase the frequency that such preliminary motions are brought, thereby reducing

efficiency and increasing costs to all parties.

[20] In reviewing the case law from the civil courts, it appears that the distinction

between the phrases “for trial” and “requiring a trial” relates to the power of the court to

engage in fact finding on a summary judgment motion. The case law indicates that

there is a broader enquiry because of the amending phrase “requiring a trial”. In both

Colonia Life and Caltex the Board referred to Rule 20 for guidance, fully aware that the

Rules of Civil Procedure do not apply to the Board (now the Tribunal). An

administrative tribunal operating under the SPPA, however, already has more relaxed

rules of evidence than a court, as well as the flexibility to adjust its procedures to ensure

fairness (see for example Tribunal Rules 1, 4 and 7). Thus, if the phrase “requiring a

hearing” denotes a more flexible approach, it is closer to the administrative law

framework than the previous language of Rule 20. This more flexible approach also

accords with the test and powers already described in Colonia Life, at para. 10:

Matters of credibility requiring resolution in a case of conflicting evidence ought to go to trial; however, that depends upon the circumstances of the case; the court in taking the “hard look” at the merits must decide if any conflict is more apparent than real, i.e. whether there is really an issue of credibility that must be resolved in order to adjudicate on the merits.

[21] The Supreme Court held in Hryniak that, in a summary judgment motion, the

court must first consider whether there is no genuine issue requiring a trial based on the

evidence submitted on the motion. If there appears to be a genuine issue requiring a

trial, then the court may use its fact finding powers under Rule 20 of the Rules of Civil

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8 15-169 Procedure to avoid the need for a trial where it is not against the interests of justice. As

further detailed below, there is no need for the Tribunal in this case to embark on further

fact finding along the lines of Hryniak because there is a considerable base of

undisputed facts in this case, sufficient to determine whether there is a genuine issue

requiring a hearing. Therefore, in this case the formulation of the test as “for hearing” or

“requiring a hearing” makes no material difference.

[22] Nevertheless, the Tribunal has considered the appropriate formulation of the test

and concludes that the “requiring a hearing” phrase and the ability to consider matters

more broadly at an early stage of the hearing is appropriate for an administrative

proceeding. It is likely to promote access to justice because it can be more efficient,

timely and less costly in circumstances that do not warrant proceeding to a full hearing.

The efficiency concern raised by the Director only arises if there is an increase in

unsuccessful motions. If there is an increase in successful motions, then the efficiency

objectives are actually furthered. Nevertheless, as stated in Ultramar Ltd., revocation at

an early stage will only take place in the clearest of cases. The test to be met by the

moving party in a motion to revoke the Director’s Order is whether there is no serious

issue requiring a hearing.

Issue 2: whether there is a serious issue requiring a hearing regarding the

Director’s jurisdiction to issue the 2015 Director’s Order to Peel

[23] The parties agree that on a motion to revoke an instrument before a full hearing,

the onus is on the moving party to establish that the test has been met.

[24] There is considerable agreement on the motion as to the essential facts in this

case. In addition, the parties filed with the Tribunal a number of affidavits and

transcripts of cross-examinations conducted prior to the motion hearing. It will also be

recalled that the Tribunal earlier ordered full disclosure of all relevant documents among

the parties in this appeal prior to Peel’s motion being heard. Thus any dispute on the

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9 15-169 relevant facts, or arising from any disclosed documentation, could and should have

been raised by the parties at this motion hearing.

[25] The following agreed facts are laid out at para. 18 of the Director’s factum on the

motion:

• The Region of Peel is responsible for collection, handling and disposal of

municipal waste generated by its 1.38 million residents. • Peel deposited some of its non-hazardous waste at Algonquin Power’s

waste incineration facility from 1992 to October 2012. The incineration process resulted in waste ash.

• The characterization of the incineration ash as a waste is not disputed. • Peel confirms that it used a licenced “waste hauler”, disposed of the ash

at licenced landfills and entered into a “waste disposal contract” with Greenpath Inc.

• Under cross-examination the Region’s affiant, Norman Lee, agreed that the proposal by Greenpath to incorporate the processed bottom ash into concrete products was a form of “waste diversion … taking waste out of landfill”.

• Under Peel’s agreement with Algonquin Power the Region was responsible for hauling waste ash from the incinerator’s site to a final disposal destination.

• In the summer of 2008 Peel was approached by Don Constable, Director of Greenpath Inc. and Greenpath Eco Group Inc., with a proposal to incorporate use the waste ash into concrete paving stones.

• On March 11, 2009 the MOECC issued Provisional Certificate of Approval No. 6601-7P4J7C approving Greenpath Inc.’s use of 121 Watline Avenue, Mississauga, Ontario (the “Watline Site”) as a waste disposal site for the processing of non-hazardous incinerator ash from Algonquin Power and a second incinerator, Index Energy (the “Greenpath CofA”).

• On April 23, 2009 the Region’s Municipal Council voted to enter into an agreement with Greenpath Inc. and subsequently that month the Region and Greenpath Inc. signed the Processed Bottom Ash Supply Agreement (“PBA Agreement”).

• On March 24, 2009, prior to the vote by Peel’s Municipal Council, the Region’s waste staff began delivery of waste ash from Algonquin Power to the Watline Site.

• Between March 24 and May 22, 2009 the Region delivered approximately 4,651,500kg of waste ash (or 4,651 metric tonnes) to the Watline Site.

• In May 2009 a quantity of waste ash, or a waste ash material sometimes referred to as Ecofill, was delivered to the Keswick Presbyterian Church Site and mixed with gravel as a base under a paved parking lot.

• Peel was not directly involved, nor did it have specific knowledge of any arrangements to deliver waste ash, or a waste ash material sometimes referred to as Ecofill, to the Keswick Presbyterian Church Site in May 2009.

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10 15-169 [26] The Director argues that the “very nature of the issues” raised by Peel in this

motion are themselves evidence of genuine issues requiring a hearing in this matter.

The Director also argues that there is disagreement on key facts that requires a full

hearing for which this motion will not suffice. In particular, the Director argues, full

evidence is required on the matter of whether Peel, a large participant in the waste

industry in Ontario, ought to have known that Greenpath, a small start-up that was as

yet without automated processing, was unable to process the quantity of waste ash that

Peel was delivering to it. In addition, the Director argues that Peel has not adduced any

evidence in support of its allegation that there is no risk of a discharge of a contaminant

from the Keswick Church Site.

[27] The issue of the Director’s jurisdiction to issue the 2015 Director’s Order is

clearly a genuine issue. However, it is not an issue requiring a full hearing on the merits

of the appeal. There is ample undisputed evidence before the Tribunal at this juncture

of the proceeding to determine key questions of law including whether Peel should be

considered an “owner”, a “previous owner”, or having “charge or control” of the waste

deposited at the Keswick Church Site, and whether a duty existed on Peel to supervise

Greenpath’s use of waste ash after it was deposited at the Watline Site. Whether Peel

“ought to have known” that Greenpath was unable to handle the quantity of waste ash it

was permitted to accept under its ECA is also a legal question that can be determined

on the basis of the evidence before the Tribunal on this motion. The issue of whether

the waste ash is a “contaminant” is one that requires evidence to determine; however, it

is extraneous to the central issue of the Director’s jurisdiction to issue the 2015

Director’s Order and need not be determined on this motion.

Sub-Issue 2(i): Whether the Director has jurisdiction under s. 43(a) or (c) of the EPA to

issue the 2015 Director’s Order

[28] Section 43 of the EPA grants the Director the authority to issue an order to

remove waste to:

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11 15-169

(a) an owner or previous owner or a person who otherwise has or had charge and control of the land or building or waste;

(b) an occupant or previous occupant of the land or building; or (c) a person that the Director reasonably believes engaged in an activity

prohibited by s. 40 or 41 that resulted in the deposit of waste.

[29] There is no dispute that s. 43(b) does not apply since Peel was never an

occupant or previous occupant of the land or building on the Keswick Church Site.

Submissions

Peel

[30] Peel argues that it has no liability as a “previous owner” of the waste deposited at

the Keswick Church Site because any legal liability relating to its ownership of the waste

ash ended pursuant to s. 42(5) of the EPA when it delivered the waste ash to the

Watline Site in accordance with Greenpath’s ECA. Thus, Peel submits, any further

action taken by Greenpath with the waste ash deposited by Peel is entirely Greenpath’s

responsibility.

[31] Peel submits that its position that it has no legal liability for the waste ash after it

was accepted at the Watline Site is consistent with modern statutory interpretation

because it:

is based on a straightforward reading of the words;

is consistent with the purpose of the EPA;

is consistent with the purpose of the provision as gleaned from Hansard when

s. 42(5) of the EPA was first introduced and discussed by the legislature;

does not conflict with other provisions of the EPA; and

is consistent with the fact that the industry is typically widely consulted before

a change in legislation or practice is implemented that would significantly

impact the industry, such as the one that the Director’s approach here would

entail.

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12 15-169

[32] With respect to s. 43(c) of the EPA, Peel submits it could not be considered to

have “permitted” the deposit of Eco-fill and/or waste ash at the Keswick Church Site for

the purposes of sections 40 and 41 of the EPA because:

Peel had nothing to do with the transfer to the Keswick Church Site, and was

not aware of the transfer until informed of it by the MOECC, well after it had

taken place;

Peel has no responsibility to ensure that a holder of an ECA is able to abide

by its terms and conditions; and

the MOECC is the regulator with responsibility, and concomitant authority, to

enforce ECA provisions.

[33] Peel, the OWMA and the City all argue that nothing in the legislative debates in

either 1995 or 1998 suggests that the intent of the Legislature was to abrogate the

protection provided by s. 42(5), or to grant powers to the MOECC akin to the absolute

liability powers granted to the U.S. Environmental Protection Agency under the

Comprehensive Response, Compensation and Liability Act.

Ontario Waste Management Association

[34] The OWMA supports Peel’s motion to revoke the 2015 Director’s Order as

against Peel. It submits that Peel is protected by s. 42(5) of the EPA. The OWMA

submits that the waste management sector in Ontario is tightly regulated under Part V

of the EPA. It submits that the process to obtain an ECA, and to keep it updated as

business evolves, is a lengthy and expensive undertaking. It states that, like the City of

Toronto, OWMA members rely on the MOECC to administer and enforce the terms and

conditions of ECAs issued under the EPA.

5 - 34

13 15-169 [35] The OWMA submits that the business model of every OWMA member assumes

the existence of the statutory protection afforded by the transfer of ownership and

liability provisions in s. 42 of the EPA. It submits that:

… the transfer of the ownership and liability for waste when it is accepted at an approved waste management facility provides an assurance to OWMA members and their customers that they will bear no further responsibility for the waste. Approved facilities are thereby provided with a distinct advantage over the potentially lower cost services of unapproved facilities. (emphasis in the original)

[36] The OWMA submits that, if the s. 42 protection did not exist, there would be

increased incentive for waste generators to use unapproved or non-compliant

operators.

[37] In the OWMA’s view, s. 42 provides that ownership of waste is transferred

irrespective of acceptance by the waste disposal operator; however, the OWMA argues,

“liability as owner of waste” is not relieved except where waste is delivered and

accepted by the operator of the waste disposal site in accordance with law, including an

applicable ECA. The OWMA submits that “liability” is not defined in the EPA, nor is the

phrase “liability as owner of waste.” The OWMA submits that there is no basis to

assume, as the Director does, that the Legislature intended to relieve previous owners

of waste from only civil liability, or from only statutory liability. The OWMA submits that

the Legislature should, at a minimum, be interpreted to have intended to relieve

previous owners of waste who act in accordance with the law from liability under Part V

of the EPA.

[38] The OWMA submits that, had the Legislature intended in 1998 to override the s.

42(5) language that relieves from liability previous owners of waste who act in

accordance with law, it could have easily done so by including words such as

“notwithstanding”; and, the OWMA submits, the Ministry “undoubtedly” would have first

consulted broadly with all stakeholders, including the OWMA, “as it has on every

significant waste management legislative reform over the past two or three decades.”

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14 15-169 [39] With respect to s. 43(c) of the EPA, the OWMA submits that in addition to the

exclusion from liability provided in s. 42(5), the facts do not support a finding that Peel

“permitted” the transfer of waste under s. 40 or 41.

City of Toronto

[40] The City agrees with the submissions of Peel and the OWMA. It submits that

there is no obligation on a previous owner of waste other than its obligation to properly

deliver waste to an approved site. The City states that it is intervening in this motion on

the basis of its concern about the effect the Director’s novel approach (i.e. overriding the

explicit statutory waiver of liability for ownership of waste in s. 42 of the EPA and using

general language applicable to an order-making power in s. 43) will have on the

administration, complexity and cost of the City’s waste disposal arrangements.

[41] The City notes that it bases its waste contracts on transfer of ownership and

liability for waste at the point of its receipt at an approved site. Further, it argues that

the City has historically relied upon the MOECC to be responsible for the administration

and enforcement of ECAs under the waste management approval system in Part V of

the EPA.

[42] The City submits that municipalities such as the City of Toronto lack the means

or resources to “police” ongoing activities at approved sites, and that there is no

indication of legislative intent to require that.

[43] The City argues that the applicable tenet of statutory interpretation is that a

general Act is not to be construed to repeal a previous particular Act, citing Century

Services Inc. v. Canada (Attorney General), 2010 SCC 60, at paras. 124-126. It argues

that s. 42 is contained in a previous version of the EPA, as well as being specific and

particular, and therefore s. 42 is not repealed by subsequent broad amendments made

to s. 43.

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15 15-169 Director

[44] With respect to s. 43(a) of the EPA, the Director argues that Peel may be ordered

to clean up the Keswick Church Site as a previous owner of the waste and/or a person

who had charge or control of the waste. With respect to s. 43(c), the Director argues

that Peel engaged in an activity prohibited by s. 40 or 41, specifically that Peel

“permitted” the deposit of waste at the Keswick Church Site.

[45] The Director submits that the modern principle of statutory interpretation involves

a purposive analysis requiring that the words of an Act be read in their entire context, in

their grammatical and ordinary sense, and harmoniously with the scheme of the Act, the

object of the Act and the intention of the Legislature. The Director submits that this

principle favours an interpretation of “limited liability”, whereby s. 42(5) does not exempt

Peel from regulatory liability under s. 43 as a previous owner of the waste ash. Rather,

the Director argues that s. 42(5) limits the protections to “civil liability” as opposed to

“regulatory liability”.

[46] The Director submits that s. 40, 41 and 43 of the EPA were specifically amended

to include liability for persons who were not directly involved in the deposit or use of

waste. The Director relies on Montague v. Ontario (Director, Ministry of the

Environment), [2005] O.J. No. 868 at para. 42, where the Court found that s. 43

provides the Director with jurisdiction to make an order against a person who was not a

property owner, but who had “charge or control” of a “waste”. The Director argues that

the fact that s. 42 was not amended at the same time as s. 43 is significant, and should

be read such that the s. 42 exclusion of liability does not apply to the newly added

“previous owners” under s. 43.

[47] In addition, the Director argues that environmental protection legislation is

remedial and should be given a large and liberal interpretation, such that any doubt

arising from interpreting a statute should be resolved in favour of the public interest.

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16 15-169 Findings on Sub-Issue 2(i)

[48] The parties do not disagree, and it is clear based on the evidence before the

Tribunal, that there were two separate deposits of materials. The first was a deposit of

waste ash by Peel to the MOECC-approved Watline Site (i.e. a location with a valid

ECA to receive waste). The second was a deposit of material (variously referred to as

“Eco-fill” or “waste ash”, but agreed by all parties to be “waste”) by Greenpath and Mr.

Cruz to the Keswick Church Site. The Keswick Church Site does not have an ECA to

receive waste.

[49] The Tribunal finds that a logical and straightforward reading of s. 42 of the EPA is

that it restricts the order-making power of the Director under s. 43. The Director’s

argument that s. 43 was amended to include previous owners of waste, and s. 42 was

not amended at that time, is unpersuasive.

[50] The Tribunal makes this finding for the following reasons. First, there is nothing

in s. 42(5) that limits the protections to “civil liability” as opposed to “regulatory liability”

as argued by the Director. Sections 42 and 43 are found within Part V of the EPA,

which deals with regulating the waste industry and regulatory liability. That Part does

not specify various types of legal liability. The Director’s interpretation of “liability as

owner of waste…” in s. 42(5), implying that the section specifies only one type of liability

(i.e., as an owner), ignores the rest of the sentence which clarifies that it is specifying

only one type of waste; i.e., “…waste that is delivered to and accepted by the operator

of a waste disposal site in accordance with law including an applicable environmental

compliance approval.”

[51] Next, statutes are to be read harmoniously to avoid conflict. The Director’s

proposed reading would clearly create conflict in that s. 42(5) relieves liability of

ownership yet s. 43 would retain liability for previous owners. Peel’s interpretation

avoids this conflict because owners and previous owners of waste deposited at an

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17 15-169 unapproved site are liable, while those depositing waste at an approved site are

relieved of liability.

[52] This interpretation is reflected in the 1998 excerpts from Hansard relating to Bill

82 (which amended s. 43 to include previous owners of waste). The Hansard

transcripts indicate that the Legislature’s intention was to: “be fair to those who comply

with the law but tough on those who break it”; introduce the “ability to go after not just

those actually involved in the commission of waste offences but also those who are

behind the scenes, such as the brokers…”; and that the Legislature wanted to “zero in

on” the “small number of people out there who disobey the laws that have been laid

down by the Ministry of the Environment.” The Minister of the day noted: “I can’t stress

enough that while the act will make life more difficult for polluters, it is also designed to

make it fair for those who obey the law, because of course the lawful operators too are

victims of polluters. For too long the field hasn’t been level for those who have followed

the law and those who have not.” (Hansard, December 1, 1998, Hon. Norm Sterling).

There is nothing in the Hansard transcripts brought to the attention of the Tribunal that

indicates an intention to allow people who work in compliance with an ECA to maintain

“regulatory liability”.

[53] It is clear that Part V is intended to provide an incentive for “good behaviour” (i.e.

depositing waste only at locations approved to receive it). The Director argues that the

incentive to use an approved landfill is that the previous waste owner will not be fined or

charged (under s. 40 or 41) with an illegal deposit of waste. However, the Hansard

excerpts filed on this motion make it clear that the intention of the Minister of the

Environment at the time was that s. 42(5) was being added to the EPA to encourage

parties to act responsibly, and to have a “stick” available for parties that act

irresponsibly.

[54] The Tribunal accepts the submissions of Peel, Toronto and the OWMA that it is

inappropriate to presume that such a fundamental change to the waste liability regime

as it is currently understood in Ontario, as is proposed by the Director through the 2015

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18 15-169 Director’s Order, would be made without consultation. The evidence is that the waste

industry relies on the certainty created by the s. 42(5) protection, and that this is

reflected by waste industry contracts.

[55] The Tribunal finds that legislation, and specifically s. 42(5) of the EPA in this

case, should provide certainty to actors in society generally, and the waste industry in

particular. Both the City and the OWMA forcefully argued that there may be significant

practical implications if that certainty is removed. The Tribunal accepts that “reading in”

the powers proposed by the Director would remove that certainty and leave parties

exposed to unanticipated legal liability. If the Legislature finds that the Director should

have such power, it can be clearly included in the legislation. It is not there currently.

[56] With respect to s. 43(c), the facts as agreed to by the Parties do not support a

finding that Peel “permitted” a prohibited activity (i.e., the deposit of waste at the

Keswick Church Site). Although the Director argues that further evidence is needed to

make this finding, the Tribunal finds that the uncontested facts before the Tribunal on

this motion are sufficient to dispose of this argument. The facts are discussed

throughout these reasons, but in particular, there is no dispute that Peel had no

knowledge of, and played no role in, the deposit of waste at the Keswick Church Site,

that Peel’s deposits of waste at the Watline Site complied with Greenpath’s ECA, and

that the contract between Peel and Greenpath required compliance with the the law,

including the EPA and Greenpath’s ECA.

[57] The Director relies on R. v. Sault Ste. Marie, [1978] 2 S.C.R. 1299 (“Sault Ste.

Marie”) as support for the position that Peel permitted the disposal of waste, and draws

a parallel with this case in that Sault Ste. Marie involved municipal liability for waste.

However, the Tribunal finds that Sault Ste. Marie does not establish that Peel has any

responsibility for the waste deposited on the Keswick Church Site in this case. Key

distinguishing features are that: Sault Ste Marie dealt with a single transfer of waste,

rather than involving a second transfer unbeknownst to the municipality, as in this case;

in Sault Ste. Marie, the waste was deposited by a contractor in the course of a contract

5 - 40

19 15-169 with the municipality; Sault Ste. Marie dealt with responsibility under the Ontario Water

Resources Act rather than the EPA, and as such there was no consideration of s. 43(5)

of the EPA or a valid ECA at the site of first deposit.

[58] In para. 71 of Sault Ste. Marie, the Supreme Court comments that a “municipality

cannot slough off responsibility by contracting out the work. It is in a position to control

those whom it hires to carry out garbage disposal operations and to supervise the

activity, either through provisions of the contract or by municipal by-laws. It fails to do

so at is peril.” In this case, however, Peel did not “slough off responsibility by

contracting out work”; it complied with the EPA and disposed of its waste in accordance

with the law.

[59] The Tribunal finds that there is no basis on which Peel could be found to have

“permitted” the transfer of waste by Greenpath to the Keswick Church Site.

Sub-Issue 2(ii): Whether the Director has Jurisdiction under s. 18

[60] The Director may only issue an order under s. 18 of the EPA to “a person who

owns or owned or who has or had charge, management or control of an undertaking or

property.”

Submissions

Peel

[61] Peel submits that the s. 42(5) protection ends the matter entirely, and that the

Director may not use s. 18 or 43 of the EPA to try to avoid the statutory protection under

s. 42. However, Peel also argues that the material deposited at the Keswick Church

Site was processed into something other than waste ash, which Greenpath called “Eco-

fill”. It submits that the deposit of Eco-fill at the Keswick Church Site by Greenpath and

Mr. Cruz was a second, separate transfer of waste. Peel submits that the Director is

5 - 41

20 15-169 wrongly attempting to paint the illegal delivery of Eco-fill to the Keswick Church Site as

part of the same transaction in which Peel legally deposited waste ash at the Watline

Site. In any event, following the lawful delivery of waste ash to the Watline Site, Peel

argues that it did not have charge, management or control over the deposit of Eco-Fill

by Greenpath and Mr. Cruz at the Keswick Church Site. Peel states it was not at all

involved in the second transfer of waste (to the Church), as evidenced by the fact that it

first learned of the transfer approximately a year after it took place, from the MOECC.

[62] Peel submits that it owed no duty, either under the EPA or at common law, to the

MOECC to notify the MOECC of Greenpath’s alleged breach of its private contract, the

PBA Agreement, with Peel or the alleged breach of Greenpath’s ECA.

[63] Peel argues that it exercised the only control possible, which was stipulated in its

contractual relationship with Greenpath: that Greenpath was obligated to comply with

the law, including the EPA and Greenpath’s ECA. Peel submits that upon breach of

such contractual obligation, its only available remedy was to terminate the PBA

Agreement and cease the deposit of waste ash at the Watline Site, both of which it did.

[64] Peel submits that it assured itself that Greenpath had a valid ECA at all times

when waste ash was delivered. Peel submits that the sole purpose for the Director’s

revocation of the 2013 Director’s Order and issuance of the 2015 Director’s Order was

to remedy the Director’s errors and delete admissions in the 2013 Director’s Order

(including the statement in the Provincial Officer’s Order that Greenpath “controlled and

managed the Waste Ash under the CoA”), and to attempt to bolster the MOECC’s case

solely as against Peel.

City of Toronto

[65] The City submits that “reading in” a due diligence requirement into s. 42(5) of the

EPA, which the Director’s position would require, would cause significant uncertainty in

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21 15-169 the waste industry in Ontario. It raises a number of practical questions about what

constitutes due diligence, such as:

a. How often would Peel/the City have to do inspections?

b. What about sites where a number of people deliver waste – who is

responsible to ensure that the end use is in compliance?

c. How does it affect contracts?

d. What does Peel/the City do if they feel an ECA is not being complied with?

e. What if Peel/the City refused to deliver waste for a perceived failure to

comply with the ECA, when the Director disagrees? Would they be open

to a lawsuit?

OWMA

[66] In its submissions the OWMA takes the position that the “undertaking or

property” that is the subject of the 2015 Director’s Order is the Keswick Church Site. It

submits that Peel has never owned or had charge, management or control of the

Keswick Church Site, and that as a result the Director has no jurisdiction to issue the

2015 Director’s Order under s.18.

The Director

[67] The Director’s position is that Peel had control of the undertaking of “depositing

waste at the Keswick Church Site”. The Director submits that the s. 42(5) protection

relates only to ownership of the waste, and not to responsibility under s. 18 as a person

having control of the undertaking of depositing waste. She submits that Peel, as a

sophisticated actor in the waste industry, “knew or ought to have known” that the

Watline Site was unable to process the quantity of waste ash it deposited there. The

Director argues that Peel’s failure to take action created a situation whereby Greenpath

used the waste ash in a manner that was not permitted by its ECA.

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22 15-169 [68] The Director argues that the evidence relating to what Peel knew or ought to

have known is contested, and that the motion to revoke should fail because a full

hearing is required to determine the issue. Nonetheless, the Director argues that Peel

delivered its first load of waste ash to the Watline Site without first confirming that

Greenpath, a “small start-up”, had the physical ability to process the waste “as required

by the ECA and Peel’s own PBA Agreement.”

[69] The Director submits that there is evidence to support a finding that Peel

continued to deliver significant quantities of waste ash to the Watline Site despite its

concerns that Greenpath could not handle it. In this regard the Director relies on

statements by Mr. Lee and Filip Reale (a technical analyst for waste with Peel) that

Peel’s staff consistently expressed concerns about the lack of proper equipment and

manufacturing at the Watline Site.

Findings on Sub-Issue 2(ii)

[70] For the reasons noted above in sub-issue 2(i), the Tribunal finds that s. 42(5) of

the EPA applies to protect Peel from responsibility as an owner or former owner of any

waste ash that was delivered to the Keswick Church Site from the Watline Site.

[71] The Director’s position, however, is that Peel had control of the deposit of waste

at the Keswick Church Site because it should have taken steps to ensure that

Greenpath was able to handle the waste ash deposited at the Watline Site under the

ECA. This is similar to the Director’s position with respect to s. 43(c), that Peel

“permitted” the deposit of waste at the Keswick Church Site contrary to s. 40 or s. 41.

The Director’s “knew or ought to have known” (that the waste had to go somewhere)

argument entails some consideration of the facts.

[72] The uncontested facts include the following:

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23 15-169

that Greenpath received a CofA (now the ECA) to process waste ash at

the Watline Site on March 11, 2009;

Peel entered into the PBA Agreement with Greenpath, under which all

Greenpath manufacturing processes at the Watline Site had to be

conducted in compliance with applicable law, including Greenpath’s ECA

and the EPA;

Peel inspected the Watline Site prior to the first deposit of waste ash;

Peel staff accompanied the first deposit of waste at the Watline Site;

Peel had no right to enter or inspect Greenpath premises and could only

do so upon consent and accompanied by Greenpath employees;

there is no allegation that Peel delivered more waste ash than permitted

by the ECA;

Peel refused to deposit waste ash outside the building on the Watline Site

when asked to do so by Greenpath, because the ECA provided that

deposits were to be made inside the building;

Peel notified the MOECC of the request to deposit waste ash outside the

building; and

Peel only re-started delivery of waste ash to the Watline Site after being

told by the MOECC that it could do so.

[73] The Tribunal finds that none of these facts suggest Peel “permitted” the deposit

of waste at the Keswick Church Site.

[74] The Director’s argument requires that the Tribunal read in a “due diligence”

requirement on Peel, to prevent a third party from committing an offence. The Tribunal

finds that the “due diligence” standard imposed by the Director in this case has no basis

in the EPA.

[75] The Tribunal agrees with Peel that the MOECC is the regulator, not Peel, and as

such, it was the MOECC’s responsibility to enforce the ECA, not Peel’s. Peel was a

responsible actor in ensuring that its deposits of waste to the Watline Site were in

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24 15-169 accordance with Greenpath’s ECA. To ensure that a subsequent transfer of waste, by

Greenpath or some other party, to a separate location unknown to Peel, was in

accordance with Greenpath’s ECA is not a legal responsibility that the Director can

place on Peel.

[76] The Tribunal also agrees with the City and the OWMA, that the result of reading

in a due diligence requirement would cause confusion and uncertainty in the waste

industry in Ontario – the very opposite of what the Legislators were hoping to achieve

through the amendments that brought s. 42(5) into being.

[77] There was an additional submission by Peel that the Director has no authority to

issue the 2015 Director’s Order pursuant to s. 18 because the Director does not have

the requisite reasonable and probable grounds that the 2015 Director’s Order is

necessary or advisable to (a) prevent or reduce the risk of a discharge of a contaminant;

or (b) prevent, decrease or eliminate an adverse effect that may result from a discharge

or presence of a contaminant. Given the Tribunal’s finding that the Director lacked

jurisdiction to issue the 2015 Director’s Order against Peel, nothing turns on this issue

and the Tribunal elects not to address it.

[78] In its notice of motion, Peel requested that the Tribunal make a number of

declarations. However, the Tribunal’s remedial powers in an appeal under s. 140(1) of

the EPA are set out in s. 145.2(1); specifically, that the Tribunal may confirm, alter or

revoke the action of the Director, by order direct the Director to take action, or substitute

its opinion for that of the Director. The Tribunal therefore does not have the jurisdiction

to make declaratory orders as requested by Peel.

ORDER

[79] The Tribunal revokes the 2015 Director’s Order as against Peel, and allows

Peel’s appeal.

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25 15-169 [80] The Tribunal makes no order at this time with respect to costs. If any party is

requesting costs, it should bring a motion in accordance with the Tribunal’s Rules 216-

220.

Motion Granted Director’s Order Revoked as against Peel

Appeal by Peel Allowed

“Heather Gibbs”

HEATHER GIBBS VICE-CHAIR

“Bruce Krushelnicki”

BRUCE KRUSHELNICKI EXECUTIVE CHAIR

Appendix 1 – Appellant List Appendix 2 – Relevant Legislation and Tribunal Rules

If there is an attachment referred to in this document,

please visit www.elto.gov.on.ca to view the attachment in PDF format.

Environmental Review Tribunal A constituent tribunal of Environment and Land Tribunals Ontario

Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

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26 15-169

Appendix 1

Appellant List


Keswick Presbyterian Church 15-169 Donald Constable 15-170 Mark Lawrence 15-171 Greenpath Inc. 15-172 Greenpath Eco Group Inc. 15-173 The Regional Municipality of Peel 15-174

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27 15-169

Appendix 2

Relevant Legislation and Tribunal Rules

Environmental Protection Act

18. (1) The Director, in the circumstances mentioned in subsection (2), by a written order may require a person who owns or owned or who has or had management or control of an undertaking or property to do any one or more of the following:

1. To have available at all times, or during such periods of time as are specified in the order, the equipment, material and personnel specified in the order at the locations specified in the order.

2. To obtain, construct and install or modify the devices, equipment and facilities specified in the order at the locations and in the manner specified in the order.

3. To implement procedures specified in the order. 4. To take all steps necessary so that procedures specified in the

order will be implemented in the event that a contaminant is discharged into the natural environment from the undertaking or property.

5. To monitor and record the presence or discharge of a contaminant specified in the order and to report thereon to the Director.

6. To study and to report to the Director on, i. the presence or discharge of a contaminant specified in

the order, ii. the effects of the presence or discharge of a

contaminant specified in the order, iii. measures to control the presence or discharge of a

contaminant specified in the order, iv. the natural environment into which a contaminant

specified in the order may be discharged. 7. To develop and implement plans to,

i. reduce the amount of a contaminant that is discharged into the natural environment,

ii. prevent or reduce the risk of a spill of a pollutant within the meaning of Part X, or

iii. prevent, decrease or eliminate any adverse effects that result or may result from a spill of a pollutant within the meaning of Part X or from any other discharge of a contaminant into the natural environment, including, A. plans to notify the Ministry, other public authorities

and members of the public who may be affected by a discharge, and

B. plans to ensure that appropriate equipment, material and personnel are available to respond to a discharge.

8. To amend a plan developed under paragraph 7 or section 91.1 in the manner specified in the order.

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28 15-169

Grounds for order (2) The Director may make an order under this section if the Director is of the opinion, on reasonable and probable grounds, that the requirements specified in the order are necessary or advisable so as,

a) to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or

b) to prevent, decrease or eliminate an adverse effect that may result from, (i) the discharge of a contaminant from the undertaking, or (ii) the presence or discharge of a contaminant in, on or

under the property.

Prohibition as to deposit of waste 40. No person shall deposit, or cause, permit or arrange for the deposit of, waste upon, in, into or through any land or land covered by water or in any building that is not a waste disposal site for which an environmental compliance approval or renewable energy approval has been issued or a registration under Part II.2 is in effect and except in accordance with the terms and conditions of the approval or the regulations made for the purposes of Part II.2. Prohibition as to use of facilities, etc. 41. No person shall use, or cause, permit or arrange for the use of, any facilities or equipment for the storage, handling, treatment, collection, transportation, processing or disposal of waste that is not part of a waste management system for which an environmental compliance approval or renewable energy approval has been issued or a registration under Part II.2 is in effect and except in accordance with the terms and conditions of the approval or the regulations made for the purposes of Part II.2. Ownership of waste 42.(1) The ownership of waste that is accepted at a waste disposal site by the operator of the site is transferred to the operator upon acceptance.

Where waste not accepted (2) Where waste is deposited but not accepted at a waste disposal site, the ownership of the waste shall be deemed to be transferred to the operator of the site immediately before the waste is deposited. Approval (3) Subsections (1) and (2) apply only in respect of a waste disposal site for which an environmental compliance approval, renewable energy approval or registration under Part II.2 is in effect. Effect of contract (4) Subsection (1) applies only in the absence of a contract to the contrary.

Liability (5) Subsections (1) to (4) do not relieve any person from liability except liability as owner of waste that is delivered to and accepted by the operator of a waste disposal site in accordance with law including an

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http://www.ontario.ca/fr/lois/loi/90e19#s40

http://www.ontario.ca/fr/lois/loi/90e19#s41

29 15-169

applicable environmental compliance approval, applicable renewable energy approval or applicable regulation made under clause 176 (2.4) (e).

Order for removal of waste 43. Where waste has been deposited upon, in, into or through any land or land covered by water or in any building that has not been approved as a waste disposal site or in respect of which no registration under Part II.2 is in effect, the Director may issue an order to remove the waste and to restore the site to a condition satisfactory to the Director to,

(a) an owner or previous owner or a person who otherwise has or had charge and control of the land or building or waste;

(b) an occupant or previous occupant of the land or building; or (c) a person that the Director reasonably believes engaged in an

activity prohibited by section 40 or 41 that resulted in the deposit of the waste.

... 145.2 (1) Subject to sections 145.3 and 145.4, a hearing by the Tribunal under this Part shall be a new hearing and the Tribunal may confirm, alter or revoke the action of the Director that is the subject-matter of the hearing and may by order direct the Director to take such action as the Tribunal considers the Director should take in accordance with this Act and the regulations, and, for such purposes, the Tribunal may substitute its opinion for that of the Director.

Rules of Practice of the Environmental Review Tribunal

Motions for Dismissal 111. A Party bringing a motion to dismiss a proceeding shall specify the basis for the motion, which may include that:

(a) the proceeding is frivolous, vexatious or is commenced in bad faith;

(b) the proceeding relates to matters that are outside the jurisdiction of the Tribunal;

(c) some aspect of the statutory requirements for bringing the proceeding has not been met; or

(d) another Party has caused undue delay or has not complied with orders, undertakings, written requests from the Tribunal or these Rules.

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APPEARANCES: Parties Counsel Regional Municipality of Peel Marc McAree and Richard Butler Director, Ministry of the Environment and Climate Change

Danielle Meuleman

ORDER DELIVERED BY HEATHER I. GIBBS AND BRUCE KRUSHELNICKI


ISSUE DATE: January 20, 2017 CASE NO.: 15-169

PROCEEDING COMMENCED UNDER section 140(1) of the Environmental Protection Act, R.S.O. 1990, c. E.19, as amended Appellants: See Appendix 1 – Appellant List Respondent: Director, Ministry of the Environment and Climate


(Environment and Climate Change) Heard: In writing

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2 15-169 REASONS

Background

[1] This order relates to an application by the Regional Municipality of Peel (“Peel” or

“Region”) for costs as against the Director, Ministry of the Environment and Climate

Change (“MOECC”) with respect to Peel’s successful motion to revoke Director’s Order

No. 6411-9M2G78 (“2015 Director’s Order”) as against Peel, which the Environmental

Review Tribunal (“Tribunal”) granted in its order dated September 13, 2016

(“Revocation Order”).

Background

[2] In March of 2009, the MOECC issued Certificate of Approval No. 6601-7P4J7C

(“CofA”) to Greenpath Inc. for a waste disposal site located at 121 Watline Avenue, in

Mississauga, Ontario (“Watline site”). Donald Constable and Mark Lawrence are, or

were, directors or officers of Greenpath Inc. and Greenpath Eco Group Inc. (collectively,

the “Greenpath parties”). The CofA authorized use of the Watline site for the

processing of waste ash provided by Peel from its Algonquin Power Energy from Waste

Facility.

[3] In 2009, the Keswick Presbyterian Church (“Church”) constructed a new building,

driveway and parking lot on a property located at 23449 Woodbine Avenue, Town of

Georgina in the Regional Municipality of York (“Church site”). The MOECC alleges that

fill deposited on the Church site during construction was unprocessed waste ash from

the Watline site.

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3 15-169 [4] The Director issued the 2015 Director’s Order on November 9, 2015 to the

Greenpath parties, Peel and the Church, requiring the removal of waste ash from the

Church site. Peel, the Church and the Greenpath parties appealed the 2015 Director’s

Order to the Tribunal.

[5] The 2015 Director’s Order replaced a Director’s order issued on August 13, 2013

(“2013 Director’s Order”). The 2015 Director’s Order requires essentially the same work

to be done as the earlier order, but refers to additional sections of the Environmental

Protection Act (“EPA”) (s. 18 and s. 43), and contains an additional allegation that the

Region “had ownership and/or charge and control of the Waste Ash.” Peel had filed a

motion to revoke the 2013 Director’s Order as it applied to Peel, but the motion was

never heard. After the 2015 Director’s Order had been issued, and upon hearing

submissions by the parties, the Tribunal revoked the 2013 Director’s Order and the

appeals relating to it were dismissed (see the Tribunal’s decision dated January 5, 2016

in Case No. 13-110 (“Dismissal Decision”)).

[6] Peel then brought a motion for revocation of the 2015 Director’s Order as against

it. The motion was heard orally on August 12, 2016. Participating in the motion were

the Director and Peel, as well as the Ontario Waste Management Association and the

City of Toronto, who together supported Peel’s position. The Tribunal issued the

Revocation Order revoking the 2015 Director’s Order as it relates to Peel, on

September 13, 2016.

[7] Following its successful motion, Peel applied for costs. Submissions were taken

in writing. Only Peel and the Director participated in the costs application.

[8] For appeals such as this one under the EPA, costs may only be awarded by the

Tribunal for “improper conduct” pursuant to s. 17.1 of the Statutory Powers Procedure

Act (“SPPA”) and the Tribunal’s Rules of Practice (“Rules”) 217 and 218. Rule 217

tracks the wording of s. 17.1(2) of the SPPA and provides that, before costs may be

awarded, the Tribunal must find that the “conduct or course of conduct of a Party has

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4 15-169 been unreasonable, frivolous or vexatious or… a Party has acted in bad faith.” Rule

212 explains the objectives of the costs rules, namely: to provide consistency and

predictability in the awarding of costs by outlining relevant principles and evaluation

criteria; to encourage responsible conduct in proceedings; and to discourage

unreasonable conduct.

[9] For reasons that follow, the Tribunal dismisses Peel’s application for costs.

Issue

[10] The issue is whether the Director should be ordered to pay costs to Peel in

relation to its appeal of the 2015 Director’s Order and its successful revocation motion

as granted in the Tribunal’s Revocation Order.


[11] The following provisions of the SPPA and the Rules are relevant here:

SPPA

17.1 (1) Subject to subsection (2), a tribunal may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party’s costs in a proceeding. (2) A tribunal shall not make an order to pay costs under this section unless,

(a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith; and

(b) the tribunal has made rules under subsection (4).

(3) The amount of the costs ordered under this section shall be determined in accordance with the rules made under subsection (4).

(4) A tribunal may make rules with respect to,

(a) the ordering of costs; (b) the circumstances in which costs may be ordered; and (c) the amount of costs or the manner in which the amount of costs

is to be determined.

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5 15-169

Rules of Practice

212. A costs award refers to the reimbursement of reasonable and eligible expenditures incurred by a Party for participation in a proceeding before the Tribunal. The objectives of the Tribunal’s costs Rules are to: provide consistency and predictability in the awarding of costs by outlining relevant principles and evaluation criteria; to encourage responsible conduct in proceedings; and to discourage unreasonable conduct. 217. The Party seeking a costs award bears the burden of proof and must demonstrate that any requested costs are:

(a) directly and necessarily incurred in relation to the proceeding before the Tribunal;

(b) reasonable in the circumstances; (c) properly documented and verified; and (d) consistent with the principles and criteria outlined in these Rules.

218. When filing a costs application with the Tribunal, the Party seeking a costs award shall provide:

(a) an explanation of how the requirements in Rule 217 (a), (b) and (d) have been met;

(b) a summary statement of hours and fees for each lawyer and consultant, supported by time dockets, invoices and a detailed description of the activity; and

(c) a summary statement of disbursements for each lawyer or consultant supported by corresponding invoices or receipts. Where invoices or receipts are not obtainable for good reasons, the Tribunal may accept a written record of individual disbursements and associated dates.

225. Under section 17.1 of the Statutory Powers Procedure Act, the Tribunal may only order costs to be paid if the conduct or course of conduct of a Party has been unreasonable, frivolous or vexatious or if a Party has acted in bad faith. This power applies to all proceedings before the Tribunal except proceedings under the Oak Ridges Moraine Conservation Act, 2001, proceedings under the Greenbelt Act, 2005 and Niagara Escarpment Plan amendment proceedings under the Niagara Escarpment Planning and Development Act, unless the Niagara Escarpment Plan amendment proceeding is brought under the Consolidated Hearings Act. It is expected that this power will only be used in the rare case where a Party’s conduct warrants such an award. In determining an award of costs under this Rule, the Tribunal may consider, among other things, the conduct of the requesting Party as well as whether the Party against whom a costs award is sought:

(a) failed to attend a Hearing or to send a representative when properly given notice, without contacting the Case Coordinator;

(b) failed to co-operate, changed a position without notice, or introduced an issue or evidence not previously mentioned;

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6 15-169

(c) failed to act in a timely manner; (d) failed to comply with the Tribunal’s Rules or procedural orders; (e) caused unnecessary adjournments or delays or failed to

prepare adequately for Hearings; (f) failed to present evidence, continued to deal with irrelevant

issues, or asked questions or acted in a manner that the Tribunal determined to be improper;

(g) failed to make reasonable efforts to combine submissions with Parties of similar interest;

(h) acted disrespectfully or maligned the character of another Party; and,

(i) knowingly presented false or misleading evidence.

226. The Tribunal is not bound to order costs when any of the instances listed in Rule 225 occurs nor does the Tribunal have to find that one of the instances occurred in order to conclude that the conduct of a Party has been unreasonable, frivolous or vexatious or that a Party has acted in bad faith. The Tribunal will also consider whether the issues respecting the conduct of such a Party can be addressed by a denial or reduction of costs in its favour rather than a costs award against it.

Discussion

[12] Peel argues that the Director engaged in unreasonable conduct as described in

s. 17.1(2) of the SPPA by failing to withdraw the 2015 Director’s Order against Peel,

and then opposing the Region’s motion to revoke that order. Peel argues that, despite

the Region having no role and no knowledge about an illegal deposit of waste ash at the

Church site, and the Director being aware “at all times” of the identity of the parties

responsible for the deposit of waste, the Director nonetheless tried to “download onto

the Region financial responsibility for the removal of waste that was illegally deposited

by others.” Peel argues that the Director is attempting to delegate responsibility as

Ontario’s environmental regulator for waste onto the Region, and in so doing brought

confusion and uncertainty to Ontario’s waste industry.

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7 15-169 [13] Peel argues that the Director should not be permitted to amend an order that is

before the Tribunal (i.e., the 2013 Director’s Order), for the sole purpose of improving

the likelihood of the Director’s success in defending that order on a motion to revoke

(i.e., by issuing the 2105 Director’s Order).

[14] Peel argues that the Director’s unreasonable conduct included: failing to act in a

timely manner to order the responsible parties to remediate the Church site; changing

her position (i.e., replacing the 2013 Director’s Order); and introducing an issue (i.e.,

delegation of the Director’s role as regulator onto the Region) not previously mentioned.

[15] Peel argues that its costs relating to the revocation motion are eligible as part of

a “proceeding before the Tribunal”, under Rule 212, because “proceeding” is defined by

the Rules to include a hearing and “refers to all matters before the Tribunal in respect of

an appeal, application or referral.” Peel submits that the Director cannot use the

MOECC counsel’s appropriate behaviour during the proceeding as a “shield”, since

counsel’s actions were directed by the Director at all times.

[16] Peel argues that the Director forced the Region to spend substantial public funds

defending its reputation publicly, and that it ought to be reimbursed for those expenses.

[17] The Director submits that all of the grounds raised by Peel relate to the Director’s

decision to issue the 2015 Director’s Order, and not to the conduct of the Director in the

course of the appeal, and on this basis they are outside the Tribunal’s jurisdiction. The

Director submits that her conduct throughout this proceeding has at all times been as a

reasonable party, fully engaged in the course of the appeal, and that she has sought to

make decisions that promote fair, efficient and reasonable use of all parties’ resources

throughout the proceedings.

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8 15-169 [18] To the extent Peel argues that the Director’s actions in withdrawing the 2013

Director’s Order and issuing the 2015 Director’s Order delayed the Tribunal’s

determination of the substantive issues on appeal, the Director submits that the issue

has already been determined. The Tribunal denied a previous request for costs by Peel

in the context of the 2013 Director’s Order. In so doing, the Tribunal found that such

delay would not impede the Tribunal’s ability to make a just and cost-effective

determination of the issues. (See Peel (Regional Municipality) v. Ontario (Ministry of

the Environment and Climate Change), [2016] O.E.R.T.D. No. 16 at para. 48 (“Prior

Costs Order”)).

Analysis and Findings

[19] The test for awarding costs in a proceeding before the Tribunal involves a three-

step analysis, as described in the case of Johnson v. Ontario (Ministry of Environment),

[2006] O.E.R.T.D. No. 20 (“Johnson”) at paras. 22 to 24. First, the Tribunal determines

the threshold issue of whether a party has engaged in unreasonable, frivolous or

vexatious conduct or acted in bad faith. If there is such a finding, the second step is to

consider whether it should award costs in the particular circumstances, since the

Tribunal is not bound to order costs. The third step is determining the amount of costs

and to whom they should be paid.

[20] Thus, the first step is to determine whether the Director has engaged in

unreasonable, frivolous or vexatious conduct or acted in bad faith. In this case, Peel

does not allege that the Director acted in bad faith, but only that her conduct was

unreasonable.

[21] In Johnson, the Tribunal analyzed the types of conduct that are pre-requisites for

a costs award. It determined that vexatious and bad faith conduct entail an element of

improper motivation, while “unreasonable” casts the widest net (at para. 31). The

Tribunal found that whether conduct was unreasonable should be considered in the

context of the purpose of the EPA, and the impact on the other parties and on the

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9 15-169 Tribunal proceedings. In Baker v. Ontario (Ministry of the Environment), [2009]

O.E.R.T.D. No. 55 (“Baker”), the Tribunal stated that an objective measure of what is

“unreasonable” is “whether the conduct or course of conduct interferes with the

Tribunal’s ability to secure the just, most expeditious and cost-effective determination of

the proceeding before it” (at para. 91).

[22] To the extent Peel argues in this costs application that the Director caused delay

in determining the substance of the appeal by revoking the 2013 Director’s Order and

issuing the 2015 Director’s Order, the Tribunal has already ruled on the argument. In

the Prior Costs Order, the Tribunal stated at para. 48 (emphasis added):

The effect of the amount of time the Director took to reach a decision and issue a new order has been to delay the final resolution of the substantive issues in the appeals, that is, the determination of whether material should be removed from the Site and who should be responsible for doing so. This delay means that final resolution of the issues has not been particularly expeditious because of the Director’s action. Nevertheless, this delay does not mean that the Tribunal will be unable to achieve a just and cost-effective resolution of the issues, which will occur in the context of the appeals of the 2015 Director’s Order. As the Tribunal stated in its order dismissing this proceeding, dated January 5, 2016, at para. 26:

The public interest in environmental protection is unaffected by the revocation of one order and issuance of a new order on substantially the same terms. There is also a public interest in having issues resolved in a just, expeditious and cost-effective manner. There could be some delay in the resolution of the legal issues, and thus continued uncertainty for the waste industry as well as the parties, if this proceeding is dismissed and the new appeals are not heard in a timely way. However, delay could be minimized through procedural directions by the Tribunal in the proceeding regarding the 2015 Director’s Order. The hearing in that proceeding will be held in any event and holding only one hearing would reduce the potential for duplication of evidence between two hearings.

[23] There is no allegation that the new appeals, and in particular Peel’s motion to

revoke the 2015 Director’s Order, have not been proceeding in a timely way. The

Tribunal has therefore already determined that the Director’s decision to issue the 2015

Director’s Order was not unreasonable through causing delay.

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10 15-169

[24] The Dismissal Decision of January 5, 2016, which related to the 2013 Director’s

Order, is also cited in the passages above. In the Dismissal Decision, the Tribunal was

required under Rule 202 to consider whether the proposed revocation was “consistent

with the purpose and provisions” of the EPA, whether it was in the public interest, and to

consider the interests of the other parties and participants (at para. 22). The Tribunal

found at para. 26 of the Dismissal Decision that the public interest in environmental

protection is unaffected by the revocation of one order and issuance of a new order.

[25] Peel also argues in this costs application that the Director was unreasonable in

“changing her position” by issuing the 2015 Director’s Order on separate jurisdictional

grounds and “removed unhelpful admissions”. As noted above, however, the Tribunal

found in the Dismissal Decision that the Director’s decision to revoke the 2013

Director’s Order and issue the 2015 Director’s Order complied with the requirements of

Rule 202. The Tribunal therefore finds in this proceeding that the Director’s actions

cannot be considered unreasonable for purposes of a costs award.

[26] The question in this application for costs is whether Peel has established that the

Director’s conduct has been unreasonable in the course of the appeal of the 2015

Director’s Order. In other words, has the Director’s conduct interfered with the

Tribunal’s ability to achieve a just, expeditious and cost-effective resolution of the

issues? The Tribunal finds that it has not.

[27] Peel appears to agree, at para. 5 of its reply submissions, that the “proceeding”

for which costs are requested “began with the Region’s filing of a Notice of Appeal on

December 1, 2015.” However, the conduct that Peel alleges to be unreasonable (i.e.,

“bolstering” the Director’s case, and failing to name Tony Cruz as an orderee) relates to

the decision to issue the 2015 Director’s Order as drafted. The Tribunal does not agree

that the Director’s failure to name Mr. Cruz as an orderee, after the Region filed a

Notice of Allegation against him, constitutes unreasonable conduct. It merely indicates

that the Director had a different position from the Region on the substantive matters in

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11 15-169 the appeal. Unlike court proceedings, where costs often “follow the cause”, costs

before the Tribunal are not meant to address whether a party has won or taken the

correct position, but rather whether a party’s course of conduct has been reasonable in

taking a position.

[28] The Tribunal agrees with the submissions of the Director that there is no

allegation that the Director delayed Peel’s ability to bring its preliminary motion, was

uncooperative, or took a position in the course of the appeals that was at odds with the

position as set out in the 2015 Director’s Order. In other words, there is no allegation

that the Director’s conduct – other than advancing a position that Peel disagreed with –

was improper or unreasonable.

[29] Peel also argues that the Region “ought to be reimbursed” for public funds that it

was forced to spend defending its reputation. However, the Tribunal’s jurisdiction to

issue costs awards in an appeal such as this one is limited under the SPPA to situations

where the conduct or course of conduct of a party has been unreasonable, frivolous or

vexatious or a party has acted in bad faith. There is no suggestion the Director’s

conduct was frivolous, vexatious or in bad faith. The Tribunal finds the Director’s

conduct in the course of this proceeding was not unreasonable. There are, therefore,

no grounds on which to order reimbursement of Peel’s costs.

ORDER

[30] The Tribunal dismisses Peel’s application for costs.

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12 15-169

Application for Costs Dismissed

“Heather I. Gibbs”

HEATHER I. GIBBS VICE-CHAIR

“Bruce Krushelnicki”

BRUCE KRUSHELNICKI EXECUTIVE CHAIR


If there is an attachment referred to in this document, please visit www.elto.gov.on.ca to view the attachment in PDF format.

Environmental Review Tribunal A constituent tribunal of Environment and Land Tribunals Ontario

Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

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13 15-169



Keswick Presbyterian Church 15-169 Donald Constable 15-170 Mark Lawrence 15-171 Greenpath Inc. 15-172 Greenpath Eco Group Inc. 15-173 The Regional Municipality of Peel 15-174 (Appeal allowed)

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TAB 6

ERT Procedural Issues: Motions for Review (Reconsideration)

Rachel McPherson-Duncan

Articling Student, Environment and Land Tribunals Ontario

Jerry DeMarco Environmental Review Tribunal,

Environment and Land Tribunals Ontario

October 4, 2017


ERT Procedural Issues: Motions for Review (Reconsideration)

The Six-Minute Environmental Lawyer

The Law Society of Upper Canada

October 4, 2017

By:

Rachel McPherson-Duncan, B.A., M.E.S., J.D.

Articling Student, Environment and Land Tribunals Ontario

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2

ERT PROCEDURAL ISSUES: MOTIONS FOR REVIEW (RECONSIDERATION):

THE SIX-MINUTE ENVIRONMENTAL LAWYER

Introduction

The Environmental Review Tribunal (the “Tribunal” or “ERT”) is an independent, quasi –

judicial administrative tribunal that was established by the Environmental Review

Tribunal Act, 2000, S.O. 2000, c. 26. Most Tribunal proceedings are subject to the

Statutory Powers Procedure Act, R.S.O. 1990 c. S. 22, (“SPPA”). The Tribunal’s primary

role is to adjudicate applications and appeals under various environmental and planning

statutes in Ontario, including but not limited to; the Environmental Protection Act, R.S.O.

1990 c. E. 19; the Ontario Water Resources Act, R.S.O. 1990, c. O.40; and, the

Environmental Bill of Rights, 1993, S.O. 1993, c. 28.

In 2005, the Tribunal introduced rules to govern a process whereby a party could

request a review (reconsideration) of a Tribunal order or decision. This paper briefly

reviews the Tribunal’s power to reconsider; the Rules guiding the process; and, the

Tribunal’s application and interpretation of the Rules with respect to Review Panel

determinations rendered thus far.

I. Background The power to review or reconsider is unique to tribunals. As explained by Robert F. Reid

in his 1971 text, Administrative Law and Practice:

The power to reconsider decisions is peculiar to tribunals. It is not found in the law-courts. Its existence is the consequence of a general lack of provisions for appeal, particularly on questions of

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3

fact, from tribunals, and of the regulatory nature of most tribunals. […] The power to reconsider thus appears to be an appropriate means both for the correction of errors in the absence of an appeal and to permit adjustments to be made as changes in that regulated activity occur. The importance of such a power has been recognized by the courts.1

In Ontario, administrative tribunals have the authority to reconsider their own decisions

pursuant to the “power to review” set out in the SPPA. Specifically, subsection 21.2(1) of

the SPPA provides:

A tribunal may, if it considers it advisable and if its rules made under section 25.1 deal with the matter, review all or part of its own decision or order, and may confirm, vary, suspend or cancel the decision or order.2

Pursuant to this authority, in 2005 the Tribunal added rules to guide the internal review

of ERT orders and decisions to its Rules of Practice (the “Rules”).3

II. Rules The Tribunal’s Rules provide the standards and procedural requirements that govern

proceedings at the ERT. The procedural and substantive requirements pertaining to the

reconsideration process are set out in Rules 235-243. Motions to review are usually

heard in writing and determined by a “Review Panel”. The Rules provide that any party

may request a review of a Tribunal decision by serving and filing a notice of motion for

review on all parties within 30 days of the issue date of the order or decision at issue.

There is an exception to this limitation date if the decision at issue was made pursuant

1 Reid, Robert F., Administrative Law and Practice (Toronto: Butterworths, 1971) at 103, cited in Re

Merrens and Municipality of Metropolitan Toronto (1973), 33 D.L.R. (3d) 513 at 526; and Trent Talbot River Property Owners Assn. v. Ontario (Ministry of the Environment), [2006] O.E.R.T.D. No. 16., at para 34, [Trent Talbot]. 2 Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22, s. 21.2(1).

3 Rules of Practice and Practice Directions of the Environmental Review Tribunal, (effective September,

2016), [Rules].

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4

to the Environmental Bill of Rights, 1993, (“EBR”) in which case all materials must be

served and filed within 10 days of the Tribunal’s issuance of the decision.4

Importantly, Rule 238 sets out the grounds for review that guide the Tribunal’s analysis

when determining whether to grant a motion for review. In particular, the first three

subsections provide examples of grounds for when the Tribunal may exercise its power

to reconsider a decision:

a) whether the Tribunal acted outside its jurisdiction; b) whether there is a material error of law or fact such that

the Tribunal would likely have reached a different decision but for that error;

c) whether there is new evidence admissible under the conditions of rule 234;

The final three criteria provide examples of factors that may weigh against granting a

motion for review:

d) The extent to which any person or any other Party has relied on the order or decision;

e) Whether the order or decision is under appeal or is the subject of a judicial review application; and,

f) Whether the public interest in finality of order and decisions is outweighed by the prejudice to the requester.5

As set out in the Rules, reconsideration is a two-step process. The first step is for the

Review Panel to determine whether a review of the decision is “advisable”. If the

Review Panel is satisfied, then the review is conducted by a different panel at a later

date. In considering whether a review is “advisable” the role of the Tribunal in the

4 Rules, supra note 3, at Rules 235 and 236 .

5 Trent Talbot, supra note 1.

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review process is not to reweigh the evidence or assess whether a decision was correct.

Rather, the Review Panel must determine:

[W]hether there were errors that meet the criteria set out in Rule [238], so as to warrant a review. The review process should not be used as an opportunity for a party to reargue the case. A panel hearing a motion to review should refrain from granting a review simply because a different outcome could have been reached by another panel of the Tribunal.6

In Trent Talbot, the Tribunal set a high threshold for reviewing decisions, namely; “the

power to review should only be exercised in exceptional circumstances”.7 This high

threshold test acknowledges the importance of finality in Tribunal decisions.

Importantly, this threshold is lowered when there is no other option to litigate the

issues, not including applications for judicial review. 8

Upon hearing the motion, the Review Panel may grant the motion, in whole or in part,

based on the material filed and/or the record from the original Hearing, and may make

procedural directions for the review.9 If the motion is granted, the review will be heard

by a different panel, who upon hearing the review, may confirm, vary, suspend, or

cancel the order or decision under review in whole or in part.10 It is important to note

these Rules are not applicable to proceedings under the Environmental Assessment Act,

section 142.1 of the Environmental Protection Act, the Niagara Escarpment Planning

6Ibid, at para. 41; see also, Miller v. Ontario (Ministry of the Environment), [2008] O.E.R.T.D. No. 27., at

para. 18, [Miller]. 7Trent Talbot, supra note 1, at para. 44.

8 Concerned Citizens of Brant v. Ontario (Ministry of Environment and Climate Change), [2016] O.E.R.T.D.

No.26 [Concerned Citizens]; see also, Miller. 9 Rules, supra note 3, at Rule 241.

10 Ibid, at Rule 242.

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6

and Development Act, the Oak Ridges Moraine Conservation Act, 2001, or the Greenbelt

Act, 2005.11

III. Grounds for Review

The list of considerations set out in Rule 238 are non-exhaustive. As previously

mentioned, the first three grounds enumerated in Rule 238 provide examples of

grounds that may lead to the granting of a Motion for Review. The last three factors

enumerated are not grounds per se; rather, they set out factors that may weigh against

allowing the review to proceed. Given this distinction, it is important to note that the

last three factors of Rule 238 are often considered only if the Requestor successfully

establishes a ground or grounds for review, as set out in Trent Talbot:

If the requester has not satisfied the Tribunal that any relevant circumstances, including … (a); (b); and (c) of Rule [238] warrant the granting of a motion to review … the Tribunal need not determine if any of the factors listed in paragraphs (d); (e); and (f) tip the balance against a review.12

In other words, if the Review Panel is not convinced that a ground for review exists, then

the Tribunal may dismiss the motion without providing a detailed analysis of any factors

weighing against the review. Below is a brief summary of the grounds for review listed in

Rule 238 and associated case law.

11

Ibid, at, Rule 243. 12

Trent Talbot, supra note 1, at para. 195.

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a) Whether the ERT acted outside its jurisdiction:

This ground is rarely put forward by requesters. Considered by the Review Panel in

Trent Talbot, the test for establishing a jurisdictional error is whether there was a

“clear jurisdictional error”.13

b) Whether there is a material error of law or fact such that the ERT would likely have

reached a different decision but for that error:

While material errors in law can often overlap with grounds for jurisdictional claims,

the wording of Rule 238(b) contains an important test. The test for granting review

based on a material error has two prongs. The first question is whether the

Requester satisfied the Review Panel that the Decision at issue contains a material

error. If the Review Panel is convinced that a material error did occur, the second

step is to determine whether the Tribunal likely would have reached a different

decision but for that error.14 If the Review Panel finds that a material error did occur,

but that the error likely would not affect the outcome of the Decision, then the

motion for review would likely be dismissed.

c) Whether there is new evidence admissible under the conditions of rule 234:

As is evident from the wording of Rule 238(c), the new evidence claimed must be

admissible under the conditions of Rule 234. Namely, the Review Panel must ask

whether the new evidence is material and credible and could affect the result of the

13

Trent Talbot, supra note 1, at para. 183. 14

Ibid; see also Miller, supra note 6, at para 41.

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8

Hearing and whether the evidence was available or obtainable at the time of the

initial Hearing.15

d) The extent to which any person or any other Party has relied on the order or decision:

This factor has not been the subject of detailed analysis by the Tribunal.16 As is

evident from the wording of Rule 238(d), this consideration examines whether a

person or party has relied on the decision subject to request to review. This

consideration may overlap with the “finality” criterion in Rule 238(f).

e) Whether the order or decision is under appeal or is the subject of a judicial review

application:

This factor weighing against a review was analyzed by the Tribunal in Concerned

Citizens of Brant:

Rule 238(e) is directed at whether the decision is under appeal or is the subject of judicial review. This factor is meant to address considerations relating to economy. If a decision is simultaneously the subject of two similar proceedings […] this fact will be considered by the Tribunal in determining whether it is advisable to conduct a review.17

f) Whether the public interest in finality of orders and decisions is outweighed by the prejudice to the requester:

This factor acknowledges the importance of finality of Tribunal decisions and has yet

to be considered by the Tribunal at length. When considered briefly in Concerned

15

Trent Talbot, supra note 1, at para. 168. 16

Concerned Citizens of Brant, supra note 8, at para. 163. 17

Concerned Citizens of Brant, supra note 8, at para. 164; see also, Trent Talbot, supra note 1, at para. 35.

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9

Citizens of Brant18 the Review Panel noted that applications for leave to appeal

pursuant to the EBR are often brought by individuals and concerned citizens groups

with limited resources for litigation,19 and that this should be considered when

determining whether the public interest is outweighed by prejudice to the

Requester:

In cases where leave is granted following a detailed written hearing, there is a strong argument in favour of deferring to the finality of the leave decision and refusing to add an unnecessary step to an already complex legal process.20

IV. Reconsideration in Context

Since the Rules for reconsideration were first established in 2005, the Tribunal has

received eight motions to review. Of the eight requests received, seven were dismissed

and one was not determined.21 The following section provides a brief summary of the

seven requests.

1) Trent Talbot River Property Owners Assn. v. Ontario (Ministry of the Environment),

[2006] O.E.R.T.D. No. 16. In 2006, the Tribunal applied the new Rules on reconsideration in Trent Talbot for

the first time since their introduction. The 38-page decision sets out the Tribunal’s

review process and the high threshold when considering whether granting a review

is “advisable”.

18

Concerned Citizens of Brant, supra note 8, at para. 164. 19

Ibid, at para. 175. 20

Ibid, at para. 174. 21

Rouleau v. Ontario (Ministry of the Environment), [2011] O.E.R.T.D. No. 27, 60 C.E.L.R. (3d) 341.

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10

The topic of this appeal was the decision of the Director of the Ministry of

Environment (now the Ministry of Environment and Climate Change) to permit the

dewatering a proposed quarry lot. Following the main hearing, the Tribunal allowed

the appeal in part by attaching a number of terms and conditions to the permits

issued by the Director. A party filed a motion for review the Tribunal’s decision to

allow the appeals in part, alleging a number of grounds and factors warranting a

review of the decision. The Review Panel dismissed the request but did correct

errors in the original decision.22

2) Miller v. Ontario (Ministry of the Environment), [2008] O.E.R.T.D. No. 27.

In Miller, the motion for review related to a Tribunal decision dismissing an

application for leave to appeal under the EBR because the applicant missed the

mandatory 15-day limitation period. In this context, the motion for review was the

last option for the requester to litigate the issues (not including an application for

Judicial Review). While the Review Panel ultimately dismissed the Motion for

Review, the Tribunal held that in cases where there is no right of appeal, the

threshold for review ought to be lower.23

3) Baker v. Ontario (Ministry of the Environment), [2009] O.E.R.T.D. No. 55. The subject of this Motion for Review was a decision issued by the Tribunal to

dismiss a motion for costs. The motion was dismissed. The Review Panel’s decision is

22

Trent Talbot, supra note 1, at paras. 196-198. 23

Concerned Citizens of Brant, supra note 8.

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11

often cited as a leading authority on the ERT’s process and considerations when

determining whether to grant a motion for review.

4) Concerned Citizens of Brant v. Ontario (Ministry of Environment and Climate

Change), [2016] O.E.R.T.D. No.26. This motion for review was brought by two Directors of the Ministry of the

Environment and Climate Change to challenge a decision of the Tribunal to grant

leave to appeal to two applicants pursuant to the EBR. The Directors argued the

lower threshold for review discussed in Miller should apply; however, the Review

Panel disagreed, stating that granting leave to appeal does not have the same effect

as dismissing an application for leave:

From a substantive point of view, decisions granting leave to appeal under the EBR are among the least final types of decisions that the Tribunal issues. Decisions granting leave are not a party’s “final option” before the Tribunal.[…] The Tribunal finds that the lower threshold in Miller is to be applied only in a subset of cases under the EBR, namely, those that are without rights of appeal and are final substantive determinations.24

As held by the Review Panel, granting leave to appeal essentially initiates further

proceedings by requiring a pre-hearing conference, hearing, and opportunities for

mediation, whereas dismissing an application for leave effectively ends the litigation

process. Therefore, when hearing a motion for review a decision to grant leave

under the EBR, the high threshold established in Tent Talbot applies.

24

Ibid, at paras. 75-76.

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12

5) Keswick Presbyterian Church v. Ontario (Environment and Climate Change), [2016] O.E.R.T.D. No. 57.

This motion for review was also brought by a Director of the Ministry of the

Environment and Climate Change. The Order subject to the request involved a

successful motion by the Municipality of Peel to revoke a Director’s order.

6) Hong v. Ontario (Environment and Climate Change), [2017] O.E.R.T.D. No. 21. The subject of the motion for review was a decision of the Tribunal to dismiss an

application for leave to appeal pursuant to the EBR. The application for leave to appeal

sought to challenge the Director’s decision to issue an amended Environmental

Compliance Approval for the operation of a batch mix hot asphalt plant. This decision

provides a review of the application of the lower threshold for review established in

Miller.

7) CCCTE v. Ontario (Environment and Climate Change), 2017 CanLII 47796 (ON ERT). This motion for review was brought by the Mohawks of the Bay of Quinte in regards to a

cost dismissal order. While the Motion was ultimately unsuccessful, it was the first case

where a party raised the issue of First Nation interests as a factor in considering whether

to grant the review.

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TAB 7

Environmental Review Tribunal Costs Awards

Harry Dahme, C.S. Gowling WLG (Canada) LLP

October 4, 2017


TOR_LAW\ 9274786\1

Gowling WLG (Canada) LLPSuite 1600, 1 First Canadian Place100 King Street WestToronto ON M5X 1G5 Canada

T +1 416 862 7525F +1 416 862 7661gowlingwlg.com

Gowling WLG (Canada) LLP is a member of Gowling WLG, an international law firm which consists of independent and autonomous entities providing services around the world. Our structure is explained in more detail at gowlingwlg.com/legal.

ENVIRONMENTAL REVIEW TRIBUNAL COSTS AWARDS

Harry Dahme(Certified Special (Environmental Law)

Gowling WLG (Canada) LLP1 First Canadian Place100 King Street West

Suite 1600Toronto, ON M5X 1G5

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http://www.gowlingwlg.com/legal

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ENVIRONMENTAL REVIEW TRIBUNAL COSTS AWARDS

SUMMARY

There are three categories of proceedings for the purpose of determining the scope of the ERT’s jurisdiction to award costs.

Category 11 proceedings afford the ERT narrower discretion and comprise the vast majority of ERT matters. The power to award costs is constrained by section 17.1 of the Statutory Powers Procedure Act2 and the Rules of Practice of the Environmental Review Tribunal3. The threshold test to be met is that the conduct of the party against whom costs are demanded must be found to have been unreasonable, frivolous, vexatious, or have acted in bad faith. The ERT has discretion to deny costs even if the SPPA’s threshold misconduct requirement is met.

Category 2 proceedings afford the ERT broad discretion and exist in a small group of hearings provided for by a variety of environmental statutes. In these instances the ERT is given broad costs-awarding powers and the SPPA restrictions are expressly overridden. There is no current case law available to define the exact parameters, if any, of the category 2 discretion to award costs

Category 3 proceedings are those where the ERT has no discretion to award costs.

In the case of either Category 1 or 2 costs, the ERT has discretion to award interim costs, but does not have the jurisdiction to award costs in advance.

THE ENVIRONMENTAL REVIEW TRIBUNALS JURISDICTION TO AWARD COSTS

In the Reasons of a recent Order of the Environmental Review Tribunal (“ERT”) which dealt with a Request for Review4, ERT panelist Jerry DeMarco summarized the costs awards powers of the ERT pursuant to Rule 213 of the ERT Rules as follows:

1. Narrow discretion – for the majority of proceedings, according to rules 225 and 226;

2. Wide discretion – for certain types of proceedings, according to rules 221 to 224;

1 Note: the terms “category 1”, “category 2” and “category 3” are used only for the purpose of this paper and do not appear in statues, rules or case law. 2 Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 [“SPPA”]3 Rules of Practice and Practice Directions of the Environmental Review Tribunal. Environment and Lands Tribunals Ontario, (2016). [“ERT Rules”]4 (paragraph 38 of CCCTE v Ontario4 (“CCCTE III”)),

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3. No costs powers – in certain types of proceedings, under rule 213 and 225.

For convenience, Rule 213 is copied below:

213. A wide authority to award costs applies to proceedings under the Consolidated Hearings Act and the Environmental Assessment Act and to proceedings under sections 20.15 and 36 of the Environmental Protection Act and section 74 of the Ontario Water Resources Act. A limited authority to award costs in situations of improper conduct applies to all proceedings before the Tribunal except Niagara Escarpment Plan amendment proceedings under the Niagara Escarpment Planning and Development Act and proceedings under the Oak Ridges Moraine Conservation Act, 2001 and Greenbelt Act, 2005.”

For the purposes of this paper the jurisdiction to award costs has been placed in three categories.

1) Category 1 Proceedings: Narrow Discretion

Under category 1, the discretion of the ERT is constrained by section 17.1 of the SPPA.

Section 17.1(2), as adopted by ERT Rule 225, expressly constrains the discretion of the ERT:

“17.1 (2) A tribunal shall not make an order to pay costs under this section unless,

(a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith; and

(b) the tribunal has made rules under subsection (4).” 5

Section 17.1 establishes a threshold test which must first be met prior to making any determination on whether or not to award costs and in what amount. The threshold requirement that must be met is unreasonable, frivolous, vexatious or bad faith conduct by the party against whom costs are being sought. If this requirement is met, the ERT then has the discretion as to whether or not to award costs, subject to the limitations as set out in Rule 229 of the ERT Rules. For convenience Rule 229 is reproduced below:

229. In the table below, the Tribunal has established maximum levels for legal and consulting fees and disbursements. Parties should not assume they will recover all of their disbursements or receive full indemnification for legal or consulting fees through a costs award. The Tribunal may make adjustments based on the criteria outlined in these Rules. Based on the circumstances of each case, the Tribunal will determine the scope of the costs and whether the commencement date for work billed may precede the date of the Notice of Hearing. Costs for preparing and presenting the costs application itself are available only where the Party's costs claim is reasonable.

5 SPPA, at 17.1.

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Established Maximum Levels for Legal and Consulting Fees and Disbursements

Type Description Maximum Level

Senior Counsel (>10 yrs. experience) $ 290/hr

Intermediate Counsel (5-10 yrs exp.) $ 230/hr

Junior Counsel (<5 yrs exp.) $ 170/hr

Legal Fees

Paralegal or Articling Student $ 100/hr

Senior Consultant (>10 yrs. experience) $ 290/hr

Intermediate Consultant (5-10 yrs exp.) $ 230/hr

Consulting Fees

Junior Consultant (<5 yrs exp.) $170/hr

Travel by Automobile 40.00¢/km for southern Ontario

41.00¢/km for northern Ontario

Meals $40.00/day

Disbursements

Photocopies/facsimile 25¢/copy

The requirements of s. 17.1 of the SPPA are reflected in ERT Rule 225 which sets out the general jurisdiction applicable to Category 1 proceedings, which cover the majority of proceedings:

“225. Under section 17.1 of the Statutory Powers Procedure Act, the Tribunal may only order costs to be paid if the conduct or course of conduct of a Party has been unreasonable, frivolous or vexatious or if a Party has acted in bad faith.

This power applies to all proceedings before the Tribunal except proceedings under the Oak Ridges Moraine Conservation Act, 2001, proceedings under the Greenbelt Act, 2005 and Niagara Escarpment Plan amendment proceedings under the Niagara Escarpment Planning and Development Act, unless the Niagara Escarpment Plan amendment proceeding is brought under the Consolidated Hearings Act.

For ERT Costs applications in this category 1, the ERT has adopted the three-part test used in Baker v. Ontario (Ministry of the Environment) (the “Baker” test).

“1. The Tribunal must first determine whether a Party has engaged in unreasonable, frivolous, or vexatious conduct or acted in bad faith.

2. If so, the Tribunal then considers whether to exercise its discretion to award costs.

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3. If the Tribunal exercises its discretion to award costs, the Tribunal then exercises its further discretion in determining the appropriate amount of the cost award”6

a) Baker Stage 1: Threshold for party misconduct

The Tribunal only has the powers provided by statute. The ERT does not have inherent jurisdiction. Therefore, for the majority of the hearings before the ERT, the discretion of the ERT in awarding costs is limited to instances where the party against whom costs are being sought demonstrates threshold misconduct that is unreasonable, vexatious, frivolous or in bad faith.7

Rule 225 provides a non-exhaustive and non-binding list of examples of conduct which the ERT considers in order to determine whether a Party’s conduct is unreasonable, vexatious, frivolous or in bad faith:

225 […] It is expected that this power will only be used in the rare case where a Party’s conduct warrants such an award. In determining an award of costs under this Rule, the Tribunal may consider, among other things, the conduct of the requesting Party as well as whether the Party against whom a costs award is sought:

(a) failed to attend a Hearing or to send a representative when properly given notice,

without contacting the Case Coordinator;

(b) failed to co-operate, changed a position without notice, or introduced an issue or

evidence not previously mentioned;

(c) failed to act in a timely manner;

(d) failed to comply with the Tribunal’s Rules or procedural orders;

(e) caused unnecessary adjournments or delays or failed to prepare adequately for

Hearings;

(f) failed to present evidence, continued to deal with irrelevant issues, or asked

questions or acted in a manner that the Tribunal determined to be improper;

(g) failed to make reasonable efforts to combine submissions with Parties of similar

interest;

(h) acted disrespectfully or maligned the character of another Party; and,

(i) knowingly presented false or misleading evidence.

The Tribunal has discretion to apply these or other considerations in determining whether a Party has acted in a manner to exceed the threshold test. However, the test as set out in s. 17.1 of the SPPA is a high one. For example, in CCCTE III, the Tribunal confirmed that a Party does not act

6 Baker v. Ontario, 2009 CarswellOnt 3421; [2009] O.E.R.T.D. No. 29, at 38. [“Baker”]7 Preserve Mapleton Inc. v Ontario (Director, Ministry of the Environment), 2012 CarswellOnt 4355; 67 CELR (3d) 207 at 91

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unreasonably just because it defends itself in a proceeding and does not agree to settle every issue in a hearing. [add footnote]

CCCTE III follows a number of other cases where a Party’s conduct has been examined and where it has not been found to be unreasonable.

There are however a few examples where a Party’s conduct was found to exceed the threshold test. One example is Krek v. Ontario8. This case involved an appeal of a Director’s Order for remediation of contamination. During the appeal, video evidence surfaced of an intervening party – a landowner neighbouring the orderee– dumping contaminants into wells of another neighbouring property (whose landowner was also an intervenor). The Order against the orderee was subsequently revoked, the appeal was dismissed and both the orderee and the innocent intervening party sought costs against the polluting intervener.

A second example of unreasonable conduct is Technical Standards and Safety Authority v. Kawartha Lakes (City)9. In that case the City was found to have exceeded the threshold test by behaving both unreasonably and frivolously due to non-compliance with various procedural requirements.

b) Baker Stage 2: Tribunal Discretion in Awarding Costs

Although meeting the SPPA threshold for misconduct is a necessary condition of a category 1 costs award, the Tribunal is not bound to award costs when those requirements are met. This discretion comes from ERT Rule 226:

226. The Tribunal is not bound to order costs when any of the instances listed in Rule 225 occurs nor does the Tribunal have to find that one of the instances occurred in order to conclude that the conduct of a Party has been unreasonable, frivolous or vexatious or that a Party has acted in bad faith. The Tribunal will also consider whether the issues respecting the conduct of such a Party can be addressed by a denial or reduction of costs in its favour rather than a costs award against it.”

In certain circumstances, threshold misconduct has been established but the Tribunal has exercised discretion under stage 2 of the test to deny the applicant party a cost award. In “TSSA II”,10 the Tribunal exercised discretion not to award costs because the misconduct did not unduly prejudice the opposing party.

In “TSSA I”,11 discretion was once again exercised not to award cost despite a finding of unreasonable and frivolous conduct as a result of a series of repetitive and unsubstantiated motions made by a municipality. The Tribunal nevertheless exercised discretion to deny costs against the municipality, because requiring the City to use public funds to pay costs, costs the taxpayer money and discourages municipal participation in the process.

8 Krek v Ontario, 2017 CarswellOnt 4782. [“Krek”]9 Technical Standards and Safety Authority v. Kawartha Lakes (City), 2016 CarswellOnt 15360, 4 C.E.L.R. (4th) 295 [“TSSA II”],10 Technical Standards and Safety Authority v. Kawartha Lakes (City), 2016 CarswellOnt 15360, 4 C.E.L.R. (4th) 295 [“TSSA II”], at 63. 11 Technical Standards and Safety Authority v. Kawartha Lakes (City), 2013 CarswellOnt 1776, 75 C.E.L.R. (3d) 83 [“TSSA I”], at 52-58.

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In “CCCTE II”,12 the Tribunal denied the application for costs on the basis of the the Party against whom costs were being sought did not act unreasonably, but then went on to suggest that stage 2 would be an appropriate time to consider the historical disadvantage or financial vulnerability of a First Nation seeking costs. Even if stage 1 were met in this case, it is not clear how the status of a First Nation would have affected stage 2 discretion.

c) Baker Stage 3: Tribunal Discretion in the Amount of Costs

If both the statutory threshold for misconduct and the Tribunal’s discretion permit a costs award, Rules 228-230 provide the Tribunal with discretion to determine the amount of the award; however, this discretion is constrained by maximum amounts set out by Rule 229 which mirror sections 17.1(3) and (4) of the SPPA:

“Amount of costs

(3) The amount of the costs ordered under this section shall be determined in accordance with the rules made under subsection (4). 2006, c. 19, Sched. B, s. 21 (2).

Rules

(4) A tribunal may make rules with respect to,

(a) the ordering of costs;

(b) the circumstances in which costs may be ordered; and

(c) the amount of costs or the manner in which the amount of costs is to be determined.”

The limitations on costs are set out in Rules 228-231 of the ERT Rules.

In Krek,13 the Tribunal ruled that their discretion was limited from awarding costs beyond the maximum amounts as provided for by ERT Rule 229. Because the fraudulent and malicious behaviour of the polluting intervenor rose well above the threshold for unreasonableness, frivolousness, vexatiousness and bad faith, the moving party sought substantial and full indemnity beyond the levels set out in the ERT Rules. However, the Tribunal did not allow costs beyond the maximum permitted by Rule 229.14

d) Additional discretionary powers

In “CCCTE I”,15 the tribunal determined that they do not have the authority to grant advance costs; however, they do have the discretion to award interim costs based on the prior conduct of a party. This is consistent with Rule 219 of the ERT Rules, which states in part:

219. In most cases, the Tribunal will not decide issues of costs until the decision on the overall substance of the proceeding is released.

12 CCCTE v Ontario, 2017 CarswellOnt 6540, [2017] O.E.R.T.D. No. 24,[“CCCTE II”] at 115-116.13 Krek v Ontario, 2017 CarswellOnt 4782. [“Krek”]14 Krek, at 100-102.15 CCCTE v Ontario, 2015 CarswellOnt 9504, [2015] O.E.R.T.D. No. 24 [“CCCTE I”], at 48-56.

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2) Category 2 Proceedings: Wide Discretion

Specific types of proceedings enumerated in Rules 213 and 221 give wider discretion to the Tribunal to award costs. Those proceedings include proceedings under: Consolidated Hearings Act16 (“CHA”) s. 7, Environmental Assessment Act17 (“EAA”) s. 21, Environmental Protection Act18 (“EPA”) s. 20.15 and 33, and Ontario Water Resources Act,19 (“OWRA”) s. 7, s. 74.

These statutory provisions establish broad costs-awarding powers to the ERT for specific types of proceedings and expressly prevail over the SPPA limitations on costs.

a) Type of proceedings falling under category 2

i. Joint Board Hearings under the CHA that include the ERT

Section 7 of the CHA grants the ERT wide discretion on the award of costs. The CHA guides hearings where matters require multiple hearings before several tribunals are consolidated in one hearing before the Joint Board.

ii. All hearings under EAA

Section 21 of the EAA grants the ERT wide discretion to award costs in respect of any hearings under the EAA. Section 21(4) expressly provides that the Tribunal “is not limited to the considerations that govern the award of costs in any court.”

iii. Director-ordered hearings for Environmental Compliance Approval applications under the EPA

Section 20.15 of the EPA provides that a Director, before making a decision on an application for an Environmental Compliance Approval (“ECA”) may require a hearing. . Section 20.15(7) gives the ERT wide discretion as to the awarding of costs and s. 20.15(8) gives the ERT wide discretion to decide who should pay costs and who the costs should be paid

Where a by-law of a municipality affects the location or operation of a proposed waste disposal site, s. 36 of the EPA allows a person applying for the ECA for the waste disposal site to apply to the Director to hold a public hearing. In the case where the Director then gives notice to hold a hearing, the ERT is then given broad discretion as to the award of costs pursuant to s. 33 of the EPA.

iv. Director-ordered hearings for public water or sewage service area designations under the OWRA

Section 74 of the OWRA allows the Director to designate an area for public water or sewage service and to require any contract in respect of public water or sewage service to be terminated. Section 7 provides that the Tribunal shall hold a hearing with respect to the subject matter of the notice received from the Director and then goes on to give the Tribunal broad discretion as to the award of costs.

16 Consolidated Hearings Act, R.S.O. 1990, c. C.29. [“CHA”]17 Environmental Assessment Act, R.S.O 1990, c. E.18. [“EAA”]18 Environmental Protection Act, R.S.O. 1990, c. E.19. [“EPA”]19 Ontario Water Resources Act, R.S.O. 1990, c. O.40. [“OWRA”]

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v. Proceedings not covered under category 2 (i.e. Environmental Bill of Rights)

It is important to distinguish the proceedings listed above from other hearings that may take place before the ERT. The ERT’s wide discretion to award costs only applies to the enumerated category 2 proceedings and does not apply to hearings where a government decision is challenged through other means.

The Environmental Bill of Rights,20 (“EBR”) s. 38, for example, provides a broad public right of appeal to challenge a government environmental decision. EBR hearings are heard by the ERT and could challenge a decision under the EAA, a decision related to an ECA under the EPA, or a designation decision under s. 74 of the OWRA. Even where EBR appeals are related to the same subject matter as the category 2 hearings, EBR appeals are not specified in category 2 under the ERT Rules and therefore have the narrow costs awards powers of category 1 cases.21

b) Common costs-awarding powers

In granting cost-awarding powers, the EAA, EPA and OWRA provisions are nearly identical to each other in the following respects:

They specify the ERT as the responsible ‘Tribunal’;22

They grant the Tribunal discretion to award costs;23

They grant the Tribunal discretion to decide “to whom and by whom costs are to be paid”;24

They grant the Tribunal discretion to “fix the amount of the costs or direct that the amount be assessed” and to “direct the scale according to which they are to be assessed and by whom they are to be assessed”;25

They state that the Tribunal “is not limited to the considerations that govern awards of costs in any court”;26

c) Prevalence over the SPPA

Unlike category 1 proceedings, category 2 proceedings are not constrained by s. 17.1 of the SPPA and do not require that threshold misconduct be established prior to considering whether or not to award costs.

The SPPA “applies to a proceeding by a tribunal in the exercise of a statutory power of decision conferred by or under an Act of the Legislature, where the tribunal is required by or under such

20 1993, S.O. 1993, c. 28 [“EBR”]21 See, CCCTE II and III, for example. 22 EAA, s. 1(1); EPA, s. 1(1); OWRA, s. 1(1).23 EAA, s. 21(1); EPA, s. 20.15 (7); OWRA, s. 7(5); CHA, s. 7(4).24 EAA, s. 21(2); EPA, s. 20.15 (8); OWRA, s. 7(6); CHA, s.7(5).25 EAA, s. 21(3); EPA, s. 20.15 (9); OWRA, s. 7(7); CHA, s.7(6).26 EAA, s. 21(4); EPA, s. 20.15 (10); OWRA, s. 7(8); CHA, s.7(7).

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Act or otherwise by law to hold or to afford to the parties to the proceeding an opportunity for a hearing before making a decision”.27 Therefore it presumptively applies to the ERT.

The SPPA prevails over other statutory provisions by virtue of its primacy clause at s. 32:

32. Unless it is expressly provided in any other Act that its provisions and regulations, rules or by-laws made under it apply despite anything in this Act, the provisions of this Act prevail over the provisions of such other Act and over regulations, rules or by-laws made under such other Act which conflict therewith

Because of the primacy clause, if a statute gives a tribunal cost-awarding powers that conflict with the SPPA’s s. 17.1, the SPPA prevails unless the other statute expressly overrides the SPPA. All of the enumerated category 2 provisions have a subsection saying that their costs award provisions “apply despite sections 17.1 and 32 of the Statutory Powers Procedure Act”.28

Aside from those enumerated in the ERT rules category 2, there are no other statutes that have overcome the SPPA-empowered ERT costs provisions.29

d) Category 2 cost-awarding powers are broad

The powers granted by statute in category 2 are extremely broad. The ERT Rules however do provide guidance and limits. For example Rule 212 sets out the objectives of the costs rules and presumably the determination of whether or not to award costs and the quantum of costs are is required to be made on the basis of whether or not it achieves the objectives.

212. A costs award refers to the reimbursement of reasonable and eligible expenditures incurred by a Party for participation in a proceeding before the Tribunal. The objectives of the Tribunal’s costs Rules are to: provide consistency and predictability in the awarding of costs by outlining relevant principles and evaluation criteria; to encourage responsible conduct in proceedings; and to discourage unreasonable conduct.

Further, Rule 217 sets out the obligations of the party seeking costs. These obligations include demonstrating that any costs are incurred in relation to the proceeding before the Tribunal, that they are reasonable, properly documented and consistent with the Rules. Last, any costs award is still constrained by the maximum levels for legal and consulting fees as set out in Rule 229, except where the Tribunal exercises its discretion to make adjustments.

3) Category 3 Proceedings: No Discretion

27 SPPA, s. 3(1).28 EAA, s. 21(5); EPA, s. 20.15 (11); OWRA, s. 7(9).29 Based on a CanLII, WestLaw and Quicklaw search for the phrase “despite section[s] 17.1 [and 32] of the Statutory Powers Procedure Act” in statutory sources.

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In category 3 proceedings, the ERT has no discretion to award costs.

According to Rule 213, the ERT may not award costs discretion in the following circumstances:

Niagara Escarpment Plan amendment proceedings under the Niagara Escarpment Planning and Development Act30

proceedings under the Oak Ridges Moraine Conservation Act, 200131; and

proceedings under the Greenbelt Act, 200532

30 R.S.O. 1990, c. N.2.31 S.O. 2001, c. 31.32 S.O. 2005, c. 1.

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TAB 8

No Take-Backs: Waste Ownership and Liability

Transfer Under the EPA

Keswick Presbyterian Church v Ontario (Ministry of the Environment and Climate Change)

Richard Butler Serin Remedios

Willms & Shier Environmental Lawyers LLP

October 4, 2017


“No Take-Backs: Waste Ownership and Liability Transfer

Under the Environmental Protection Act”

Keswick Presbyterian Church v Ontario (Ministry of the Environment and Climate Change)

Authors: Richard Butler, with the assistance of Serin Remedios, Willms & Shier Environmental Lawyers LLP

PART 1 – BACKGROUND FACTS AND ERT APPEAL

On September 13, 2016, Ontario’s Environmental Review Tribunal (ERT) decided a motion

brought by the Regional Municipality of Peel (Region).1 In so doing, the ERT made new

procedural and substantive law.

The ERT revoked the Ontario Ministry of the Environment and Climate Change (MOECC)

Director’s Order against the Region in Keswick Presbyterian Church v Ontario (Ministry of the

Environment and Climate Change).2

The first part of this article summarizes key evidence before the ERT on the Region’s Motion to

Revoke and the ERT’s decision. The second part examines the ERT’s analysis of the Environmental

Protection Act (EPA), and more specifically, how the various sections of ‘Part V – Waste

Management’ interact.

Waste Diversion Project in the Region

In 2008, the Region sent curb-side waste to an energy-from-waste facility as part of the Region’s

waste diversion initiatives. The Region sent the post-incineration end product, known as bottom

ash, to landfill.

In March 2009, the MOECC issued an Environmental Compliance Approval to Greenpath Inc.

(Greenpath) to operate a waste disposal site (Greenpath Site). The MOECC approved Greenpath

to accept bottom ash from the Region and other waste generators, and to process the bottom

ash into cast-stone products, including patio stones.

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2

The Region and Greenpath entered into an agreement that set out terms associated with the

delivery of bottom ash (Bottom Ash Agreement). The Bottom Ash Agreement specifically set out

the transfer of ownership of and liability for the bottom ash from the Region to Greenpath. The

Bottom Ash Agreement also set out restrictions on the permissible uses for the bottom ash, and

at all times required Greenpath to comply with Greenpath’s ECA and environmental law.

Between March 2009 and October 2009, the Region deposited and Greenpath accepted bottom

ash at the Greenpath Site. During on-site inspections (permitted by the Bottom Ash Agreement),

Region staff observed Greenpath staff producing patio stones and large cinder blocks.

The ERT found that the Region’s deposit of bottom ash at the Greenpath Site to be the first of

two deposits.

Unlawful Deposit of Bottom Ash/Eco-Fill

Without the knowledge of the Region or the MOECC, Greenpath began incorporating bottom ash

into products other than patio stones. The MOECC would later allege that Greenpath combined

the bottom ash with other material to create a new product that Greenpath called ‘Eco-Fill’.

In April 2009, the Keswick Presbyterian Church purchased Eco-Fill for grading purposes when re-

paving the Church parking lot. The MOECC alleged that the Eco-Fill originated from Greenpath

and contained bottom ash.

Greenpath’s ECA did not permit the manufacture or sale of Eco-Fill. The MOECC and the Region

had no knowledge at the time that Greenpath was producing Eco-Fill that contained bottom ash

and selling it to be used as fill.

On the Region’s Motion to Revoke, the ERT held that the deposit of Eco-Fill at the Church

property was the second deposit.

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MOECC Investigation and Orders

Beginning in late 2010, the MOECC became concerned with Greenpath’s operations at the

Greenpath Site and conducted an inspection. During its investigation, the MOECC discovered at

least four sites where Eco-Fill was allegedly used as fill, including the Keswick Church property.

In 2012, the MOECC issued a Provincial Officer’s Order naming (among others), Greenpath, its

corporate officers and directors, the Church and the Region. The Provincial Officer’s Order

required removal of Eco-Fill from beneath the Church parking lot.

The MOECC Director confirmed the Provincial Officer’s Order by issuance of a Director’s Order in

2013. The 2013 Director’s Order alleged that Greenpath’s deposit of Eco-Fill at the Church

property violated Greenpath’s ECA and Ontario’s Environmental Protection Act (EPA).3

The Director’s Order alleged that the Region was liable because the Region ‘permitted’ the

second deposit at the Church by: (i) not advising the MOECC of Greenpath’s non-compliance with

the ECA4, and (ii) not taking steps to prevent the illegal second deposit at the Church property.

In short, the MOECC alleged that the Region had a ‘due diligence’ obligation to keep track of the

bottom ash after delivery and acceptance by Greenpath at the Greenpath Site.

The Region and other parties to the 2013 Director’s Order appealed to the ERT.

In December 2015, during the course of the appeal, the Director revoked and replaced the

2013 Director’s Order. The 2015 Director’s Order incorporated additional sections of the EPA,

namely sections 18, 41 and 43. The 2015 Director’s Order also asserted that the Region, as a

‘previous owner’ of waste under EPA, s. 43, must remove Eco-Fill from the Church property.

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The Region’s Motion for Revocation

In 2016, the Region brought a Motion to Revoke the 2015 Director’s Order. A Motion to Revoke

is akin to a Rule 20 Summary Judgment Motion in civil litigation.5 The City of Toronto (City) and

the Ontario Waste Management Association (OWMA) were granted leave to intervene on the

Region’s Motion to Revoke.

The focus of the appeal was the interplay between the EPA, ss. 42 and 43. Section 42 provides

that the ownership of and liability for waste that is lawfully deposited at a MOECC approved

waste disposal site (i.e. an ECA site) transfers upon acceptance of the waste by the approved

receiver. In contrast, section 43 sets out a Director’s order-making power to compel removal of

waste that is unlawfully deposited. Section 43 applies to any ‘previous owner’.

The Region (and both intervenors) argued that the Region had no liability as a ‘previous owner’

of waste deposited and accepted at a MOECC approved waste disposal site, and which was later

illegally taken by others to the Church property. The Region argued that the EPA created a

regulatory framework whereby ‘good actors’ in the waste industry, who lawfully deposit waste

at MOECC approved waste disposal sites, do not retain liability for the waste. The Region’s

ownership and liability ceased at the time of the first deposit when the Region deposited and

Greenpath accepted bottom ash at the Greenpath Site, pursuant to Greenpath’s ECA – in other

words: the plain wording of the EPA, s. 42 protected the Region.

The Director conceded that the Region had no knowledge about the second deposit at the Church

property, but maintained the position that the Region continued to have a responsibility for the

bottom ash even after the first lawful deposit at the Greenpath Site. The Director sought to

apportion permanent “generator liability” on the Region for the bottom ash regardless of a

change in ownership (more akin to ‘Superfund’ liability in the United States). The Director argued

that the EPA permitted the Director to order any ‘previous owner’ of waste to remove waste

from the Church property – in other words: the EPA, s. 43 gave the MOECC authority to Order

the Region.

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The ERT Decision

The ERT agreed with the Region, the City and the OWMA that there were two separate waste

deposits: (i) the lawful deposit by the Region at the Greenpath Site, and (ii) the subsequent

unlawful deposit at the Church property. The ERT concluded that the Region’s ownership and

liability for the bottom ash terminated at the Greenpath Site. The Region held no liability for the

second unlawful deposit by others, contrary to the ECA and the Bottom Ash Agreement, and

without the knowledge of the Region.

PART 2 – BALANCING SECTION 43 WITH SECTION 42

DIRECTOR’S POSITION – SECTION 43

The Director alleged that the Region continued to have a responsibility for the waste even after

Greenpath accepted the waste at the Greenpath Waste Disposal Site. The Director’s Order

relied on the EPA, ss. 18, 41 and 43.

Section 43 states:

43. Where waste has been deposited upon, in, into or through any land or land

covered by water or in any building that has not been approved as a waste

disposal site or in respect of which no registration under Part II.2 is in effect, the

Director may issue an order to remove the waste and to restore the site to a

condition satisfactory to the Director to,

(a) an owner or previous owner or a person who otherwise has or had charge

and control of the land or building or waste;

…

(c) a person that the Director reasonably believes engaged in an activity

prohibited by section 40 or 41 that resulted in the deposit of the waste.

[emphasis added]

The Director argued that section 43 allowed the Director to order any “previous owner” of

waste to remediate and restore the Church property. The Region was a previous owner of the

waste. Even though the Region had no knowledge of the illegal second deposit, the Director

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believed that the Region could have taken steps to prevent the illegal deposit at the Church

Property.

In the alternative, the Director argued that the Region ‘caused or permitted’ the illegal deposit

of waste (triggering s. 41).

Section 41 states:

41. No person shall use, or cause, permit or arrange for the use of, any facilities

or equipment for the storage, handling, treatment, collection, transportation,

processing or disposal of waste that is not part of a waste management system

for which an environmental compliance approval or renewable energy approval

has been issued or a registration under Part II.2 is in effect and except in

accordance with the terms and conditions of the approval or the regulations

made for the purposes of Part II.2.

The Director argued that the Region could not rely on section 42. The Director said it was not

reasonable for the Region to send many tonnes of waste to the Greenpath Site and fail to track

whether the bottom ash actually made it into many tonnes of stone products. In essence, the

Director sought to read a due diligence provision into s. 42, arguing that if a party wishes to

avail itself of the transfer of liability under section 42, that party must take steps to ensure that

the receiving site can accommodate the waste.

REGION’S POSITION – SECTION 42

In contrast, the Region argued that that all ownership of and liability for the waste terminated

when the Region delivered and Greenpath accepted waste at the Greenpath Waste Disposal

Site. The Region relied on the plain wording of the EPA. 42:

42. (1) The ownership of waste that is accepted at a waste disposal site by the

operator of the site is transferred to the operator upon acceptance.

…

(5) Subsections (1) to (4) do not relieve any person from liability except liability

as owner of waste that is delivered to and accepted by the operator of a waste

disposal site in accordance with law including an applicable environmental

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compliance approval, applicable renewable energy approval or applicable

regulation made under clause 176.

The language and intention of s. 42 protected the Region from liability under s. 43. Acceptance

of the Region’s bottom ash by Greenpath at its MOECC approved waste disposal site

terminated The Region’s liability. The Region argued that any further use of the bottom ash

taken by Greenpath (and without the Region’s knowledge) was entirely Greenpath’s

responsibility.6

The Region, OWMA and the City rejected the subsequent generator liability proposed by the

Director and argued that waste framework in the EPA did not impose such an obligation. The

City used its 50-plus waste contracts as an example of why no such obligation could be read-in;

how could the City of Toronto track all of its wastes, at all of the approved receiving sites, from

now until eternity?

The Director’s interpretation of “previous owner” was also problematic because it meant that

every previous owner of the waste, all the way back to the individual home owner, could be

ordered to remediate the Church Property.

The ERT held that the logical and straightforward reading of EPA, Part V is that s. 42 restricts the

order-making power of the Director under EPA, s. 43.

The ERT agreed with the Region that various sections of EPA, Part V must be read harmoniously.

Section 42 is intended to provide an incentive for ‘good behaviour’ in that it allows industry

participants who lawfully deposit waste at MOECC approved waste sites to gain the benefit of

protection from future liability for that waste. The ERT also held that section 43 (and other Order

making provisions) provides the MOECC with a ‘stick’ to use against parties who act irresponsibly

including unlawfully dumping waste at unapproved sites. In those cases, the MOECC can impose

liability against those bad actors that dump waste in Ontario. This did not apply to the Region

who lawfully deposited its waste at an approved waste disposal site.

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In essence, the Director’s Order required the Region (or other waste generators) to step into the

MOECC’s shoes and ensure that owners/operators of MOECC approved waste disposal sites

complied with their ECAs. The ERT explicitly held this is not the case under the EPA’s waste

framework, stating:

The Tribunal agrees with Peel that the MOECC is the regulator, not Peel, and as

such, it was the MOECC’s responsibility to enforce the ECA, not Peel’s. Peel was a

responsible actor in ensuring that its deposits of waste to the Greenpath Site were

in accordance with Greenpath’s ECA. To ensure that a subsequent transfer of

waste, by Greenpath or some other party, to a separate location unknown to Peel,

was in accordance with Greenpath’s ECA is not a legal responsibility that the

Director can place on Peel7 (para 71). [emphasis added]

The ERT held that legislation, specifically EPA, s. 42(5), should provide certainty to the waste

industry. The Tribunal agreed that ‘reading in’ the broad powers proposed by the Director

would remove that certainty and leave parties exposed to unanticipated legal liability.8 It

would also raise practical difficulties with waste contracts and be tantamount to the MOECC

attempting to delegate regulatory oversight to municipalities.

These consequences would be contrary legislative intention, namely to incentivize parties who

follow the rules and responsibly deposit waste.9

The ERT further disagreed with the Director that the Region ‘permitted’ the second deposit.

Citing the Supreme Court of Canada in R v Sault Ste. Marie, the ERT stated that the Region “did

not ‘slough off responsibility by contracting out work’; [the Region] complied with the EPA and

disposed of its waste in accordance with the law.” 10

Subsequent to the ERT Revocation Order, the Director brought a Motion for Review of the

Revocation Order. In deciding the Director’s Motion for Review, the ERT confirmed its Revocation

Order on December 1, 2016.11 The Director did not appeal.

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Richard Butler is a partner at Willms & Shier Environmental Lawyers LLP in Toronto. You can

reach Richard at 416-862-4837 or [email protected].

Serin Remedios is an associate at Willms & Shier Environmental Lawyers LLP in Toronto. You

can reach Serin at 416-862-4823 or [email protected].

The information and comments herein are for the general information of the reader only and do

not constitute legal advice or opinion. The reader should seek specific legal advice for particular

applications of the law to specific situations.

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http://www.willmsshier.com/lawyers/details/richard-butler

mailto:[email protected]

http://www.willmsshier.com/lawyers/details/serin-remedios

mailto:[email protected]

10

APPENDIX A

1 Our firm acted on behalf of the Region, including Marc McAree, Partner and Certified Environmental Law Specialist, Richard Butler, Partner, Robert Woon, Associate and Serin Remedios, Associate. 2 Keswick Presbyterian Church v Ontario (Ministry of the Environment and Climate Change), [2016] OERTD No 41. 3 Environmental Protection Act, RSO 1990, c E.19. 4 This allegation was later revoked by the Director as a basis for the Order, as no such obligation exists under the EPA. 5 Rules of Civil Procedure, RRO 1990, Reg 194, Rule 20. 6 Keswick, supra note 1 at para 30-32. 7 Ibid at para 71. 8 Ibid at para 76. 9 Ibid. 10 [1978] 2 SCR 1299 at para 71. 11 Keswick Presbyterian Church v Ontario (Ministry of the Environment and Climate Change), Case No. 150169, December 1, 2016.

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TAB 9

Proving Harm: How the REA Health Test was met in Wiggins v. Ontario

(Ministry of the Environment and Climate Change)

Konstantine Stavrakos Town of Caledon

October 4, 2017


1

Proving Harm: How the REA Health Test was met

in Wiggins v. Ontario (Ministry of the Environment and Climate Change)1

By Konstantine J. Stavrakos2

On October 7th, 2016 the Environmental Review Tribunal (“Tribunal”) found for the first

and to date only time, that an appeal of a renewable energy approval (“REA”) had

successfully proven that the renewable energy project would cause serious harm to

human health.3

The appeal involved a unique set of circumstances. The Approval Holder, wpd Fairview

Wind Incorporated, proposed to locate all eight of its 480-foot turbines (the “Project”)

close to the aircraft takeoff and landing routes of two aerodromes, Clearview Field and

the Collingwood Regional Airport (the “CRA”). Both aerodromes are located in the

Township of Clearview. Clearview Field is owned by Kevin and Gail Elwood and the CRA

is owned by the Town of Collingwood, respectively.

The owners of the aerodromes, together with four other parties (the Township of

Clearview, the County of Simcoe, Preserve Clearview Inc., and John Wiggins) appealed

the approval to the Environmental Review Tribunal (“Tribunal”). The Canadian Owners

and Pilots Association (“COPA”) obtained party status at the hearing as well.

The Tribunal was tasked with determining whether the Project would cause serious

harm to human health. In other words, it needed to predict whether the location of the

turbines would result in one or more collisions between aircraft and wind turbines,

resulting in serious injuries or fatalities. During the course of the hearing, several

1 Wiggins v. Ontario (Ministry of the Environment and Climate Change), [2016] O.E.R.T.D. No. 47 [“Wiggins”]. 2 Konstantine Stavrakos is the Town Solicitor and Manager of Legal Services at the Town of Caledon. Before joining the Town he worked at several prominent Toronto law firms, where his practice focused on environmental law, municipal law and municipal land use planning as well as energy and Aboriginal law. He was the lawyer for the Elwoods and Preserve Clearview at the hearing of the main part of the appeal and joined the Town prior to the remedy hearing. 3 The Tribunal subsequently revoked the REA by on August 16, 2017, Wiggins v. Ontario (Ministry of the Environment and Climate Change) Order dated on August 16, 2017 (ERT).

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appellants remarked that the Tribunal should never have been placed in the

unfortunate position of hearing the appeal; that the Project should never have been

permitted to proceed as far as it did.

The reason the decision was in the Tribunal’s hands is that it wasn’t in anyone else’s.

Aviation is under federal constitutional jurisdiction, but Transport Canada does not

regulate land use around Canada’s thousands of aerodromes that do not qualify as

airports. The REA approval process under O.Reg 359/09, on the other hand, does not

require applicants to evaluate the safety impacts of proposed projects on aerodromes.

The question of how close is too close for wind turbines and aerodromes is something

that jurisdictions across the world are grappling with. In Ontario, it is not even a

question that a renewable energy application is required to consider.

In finding for the appellants, the Tribunal held that the location of the Turbines left

pilots with little to no margin for error in order to avoid collision. Expecting the primarily

recreational pilots who use these facilities to be consistently perfect or near perfect

across tens of thousands of future take-offs and landings was not reasonable. Taking

into account how pilots actually behave in flight, rather than how they should optimally

behave – an area of study called “human factors” which the Tribunal had never grappled

with before – the Tribunal found the Project will cause collisions resulting in serious

harm to human health.

This paper will discuss the regulatory gap that lead to the Wiggins appeal, prior

decisions on REA appeals that set the framework for the hearing, and the key points

that lead the Tribunal to grant the appeal.

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Regulatory Context: A Perfect Storm

Aviation falls under federal constitutional jurisdiction and enjoys inter-jurisdictional

immunity.4 An aerodrome is broadly defined under the federal Aeronautics Act as any

surface where aircraft takeoff or land.5 Airports are aerodromes that have been

certified. Aerodromes must be certified if they are located within built-up areas or have

regularly scheduled passenger services.

There are thousands of uncertified aerodromes across Canada. The distinction between

aerodromes and airports is significant as it marks the boundary of active regulation by

Transport Canada. Land use around airports is generally federally controlled to ensure

new obstacles are not permitted that would put aircraft arriving or departing from

airports at risk. This is normally done through federal regulations. By contrast, there are

no regulations protecting aerodromes.

Instead, Transport Canada encourages provincial land use regulators to work

cooperatively with aerodromes in their jurisdiction in the siting of potential obstacles to

aviation. It also specifically recognizes that wind turbines can be threats to aviation:

Municipal planners and developers must understand that how land is used around an aerodrome will have an impact on the aerodrome’s operations. The land use around aerodromes can have significant impacts on safety at the aerodrome and can negatively impact the operational viability of the aerodrome to the detriment of the local community that depends upon it.

The compatible land-use planning concept is an outgrowth of the focus of attention on the environmental relationship between aerodromes and their community neighbours. This planning concept is relatively simple and the results can be impressive, but the implementation requires careful study and co-ordinated planning. ...

Note: It is of the utmost importance to be aware that the proximity of obstacles, for example, wind turbines telecommunications towers, antennae, smoke stacks, etc., may have an impact on the current and future usability of an aerodrome. Therefore, it is critical that planning

4 Quebec (Attorney General) v Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 SCR 536; Construction Montcalm Inv v Minimum Wage Commission, [1979] 1 SCR 754, 1978 CarswellQue 146. 5 Aeronautics Act, (R.S.C., 1985, c. A-2).

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and coordination of the siting of obstacles should be conducted in conjunction with an aerodrome operator at the earliest possible opportunity.6

Transport Canada’s hands-off approach to regulating land use around aerodromes lead

to a perfect storm in the context of Ontario’s regulation of renewable energy. Ontario

Regulation 359/09 provides the criteria for approving renewable energy facilities. It

includes no criteria related to aerodromes. There are also no general health or safety

criteria that aviation safety could fit within. In short, there is nothing that says “stop” if

the lives of pilots and their passengers are put in danger.

Compounding this, there are no clear standards—nationally or internationally—for how

close is too close for wind turbines and aerodromes or airports. In addition to being

physical obstacles themselves, wind turbines have several novel features that make

them unlike any other obstacle the aviation industry has faced before:

• wind turbines have a narrow profile and are painted white, which make them

difficult to see;

• they are significantly taller than other narrow-profile obstacles like

telecommunication towers and significantly thinner than other obstacles of a

similar height like tall buildings;

• they have long blades that move and change direction with the wind, whereas

other obstacles are stationary;

• they produce mechanical turbulence that in itself poses a threat to aviation

safety.

Clearview Field, the CRA, and Turbine Locations

Clearview Field and the CRA are both active general aviation aerodromes. At the time of

the application, Clearview Field saw an estimated 800 movements (takeoffs and

6 Transport Canada, Aviation Land Use in the Vicinity of Aerodromes (TP1237E) (nd) at 68 and 73.

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landings) per year, while the CRA saw approximately 13,200 movements.7 General

aviation encompasses recreational flying in smaller, lighter aircraft as well as small

private charters. Commercial aviation involves larger aircraft and regularly scheduled

passenger services.

General aviation pilots have significantly less training, and far fewer cockpit resources

than their commercial counterparts. General aviation aerodromes also provide far fewer

aides to navigation and protections than commercial airports. As a result, general

aviation is a far riskier and more error-prone activity than commercial aviation. To put

this in familiar terms, an Air Canada 747 is a commercial aviation aircraft. John Denver,

Buddy Holly, and JFK Jr. were all flying in general aviation aircraft when they met their

untimely deaths.

All eight of the Project turbines were to be located within what Transport Canada

identifies as the Obstacle Limitation Surface (OLS) of Clearview Field. Four of the eight

turbines were to be located within the OLS of the CRA. The obstacle limitation surface

consists of a transitional surface, a takeoff surface, and an approach surface, as well as

an outer surface (now called an obstacle information surface). The takeoff and approach

surfaces are the three-dimensional planes where aircraft are expected to be while

taking off or landing, while the outer surface covers the maneuvering area for these

aircraft.8

Putting these distances in terms of flight time on takeoff and landing, the majority of the

wind turbines would have been located seconds away from the ideal flights paths for

Clearview Field aircraft and slightly more than a minute away for the CRA.9

7 Wiggins, supra note 1, at 65-79. 8 Wiggins, supra note 1, at 34. 9 Ibid. at 89-92.

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The REA Appeal Test and Prior Decisions

Under section 145.2.1(2) of the Environmental Protection Act10 an appellant bears the

onus of proving one of the following, in order to succeed on appeal:

(a) serious harm to human health (the “Health Test”); or

(b) serious and irreversible harm to plant life, animal life, or the natural

environment (the “Environmental Harm Test”).

Appeals were issued under both branches of the test in the hearing, with the majority of

appellants focusing on the Health Test. At the time of the hearing, there had been

approximately twenty appeals seeking relief under the Health Test, none of them

successful. A few appeals had met the environmental harm test, with only one resulting

in a permit revocation.11

The basic contours of the legal test were established over the course of these many

unsuccessful attempts:

• causation must be established on the balance of probability; proof to a scientific

standard is not required;

• “will cause” does not require that the renewable energy project is the sole

cause, rather multiple causality, including causation resulting from synergistic

and cumulative effects is sufficient;

• harm may be caused directly or indirectly.12

10 Environmental Protection Act, R.S.O. 1990, c. E.19.[“Ostrander”] 11 Alliance to Protect Prince Edward County v. Director, Ministry of the Environment, 2013 CarswellOnt 9187.. 12 Erickson v. Ontario (Director, Ministry of Environment), 61 CELR (3d) 1, 2011 CarswellOnt 6794; Ostrander; Fohr v Ontario (Director, Ministry of the Environment and Climate Change), 2015 CarswellOnt 16130; Pitt v Director, Ministry of the Environment, 2014 CarswellOnt 6429 [“Pitt”]; Wrightman v Director, Ministry of the Environment, 2014 CarswellOnt 2321; Kroeplin v Director, Ministry of the Environment, 2014 CarswellOnt 5220.

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With respect to the Health Test, a significant point remained outstanding: the role of

quantitative vs. qualitative expert evidence. In Ostrander, the first Tribunal decision to

find that that the Environmental Harm Test had been met, the Tribunal found causation

was established by qualitative expert evidence alone. The expert evidence established

that the local Blanding’s turtle population would suffer serious and irreversible harm,

but no quantitative impact predictions were provided to support this finding.

The Divisional Court, largely on the grounds of insufficient quantitative data, reversed

the Tribunal decision. On appeal to the Ontario Court of Appeal, the Tribunal’s findings

were restored:

The Divisional Court did say that mathematical precision was not required, but it seems to me the court thought it necessary the Tribunal be able to make calculations using quantitative orders of magnitude that proved that road mortality would lead to a decline in the population resulting in eventual extinction. I do not accept that. It was for the Tribunal to decide whether the qualitative indications of magnitude the experts proceeded upon provided an adequate base for their conclusions. …

When considered in light of all the evidence, I am satisfied the Tribunal could reasonably accept the evidence of Ms. Gunson and Dr. Beaudry that the project would cause serious and irreversible harm without having specific numerical data on the turtle’s population size, the volume of traffic, and the rate of mortality. I am also satisfied that the Tribunal’s reasons for accepting the opinions of these experts are intelligible, and its conclusion there would be serious and irreversible harm falls within the range of reasonable outcomes and should not be disturbed.13

However, in Pitt14 the Tribunal found the Health Test was not met, largely on the basis

of a quantitative risk assessment. The appeal involved a skydiving club that claimed

wind turbines posed harm to airplanes (based on turbulence from wind turbines) and

parachutists (collision risk) who operated in the vicinity of the proposed project.

13 Ostrander Point GP Inc v Prince Edward County Field Naturalists, [2015] O.J. No. 1988 (OCA) at paras 65–68. 14 Pitt, supra note 11.

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The appellants’ evidence on turbulence was found to be wanting. With respect to

collision risk for parachutists, the approval holder adduced expert evidence based on a

quantitative risk assessment indicating parachutists would not be put to significant risk.

The Tribunal found for the approval holder, on the basis that the quantitative risk

assessment was not countered:

In addressing the above submission, the Tribunal first notes that the Appellants adduced no opinion evidence which indicates that the data and statistics on which Dr. Cox relies is insufficient for purposes his probability analysis. While the Appellants’ maintain that not every activity can be adequately and effectively assessed, and they adduced no opinion evidence to challenge Dr. Cox’s assessment in this regard. Dr. Cox is a recognized expert in conducting risk assessments and has been qualified to provide opinion evidence in this subject area. As he has provided an assessment of the potential impact of wind turbines T4 and T5 on Skydive’s operations, his evidence clearly indicates that it is his view that these activities can be assessed. …

The Tribunal now turns to the calculation of the probabilities to support Dr. Cox’s conclusions are set out in detail in the Risk Assessment Report, and further explained in Dr. Cox’s response to the additional questions posed by the Tribunal. The mathematical calculations involved are complicated, and not easily described in words. For this reason, the Tribunal does not describe them in detail in this Decision.

In this case, the Tribunal has carefully reviewed the detailed calculations provided by Dr. Cox. The Tribunal notes that the Appellants adduced no opinion evidence to indicate that these calculations are incorrect. Therefore, the Tribunal accepts that they are accurate.15

As the quantitative risk assessment was essentially unchallenged, Pitt provides little

guidance for appeals in which the quantitative risk assessment is challenged by

qualitative evidence, or a quantitative analysis is not possible.

15 Ibid.at paras. 255-258.

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The Wiggins Appeal

The Tribunal in Wiggins heard from 15 expert aviation witnesses: 12 called by the

appellants; two by the Approval Holder, wpd Fairview Wind Incorporated; and one by

the Director. The appellants’ witnesses had significantly broader and more varied

expertise than in the Pitt hearing, including expertise in aeronautical engineering,

aircraft performance, aviation safety, aviation accident investigations and air incident

recreation, flight data analysis, aviation safety training, aviation risk assessment, pilot

training, airport operational safety, and climatology.

All parties agreed that if the wind turbines were to cause an aviation accident, the result

would be death or serious injury, thereby meeting the “serious harm” requirement of

the Health Test. The main dispute was whether the evidence established causation—the

“will harm”—element of the test. In this regard, the appeal largely turned on three core

issues:

1. whether qualitative evidence on its own was sufficient to establish causation;

2. whether human error should be taken into account in determining causation;

3. whether potential mitigation measures that neither the Approval Holder nor the

Director had any control over should be considered.

Qualitative vs. Quantitative Evidence

Experts for both the appellants and the Approval Holder agreed that a quantitative risk

assessment—assessing the statistical probability of an accident—was not possible. This

was largely due to the lack of precedent for wind turbines in close proximity to

aerodromes or airports, resulting in insufficient data to make quantitative predictions.

The Director argued that the lack of a quantitative risk assessment should be fatal to the

appeals. The Director also argued that the Tribunal’s prior acceptance of qualitative data

(in Ostrander and subsequent decisions) should be distinguished as the decisions

involved the Environmental Harm Test, not the Health Test.

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The Tribunal disagreed and used the opportunity to clarify both Pitt and Ostrander. It

found that a quantitative assessment is not required for the Health Test. It also found

that quantitative analysis is not necessarily preferred over qualitative analysis:

Dr. Cox, who was called by the Approval Holder, provided a qualitative risk analysis. The Approval Holder nonetheless, asserts that a quantitative probability assessment is necessary in order to determine whether the Health Test has been met. …

The Tribunal did not indicate in Pitt that a quantitative analysis is necessary in order to determine whether the Health Test has been met, nor did the Tribunal state that a quantitative analysis should be preferred over a qualitative analysis. 16

The Tribunal further found that the Ostrander analysis applied to the Health Test as

well:

The Director maintains that the issue in Ostrander was whether evidence on population numbers of a threatened species was required to prove harm, and takes the position that this is a different test than the test to be applied by the Tribunal in this proceeding. However, the Director provided no analysis to further explain this position. The Tribunal does not accept the Director’s interpretation. The Court in Ostrander clearly found that it was within the Tribunal’s jurisdiction to rely on a qualitative assessment as an evidentiary base for its conclusions.17

For either type of evidence, the key is whether the conclusions are appropriately

supported. In Wiggins, the Tribunal found the appellants’ experts provided an “informed

and reasoned evidentiary base to support their qualitative assessments” and as a result

they had established serious harm to human health would occur if the Project proceeds

as planned.18 Although the analysis did not put a numerical value to the likelihood of

harm, it was supported by extensive statistical, scientific, engineering and experiential

evidence.

16 Wiggins, supra note 1, at 111. 17 Ibid. 18 Ibid at 152 and 157.

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The Role of Human Error

At the core of aviation safety is a series of dynamic interactions between pilot and

aircraft, pilot and other pilots, pilot and aerodrome, pilot and weather, pilot and

obstacles. The common denominator in all of these interactions is the pilot—or as it is—

the “human factor.”

Human factors, is a field of study dedicated to determining how humans will perform

within technological systems and environments. Human factors analysis looks at how

humans actually behave, rather than how they are supposed to behave or should

behave. It then seeks to use that knowledge to improve system safety, by for instance

introducing new safety buffers or reducing systemic stresses that lead to operator. It

does not appear that the Tribunal has considered expert evidence in human factors in

any prior decision (neither REA nor other appeals); although, human factors evidence

has been called from time to time in civil proceedings.

Drawing on extensive evidence, it has been found that pilots will commit multiple errors

on any given flight, and aviation safety can only be established by creating safety buffers

that allow a sufficient margin for error. The appellants aviation experts found that the

location of the wind turbines:

• would increase the likelihood of pilot error;

• provided inadequate margin for error; and

• as a result, one or more serious accidents would occur over the 20-year life of

the Project (involving 264,000 movements at the CRA alone).

The key witness for the Approval Holder did not take the “human factor” into account in

his analysis. Instead, his analysis focused on whether it was technically feasible to avoid

collision with the wind turbines. The Tribunal disagreed with his approach, finding that

what pilots should do was irrelevant; rather it was what pilots will do that is material to

the Health Test:

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Messrs. Duncan and Hutton provided extensive evidence on the factors that contribute to accidents, which include human factors. This evidence was not disputed, and is accepted by the Tribunal. Mr. McDonald did not dispute that pilot error must be considered. Messrs. Duncan and Hutton also discussed in detail Mr. McDonald’s analysis of safety. In summary, they observed that Mr. McDonald “errs when he focuses only on what pilots should do, and does not address what pilots in fact do.” As noted by Mr. Pereira, “Mr. McDonald’s analysis provides little margin for safety and appears premised on the assumption that such small margin of safety is adequate.” The Tribunal finds that these observations provide a fair characterization of this aspect of Mr. McDonald’s evidence. For this reason, the Tribunal accepts the evidence of Messrs. Duncan, Hutton, and Pereira to the extent that it conflicts with the evidence given by Mr. McDonald. [emphasis added]19

As a result, the Tribunal found that the proposed location of the wind turbines left an

insufficient margin for error to prevent collision of an aircraft with a wind turbine,

resulting in serious harm to human health:

Considering all the above factors, the Tribunal accepts that the margin for error posed by introducing the proposed wind turbines at their proposed locations would be inadequate to prevent collision with a wind turbine. For this reason, the Tribunal accepts the opinions of Mssrs. Cormier, Hatcher and Mr. Gascoine that serious harm will occur. …

For these reasons, Tribunal accepts that the margin for error posed by introducing the proposed wind turbines at their proposed locations would be inadequate to either prevent collision with a wind turbine, or prevent a crash due to wind turbine-induced turbulence.20

The appellants’ experts had adduced extensive evidence that pilot error would occur

and should be expected. A pilot error need not be anything significant – it is essentially

anything less than the optimal response to the circumstances the pilot faces. Pilot error

can be something as small as being slightly too far to the left on approach or as

significant as panic in the face of an unexpected contingency.

19 Ibid. at 119. 20 Ibid. at 151 and 156.

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Aviation safety is maintained is by providing adequate “buffers,” or margins for error

that allow pilots the room to recover from their mistakes or sub-optimal decisions. The

same principle applies while driving a car. Following distance is a buffer or margin of

safety. If we maintain adequate following distance we have time to react to whatever

occurs ahead. Now let’s remove this safety buffer and imagine everyone on a highway

is tailgating. All drivers would need to react with instantaneous precision in order to

avoid an accident. Removing the margin for safety will result in accidents.

The Tribunal found that placing wind turbine seconds away from takeoff and landing

flight paths left little to no margin for error. Over the course of tens or thousands of

takeoffs and landings pilots would have to fly almost perfectly in order to avoid colliding

with turbines. That was not a realistic expectation—the margin for error was far too

small and a collision was bound to occur.

Mitigation and Control

The Approval Holder proposed a number of mitigation measures that were not under

the control of the Approval Holder, the Director, or the Tribunal. The Tribunal found

that these types of speculative mitigation measures should not be considered:

In addressing these proposed mitigation measures, the Tribunal must address whether they are feasible. Options 2 and 3 both require implementation of a right-hand circuit pattern. However, as previously noted, under the CARS, which is federal law, not a merely a policy guideline, a right-hand circuit can only be implemented with approval of the Minister of Transportation. There is no such approval in place for either Clearview or CRA and neither aerodrome operator has indicated that they intend to apply for such approval. …

Having found that the Health Test has been met in respect of both CRA and Clearview, the Tribunal cannot simply assume that the Minister’s approval would be given, nor can the Tribunal evaluate the proposed mitigation measures by deciding itself that a right-hand circuit is acceptable. The reason for this is obvious. If the Tribunal were to confirm that the Director’s decision to approve the REA, based on an assumption that a right-hand circuit would be implemented, the Project could proceed,

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14

notwithstanding that a right-hand circuit may never be approved. Consequently, the Tribunal finds that mitigation options 2 and 3 are not feasible as there is no indication that a right-hand circuit will be approved by the Minister. …

The evidence adduced in this proceeding does not address whether the Approval Holder could apply for approval of a right-hand circuit. If, indeed, only an aerodrome operator can apply for the Minister’s approval, the Tribunal recognizes that the Approval Holder would be prevented from presenting mitigation options that require the implementation of a right-hand circuit. However, as previously noted, neither the Approval Holder, CRA or Clearview can control the use of another person’s property.21

The Tribunal thus rejected the feasibility of the proposed mitigation measures on two

grounds:

1. the measures required the approval of a regulatory authority outside the

Tribunal or the Director’s control, which had indicated no predisposition to

approval;

2. the measures required the control of private property not in the Approval

Holder’s control.

Ultimately, the Tribunal found that even if the measures were implemented, they

would not avoid serious harm to human health.

Health Test Met for all Eight Turbines

As a result of these key findings, the Tribunal ruled that the Health Test had been

met for all eight turbines. The Tribunal provided the parties an opportunity to argue

what was the appropriate remedy in the circumstances. As the Approval Holder and

Director adduced no further evidence on how the harm could be remedied, the

Tribunal revoked the REA. 22 While these exact circumstances are unlikely to arise in

21 Ibid. at 164-168. 22 Wiggins, supra note 3.

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15

another REA hearing, the appeal serves to shed light on a problematic regulatory

gap, provides further clarity regarding evidentiary issues and introduces a new field

– human factors analysis – into the Tribunal’s orbit.

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TAB 10

Excess Soil Management: Proposed Regime

Katherine Koven, Counsel Legal Services Branch, Environment and Climate Change (MOECC)

Ministry of the Attorney General

October 4, 2017


1

Excess Soil Management: Proposed Regime

Katherine Koven, Counsel

Ministry of the Environment and Climate Change

Introduction

• What is excess soil? Soil and sediment that is removed from a property as part of a

development project.

• Why is appropriate management of excess soil important?

o Improper management can result in impacts to the natural environment, including in

agricultural or natural areas;

o It can also cause such local concerns as dust, truck traffic, erosion and drainage issues;

o Moving excess soil around over long distances contributes to greenhouse gas

emissions.

• In 2016 the Ministry of the Environment and Climate Change (MOECC) consulted on, and

finalized, an Excess Soil Management Policy Framework. Key goals:

o Protect human health and the environment from inappropriate relocation of excess

soil; and

o Enhance opportunities for the beneficial reuse of excess soil and reduce greenhouse

gas emissions associated with the movement of excess soil.

• Pursuant to the Framework, the MOECC developed a regulatory proposal for the

management of excess soil. This was posted on the Environmental Registry from April-June

2017.

• Proposal includes a proposed new excess soil management regulation under the

Environmental Protection Act, R.S.O. 1990, c. E.19 (EPA); proposed excess soil standards and

sampling guidance; and proposed consequential amendments to Regulation 347 (General –

Waste Management) and O. Reg. 153/04 (Records of Site Condition), both made under the

EPA.

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2

Key Elements of Proposed Regime

• “Inert fill” definition in Regulation 347 would be amended to clarify that excess soil is not part

of “inert fill”.

• Excess soil would be designated as a waste from the time that it leaves a project area. This

means the material would be subject to the requirements of Part V of the EPA, including:

o The need to manage the excess soil in accordance with the requirements of Regulation

347;

o The need to use an approved waste management system to transport the excess soil;

o The need to dispose of excess soil at an approved waste disposal site; and

o If a person unlawfully disposes of waste on a property, the person who owns the

property and the person who arranged for the disposal may be subject to an order to

remove the waste and dispose of it in accordance with Part V of the EPA.

• It is proposed that sections 27, 40 and 41 of the EPA would not apply to the transportation of

excess soil from a project area to a temporary excess soil storage site or a receiving site, other

than a waste disposal site.

• The waste designation would cease once the excess soil is deposited at an appropriate

receiving site that is not a waste disposal site. The following have been proposed as

appropriate receiving sites:

o A receiving site that is governed by a site-specific instrument or by-law (e.g. permit

issued pursuant to a by-law passed under section 142 of the Municipal Act, 2001, S.O.

2001, c. 25; licence or permit issued under the Aggregate Resources Act, R.S.O. 1990,

c. A.8);

o A receiving site that is not governed by a site-specific instrument or by-law, so long as:

the excess soil is appropriate based on the excess soil reuse standards;

the excess soil has been used at the receiving site for one of the specified types

of uses; and

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3

the receiving site is not being used primarily for the purpose of depositing

excess soil; or

o If the excess soil originates from an infrastructure project, the excess soil is deposited

at another infrastructure project belonging to the same proponent.

• Tables of excess soil reuse standards would be based on the total volume of excess soil to be

received at a receiving site, as well as property use and ground water potability.

• The regulation would contain rules about temporary excess soil storage sites, as well as

operational requirements for soil processing sites and “soil banks”.

• Subject to some exceptions, proponents of projects generating excess soil would be required

to prepare and implement excess soil management plans if:

o 1000 cubic metres or greater of excess soil are to be removed from the project area;

or

o A potentially contaminating activity (PCA) is being engaged in within the project area,

or it is known or can reasonably be determined that a PCA has been engaged in, or the

excess soil originates from any part of the project area that has potentially been

affected by a PCA.

• Excess soil management plans would be prepared and certified by a Qualified Person, and

would include such things as:

o Project location and description;

o Qualified Persons and contractors;

o A phase one environmental site assessment;

o Based on the results of the phase one environmental site assessment, an excess soil

characterization to determine appropriate receiving sites. This would include:

Preparing a sampling and analysis plan;

Implementing the sampling and analysis plan; and

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4

Reviewing and evaluating the information and preparing an excess soil

characterization report.

o Receiving site locations;

o Tracking system;

o Certification statements by Qualified Person and proponent;

o Cumulative record of excess soil movements (receiving sites, volume, quality);

o Record of any plan modifications.

• If an excess soil management plan is required, certain information would need to be

registered to the Environmental Site Registry before and after excess soil is removed from a

project area.

• The regulation would contain a prohibition on constructing a building, if the building includes

shoring, unless the Environmental Site Registry has issued a notice that an excess soil

management plan has been prepared and registered, or a Qualified Person has signed a

document certifying that the volume of excess soil from the excavation associated with the

construction will be less than 1000 cubic metres. It is proposed that O. Reg. 332/12 (Building

Code) made under the Building Code Act, 1992, S.O. 1992, c. 23 be amended to add this

provision to the applicable law requirements.

Current Status

• The MOECC is considering all comments received on the regulatory proposal as it continues to

work on developing proposed regulations.

• Regulation proposal can be accessed at: http://www.ebr.gov.on.ca/ERS-WEB-

External/displaynoticecontent.do?noticeId=MTMyMzMw&statusId=MjAwOTA2&language=en

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http://www.ebr.gov.on.ca/ERS-WEB-External/displaynoticecontent.do?noticeId=MTMyMzMw&statusId=MjAwOTA2&language=en

http://www.ebr.gov.on.ca/ERS-WEB-External/displaynoticecontent.do?noticeId=MTMyMzMw&statusId=MjAwOTA2&language=en

TAB 11

Expropriating Contaminated Lands

Frank Sperduti Christel Higgs

Borden Ladner Gervais LLP

October 4, 2017


EXPROPRIATING CONTAMINATED LANDS

The Six-Minute Environmental Lawyer

October 4, 2017

Authors:Frank J. Sperduti

Partner, Borden Ladner Gervais [email protected]

416.367.6243

Christel HiggsPartner, Borden Ladner Gervais LLP

[email protected]

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Expropriating Contaminated Lands 1 | P a g e

Overview

Evidence of environmental contamination, or “impairment”, can have significant ramifications in the marketing and sale of real estate. For example, the presence of contamination could attract the requirement for clean up costs to be incurred, impact or alter the highest and best use of part of all of a site, affect the ability of an owner or purchaser to obtain financing, building permits or redevelopment approvals, create civil liability to adjoining landowners, or result in regulatory orders or charges under provincial legislation.

All of these potential issues may impact the market value of a contaminated site. In order to assess the impact on market value, if any, of evidence of contamination, a myriad of variables must be examined and weighed. Such a task is challenging even when undertaken in the context of an open market sale. The task is even more challenging when the “sale” in question is one that results from an expropriation - defined in Ontario as the “taking of land without the consent of the owner by an expropriating authority in the exercise of its statutory powers.”1

The Ontario Expropriations Act, R.S.O. 1990, c. E.26 (the “Act”) directs the adjudicator to ascertain the market value of the expropriated land as of the valuation date. Market value is defined as “the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.”2 Understanding how market participants factor evidence of contamination into their buy/sell decisions is complex and evolving. As information about the sources and physical impacts of contaminants expands, the decision making process becomes increasingly complex. Proving how willing buyers and sellers would factor evidence of environmental contamination into the market value equation in an expropriation claim, where evidentiary and legal rules apply, introduces a whole host of unique issues. As the case law demonstrates, mere evidence of contamination alone may be insufficient to warrant a reduction in the compensation otherwise payable to the expropriated owner.

Some of the issues that arise in the expropriation claim process where contamination is alleged to have impaired market value include:

Does the prohibition against considering the impact of the expropriation scheme (s.14(4)(b)) preclude the adjudicator from taking clean up costs into account?

If expropriated land is contaminated, how and to what extent could clean up costs impact the award of compensation?

Are there other categories of impact, beyond clean up costs, that could reduce market value?

Who bears the onus of proving that environmental contamination or impairment impacts market value, and what are the evidentiary challenges in advancing such a case?

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This paper will review the case law in Ontario and in other Canadian jurisdictions to assist the reader in understanding how Courts and tribunals have approached these issues in the context of expropriation claims. We will then look at what we have learned from the case law to date, and what the future may hold for these types of claims.

First Principles

Every paper on expropriation must begin with a recitation of the principles of the Supreme Court’s decision in Dell Holdings Ltd. v. Toronto Area Transit Operating Authority3:

1. The primary policy considerations must be to indemnify the expropriated party for losses suffered.

2. The Act is a remedial statute enacted for the specific purpose of adequately compensating those whose lands are taken to serve a public interest.

3. Taking all or part of a person's property constitutes a severe loss and a very significant interference with a citizen's private property rights. It follows that the power of an expropriating authority should be construed strictly in favour of those whose rights have been affected.

4. The Act must be given a broad and liberal interpretation consistent with its purpose.

5. The Act should be read in a broad and purposive manner in order to comply with its aim to fully compensate a landowner whose property has been taken.

The foregoing principles guide all administrative and Court level decisions under the Act and, in essence, require an expropriated owner to be “made whole”. Thus, any consideration of environmental contamination must take these principles into account.

The threshold question is of course whether, as a matter of law, tribunals and courts ought to even consider the impact of clean up costs on market value claims in expropriation proceedings. Typically, citing the principles in Dell Holdings enunciated above and s. 14(4)(b) of the Act, owners’ counsel commonly argue that, since the clean up costs would not have been incurred but for the expropriation, it is improper to penalize expropriated landowners by deducting clean up costs in determining compensation claims.

Relevance of Clean Up Costs

There are scant few reported decisions in Ontario which directly address the treatment of clean up costs in determining market value in expropriation claims. Many of the cases deal with the relevance of clean up costs not from a compensation perspective, but from an “access to land”perspective. For example, in a 1994 case entitled Le Goyeau Holdings4 , the Board granted the expropriating authority access to confirm whether the lands were contaminated from previous use. In reaching its decision, the Board made the following finding:

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The Board finds that as environmental audit of the subject properties is germane to market value and access to determine this is necessary to fulfil the intent of Section 10(3) and to complete a full report appraising the market value of the lands as required under Section 25.5

The Board did not elaborate on how environmental testing could impact market value. Nevertheless, this case is often cited as evidence of the Ontario Municipal Board’s willingness to consider the issue of contamination when assessing market value under the Act.

Access for purposes of conducting environmental testing was again reviewed by the Board in a series of decisions in Melancthon Investments Ltd. v. City of Owen Sound.6 In 2005, the City of Owen Sound applied under s. 10(3) of the Act for access to property to test for environmental contamination. The owner had refused the City access on the basis that the City had not made a section 25 offer and that there was no evidence of contamination. The City argued that it needed to test the lands for contamination in order to prepare and serve a meaningful offer. In approving the testing subject to terms, the Board made the following finding:

The Board is mindful of the relevant jurisprudence applicable to the case at hand, in particular, 690346 Ontario Inc. v. Town of Markham (2002) OMBD No. 600 whereby the Board, pursuant to the same provision, authorized entry and permitted the authority to perform environmental testings. To the extent that it makes good sense to have some idea whether the lands in question has been contaminated or not and that whether remedial actions may be required and that the value of the lands taken may be affected by such possible remedial measures, the Board sees little distinction between this case and the Markham case.7

The claimant appealed the decision to the Ontario Divisional Court. In dismissing the appeal, the Court stated the following:

The Act provides exclusive jurisdiction to the Board in establishing compensation based upon the market value of the expropriated land, which is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer...Contamination of the land can affect the market value and thus the compensation.8

Melancthon was brought before the Board again in 2007 and 2009 and the Board’s decisions affirmed the importance and relevance of obtaining full and proper information about the environmental condition of the site. In 2007, the owner argued that the City should post $15,000 in security before its environmental expert entered the property. The owner also sought an order alternating the location of some of the boreholes proposed by the expert for testing. The Board rejected both arguments.9 In 2009, the owner requested that the Board permit its own environmental expert to conduct the testing on the expropriated land. The owner argued that testing was needed to determine the highest and best of the land because, as it contended, different levels of remediation might be required for different uses. The Board granted the owner’s request.

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The weight of authority supports the proposition that clean-up costs are a factor that may be considered and weighed, but the more important and difficult question is how to take this information into account in determining compensation. We turn now to a discussion of the case law in Ontario and in other jurisdictions to assess how tribunals and courts have responded to this challenge.

Impact of Clean Up Costs in Expropriations

The first case dealing with the impact of clean-up costs on market value in Ontario was the 1992 Board decision in Masae Ltd. v. Municipality of Metropolitan Toronto.10 In that case, the owner had purchased land in 1986 which it proposed would be redeveloped with office and industrial space by 1990. The City of Toronto expropriated the land, comprising 4.87 acres, on June 30, 1988. In responding to the claim for almost $15 million in market value, the City sought to reduce the market value by $465,000, representing estimated soil remediation costs. In the absence of any case law about how the cost of soil clean up should affect the market value of expropriated land, the Board concluded that it should be deducted as clean up costs would have had to be incurred to obtain a building permit.11 Clearly, the Board’s conclusion was influenced by the evidence about the imminent redevelopment of the site.

The issue was subsequently considered by the Ontario Superior Court in 2004 in Toronto (City) v. Bernardo.12 The property being expropriated by the City had been used by the owners as a scrap metal yard. After undertaking environmental testing, the City concluded that the costs to remediate the property exceeded its market value and offered the owner $1 pursuant to section 25 of the Act. The owner refused to vacate the premises arguing, in part, that the offer of $1 did not comply with the Act.

The Court reluctantly concluded that the City had complied with section 25 of the Act. In other words, that a $1 offer of compensation pursuant to section.25 was sufficient to entitle the City to take possession of the land. That said, the Court struggled with whether it would be appropriate to deduct clean up costs from market value. While noting, based on Masae, that full deduction of clean up costs was “one possible outcome”, the Court observed that it was not convinced that in the absence of orders under the Environmental Protection Act, clean-up costs should be deducted from market value in all circumstances.13

The most recent Ontario case to consider the treatment of remediation costs is a decision of the Ontario Municipal Board in Simone Group Properties et al v The City of Toronto and affirmed by the Divisional Court.14 In that case, the Board declined to deduct remediation costs from the market value of expropriated land. Prior to the expropriation in 2005, the land had been used for the owners’ soft drink manufacturing and bottling business. According to the Board’s decision, all appraisers were of the opinion that the highest and best use of the property was a continuation of its existing use as an industrial property.

The City’s environmental consultant’s evidence assumed two scenarios: Scenario 1, in which the building would be removed, and Scenario 2, which assumed the building would remain in place. Since the highest and best use was agreed to be for continuation of existing uses, and no building permits were required, the Board focused its decision on the “Scenario 2” evidence of the City’s witness.

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The evidence at the hearing was that there were exceedances of various chemicals and metals scattered over the site, but that two substances in particular merited attention: tetrachloroethylene, a possible carcinogen, and vinyl chloride, a known carcinogen. These substances were found in only two isolated locations, and there was some dispute about the extent of the exceedances (whether using the 2004 MOE guidelines in place at the time of expropriation, or using the 2009 MOE guidelines that came into effect four years after the valuation date). According to the Board’s decision, the witness for the City testified that, assuming the building would remain in place, a Risk Assessment (RA) would likely be required to determine the extent, if any, of the risk to human health and the environment due to the presence of contaminants. Thereafter, a risk management plan would be developed and implemented to address the results of the RA. The Board found that the City’s witness had not completed an RA, and that the risk management estimate of $335,000 was premised on broad based assumptions that contradicted his own recommendations.

Based on “undisputed” evidence, the Board found that there was no requirement for filing a Record of Site Condition under O. Reg. 153/04 and, further, that there was no legal requirement to remediate the property to MOE 2004 guidelines because the existing use and building would have been maintained. The Board heard evidence from the Claimant’s witnesses that the harmful substances posed no risk to human safety. The Board concluded that the City had not discharged its burden of showing that the market value should be reduced by any amount for environmental remediation or risk management. In fact, the Board criticized the City’s witness for failing to conduct a proper risk assessment despite his own evidence that one would be required as a precursor to the risk management step.

The Divisional Court dismissed the City’s appeal and on the question of whether the Board had erred in refusing to make a deduction for the presence of environmental contaminants it concluded that “the Board’s decision not to reduce market value …was within a range of reasonable outcomes”.15

Cases outside Ontario support the proposition that, in appropriate circumstances, evidence of site contamination might impact the market value of lands expropriated.

In a case before the now defunct British Columbia Expropriation Compensation Board entitled Pay Less Gas Co. et al v. Her Majesty the Queen in Right of the Province of British Columbia16, the Board was asked to consider whether it should take into account site contamination in awarding compensation for market value. The Board concluded that while there was evidence of site contamination, the extent of the contamination was not clear. The Board further held that, on the evidence, there was no quantifiable basis upon which they would be prepared to calculate a reduction in market value. The Board, however, did not reject the assertion made by the Ministry of Transportation that market value should be calculated in light of site contamination.

In a subsequent case, entitled Baines et al v. British Columbia Ministry of Transportation and Highways, the BC Board considered the effect of subsurface coal mine workings on the market value of expropriated lands.17 In considering this issue, the Board stated that “...it is what a prudent and willing purchaser would have known or estimated about the mine workings and their expected effects on the development potential of the property that is important in determining the price a purchaser would have agreed to pay on May 31, 1994”. The claimant lead appraisal

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evidence which applied a 20% reduction to three comparable properties to reflect the fact that the subject site did not have underlying coal mines. While preferring the Ministry’s evidence on highest and best use, the Board did not specifically challenge the appraiser’s application of a percentage reduction on the comparables, possibly leaving open that approach in other cases.

In a Nova Scotia case entitled Warner v. District of Guysborough (Municipality), the Nova Scotia Utility and Review Board was asked to consider the market value of land expropriated to build a liquid natural gas plant and docking facilities.118 The site had historically been used for gold mining exploration and operations and there was some evidence of mine workings, trailways and waste on the property at the time of valuation. There was also evidence of arsenic and mercury pollution in the soil.

The Board awarded $1,670,000 for the property, but deducted $330,000 for assessment and rehabilitation costs related to the contamination. The deducted figure was based on the costs estimated by the municipality’s appraiser for assessment, rehabilitation and the market value of the contaminated land. The Board then reduced those costs by 50%, on the grounds that the contaminated area could possibly be used as a buffer. The Board also reasoned that an informed purchaser, knowledgeable of the mine workings, would only reduce the market value by thatfraction when purchasing the property.

Looking Forward: What Have We Learned?

Clearly, evidence of environmental impairment is relevant to the valuation exercise in the expropriation context. However, mere evidence of contamination may not justify a reduction in market value. The challenge is to demonstrate how market participants would view the presence of contamination as of the valuation date. The type of property (industrial, residential, service station), the tolerance for risk, the proposed use and the anticipated timing to address clean up costs are all factors that must be accounted for.

A threshold issue to grapple with is whether, as of the valuation date, the circumstances of the property at issue would have caused willing market participants to account for (in terms of price or other concessions) the impact of environmental impairment. In other words, was there a “trigger” that would have made the issue relevant in negotiating the value of the site in question as of the valuation date. “Triggers” may include, but are certainly not limited to, the potential for and timing of redevelopment, a change in utility or limitation in highest and best use brought about by contamination, the requirement to satisfy lenders for financing purposes, the existence of clean up orders pursuant to applicable legislation, evidence of migration of contaminants off site, or demonstrated risk to human health or safety. The absence of a demonstrated trigger may have been the deciding factor in Simone (supra).

Conclusion

The Expropriations Act requires that the market value of expropriated land be determined as the amount that the lands might be expected to realize if sold in the open market by a willing seller

1

2009 NSUARB 130.

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to a willing buyer.19 In discharging its duty under the Act, the Board is required to determine how prudent market participants would react to evidence of contamination in the circumstances.

As the law stands now, the onus rests with the expropriating authority to justify any reduction in value resulting from environmental contamination with clear and persuasive evidence.

As expropriating authorities come under increasing pressure to protect tax payer dollars from being expended to remediate properties contaminated by private owners and acquired for public purposes, we can expect to see more sophisticated and creative arguments about the impact of contamination on the market value of expropriated lands in Ontario. With ever evolving science, pressure to contain urban sprawl, and well informed investors forming part of this complex equation, the law is only beginning to develop in this area.

1 Ontario Expropriations Act, R.S.O. 1990, c. E.26 (The “Expropriations Act”), s. 1(1)2 Ibid, s. 14(1)3 [1997] 1 S.C.R. 32 (S.C.C.)4 Le Goyeau Holdings Ltd. v. Windsor (City), [1994] O.M.B.D. No. 6415 Ibid, p. 26 City of Owen Sound v. Melancthon Investments Ltd. (2005), Ontario Municipal Board7 Ibid, p. 28 Melancthon Investments Ltd. v. Owen Sound (City), [2006] O.J. No. 2926 (Ont. Div. Ct.), p. 29 Melancthon Investments Ltd. v. Owen Sound (City), 2007 CarswellOnt 454210 49, L.C.R. 111 Ibid, p. 4512 [2004] O.J. No. 325813 Ibid, p. 714 Simone Group Properties Ltd. v Toronto (city) (2012), 106 L.C.R. 101 (OMB); aff’d (2013), 108 L.C.R. 12 (Div. Ct)15 Ibid, para. 4416 September 21, 2001 E.C.B. No.: 8/91/21017 April 18, 1997, E.C.B. No. 21/94/13718 2009 NSUARB 13019 Expropriations Act, R.S.O. 1990, c. E.26, section 14(1)

TOR01: 7049137: v1

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TAB 12

Recent Cases: Sorbram v. Litwack

Tamara Farber, C.S. Miller Thomson LLP

October 4, 2017


27009139.1

LANDLORD LIABILITY FOR ACTS/OMISSIONS OF ITS TENANT – A case review of SORBAM v LITWACK1 by Tamara Farber, Miller Thomson LLP, Certified Specialist – Environmental Law

The Sorbam case involves a somewhat typical contaminated land dispute between neighbouring commercial property owners. The plaintiff conducted investigations on its property in support of a sale, only to discover contamination. The impacts were thought to be sourced from the commercial property next door. The interesting part of the action was that the alleged source activities were not activities from current commercial tenants, but from a one-time dry-cleaner who was no longer a tenant at the site, and hadn’t been for over a decade or two. The plaintiff had owned its property for a long period of time, including during the operations of the former dry-cleaner. The case, still ongoing, revolves around both the current owner of the source property and the former owner, who owned the property at the time of the dry-cleaning operations by its tenant. The decision discussed below is the decision of Madam Justice Sheard on a summary judgment motion brought by the former landlord. The decision, which granted summary judgment, is under appeal. The case is noteworthy in that a key issue is the liability of the former landlord for alleged contaminating acts of its tenant. The dry-cleaning tenant, as will be noted below, was not sued.

THE PARTIES

The current landlord of the alleged source property had purchased the property several years

prior to the discovery of contamination by the plaintiff neighbour. At the time of its purchase

(which occurred in early 2007), environmental reports had been obtained in the course of the

transactional due diligence period. The investigations had disclosed the existence of

contaminants (chlorinated solvents). Nonetheless, its lender had agreed to lend. There was no

indication in the environmental reports obtained in support of the sale/purchase of an offsite

migration issue. There was information suggesting relatively low concentrations of chlorinated

solvents, and groundwater movement in the opposite direction of the plaintiff’s property. In fact,

there was some question as to whether the historical dry-cleaning operations, or an offsite

source from the direction of the plaintiff’s property, might be the source of the contamination.

1 2017 ONSC 706 (CanLII)

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The purchaser waived environmental conditions and purchased the property. There were no

environmental representations or warranties.

The vendor of the alleged source property owned the property for many years prior to the sale in

2007. There was some evidence that the former owner had leased to a dry cleaner for possibly

a 5 year period in the early 1990s. There was also evidence that other than the environmental

reports obtained in the context of its sale in 2007, it had no information to suggest there was an

environmental issue, and no knowledge of chemical usage by the dry-cleaner. The court

accepted that the vendor had no reason to suspect an issue, and certainly not to suspect

migration of contamination to the plaintiff’s property.

The dry-cleaner was not sued. The case is interesting in that respect, as it appears to be one of

a few cases where the alleged polluter is not also a party in the action.

THE CLAIM

The plaintiff claimed against the alleged source property landlord, and the former landlord. Its

claim against the former landlord was based on several arguments:

that the chemicals used in the dry-cleaning operation constituted a non-natural use of lands and the former landlord was strictly liability for the escape of chemicals under the Rylands v Fletcher doctrine

that the former landlord owed a duty of care to its neighbours to prevent the discharge of (and migration of) contamination from its property, to investigate its land, confirm that no contaminant was being discharged, and to remediate its property

that the former landlord was liable under s. 99 of the EPA

The plaintiff also claimed against the current owner/landlord on similar grounds.

The former landlord defended on the basis that it sold the land to the current owner, on an “as-

is” basis, with environmental disclosure, and that it had no knowledge of a potential issue arising

from any tenancy during its period of ownership. The former landlord provided affidavits that it

did not authorize any nuisance on its property, did not use, own or control chemicals, did not

authorize any use of chemicals, did not bring chemicals onto its property, and did not have any

knowledge of the use of, spill of, or migration of chemicals. The plaintiff did not challenge this

evidence.

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THE SUMMARY JUDGMENT MOTION

The former landlord brought a motion for summary judgment. There was no actual evidence of

use of chemicals by the dry-cleaner, just speculation. Expanding on the absence of evidence to

support the claim, the motion focused on the fact that the landlord:

had no information that the dry-cleaner was using, storing, disposing or emitting

contaminants during its tenancy,

had no reason to investigate the operations of the dry-cleaner,

did not have knowledge of actual contamination by the dry-cleaner,

did not obtain any knowledge of impact other than in the context of the sale,

that even after it became aware of the impact to its property, it did not have reason to

suspect the contamination on its land was a potential source of contamination to the

plaintiff (given the information of opposite groundwater flow direction).

The plaintiff also had no evidence of migration to its property during any period of ownership by

the former landlord.

On the legal analysis of the relevant torts (the plaintiff abandoned its argument in strict liability

immediately before the hearing of the motion), the court agreed that there was a lack of

evidence to support the claims. The Court analysed the allegations of negligence, nuisance and

statutory liability as follows:

Negligence

The plaintiff alleged that the former landlord owed it a duty of care. The former landlord argued

that in order to establish a claim in negligence, the plaintiff had to establish proximity, and in

turn, that the harm to the plaintiff had to be foreseeable. It relied upon (and the Court

considered and relied upon) Justice Lederer’s decision in Durling v. Sunrise Propane Energy

Group Inc.2, commenting on the nature of the landlord/tenant relationship. “It would change the

nature of the landlord/tenant relationship. To protect itself from liability, the landlord would be

required to play a role in the activities being carried out on the property. The mere fact that a

party is a landlord does not demonstrate the proximity necessary to establish a duty of care.”3

2 Durling v Sunrise Propane Energy Group Inc. 2013 ONSC 5830 (Div Ct per Lederer J.); appealed in

part, Durling v Teskey 2014 ONSC 1041 (Div Ct.)3 Durling, supra, per Lederer J., at 93

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If a landlord surrenders rights of possession and quiet enjoyment to a tenant, how can it then

also involve itself in the operations of the tenant in order to protect itself from liability to damage

to neighbouring property owners? In Durling, the plaintiff had alleged that the landlord knew “of

dangerous, unsafe and illegal conduct of the tenant during the lease, amounting to

foreseeability of catastrophic harm”4. On the basis of that allegation, and since the motion in

that case was brought in the context of a certification motion in a class action, the negligence

allegation survived. In the Sorbam case, Justice Sheard held that there was no foreseeability of

harm. “With no actual knowledge and no reason to be concerns about the operation of...the dry

cleaning tenant, it cannot be said that the defendant [is] in breach of a duty to act, or, in fact,

failed to act, to prevent the hard allegedly suffered.” 5 Justice Sheard found that there was no

evidence that the former landlord knew or ought to have known that the dry-cleaning operation

could be considered highly dangerous or that the lease would be accompanied by a risk to their

property or neighbouring property.6 There was no evidence of any breaches of environmental

law (or otherwise) by the tenant and the landlord had no knowledge of any dangerous activity

authorized by a lease or other agreement. The Court held that there was no evidence to find

that leasing to a dry-cleaner in the 1990s carried with it a foreseeable of risk of harm to the

plaintiff.

This is a significant but fact specific finding. It is noted as a commentary that while the case

was dismissed, it is certainly not clear that all historical landlords with industrial or commercial

tenants would be able to develop the same evidence or absence of evidence of lack of

foreseeability of harm.

Justice Sheard also considered the tort allegations from the perspective of the events during the

due diligence period of the sale transaction up to closing. She found nothing improper in the

handling of the issue in the context of the sale. She concluded that it was still not foreseeable to

the former landlord that harm would result to the plaintiff.

Nuisance

The Court again relied on the Sunrise Propane case addressing the question of landlord liability

for the nuisance created by its tenant. That case involved a significant propane explosion on an

industrial property surrounded by a residential neighbourhood. The propane operations of the

4 Durling, supra.5 Sorbam, at para 526 Sorbam, at para 57.

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tenant, also a party in the case, were subject to a lease. At issue in the certification motion was

whether the landlord was independently liable to the plaintiffs for the nuisance caused by the

tenant. The decision focused on foreseeability - the fault of a landlord flowed from foreseeability

of whether the nuisance was expected and accepted. This may be determined by whether the

nuisance was in contemplation of the parties at the time of entering the lease. Justice Lederer

held that “the measure of the required foreseeability is that the nuisance be inherently part of

the activity to be undertaken on the property. If a landowner leases property for use that would,

by its nature, create a nuisance, it bears part of the blame and shares in the responsibility for

it”.7 That court further held that unless the nuisance was plainly contemplated by the lease, and

almost certain to create a nuisance, the landlord would not be found liable in nuisance.

The motions judge in Sorbam applied this reasoning to the case, looking for evidence of the

nuisance being plainly contemplated by the lease and found none. The plaintiff had no

information that the landlord had brought contaminants onto the property, or that they had

authorized their tenant to do so. The Landlord’s evidence was that it never saw chemicals

used, stored, or disposed of by the tenant. The Plaintiff led no evidence the nuisance was

plainly contemplated by the lease. The Plaintiff also led no evidence as to the timing of

migration of the contamination, other than to concede it had no ability to determine that. It

discovered the contamination in 2010 and had no prior investigative reports. The Court

dismissed the nuisance claim.

STATUTORY LIABILITY – S. 99 Environmental Protection Act

The Court dismissed the statutory liability claim on the basis that the landlord was not an owner

of the pollutant or in control of the pollutant prior to the discharge. This is in keeping with the

plain language of s. 99 of the EPA, and the few cases that have interpreted this part of the

statute.

THE SAGA CONTINUES

The Plaintiff has appealed the case. The hearing is slated for early November 2017. The

appeal challenges the findings of the absence of foreseeability in the context of alleged errors

made by the motion court judge. If the appeal is unsuccessful, that might signal an openness

for the court to consider the roles of land owners in contaminated land cases, in specific

timeframes and specific lease situations, in the context of foreseeability. If the decision is

7 Durling, supra, per Lederer J., at 49.

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overturned and the matter left to be determined at an overall trial with the current landlord, it will

remain to be seen whether a trial court reaches any different conclusion on liability.

….to be continued

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TAB 13

Huang v. Fraser Hillary’s: How Far From Smith v. Inco

Have We Come

Michael Hebert Beament Hebert Nicholson LLP

October 4, 2017


1

Huang v. Fraser Hillary’s: How Far From Smith v. Inco Have We Come

Michael S. Hebert Beament Hebert Nicholson LLP

The issues raised by the Trial decision and to be determined by the Court of Appeal.

On March 6, 2017 Justice Pierre Roger released his reasons in the Plaintiff Eddy Huang’s

case against Fraser Hillary’s Limited and David Hillary dealing with the contamination of

Mr. Huang’s land with chlorinated solvents from the adjacent dry cleaning operation

and residential property.

This case deals with several significant issues which previous jurisprudence has only

tangentially dealt with. It is submitted that to resolve the outstanding appeal issues

decisions will have to be made dealing with these unresolved legal principles.

A correct copy of the Trial decision follows this paper. The CanLII version is missing

paragraphs 176, 177 and 178 in whole or in part.

The facts of this case are relatively uncomplicated. The Defendant, Fraser Hillary’s

Limited operated a dry cleaning facility since 1960 and continues to do so today at its

premises on Bank Street in Ottawa. Directly south of that facility and directly

downgradient are two parcels of land with commercial uses owned by the Plaintiff. The

present uses are not the highest and best use. Huang bought the properties for

redevelopment and, if he manages to get them remediated, will proceed with a

residential/commercial hybrid project in this very desirable area of Ottawa South.

Briefly, the contamination had its origin at the dry cleaning facility and was spilled in a

number of ways. What resulted from the spills is a free product “source zone” located

on both the Defendant Fraser Hillary’s lands, the Defendant David Hillary’s land and on

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the Plaintiff’s lands. Migration from these source zones are continuous and ongoing and

have been for some time.

Evidence indicated that these three (3) areas constituted a “source zone” such that

groundwater flowing through them would migrate downgradient and contaminate the

Plaintiff’s lands.

The Plaintiff brought its action against the Defendants for the costs of remediating its

lands and all engineering costs incurred to date. Those costs amounted to

approximately $4.3 million; the award of Justice Roger awarded the Plaintiff only slightly

less than $2.0 million based on a cocktail of interpretations put forth by the Trial Judge

of several different reports.

A series of different technologies and levels of remediation were set out in various

reports to meet all eventualities that could have resulted in a disposition on remedial

costs. The Trial Judge found that the Plaintiff was entitled to remediation to residential

standards but the Plaintiff feels that the award did not provide this level of

compensation at all.

The Trial Judge found liability against Fraser Hillary’s Limited on the grounds of nuisance

and s. 99 of the Environmental Protection Act, R.S.O. 1990, c. E.19 and dismissed entirely

any liability of David Hillary as owner of a residential property which had a source zone

that was and is contaminating the Plaintiff’s lands.

The decision has been appealed by the Plaintiff on the findings of trespass, nuisance as

against David Hillary, negligence as against both Fraser Hillary’s Limited and David

Hillary and damages. The Defendant, Fraser Hillary’s Limited has appealed the findings

against it and urges the Court of Appeal to find that there is no liability on it for the

Plaintiff’s damages.

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The issues to be dealt with by the Court of Appeal in these appeals are as follows:

1. Trespass. The Trial Judge correctly cited the four (4) essential characteristics of a

trespass to land as set out in the Trial decision of Smith v. Inco Ltd., 2010 ONSC 3790.

The characteristic that is in issue is the question of the direct physical intrusion on to

land in the possession of the Plaintiff. In this case, the Trial Judge held that the

contaminant migrated from Fraser Hillary’s Limited’s lands on to the Plaintiff’s lands

by travelling downgradient and therefore this did not constituted a direct intrusion

onto the Plaintiff’s lands thereby disentitling him to a remedy on the grounds of

trespass.

The important point on this issue is the fact that the Defendants’ lands as well as the

Plaintiff’s lands contain free product. On the logic of the recent decision in Canadian

Tire Real Estate v. Huron Concrete Supply Ltd., 2014 ONSC 288, free product on the

Plaintiff’s land which came from the Defendant’s land would be sufficient to justify a

finding of direct intrusion. It would seem that if the reasoning in Canadian Tire Real

Estate v. Huron Concrete Supply Ltd., 2014 ONSC 288 is correct, then a similar finding

of direct intrusion could be made here where the free product on the Plaintiff’s

lands came from the Defendant’s lands.

2. Liability of the personal Defendant, David Hillary in nuisance. This issue has two (2)

findings that the Trial Judge felt avoided liability by Hillary in nuisance. The first lies

in the question of whether a wrongful act is required to find liability in nuisance on

the facts of this case. The second portion of the problem relates to the Trial Judge’s

findings with respect to causation of the damages in question.

On the question of the wrongful act, it is to be noted that there is a very small sliver

of land separating the land of David Hillary from the Plaintiff’s lands. In his action,

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the Plaintiff alleged that David Hillary was liable to him in nuisance because he was

informed in 2007 that his lands were contaminated and that he would need to

remediate them in order to prevent continued contamination of the Plaintiff’s lands.

In spite of this, as at the trial date in 2016, the Defendant, Hillary, had done nothing

to attempt to abate the contamination, including free product on its lands. The

evidence was clear that the migration of the contaminant onto the Plaintiff’s lands

was and is continuous; that if unremediated the contaminant would continue to

contaminate the Plaintiff’s lands and that in order to stop it the Defendant, Hillary

either had to remediate his lands or erect a barrier to prevent further migration

onto the Plaintiff’s lands.

Because of the slight separation between the lands of David Hillary and the Plaintiff,

the Trial Judge ruled that in order to find a claim in nuisance against David Hillary,

the Plaintiff had to establish a wrongful act committed by David Hillary. The Plaintiff

feels that the jurisprudence does not require the lands in question to be directly

adjacent in order to find liability in nuisance. There is however a line of authority

clearly set out in the case of Hoffman v. Monsanto Canada Inc., 2005 SKQB 225

(“Monsanto”) under the terms of which where a Defendant being sued for nuisance

is not an adjoining or close land owner, the Plaintiff must establish a wrongful act

that caused the nuisance in order to find liability on the Defendant. In the Monsanto

case, a farmer sought to visit liability against Monsanto in negligence as a result of

the manufacture of its product. Monsanto owned no lands anywhere near the

Plaintiff farmer. The Court held that in order to find liability in nuisance you needed

a wrongful act. In this case, given that the property of the Defendant, Hillary had

free product which was continuing to contaminate the Plaintiff’s lands, no such

wrongful act was required in the submission of the Plaintiff. It is the position of the

Plaintiff that the existence of knowledge by Hillary of the nuisance and the failure to

do anything to abate it is actionable on the grounds of nuisance. The Court of

Appeal will be asked to determine this issue.

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The second sub issue involved in the Trial Judge’s analysis as against Hillary in

nuisance and against Fraser Hillary’s Limited and Hillary in negligence as well deals

with a very interesting issue that should be at the heart of most environmental

contamination cases.

In his analysis of the nuisance liability of Hillary the Trial Judge felt that by the time

Hillary discovered the contamination on the Plaintiff’s lands, the Plaintiff’s lands

were already contaminated and therefore causation was not established. This is in

spite of the Trial Judge’s clear finding that the free product exists on the Defendant,

Hillary’s land, that it has and continues to travel downgradient onto the Plaintiff’s

lands and continues to contaminate them and will do so until abated. The source

zone on the Defendant Hillary’s land is contaminating and continuously flowing onto

the Plaintiff’s lands and that if left untreated the contamination could continue for

generations.

This logic, if left unchecked, could result in a situation where parties affected by

historical spills would be remediless where the contamination is discovered some

time after its occurrence even in a case where it is continuing as at the date of the

Trial. Another companion issue that is troublesome in the Trial decision is the Trial

Judge’s contention that remediating only Hillary’s land would not fix the Plaintiff’s

problems (and both pieces of property would need to be remediated). Surely where

two parcels of land have impacted an innocent third party’s land, liability of one of

the two contaminators cannot be avoided simply by them each saying that it

wouldn’t do any good to remediate only one site. Co-Defendants need to remediate

both sites. This should have no impact on individual liability.

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3. Negligence as against both Defendants. In addition to difficulties in the finding of

negligence as against both the corporate and personal Defendant, the issue here

relates to whether or not conduct of the Defendants was negligent and once again

whether the concept of the Plaintiff’s lands being earlier contaminated somehow

avoids liability in negligence for a later discovery of the contamination.

The Trial Judge correctly found that both corporate and personal Defendant owed a

duty to the Plaintiff to prevent or limit further harm to their neighbours. The issue

that the Plaintiff has with the finding is the Trial Judge’s decision that the standard

of care was not breached prior to mid-2013. The Plaintiff states that there is ample

evidence to substantiate negligence by both Defendants prior to 2013 as neither

Defendant did very much over the course of 13 years to attempt to control the

contamination on its site or to remediate the site of the Plaintiff.

The more interesting issue is the causation issue. The Trial Judge found that both the

corporate and personal Defendant breached the standard of care from mid-2013

onwards as a result of their failure to take steps at that point in time, given the

evolution of the engineering evidence and so forth. He found however that

although the standard of care was breached by them, the damage to the Plaintiff’s

lands had already been done by 2013 but no evidence of additional harm or loss

suffered was present. This is in spite of the finding that both Defendants’ lands are

source zones, have carried and continue to carry contaminants that continue to

migrate onto the Plaintiff’s lands and will continue to do so for generations and that

need to be treated. The continued presence of the source zone on both properties

and the continued migration of contaminants from the Defendants’ lands are

continuing further harm.

The problem with the Trial Judge’s decision is that liability in negligence would likely

never arise for a failure to remediate a known historical spill because the damage

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would likely have largely occurred at the time of the spill not at the time it became

known. One is left to wonder why s. 17 of the Limitations Act, 2002, S.O. 2002, c.24

is there at all if this logic should prevail.

It is submitted by the Plaintiff that the Trial Judge overlooked the fact that post-2002

both Defendants were negligent in failing to take steps to remedy the contamination

and remove the source to prevent its continued migration onto the Plaintiff’s lands.

The damage they have caused in failing to take those steps is the ongoing and

continuous existence of the source zone on both Defendants’ lands which prevents

the Plaintiff from developing his lands. The damage is continuous and is a direct

result of the Defendants failure to act.

Once again on this issue the reasoning of one of two tortfeasors escaping liability

because both tortfeasors needs to remediate is a concept that will need to be dealt

with by the Court of Appeal.

Damages

The Plaintiff claimed damages to remediate the site to a residential standard

because the evidence accepted by the Trial Judge indicated that the present use of

the property was not its highest and best use and that a residential use was

appropriate. However, given that there was no guarantee that the Trial Judge would

accept remediation to a residential standard the Plaintiff put forth evidence of

several different remediation strategies, some to commercial standards and some to

residential standards. It was generally agreed that it would be inappropriate to

remediate the site and then subsequently develop it where all of the remediated

soils would be removed. The best move would be to wait until redevelopment

occurs, remove the contaminated soils, treat the contaminated groundwater and

prepare an impermeable barrier to prevent any residual contamination from

entering the new building. The Plaintiff presented clear evidence of the incremental

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cost in adopting this approach over and above that which would be occurred as

simply building the same building on a piece of clean land. That differential was

approximately $4.2 million.

Although the Defendants led no evidence of alternative remediation strategies or

any reports criticizing the remediation strategies of the Plaintiff’s experts, the Trial

Judge picked one of the least expensive options which could take 8 to 10 years to

accomplish.

The difficulty with his decision was that he mixed reports that dealt with completely

different remediation strategies and which were not interchangeable because they

were dealing with different approaches and used the costing from one to

hypothetically add to another technology and come up with his own number. The

Plaintiff is of the view that it is up to the Trial Judge to assess damages as best as he

or she sees but it is not open to the Trial Judge to guess. Given that the finding was

that the lands need to be remediated to the residential standard and given that the

only evidence of how to proceed with that on a realistic basis was a costing of $4.2

Million, the Trial Judge should have accepted this alternative.

Conclusion

We have in this case a clear determination that will need to be made of liability of

non-polluting land owners to adjacent sites, the concept of causation, the concept of

liability of one or more property owners for contaminating a third property and the

concept of assessing damages by choosing a series of criteria at will without regard

to whether they belong grouped together from an engineering point of view. The

appeal has now been perfected and we are awaiting a hearing date from the Court

of Appeal.

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Reprinted with Permission.

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BETWEEN:

EDDY HUANG

-and-

CITATION: Huang v. Fraser Hillary's Limited, 2017, ONSC 1500 COURT FILE NO.: 07-CV-39359

DATE: 2017/03/06

ONTARIO

SUPERIOR COURT OF JUSTICE

) ) ) )

Plaintiff ) ) )

Michael S. Hebert and Cheryl Gerhardt McLuckie, for the Plaintiff

FRASER HILLARY'S LIMITED and DAVID HILLARY

) ) )

Jonathan O'Hara, for the Defendant Fraser Hillary's Limited

P.E. ROGER. J.

Overview

Defendants ) ) ) ) ) ) )

Paul Muirhead and Jeremy Rubenstein, for the Defendant David Hillary

HEARD: January 11-15, 18, 19 and 29, 2016 at Ottawa

REASONS FOR DECISION

[1] The plaintiff brings this action against Fraser Hillary's Limited ("FHL") and David

Hillary, seeking significant damages for remedial and related expert expenses for the

tetrachloroethylene ("PCE" or "PERC") and trichloroethylene ("TCE") contamination of soils

and groundwater at 1255 and 1263 Bank Street, Ottawa ("1255 Bank" and "1263 Bank",

respectively).

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[2] FHL is the owner of 1235 Bank Street ("1235 Bank"). That property is located on the

southeast comer of Bank Street and Cameron Avenue. FHL has operated a dry cleaning business

at that location since 1960. David Hillary is the president and sole director ofFHL.

[3] David Hillary is also the owner of 36 Cameron Avenue ("36 Cameron"), a residential

property that he purchased as a rental property in 1986. That property is adjacent to and

immediately northeast of 1235 Bank. The two properties share a common driveway on the

northeast side of 1235 Bank.

[4] The plaintiff is the owner of 1255 Bank and 1263 Bank. Both properties are located on

the southeast side of Bank Street, beside 1235 Bank. 1235 Bank, 1255 Bank, and 1263 Bank are

adjacent to one another (in that order from north to south), with 36 Cameron to the east of 1235

Bank. The south border of36 Cameron is boarded by 1235 Bank, such that 36 Cameron does not

abut any of the plaintiffs properties. Rather, the most northerly of the plaintiffs property, 1255

Bank, on its northern border abuts 1235 Bank.

[5] The plaintiff alleges five potential causes of action:

(a) Nuisance;

(b) Negligence;

(c) Liability under s. 99 of Ontario's Environmental Protection Act, R.S.O. 1990,

c. E.19 (the "EPA");

(d) Trespass; and

(e) Strict liability under the doctrine of Rylands v. Fletcher (1868), L.R. 3 H.L. 330.

[6]. The plaintiff alleges that in the 1960s and 1970s, up until 1974, dry cleaning solvents

used by FHL at 1235 Bank were allowed to enter the ground via dry cleaning filters and products

stored at the dry cleaner and, as well, through the building's sump in the basement. He also

alleges that FHL and David Hillary, since knowing about the migration of contaminant to the

plaintiffs properties, have taken no meaningful steps to address it.

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[7] It is not disputed by FHL that its dry cleaning solvents contaminated the plaintiffs

properties. FHL however denies liability on a number of grounds, including that the products

were, at the time, not known to be hazardous; that it disposed of the products as recommended;

and that the plaintiff has not established damages to or interference with his properties.

[8] David Hillary is sued only as owner of 36 Cameron. He denies liability and alleges that,

as a homeowner, he is exactly in the same position as the plaintiff. Both their properties were

contaminated by the dry cleaning practices of their shared neighbour, FHL, at 1235 Bank.

Further, David Hillary alleges that there is nothing he could have done at 36 Cameron that could

have impacted the contamination of the plaintiffs properties and that causation has not been

established.

[9] The defendants called no evidence.

Background Facts

[10] The plaintiff, Eddy Huang, purchased 1263 Bank in 1972 and 1255 Bank in 1978. With

some exceptions in the 1980s, these properties have been rented. However, he testified that he

always wanted to develop a better project.

[11] In 2002, Mr. Huang entered into a 20-year ground lease with Tim Hortons for 1263 Bank.

Tim Hortons was required to build its own building for its restaurant, which it did. This lease

expires in 2022. The lease on 1255 Bank expires in 2024.

[12] Over the years, Mr. Huang had conversations with Mr. Fraser Hillary and after with

David Hillary about purchasing 1235 Bank. Neither wanted to sell.

[13] Mr. Huang testified that in 2002 he contemplated developing 1255 and 1263 Bank Street.

He approached his bank and, at its request, arranged for a Phase I enviromnental report on the

recommendation of his mortgage specialist. It confirmed the likely presence of contamination.

[14] Mark D'Arcy is an associate with John D. Paterson and Associates Limited ("Paterson").

He was retained by Mr. Huang in 2002 for a Phase I and Phase II environmental site assessment

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of the plaintiffs properties. He testified that the Phase I found moderate to high likelihood of

contaminants on the plaintiffs properties due to the dry cleaner directly to the northwest. As a

result, a Phase II assessment was conducted. Paterson concluded that soil and groundwater have

concentration of TCE that exceed Ministry of Environment and Climate Change ("MOECC" or

"MOE") tables. It recommended that the soil be excavated and disposed of off-site, with

remediation to be done with the FHL site or else that a barrier system be installed along the

common property boundary. He recommended as well remediation of the groundwater.

[15] Mr. Huang testified that, as a result of the contamination, his bank would not advance any

funds and would not renew his existing mortgage. He also testified that he is not able to develop

his properties in their present condition and that, once environmental issues are addressed, he

intends to proceed with his development plans.

[16] Mr. Huang presented no evidence of any concrete plan to deal with his tenants in the

event of any early re-development and provided only vague answers on how he would, for

example, deal with Tim Hortons.

[17] The court heard technical evidence from two experts, Mr. Brian Byerley of Golder

Associates Ltd. ("Golder") and Dr. David Reynolds of Geosyntec Consultants ("Geosyntec").

Both were called by the plaintiff.

[18] They explained that PCE is a chemical solvent used as a degreaser and predominantly

used in the dry cleaning industry. TCE is another chemical compound that can exist independent

of PCE or as a breakdown product of PCE. Dense Non-Aqueous Phase Liquid ("DNAPL" -

pronounced "dean apple") is the purest form ofPCE. It is denser than water. When PCE impacts

the ground, it does not migrate straight down. It chooses the path of least resistance and can

spread out over a large area as it breaks down and falls apart during its descent through the

ground. As a result, the final resting place of DNAPL may not be where it originally impacted

the ground. Since it can spread out and migrate below the ground - both horizontally and

vertically, there can be a large surface area that can have traces of DNAPL. This possible area of

DNAPL is known as a "Source Zone", which, again, is not necessarily where the actual PCE first

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impacted the ground. When clean groundwater passes through DNAPL it becomes contaminated

and continues its migration.

[19] FHL has owned and operated a dry cleaning facility at 1235 Bauk since 1960 and Mr.

Hillary has been its president and sole shareholder since 1971. However, as indicated above, Mr.

Hillary is not sued in relation to his role with FHL but as homeowner of 36 Cameron A venue.

[20] PCE and TCE were important ingredients in "PERC", the dry cleaning solvent used at

1235 Bauk from 1960 to 1974. During that time, FHL was purchasing about $5,000.00 worth of

PCE per month. The PCE was delivered in 45 gallon drums, which were kept in the basement of

FHL at 1235 Bauk.

[21] Up to the mid-70s, the adverse effects ofPCE were unknown to both the industry and the

environmental engineering community. It was then understood that you could dispose ofPCE by

pouring it onto the ground. The thinking was, apparently, that it would evaporate.

[22] From 1960 to 1974, the use of PCE/TCE at 1235 Bauk resulted in spills of these

chemicals onto the ground. Used PCE would be stored by FHL in cardboard boxes in the parking

lot at the rear of its property at 1235 Bauk and left there until the weekly garbage collection. The

evidence of FHL, from read-ins of its examinations for discovery, demonstrates that before 1974,

in addition to the storage practices in the rear laneway, there were also spills ofPCE within 1235

Bauk and that PCE contamination likely made its way into the sump.

[23] FHL's handling practices of PCE/TCE changed in 1974 when FHL purchased new dry

cleaning machines. The new machines and resulting new practices significantly reduced the

amount ofPCE/TCE used at 1235 Bauk, and virtually eliminated the potential for spills.

[24] It is clear from the evidence that those solvents entered the environment as a result of the

disposal techniques for waste products used by FHL in the 1960s and 1970s -up to 1974 -(i.e.

cardboard boxes stored at the rear) and that PERC losses occurred during the ongoing operations

and entered the building's sump.

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[25] It is also clear that the solvents that entered the ground have resulted in a source zone,

present on a portion of 1235 Bank, 36 Cameron, and 1255 Bank. That source zone is well

illustrated by Dr. Reynold in his report of August 21,2012, at Figure 2 (Exhibit 5, Tab 51). As

explained quite candidly by Dr. Reynold, that figure was prepared with the data up to 2008. It

shows the source zone to be primarily on 1235 Bank, slightly upon 36 Cameron, and also on

1255 Bank. Although we are missing data to more precisely define the DNAPL area, Dr.

Reynold testified that if he added the 2011 data he would then include MW8-07 (monitoring well

8 of2007 which is on 36 Cameron) into the source zone of Figure 2 (the DNAPL zone).

[26] As indicated by the experts (Byerley and Reynold), a source zone contains free phase

(undissolved) PCE. As groundwater flows through a source zone, it carries with it contaminant

particles, thereby spreading the contaminants. In other words, DNAPLs constitute a source zone.

As DNAPL have very low solubility, they take years to dissolve in water and, as groundwater

flows over DNAPLs, they (DNAPLs) feed the groundwater plume. The DNAPLs and the

groundwater plumes are the problem as none of the soil data indicates DNAPL in the soil. The

evidence indicates that untreated, this contamination could exist for multiple generations.

[27] Generally, the direction of groundwater flow across the site is southeast, from 1235 Bank

and 36 Cameron Avenue towards the plaintiffs lands, and onwards towards the Rideau River.

[28] As indicated above, pure PCE/TCE was discovered to have accumulated in a

concentrated pool of DNAPL under 1235 Bank, 1255 Bank, 36 Cameron, and some residential

properties to the northeast. Less concentrated, non-DNAPL PCE/TCE also spread to portions of

1255 Bank, 1263 Bank, and 36 Cameron. The PCE/TCE moved as groundwater passed over the

DNAPL pool and carried small amounts ofPCE/TCE onwards.

[29] This has led to PCE/TCE levels in groundwater and soil across portions of the properties

that exceed MOE standards.

[30] There is no evidence of anyone becoming ill from exposure to PCE/TCE on any of these

properties. Both experts indicated that the risk of exposure to humans is small (no appreciable

risk) as the top three metres of soil is clean. The risk of exposure by vapour is also small for the

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same reason. Dr. Reynold assumed, while elaborating his remedial alternatives, that the site (all

properties) poses no risk to human health and ecology. However, the MOE is concerned and has

ordered ongoing monitoring of any vapour to ensure the continued safety of residents.

[31] The experts agreed that the contaminants found in the groundwater and soils of the

plaintiffs lands are from the dry-cleaning solvents used by the dry-cleaning facility operated by

FHL. Both Mr. Byerley and Dr. Reynold indicated, during their cross-examination, that the

source of contamination is PCE and TCE; that their source is dry cleaning fluids; and that these

originated from the dry cleaner at 1235 Bank- this is clear.

[32] Both experts agreed that 36 Cameron was also contaminated by the dry cleaner at 1235

Bank.

[33] As noted above, David Hillary purchased 36 Cameron in 1986 and by that time it had

been over ten years since FHL had stopped disposing and spilling PERC as described above.

[34] Dr. Reynold indicated, without any hesitation, that in his opinion it is reasonable to

assume that the source of the contamination is 1235 Bank as PCE is a classic dry cleaning

product. In his opinion, there is no second source. He further indicated that cleaning only 36

Cameron would probably make no difference to 1255 Bank and 1263 Bank. Mr. Byerley also

indicated that all properties, including 36 Cameron, were contaminated by the dry cleaner at

1235 Bank.

[35] I note that, in dealing with these issues, we have to be careful not to confuse source with

source zone. Although there are a number of source zones, the evidence is clear that their source

is the dry cleaner operated by FHL at 1235 Bank.

[36] There is no evidence of any second source, other than FHL, for the contaminants on these

properties.

[37] Both Mr. Byerley and Dr. Reynold testified that the plaintiffs lands cannot be

remediated until the source area is either removed or isolated in its entirety.

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[38] Mr. Byerley testified that the plaintiff is unable to redevelop his lands unless they are

remediated.

[39] Michael Heeringa is an employee with the MOE. His involvement with these properties

started in 2006. Mr. Heeringa testified that the applicable generic soil and groundwater clean-up

criteria for this site are provided in the document entitled "Soils, Groundwater and Sediment

Standards for Use under Part XV.1 of the Environmental Protection Act". He reviewed

Exhibit 6, Tab 73 (a memorandum from MOE dated AprilS, 2013), and confirmed that the

applicable standards are provided in Table 3; that the Table 3 generic standard for allowable PCE

concentrations in groundwater is the same for residential land use as for commercial land use

(1.6 J.!g/L); and that in remediating a site, the applicable standard for both groundwater and soil

must be met. In the absence of a risk assessment and of site-specific standards, I accept his

evidence on this point as it represents a conservative or prudent assessment.

[ 40] He indicated that, by April2013, he was not receiving any further communication, report,

or document from FHL and that their remedial efforts to date did not appear to have had any

significant impact on contaminants. As a result, he prepared his Provincial Officer's Report

dated April15, 2013 (Exhibit 6, Tab 74) and the Provincial Officer's Order of April15, 2013

(Exhibit 6, Tab 75). This order requires FHL to retain a qualified person and submit a detailed

work plan to take appropriate measures to remedy the property.

[41] Subsequently, he prepared another Provincial Officer's Report dated July 23,2014

(Exhibit 6, Tab 78). He noted that the MOECC had observed less and less communication from

FHL and therefore took steps to formalize their requests. As a result, he made another Provincial

Officer's Order dated July 23, 2014 (Exhibit 6, Tab 79). Mr. Huang was served to ensure access

to his property.

[42] The order of July 23, 2014 seeks implementation of the work plan and has a compliance

date of August 31,2015. The MOECC was to receive a report by that date addressing the

interpretation of soil vapour monitoring results, interpretation of groundwater and soil

monitoring results, and identification of the proposed measures for ongoing assessment and

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remediation. Mr. Heeringa testified that the MOECC has not received anything further from

FHL, and that FHL has complied with none of the July 2014 order. As a result, he explained that

the order has been referred to their non-compliance section and that enforcement proceedings

under the EPA have been initiated against FHL.

[43] Mr. Heeringa was a credible witness who occasionally seemed to conflate the role of Mr.

Hillary as homeowner of 36 Cameron with that of shareholder or principal of FHL. Nonetheless,

he gave honest and straightforward answers. He explained, quite clearly, that the Ministry was

experiencing decreased communication from FHL and their experts, Conestoga Rovers &

Associates ("CRA"). In 2014, the Ministry wanted to better understand the risk of vapour and

wanted a probe put in at 36 Cameron, as they viewed 36 Cameron as a reasonable place to do

this investigation. Mr. Hillary was ordered or included in the order as owner of 36 Cameron and

as owner of FHL as the Ministry wanted it done. Mr. Heeringa explained that they included

David Hillary personally to make certain that either he did it (had it done) or that he took steps to

have FHL do the ordered work. They wanted vapour data and ongoing assessment of the

contamination to understand the big picture. By the time of trial, they had received none of it.

[44] Mr. Heeringa testified that the MOECC would be unlikely to approve a risk assessment

for a site which has free phase products present.

[ 45] Ronald Juteau, a real estate appraiser, provided his opinion on the highest and best use of

the plaintiff's properties. In his opinion, the highest and best use of the plaintiff's properties

would be a mid-density mixed-use development with a retail ground floor and residential units

above in a four- to six-storey building. Although he opined on the market value of the plaintiff's

properties for various scenarios, he did not opine on the impact of contamination on their market

value.

[ 46] Lloyd Phillips, an expert on land use, confirmed that current zoning allows five storeys

and that a four-storey mixed-use development would have a very high chance of approval (six

storeys would have a moderate to high chance of approval), with the outcome uncertain as there

are no six-storey buildings in that immediate area on Bank Street.

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[ 4 7] Read-ins from the examinations for discovery of FHL and David Hillary established,

amongst others, that Mr. Hillary and FHL first became aware of a contamination issue on the

dry cleaner property (1235 Bank) when Mr. Huang informed him that there was a problem with

the land on his property in about 2001. They establish further that when Mr. Hillary purchased

36 Cameron in 1986, he was not aware of any contamination and only became aware of

contamination at 36 Cameron following the investigation by the experts hired by FHL,

Conestoga Rovers & Associates (CRA). Mr. Hillary admits that contaminants are still on his

land, are still escaping from his land to adjacent land, and that he was informed by CRA that he

will have to clean up his land.

Issues, Law, and Analysis

[ 48] I will firstly analyse the five causes of action raised by the plaintiff and will thereafter

address damages.

Trespass

[ 49] The essential characteristics of a trespass to land are as follows:

I. Any direct and physical intrusion onto land that is in the possession of

the plaintiff;

2. The defendant's act need not be intentional, but it must be voluntary;

3. Trespass is actionable without proof of damage; and

4. While some form of physical entry onto, or contact with, the plaintiffs

land is essential to constitute a trespass, the act may involve placing or

propelling an object, or discharging some substance onto, the plaintiffs

land.

(see Smith v. Inca Ltd, 2010 ONSC 3790, 52 C.E.L.R. (3d) 74, at para. 37,

rev'd on other grounds, 2011 ONCA 628, 107 O.R. (3d) 321.)

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[50] Trespass requires a direct intrusion onto the plaintiffs land. As indicated in Smith v. Inca,

at paras. 40-42, examples of indirect intrusions that do not satisfY the requirements of a trespass

claim include:

• a tank on the defendant's property leaking onto the plaintiffs property;

• oil discharged into the sea that washes onto the plaintiffs lands; or

• nickel particles emitted into the air by the defendant settling on the plaintiff's property.

[51] The plaintiff argues that, by having knowledge of the contamination and the presence of

the source area of their lands, by allowing the continued migration of contaminant onto the

plaintiff's lands from that source area, and by taking no steps to prevent that migration, the

defendants have committed an actionable trespass. The plaintiff argues that the contamination is

a voluntary, direct, and physical intrusion, and that the plaintiff has free product on his lands as a

result.

[52] I disagree with the arguments raised by the plaintiff on this issue. According to the

evidence, none of FHL' s actions, including the occasional spills of PCE/TCE between 1960 and

1974, resulted in a direct intrusion ofPCE/TCE onto the plaintiff's properties.

[53] According to Mr. Byerley's evidence, spilled DNAPL ofPCE/TCE would have sunk into

the ground of 1235 Bank. As DNAPL ofPCE/TCE is heavy, it would have gradually sunk into

the ground, and slowly moved along the most permeable route in the soil. The DNAPL of

PCE/TCE would have pooled when it hit a relatively impermeable barrier, such as bedrock.

[54] Once the DNAPL of PCE/TCE collected in a pool, groundwater would have flowed

across the DNAPL, gradually carrying small amounts of PCE/TCE onward (including to 1255

Bank and 1263 Bank) and into the soil. Mr. Byerley also explained how the PCE/TCE would

have spread by diffusion, moving from areas of higher concentrations to lower concentrations,

gradually spreading from 1235 Bank onward.

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[55] These mechanisms by which the PCE/TCE entered the plaintiff's properties are indirect,

rather than direct, intrusions onto the plaintiffs properties. The first required element of trespass

is therefore not met.

[56] Consequently, the plaintiff's claim for trespass is dismissed.

Strict Liability: The Rule in Rylands v. Fletcher

[57] The plaintiff also claims against FHL in strict liability, under the rule in Rylands v.

Fletcher.

[58] The plaintiff alleges that the use of its land by FHL is a non-natural use. Mr. Huang

argues that a dry cleaning facility inherently constitutes a non-natural use of land, given its use of

solvents and degreasers such as PCE and TCE. He alleges further that the manner in which the

spent PCE, filters, and sludge were disposed of on the land also constitutes a non-natural use. He

states that the solvent was likely to do mischief if it escaped and it did, in fact, escape and cause

considerable damage in the form of contamination in excess of MOECC standards, meeting he

alleges the requisites of strict liability.

[59] The rule in Rylands v. Fletcher has been formulated to require four prerequisites:

i) the defendant made a "non-natural" or "special" use of his land;

ii) the defendant brought on to his land something that was likely to do mischief if it

escaped;

iii) the substance in question in fact escaped; and

iv) damage was caused to the plaintiff's property as a result of the escape.

(see Smith v. !nco Ltd, 2011 ONCA 628, at para. 71)

[60] When applying the above formulation of the rule in Rylands v. Fletcher to the facts of

this case, I conclude that it does not apply. Here are my reasons.

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[6'1] Similarly to the situation in Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108,

371 D.L.R. (4th) 399, when I consider the place where the use was made, the time when the use

was made and the manner of the use, I conclude that the use of these products (PCE/TCE) was

not a "non-natural" or "special" use of this land. There is no evidence that the dry-cleaning

operations on the property were a non-natural or special use of the land nor is there evidence that

the use made, at the time and in this business, of PCE/TCE was a non-natural or special use.

There is simply no evidence to support these allegations of the plaintiff, which are essentially

contradicted by his own experts.

[ 62] In addition, if the requirement that the substance was "likely to do mischief if it escaped"

envisions some element of foreseeability (as seems to be suggested by Inco, at paras. 1 08-110

and more specifically suggested in Windsor, at paras. 20--21), then the second requirement of the

rule is as well not met as, on the evidence, very little was known about any harmful effect of

PCE/TCE prior to 1974. In fact, as indicated above, it was then believed that PCE/TCE could be

dumped on the ground. Therefore, it could not have been considered that that the substance was

"likely to do mischief if it escaped".

[63] Consequently, the plaintiffs claim under strict liability (or under the rule in Rylands v.

Fletcher) is dismissed.

[64] As an aside, I wish to point out that comments have been made in a number of cases

questioning whether liability under this principle should, in such circumstances, be exceptional

(as strict liability does not require a fmding of negligence or of other fault): see Windsor, at para.

17; Smith v. Inco Ltd., 2011 ONCA 628, at paras. 84, 90, 93-94. Indeed, as indicated by the

Court of Appeal in Smith v. ]nco, at, amongst others, para. 94: "Having concluded there is no

common law rule imposing strict liability on those whose activities are said to be 'ultra

hazardous'", and, at para. 112, that this "paradigm involves an mmatural use of the defendant's

property and some kind of mishap or accident that result in damage[,] [t]he application of

Rylands v. Fletcher to consequences that are the intended result of the activity undertaken by the

defendant has been doubted".

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Section 99 of the Environmental Protection Act, R.S.0.1990, c. E.l9

[65] At paragraph 8 of the Amended Statement of Claim, the plaintiff pleads that FHL and

Mr. Hillary had management and control of the chemicals and dry-cleaning wastes which caused

the contamination of the plaintiffs properties and, at paragraph 29, pleads and relies upon the

provisions of the Environmental Protection Act ("EPA"), including section 99.

[ 66] The plaintiff argues that FHL is an "owner of the pollutant" and a "person having control

of the pollutant", and that it was both the party that owned the PCE and the party in the charge,

management, and control of the PCE before it was first discharged. Thus, it argues that FHL is

under a duty under s. 93 of the EPA to take steps, which it has failed to, and that it is in violation

of an order of the MOECC, with resulting liability to the plaintiff under s. 99(2)(a)(iii) of the

EPA.

[ 67] The plaintiff argues that David Hillary is also an "owner of the pollutant" and a "person

having control of the pollutant" on the basis, he alleges, that the evidence establishes that a

source area is located on 36 Cameron and that contaminants are migrating from that source zone

onto the plaintiffs properties.

[ 68] Both defendants argue that section 99 of the EPA is not applicable. FHL argues that s.

99(2) does not apply retrospectively and Mr. Hillary argues that, as a homeowner of 36

Cameron, he was not the owner or person having charge or control of the pollutant before the

first discharge.

[ 69] Section 99 of the EPA provides for a civil cause of action between private parties,

irrespective of fault or negligence.

[70] Section 99(2) of the EPA provides as follows:

Her Majesty in right of Ontario or in right of Canada or any other person has the right to compensation,

(a) for loss or damage incurred as a direct result of,

(i) the spill of a pollutant that causes or is likely to cause an adverse effect,

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(ii) the exercise of any authority under subsection 100 (1) or the carrying out of or attempting to carry out a duty imposed or an order or direction made under this Part, or

(iii) neglect or default in carrying out a duty imposed or an order or direction made under this Part;

(b) for all reasonable cost and expense incurred in respect of carrying out or attempting to carry out an order or direction under this Part,

from the owner of the pollutant and the person having control of the pollutant.

[71] The term "spill" is defined ins. 91(1) and refers to a discharge of a pollutant into the

natural environment "from or out of a structure, vehicle or other container" that is abnormal in

quality or quantity. More precisely, it provides:

"spill", when used with reference to a pollutant, means a discharge,

(a) into the natural environment,

(b) from or out of a structure, vehicle or other container, and

(c) that is abnormal in quality or quantity in light of all the circumstances of the discharge,

and when used as a verb has a corresponding meaning.

[72] The "owner of the pollutant" is defined at s. 91 (1) to mean "the owner of the pollutant

immediately before the first discharge of the pollutant, whether into the natural environment or

not ... ".

[73] The "person having control of a pollutant" is defined at s. 91(1) to mean "the person and

the person's employee or agent, if any, having the charge, management or control of a pollutant

immediately before the first discharge of the pollutant, whether into the natural environment or

not ... ".

[74] "Discharge" is defmed at s. 1(1), when used as a verb, to include add, deposit, leak or

emit and, when used as a noun, to include addition, deposit, emission or leak.

[75] Based on the undisputed evidence presented by the plaintiff from the read-ins of the

examinations for discovery of the defendants, and based on the definition of "spill" in the EPA,

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the spills ofPCE/TCE occurred between 1960, when Hillary's opened at 1235 Bank, and 1974,

when new machines were installed.

[76] These acts between 1960 and 1974 are the ones that could meet the defmition of "spills"

under the EPA, as PCE/TCE moved from a structure or container, into the natural environment.

There is no evidence of"spills" ofPCE/TCE after 1974.

[77] The flow of PCE/TCE underneath 1235 Bank onto neighbouring properties is not a

"spill" as defined by the EPA because the PCE/TCE was already in the natural environment, it

did not discharge from or out a structure, vehicle or other container.

[78] At the time the spills were happening, there was no statutory right to compensation for

private individuals (see Environmental Protection Act, 1971, S.O. 1971, c. 86, as amended up to

January 1, 1975. See also Midwest Properties Ltd. v. Thordarson, 2015 ONCA 819, 128 O.R.

(3d) 81, at para. 44, which provides an excellent history of this part of the EPA. As indicated by

the Court of Appeal in Midwest Properties, this part of the EPA was introduced in 1979 and

proclaimed into force on November 29, 1985). The right to compensation provided by s. 99(2) of

the EPA was therefore enacted after the spills had stopped.

[79] Consequently, FHL argues that legislation is presumed not to have retrospective effect

and relies upon Gustavson Drilling (1964) Ltd v. Minister of National Revenue, [1977]1 S.C.R.

271, 66 D.L.R. (3d) 449, at para. 11:

The general rule is that statutes are not to be construed as having retrospective operation unless such a construction is expressly or by necessary implication required by the language of the Act. An amending enactment may provide that it shall be deemed to have come into force on a date prior to its enactment or it may provide that it is to be operative with respect to transactions occurring prior to its enactment. In those instances the statute operates retrospectively.

[80] FHL also argues that the language of the EPA does not expressly or implicitly provide

that it operates retrospectively and relies upon subsections 3(2) and 3(3) of the EPA (emphasis

added):

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(2) No action taken under this Act is invalid by reason only that the action was taken for the purpose of the protection, conservation or management of the environment outside Ontario's borders.

(3) Subsection (2) applies even ifthe action was taken before the coming into force of that subsection.

[81] I disagree with the arguments of FHL on this issue. Firstly, I am not convinced that

applying s. 99(2) to the circumstances of this case constitutes a retrospective application.

Secondly, or alternatively, I am of opinion that the presumption against retrospective application

is inapplicable given that the provision is designed to protect the public. Lastly, and in any event,

if the presumption against retroactivity applies, it is rebutted by the clear intent of the legislator.

[82] In ReA Solicitor's Clerk, [1957] 3 All E.R. 617, a statute concerning the practice of law

by solicitors was amended to enable an order disqualifying a person from acting as a solicitor's

clerk if such person had been convicted of larceny, embezzlement or fraudulent conversion of

property. A clerk who had been convicted of one of those offenses before the coming into effect

of the new law, contested his disqualification on the basis that the law was given a retrospective

effect. The Court of Queen's Bench dismissed these arguments. Lord Goddard C.J. found that

there was no retrospective effect since the real aim of the law was prospective and aimed at

protecting the public. He wrote at p. 619:

In my opinion, however, this Act is not in truth retrospective. It enables an order to be made disqualifying a person from acting as a solicitor's clerk in the future and what happened in the past is the cause or reason for the making of the order; but the order has no retrospective effect. It would be retrospective ifthe Act provided that anything done before the Act came into force or before the order was made should be void or voidable or if a penalty were inflicted for having acted in this or any other capacity before the Act came into force or the order was made. This Act simply enables a disqualification to be imposed for the future which in no way affects anything done by the appellant in the past.

[83] The above bears some similarity to the facts of this case. Section 99(2) does not seek to

make anything void or voidable or to impose a penalty for having acted in this or that way before

it came into force. Rather, it creates a right to compensation to "ensure that parties that suffer

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damage through the discharge of pollutants are compensated by establishing a statutory right to

recover from parties that owned and controlled the pollutant" (Midwest Properties, at para. 45).

[84] Consequently, applying s. 99(2) to the circumstances of this case, even when the spills

occurred before the section came into force (which is not dissimilar to the situation of being

disqualified now for a prior conviction as in Re A Solicitor's Clerk), is a prospective application

as it enables such a right to compensation at this time or in the future for loss or damage incurred

as a direct result of such spills. Allowing, at this time, a right to compensation for spills that

occurred before the section came into force does not change anything done in the past. Rather, it

protects the public by creating a right to compensation and, as such, does not constitute a

retrospective application.

[85] Alternatively, if I am wrong that applying s. 99(2) to the facts of this case is not in truth

retrospective, then I am of opinion that the presumption against retrospective application relied

upon by FHL is inapplicable, as s. 99(2) is intended as protection for the public rather than as a

punishment for a prior event.

[86] In Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301, the facts involve the

imposition of a remedy, the application of which was based upon the conduct of the appellant prior

to the enactment of the relevant provisions. As noted by the Supreme Court, the remedy was not

designed as a punishment but rather to protect the public. Consequently, it was held that the

presumption against a retrospective application had been rebutted.

[87] Justice L'Heureux-Dube, writing for the Court, canvassed the law surrounding the

presumption against retroactivity, and held, at para. 50, as follows:

The so-called presumption against retrospectivity applies only to prejudicial statutes. It does not apply to those which confer a benefit. As Elmer Driedger, Construction of Statutes, 2nd ed. (1983), explains at p. 198:

... there are three kinds of statutes that can properly be said to be retrospective, but there is only one that attracts the presumption. First, there are the statutes that attach benevolent consequences to a prior event; they do not attract the presumption. Second, there are

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those that attach prejudicial consequences to a prior event; they attract the presumption. Third, there are those that impose a penalty on a person who is described by reference to a prior event, but the penalty is not intended as further punislnnent for the event; these do not attract the presumption.

[88] L'Heureux-Dube J. then delineated a subcategory of the third type of statute: "enactments

which may impose a penalty on a person related to a past event, so long as the goal of the penalty

is not to punish the person in question, but to protect the public" (at para. 51). If the intent is to

punish, the presumption applies; if the punislnnent is intended to protect to public, the

presumption does not apply.

[89] Shortly thereafter, the Federal Court of Appeal was faced with deciding whether parts of

the Royal Canadian Mounted Police Act, R.S.C., 1985, c. R-10, were retrospective, allowing the

RCMP Public Complaints Commission to entertain complaints about the conduct of Force

members based upon facts occurring before the coming into force of the various provisions.

[90] In Re Royal Canadian Mounted Police Act (Canada), [1991] 1 F.C. 529 (C.A.) ("Re

RCMP"), leave to appeal to SCC refused, [1991] S.C.C.A. No. 57, Justice MacGuigan rejected

the idea that the "protection of the public" exception against retroactivity had been broadened:

Whether there is a general category broader than the sub-category, it must at least be recognized that there cannot be any public-interest or public-protection exception, writ large, to the presumption against retrospectivity, for the simple reason that every statute, whatever its content, can be said to be in the public interest or for the public protection ....

If there is a public-interest exception at all, therefore, it must in my opinion be reducible to a matter of legislative intent, that is, whether parliament intended prospectivity or retrospectivity (at paras. 34-35).

[91] To MacGuigan J.A., the exception to the presumption against retrospectivity is much

more narrow and only applies where there is "(1) a statutory disqualification, (2) based on past

conduct, (3) which demonstrates a continuing unfitness for the privilege in question" (at para.

32).

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[92] Then, in Thaw v. British Columbia (Securities Commission), 2009 BCCA 46, 307 D.L.R.

(4th) 121, the British Columbia Court of Appeal allowed Mr. Thow's appeal from the decision of

the British Columbia Securities Commission to impose on him an administrative penalty of $6

million. It was agreed that Mr. Thow's contraventions of the Securities Act, R.S.B.C. 1996, c.

418, pre-dated the amendments that increased the maximum administrative penalty from

$250,000 to the $6 million he was fmed.

[93] In reducing his penalty to the pre-2006 maximum of $250,000, the Court of Appeal held

that the Securities Commission erred in finding that the presumption against retroactivity was

inapplicable. Groberman J.A., writing for the Court, found that the Federal Court of Appeal's

analysis in Re RCMP to be "overly restrictive in suggesting that the presumption against

retroactivity extends only to statutory disqualifications, per se" (at para. 45).

[94] To Groberman J.A., the presumption may be extended to apply more broadly - the

exception operating "only where a prejudicial sanction is imposed, not for penal purposes, but as

a prophylactic measure to protect society against future wrongdoing by that person" (at para. 46).

[95] The Court held that the Securities Commission's imposition of the fine was not merely a

prophylactic measure to limit or eliminate the risk that Mr. Thow might pose in the future;

instead, it was "punitive" in the broad sense of the word, designed to penalize him and to deter

others from similar conduct.

[96] In the case at bar, s. 3(1) ofthe EPA provides that the purpose of the EPA is to "provide

for the protection and conservation of the natural environment." This must be borne in mind

when interpreting the EPA and its reach should be wide and deep (see Midwest Properties, at

para. 51, citing R. v. Consolidated Maybrun Mines Ltd., [1998]1 S.C.R. 706, at para. 54).

[97] Clearly, the purpose of the EPA and of s. 99(2) is the protection of the public. The intent

of the legislator, by enacting s. 99(2), is that innocent parties be entitled to compensation directly

from the polluter. This is achieved by granting to any person a new and powerful tool to seek

compensation from the owner of the pollutant and the persons having control of the pollutant

without any requirement of intent, fanlt, duty of care, or foreseeability (see Midwest Properties,

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at paras. 70, 73). Further, this right to compensation clearly applies now for loss or damage

incurred as a direct result of the spill of a pollutant, the exercise of some authority, or the neglect

or default in carrying out a duty. Consequently, the presumption against retrospective application

does not apply or is rebutted.

[98] In any event, or if I am wrong regarding any of the above - i.e. if the intent of s. 99(2)

of the EPA is "punitive" in the broad sense, designed to punish polluters for their wrongdoing

(which I believe it is not), or if this stature is one that attaches prejudicial consequences to a prior

event as mentioned by Justice L'Heureux-Dube in Brosseau - then in my opinion the

presumption is rebutted by the clear intent of the legislation.

[99] Equivalent language to that found ins. 3(2) of the EPA (which is stated to apply even if

the action was taken before the coming into force of that subsection) is not required for s. 99(2),

as the right to compensation provided by this section is a present right and not a right to

prospectively adjust some earlier action or earlier compensation (as is the case for s. 3(2) of the

EPA). The intent of the legislator seems clear as well from the definition of"spill", which is not

limited to discharges occurring after the coming into force of Part X of the EPA. Subsection

93(2) of the EPA reinforces this interpretation. Furthermore, when one reads the EPA, the intent

of the legislature is to afford compensation now for spills, which would obviously include earlier

spills. Otherwise, the legislators would have provided that this remedy is limited to spills

occurring henceforth.

[1 00] Therefore, any presumption against a retrospective application is inapplicable by virtue of

the purpose of the statute and, in any event, is rebutted by the intent of the legislator.

[1 01] Consequently, the plaintiff is entitled to compensation against FHL under s. 99(2) of the

EPA as, on the evidence, FHL was both the owner of the pollutant and the person having control

of the pollutant immediately before the first discharge of the pollutant, as these terms are defined

in the EPA.

[1 02] However, for the following reasons, no such remedy is available against David Hillary.

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[103] The "owner of the pollutant" is defmed as "the owner of the pollutant immediately before

the first discharge of the pollutant, whether into the natural environment or not ... ". The owner of

the PCE/TCE immediately before the first discharge was FHL. There is no evidence that it was

ever Mr. Hillary.

[104] The "person having control of a pollutant" is defmed as "the person and the person's

employee or agent, if any, having the charge, management or control of a pollutant immediately

before the first discharge of the pollutant, whether into the natural environment or not ... ".

[1 05] The evidence at trial is that Mr. Hillary was president, director, and officer of FHL since

1971. However, there is no evidence that Mr. Hillary was ever employed by FHL at this location

at any time prior to 1974 or that he, personally, ever acted as agent for FHL at this location.

Similarly, there is no evidence as to who were any of the employees or agents who had the

charge, management or control of the PCE/TCE immediately before its first discharge in the

years leading up to and including 1974.

[1 06] As indicated in Midwest Properties, at para. 88, the factual circumstances of each case

will determine whether or not personal liability attaches under the provisions of s. 99 of the EPA.

Unlike the facts in Midwest Properties, the evidence is in this case is that Mr. Hillary was never

the owner of the pollutant or the person having control of the pollutant, as these terms are

defined. Similarly, there is no evidence that he ever personally owned the pollutant immediately

before the first discharge or that he ever was, at any time up to 1974, either an employee or an

agent of FHL having the charge, management or control of a pollutant immediately before the

first discharge.

[107] Moreover, there is no evidence that Mr. Hillary, as owner of 36 Cameron, ever owned the

pollutant immediately before the first discharge or ever had the he charge, management or

control of the pollutant immediately before the first discharge, as these terms are defined in the

EPA. As the homeowner of 36 Cameron, this is clear from the fact that David Hillary did not

purchase 36 Cameron until 1986, at least 12 years after the pollutants entered the ground from

FHL.

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[1 08] The established principle that a corporation has a separate legal personality is applicable

and the actions or inactions of FHL (by extension those actions or inactions of David Hillary as

its president) are not those of David Hillary as the owner of36 Cameron Avenue.

[1 09] The plaintiffs claim against David Hillary under s. 99(2) of the EPA 1s therefore

dismissed.

Nuisance

[11 0] The plaintiff argues that a consideration of the appropriate factors leads to a conclusion

that the interference caused by the migration of contaminant from the defendants' lands is

unreasonable and that the interference is severe and the harm grave. He alleges that it is

incompatible with the character of the neighbourhood for the plaintiffs lands to be impacted by

contaminants and that his use and enjoyment of his property has been interfered with, as he has

been unable to redevelop the lands or even refinance them. He argues, as well, that it is further

unreasonable for the Defendants to take no steps to prevent or abate the nuisance, which has

been continuing for years. The plaintiff argues also that similarly to Midwest Properties, the

costs to remediate the plaintiffs lands are significant and that there is a risk to human health, as

demonstrated by the MOECC's order to install vapour probes and its requests that air quality

testing be performed.

[111] The plaintiff argues that once a defendant becomes aware of a nuisance emanating from

his property, he or she has a duty to abate it, even where the defendant did not create the

nuisance. He makes reference to Schoeni eta/. v. King et al., [1943] O.R. 478 (S.C.), at p. 490:

The occupant of property will be liable for a nuisance not created by him, and even though it has arisen without his own act or default, if he omits to remedy it within a reasonable time after he knows of its existence, or ought to have become aware of it.

[112] Consequently, the plaintiffs argues that both FHL and David Hillary are liable to the

plaintiff in nuisance as neither has taken any steps to abate it despite knowing of the nuisance

emanating from their respective property since 2003 (for FHL) and since 2007 (for David

Hillary).

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[113] FHL argues that it is not liable under private nuisance because the plaintiff has not

established either physical damage to the property or interference with the enjoyment of the land.

[114] It relies on Smith v. Inca Ltd., 2011 ONCA 628, to the effect that something more than a

change to the soil is required to satisfy the "physical damage" requirement of nuisance and that

the evidence must show more than "potential health risks" to show physical damage to the

property. FHL points out that the experts called by the plaintiff confirmed that they are unaware

of anyone becoming ill from exposure to PCE/TCE on the plaintiffs properties and that there is

no real risk from vapours at these properties. FHL argues as well that there is no evidence that

the value of 1255 Bank or 1263 Bank had decreased, which they say is quite different from the

situation in Midwest Properties. Finally, FHL argues that unreasonable interference has not been

demonstrated, as they allege that the evidence does not support the plaintiffs contention that his

properties cannot be developed as a result of the contamination and that the evidence does not

show that the MOE would not accept the risk assessment for elevated PCE/TCE.

[115] For his part, David Hillary argues that a causal link between the alleged action or inaction

and the damage suffered by the plaintiff is a prerequisite to a finding of nuisance against an

individual. In support of this proposition, he relies upon Murray v. Langley (I'ownship), 2010

BCSC 102, at para. 36; Kay v. Caverson, 2011 ONSC 4528, 5 C.L.R. (4th) 17, at paras. 195-98;

andAlfarano v. Regina, 2010 ONSC 1538, 91 C.L.R. (3d) 165, at paras. 99-100, which involved

a claim under negligence and nuisance.

[116] Mr. Hillary also makes reference to a discussion Klar, Tort Law, 3d ed.

(Toronto: Carswell, 2003) as instructive on the issue, which he describes as this: in what

circumstances may the innocent neighbour be held liable for a failure to act upon a nuisance

caused by an up-gradient perpetrator? He points out that the author addresses, at pp. 656-57, the

subject of "Continuing or Adopting a Nuisance":

However, unlike the situation of an individual who deliberately engages in an activity which constitutes a nuisance, the law's treatment of an occupier who in some way inherits a nuisance is considerably more sympathetic. The liability of a person who occupies property on which a nuisance, or potential

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nuisance, which was created by a previous owner, a trespasser, an act of nature or a latent defect in a property, is discovered, is essentially a matter not of strict liability, but of negligence law. In a series of English decisions, it was determined that an occupier of land has a duty only to take reasonable steps to abate a nuisance, or a potential nuisance, discovered on the occupied land, where the occupier did not create the nuisance or continue it by use. Liability is predicated on actual or constructive knowledge of hazardous condition and the occupier's lack of reasonable care in responding to it. In view of the fact that the hazardous condition was thrust upon an innocent occupier, a more lenient duty of care than that ordinarily imposed by negligence law has been laid down. The Defendant's particular circumstances, including the fmancial and physical capacity to abate the nuisance will be considered.

[117] Finally, Mr. Hillary argues that Professor Klar's text on this issue of nuisance and the

property owner who had not originally created the nuisance was cited in the British Columbia

case of Kraps v. Paradise Canyon Holding Ltd, 1998 CanLII 6650 (B.C.S.C.). He argues that in

that case, the Court agreed that liability for nuisance should not be so strictly applied in a case

where a party did not take positive steps to create the nuisance. In such circumstances, he argues

the Court must consider what reasonably could be done by the individual to eliminate or abate

the nuisance and relies upon Kraps for that proposition. Mr. Hillary also relies upon Yates v.

Fedirchuk, 2011 ONSC 5549, 343 D.L.R. (4th) 171, at paras. 30, 67-70, to the effect that a

homeowner carmot be liable for an unknown nuisance cause by a third party until such time that

they discover the nuisance.

Analysis - FHL

[118] It is well established that the tort of nuisance consists of an interference with the

claimant's use or enjoyment of land that is both substantial and unreasonable (see Antrim Truck

Centre Ltd. v. Ontario (Transportation), 2013 SCC 13, [2013] I S.C.R. 594, at paras. 18-2, 51;

TMS Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1, 40 R.P.R. (5th) 171, at paras. 13-15;

and Midwest Properties, supra, at para. 1 06).

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[119] A substantial interference with property is an interference or an injury to the

complainant's property interest that is non-trivial or that is more than a slight annoyance or

trifling interference. If this threshold is met (i.e. the claimant showed harm that is substantial),

then the analysis proceeds to an inquiry into whether the interference is unreasonable, regardless

of the type of harm involved - whether the non-trivial interference is also unreasonable in all of

the circumstances (see Antrim, supra, at paras. 19-23, 51).

[120] The reasonableness of the interference must be assessed in light of all the relevant

circumstances. Under the reasonableness inquiry, the Court assesses whether the interference is

unreasonable by balancing the gravity of the harm and the nature and utility of the defendant's

conduct. As explained by the Supreme Court in Antrim (at paras. 28-29, 51-53), although the

focus of the reasonableness analysis is on the character and the extent of the interference with the

claimant's land (as the burden is on the claimant to show that the interference is substantial and

unreasonable), the nature of the defendant's conduct is not irrelevant to that assessment. Whether

the conduct is malicious or careless or whether the conduct is reasonable are relevant factors for

the court to consider when assessing whether the interference is unreasonable.

[121] The Court of Appeal also describes this assessment in Smith v. !nco Ltd., 2011 ONCA

628, at para. 40:

The reasonableness inquiry focuses on the effect of the defendants conduct on the property rights of the plaintiff. Nuisance, unlike negligence, does not focus on or characterize the defendant's conduct. The defendant's conduct may be reasonable and yet result in an unreasonable interference with the plaintiffs property rights. The characterization of the defendant's conduct is relevant only to the extent that it impacts on the proper characterization of the nature of the interference with the plaintiffs property rights.

[122] In assessing unreasonableness, Cromwell J., at paras. 26-29 of Antrim, reminds us that

courts are not bound to a prescribed list of factors, but should "consider the substance of the

balancing exercise in light of the factors relevant in the particular case." In Antrim, the Supreme

Court makes it clear that the balancing that is inherent in the reasonableness analysis is at the

heart of the tort of private nuisance and that, where there is significant and permanent harm

caused by an interference, the reasonableness analysis may be very brief. It states further that this

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analysis is required in all cases of private nuisance irrespective of whether the case involves

physical harm or interferences that involve a loss of amenities, thereby minimizing the

usefulness oftrying to classify such distinctions (see paras. 50-51).

[123] These principles were subsequently applied by the Court of Appeal in TMS Lighting,

supra, and in Midwest Properties, supra. In Midwest Properties, the Court of Appeal applied

Antrim and found the defendant liable in nuisance. In so doing, the Court considered the cost to

remediate the plaintiff's lands as part of its reasonableness analysis. As stated by Hourigan J.A.,

at para. 1 07:

The invasion ofPHC [petroleum hydrocarbons] onto Midwest's property, to the point that the product is of such a concentration that it can no longer dissolve in groundwater and is found to pose a risk to human health, cannot be classified as trivial, insubstantial, or reasonable. The interference becomes all the more unreasonable when the significant cost to Midwest to remediate the contamination and undo the damage to soil and groundwater on its property is considered. This is not the kind of interference with the use or enjoyment of property that society, through the law of nuisance, expects a property owner such as Midwest to bear in the name of being a good neighbour.

[124] Considering the evidence presented and the above principles, I find that the damage or

interference with the plaintiff's land is substantial or non-trivial. I find further that the

interference with the plaintiff's use or enjoyment ofland is unreasonable. Here is my analysis.

[125] Firstly, in determining whether there is an interference with the plaintiff's land that is

substantial or not trivial, I note the following which to me are not at all trivial annoyances that

should be accepted as part of the normal give and take between neighbours:

• The groundwater and soil of the plaintiff's properties are impacted by PCE/TCE

contamination and concentrations of PCE/TCE in the groundwater and of PCE in the

soil of the Plaintiff's properties currently exceed generic standard for any type of

property use as set out in the MOECC standards for maximum allowable

concentrations.

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• The migration of contaminants, originating from 1235 Bank, onto the plaintiffs lands

continues to this day and will continue until the source area is removed or isolated in

its entirety.

• Contaminants remain at the source property (1235 Bank) and, according to the MOE,

may have the potential to cause adverse effect to adjacent properties, including

obviously the plaintiffs properties.

• The MOE requested significant additional information from the defendants in 2014 in

order to better assess potential adverse effects, including effects on surrounding

properties, in the event of construction, and from soil vapour intrusion into buildings

overlying contaminated area- none of which has been provided by the defendants.

• The MOE order of July 23, 2014 orders the plaintiff, Mr. Huang, to provide access to

the defendants for purposes of FHL carrying out additional delineation investigation

and studies.

• The plaintiff is unable to redevelop his lands unless they are remediated.

• The cost of remediation of the plaintiffs properties, irrespective of which option is

considered, is significant.

[126] These are not insubstantial concerns, or concerns of the nature described in Smith v. Inca

- not with the MOE actively and significantly involved with the properties to the extent

described by Mr. Heeringa and revealed by the MOE orders of Apri115, 2013 and July 23, 2014.

[127] Secondly, when assessing whether the interference with the plaintiffs use or enjoyment

of land is uureasonable, I make reference to the above, as well as to the continued involvement

of the MOE and its impact on the plaintiff (see the order of July 23, 2014) and, further, to the

added layers of uncertainty and added costs to the plaintiff that will, on a balance of

probabilities, be incurred when his properties are developed along the lines of their

recommended highest and best use. These are uureasonable interferences for a property owner to

impose on his neighbour.

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[128] I note that, although a risk assessment may be approved by the MOECC to allow a site to

be remediated to site specific standards, I accept the evidence of Mr. Herringa that the MOECC

would be unlikely to approve a risk assessment for a site which has free phase products present.

[129] When considering the arguments advanced by FHL that it has acted reasonably, I note

that the MOECC has ordered FHL and Mr. Hillary to conduct further delineation work on their

lands, the plaintiff's lands, and other lands in the vicinity, none of which has to date been

complied with.

[130] I disagree with FHL's arguments that the plaintiff has not established either physical

damage to the property or interference with the enjoyment of the land.

[131] Midwest Properties applied Antrim and both stressed the importance of looking at all

relevant circumstances in a manner that is not constrained by specific and pre-determined factors

(see Midwest Properties, at paras. 95-99). This is precisely the approach recommended by

Justice Cromwell in Antrim, at para. 23:

In referring to these statements I do not mean to suggest that there are firm categories of types of interference which determine whether an interference is or is not actionable, a point I will discuss in more detail later. Nuisance may take a variety of forms and may include not only actual physical damage to land but also interference with the health, comfort or convenience of the owner or occupier: Tack, at pp. 1190-91. The point is not that there is a typology of actionable interferences; the point is rather that there is a threshold of seriousness that must be met before an interference is actionable.

[132] Midwest Properties, at paras. 95-99, dismisses arguments that contaminants in the soil

exceeding MOE guidelines cannot be evidence of interference to the property. These paragraphs

answer many of the arguments raised by FHL. Furthermore, considering the very clear

pronouncements made by the Court of Appeal in Midwest Properties, I find that FHL's attempt

to distinguish Midwest Properties on the basis that the Court's analysis was only for purposes of

determining if any nuisance existed as a ground to award punitive damages is ineffective.

[133] Midwest Properties also answers an earlier debate in the case law, whether diminution in

value or restorative costs is the appropriate measure of damages in cases of environmental harm.

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The Court of Appeal states that "[t]he restoration approach is superior, from an environmental

perspective, to the diminution of value approach" (at para. 62; see generally paras. 60-68).

Although this is not applicable to this part ofthe analysis, it is certainly informative of why many

earlier decisions focused significantly on whether there was evidence of a diminution in value

when assessing whether the interference to property was serious.

[134] I also disagree with FHL's argument that any interference with the use of the plaintiffs

land is not, in light of all the surrounding circumstances, unreasonable as Bank Street is

predominantly commercial such that any inability of the plaintiff to develop a mixed residential

property cannot be unreasonable. This runs contrary to the evidence of Mr. Juteau and of Mr.

Phillips, that zoning would allow a mixed residential and commercial use and that the City of

Ottawa would approve their suggested redevelopment plans. It runs contrary to the evidence of

Mr. Huang - that this is what he intends for his properties - and it also runs contrary to the

evidence of Mr. Byerley, that as the plaintiffs properties do not meet the criteria for

groundwater, they could not be developed for industrial or commercial use either.

[135] Moreover, as indicated above, the evidence does establish, on a balance of probabilities,

that the plaintiff will be unable to redevelop 1255 Bank and 1263 Bank until the PCE

contamination is remedied to the satisfaction of the MOE.

[136] Mr. D' Arcy, of Paterson, at the conclusion of the Phase I and II reports in October 2002,

recommended, with regard to the plaintiffs properties, that the contaminated soil be removed to

avoid any further liability and that groundwater beneath the plaintiffs properties be remedied

(Exhibit 1, tab 3). He stated as well that this will have to be carried out in conjunction with the

FHL site or else a permanent barrier system will be required along the property boundary.

[137] Conestoga Rovers and Associates (CRA), who were retained by FHL to further

investigate the contamination at 1235 Bank and 1255 Bank, over the years and up until their

involvement stopped in or about 2013, recommended to FHL and proceeded unsuccessfully with

a number of remediation action plans all designed to remediate the soil and groundwater at 1235

Bank and 1255 Bank.

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[138] The MOECC has been and remains actively involved with these properties, now for over

ten years, ordering the defendants to proceed with various remedial strategies, and has now

started enforcement proceedings, as described earlier and in its orders.

[139] Mr. Byerley and Dr. Reynolds testified, as per their reports, that remediation of the

properties should comply with MOE standards (see for example Exhibit 5, tab 45, p. 4).

[140] Mr. Byerley testified that to remediate to residential standards, or to a more sensitive

residential land use, a Phase I and Phase II assessment would be required to demonstrate that the

properties meet the standards of the Ministry. Otherwise, a property owner could not develop the

site and a building permit or record of site conditions will not be issued. He explained that in this

case, as the plaintiff's properties do not meet the commercial criteria for groundwater, they could

not even be developed for industrial or commercial use in their current condition.

[141] Mr. Huang testified that following receipt of the Phase I and II reports, his bank would

not lend him any additional funds for purposes of developing these properties and refused to

renew his existing mortgage. He also testified that his understanding is that he cannot develop

the properties in their present condition as he cannot obtain a building permit from the City -

until they are remedied - and that he will proceed with his contemplated development once his

properties are remedied (evidence that I admitted, not as proof of its content but as proof of what

Mr. Huang believes and intends to do).

[142] The above are not interferences of a nature that should be tolerated by the ordinary

occupier or neighbour. For reasons stated above, the required threshold of seriousness has been

met and the plaintiff has established the tort of private nuisance against FHL.

[143] I note, as well, that the defendants called no evidence and that I may draw an adverse

inference against FHL for the failure to call CRA to contradict the evidence of Mr. Byerley that

the plaintiff's properties cannot be developed, even for an industrial or commercial use, until

such time as they are remedied. In these circumstances, such a failure amounts to an implied

admission that the evidence of CRA on this issue would be contrary to the many arguments

raised by FHL or at least would not support their arguments that elevated PCE/TCE levels do not

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necessarily prevent a record of site conditions from being obtained or that the MOECC might

accept a risk assessment as there is low risk relating to vapours. These are interesting arguments

that are contradicted by the evidence of the plaintiff and which could have been addressed by

CRA, such that an adverse inference is drawn.

Analysis- David Hillary

[144] As it relates to David Hillary, I agree with the submission of his lawyer that the required

analysis, relevant to nuisance, is different.

[145] Mr. Hillary is sued as homeowner of 36 Cameron. 36 Cameron does not directly abut any

of the plaintiff's properties. Rather, 36 Cameron is surrounded on its south side by 1235 Bank

(FHL's property). Moreover, the evidence establishes that 36 Cameron is not the source of the

contamination, which all experts agree is 1235 Bank. Consequently, on these facts, two

important factual distinctions are applicable to Mr. Hillary:

(1) He is not an adjoining landowner.

(2) In his role, as a homeowner, he is as well a victim of 1235 - in a situation not

much different from that of the plaintiff- with the exception that his property is

up-gradient to those of the plaintiff. If his property was down-gradient to those of

the plaintiff, the roles might be inverted. In any event, as such, he is in a position

similar to those described as persons who have inherited the situation from the

primary culprit.

[146] Linden and Feldthusen, Canadian Tort Law, Tenth Edition, at pp. 608, 622, make

reference to the above and indicate:

(1) When the defendant is not an adjoining landowner, absent an independent wrong,

the courts will only hold the defendant liable in nuisance for the direct harm it

caused.

(2) If people permit a nuisance, which they did not create, to continue, they may be

required to answer for it because they adopted it as their own, noting that

knowledge was not previously required but indicating that this now appears to be

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in doubt and making reference to Sappideen and Vines, Fleming's The Law of

Torts, lOth ed. (2011), at pp. 509-10, and Klar, Tort Law, 5th ed. (2012), at pp.

766-67 - that "[l]iability is predicated on actual or constructive knowledge of

the hazardous condition, and the occupier's lack of reasonable care in responding

to it."

[147] The above comment at (1) above, relating to non-adjoining landowners, finds it source in

the decision of Hoffman v. Monsanto Canada Inc., 2005 SKQB 225, 264 Sask. R. 1, affd 2007

SKCA 47, 283 D.L.R. (4th) 190, leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 347. At

para. 122 of the trial decision, the Court indicates:

The tort of nuisance imposes strict liability when the conditions for its application are met. The implications of holding a manufacturer, or even inventor, liable in nuisance for damage caused by the use of its product or invention by another would be very sweeping indeed. It is my conclusion that where the activity complained of is the activity of one who is not in occupation or control of adjoining land, and no independent malfeasance is alleged, then, at the very least, direct causation of the damage alleged must be alleged. This is not the case. I conclude that there are no facts alleged in this case that could support a finding that the defendants substantially caused the nuisance alleged. [Emphasis in original.]

[148] A requirement of some causal link in circumstances relevant to (2) above, when people

permit a nuisance which they did not create, also finds support in the cases cited by Mr. Hillary,

including Gatta Homes Inc. v. St. Catherine (City) (2009), 90 R.P.R. (4th) 40, at para. 176, and

Alfarano v. Regina, 2010 ONSC 1538, 92 R.P.R. (4th) 53, at para. 124.

[149] Applying the above, the plaintiffs characterization of the claim against the Mr. Hillary

vis-a-vis his property at 36 Cameron is based upon his inaction since becoming aware of the

presence ofDNAPL. However, by the time Mr. Hillary became aware of 36 Cameron's location

within the source zone, whether it was shortly after 2002, as is argued by the plaintiff, or shortly

after 2007, which I find is most probable, the plaintiffs lands were already contaminated.

[150] I have found that that the most probable time for Mr. Hillary to have known that 36

Cameron was in the source zone is after May 2007 as this is when MW8-07, which is on 36

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Cameron, was drilled and before March 13, 2009 when the plaintiffs engineers in their report

allude to the possibility of MWS-07 being in the source zone.

[151] As early as 2002, Paterson's groundwater sampling showed that only one of the sampled

boreholes had PCE contamination levels below MOE Guidelines. At that time, JDP

recommended a remediation of the groundwater under the Plaintiffs property.

[152] By June 2007, the seven new monitoring wells (MWS-07 to MW14-07) advanced

throughout the properties all came back with groundwater PCE concentrations in excess of the

MOE Guidelines. Moreover, the newly installed monitoring wells that were on the plaintiffs

property at 1255 Bank immediately showed the possible presence ofDNAPL. The first readings

from MW9-07 and MW10-07, both of which are at the north westerly area of 1255 Bank,

measured in excess 2000ug/L (the "1% Rule") and therefore were ·immediately indicative of

free-phase PCE (DNAPL).

[153] Subject only to one exception, at no time since 2007 did a monitoring well or borehole

that was previously uncontaminated become contaminated. In other words, the need or

requirement for remediation at the plaintiffs property has not changed or become any worse

since 2007, when, at the earliest, Mr. Hillary became aware that 36 Cameron was within a source

zone.

[154] Furthermore, Dr. Reynold's evidence was that, even if 36 Cameron was completely free

of DNAPL (and all the other properties remained the same), the plaintiffs properties would still

be contaminated and newly contaminated groundwater would continue to flow through the

plaintiffs property. Consequently, there is nothing Mr. Hillary can do vis-a-vis 36 Cameron that

would change the fact that the plaintiffs properties continue to be contaminated from the PCE

originating from FHL.

[155] I therefore find that the plaintiffs claim in nuisance against David Hillary fails, as the

plaintiff has not established that any inaction on the part of Mr. Hillary since becoming aware of

the contamination on 36 Cameron caused any of the substantial interference with the plaintiffs

properties.

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Negligence

[156] The plaintiffs claim in negligence against both FHL and David Hillary is dismissed on

the basis that the plaintiff has not proven causation.

[157] The elements of a negligence claim are: duty of care, breach of the standard of care,

causation, and damages.

[158] The existence of a duty of care for FHL is obvious and not disputed, as FHL is the

plaintiffs adjoining neighbour.

[159] David Hillary argues the absence of a duty of care, alleging that imposing such a duty

would create a spectre of indeterminate liability. I disagree and find that Mr. Hillary, as owner of

36 Cameron, has a duty of care - to be careful and avoid acts and omissions that may cause

harm to the plaintiff.

[160] The relationship between two close neighbours, such as between Mr. Hillary as

homeowner of 36 Cameron and the plaintiff, even if their properties are not adjoining, discloses

a sufficient degree of foreseeability and proximity. Moreover, in our circumstances, there are no

residual policy considerations which could negate such a duty.

[161] Indeed, the situation as it relates to David Hillary discloses very clearly that there might

very well be no other available remedy but negligence - I have not yet found him liable under

any of the many claims advanced by the plaintiff. Furthermore, these facts do not suggest a

situation where there would then be no logical way to distinguish this claim from an

indeterminate number of others who could claim on the basis of this duty of care. This is

contradicted by the evidence and by the applicable geographical layout.

[162] On the issue of a breach of the standard of care, I agree with the defendants that this

analysis must be divided into different timelines:

(i) 1960 to 1974;

(ii) 2002 and later as it relates to FHL; and

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(iii) 2007 and later as it relates to David Hillary.

[163] The evidence, particularly that presented by the plaintiffs experts, was that based on the

scientific understanding at the time (prior to 1975), no special care was required in dealing with

the PCE/TCE- the recommended disposal method was to pour it out on the ground. No other

evidence has been presented on this issue.

[164] Consequently, spills of PCE/TCE that happened between 1960 and 1974 were not in

breach of any applicable standard of care.

[165] For the period from 2002 onward, as it relates to FHL, I agree with FHL's arguments and

find, on the evidence, that FHL initially took reasonable measures, such as engaging experts and

attempting and pursuing the various strategies recommended by their expert. Even if some of the

efforts of FHL' s expert, CRA, were criticized by the plaintiffs experts, including Golder

Associates Ltd., as early as May 2006, there is no evidence that these efforts were in breach of

the standard of care applicable to a reasonable property owner. However, I fmd that from about

mid-2013 onward FHL failed to remain engaged in the process and from then on I fmd that it

failed to take any reasonable step, in breach of the standard of care, to prevent or limit further

harm to its neighbours. FHL's ultimate failure to respond to any enquiry from the MOECC post-

2013, as disclosed by the evidence of Mr. Heeringa, and FHL's failure to comply with any of the

2014 orders is also in breach of the standard of care of a reasonable property owner.

[166] The same analysis applies to Mr. Hillary. Although initially it was reasonable for him to

rely on the efforts of FHL and its expert, CRA, he did not act like a reasonable property owner

should have acted in the circumstances when he failed to take any step whatsoever from about

mid-2013 onward to prevent or limit further harm to his neighbours. If Mr. Hillary intended to

successfully argue that he could not understand the 2014 orders, he should have testified. Despite

some confusion relating to parts of the testimony of Mr. Heeringa relating to Mr. Hillary,

described above, taking no step whatsoever, not even to enquire, cannot and does not meet the

standard of care of a reasonable property owner to prevent or limit harm to his neighbours in

these circumstances.

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[167] However, irrespective of whether a "but for" test or a "material contribution" test is

applied - on the theory that "but for" is not applicable because we cannot distinguish between

contamination originating from 1235 Bank or 36 Cameron - I find that the plaintiff has not

proven, on a balance of probabilities, that his damages were caused by the defendants' negligent

conduct.

[168] As indicated above, I find that the conduct of the defendants was not in breach of their

respective standard of care until about 2013. Although I appreciate that some of the 2015 water

readings are higher than earlier readings, Mr. Byerley explained that these different readings

could be due to a multitude of collection related factors. More importantly, there is no evidence

that these higher readings have any impact on the requirement for remediation of the plaintiffs

properties and associated cost.

[169] I make reference to the analysis on this topic conducted under the nuisance heading. As

demonstrated, the plaintiff has advanced no evidence of any additional harm or loss suffered as a

result of the inaction of any of the defendants from 2013 onward.

Damages

[170] The plaintiff seeks the following relief:

(a) a declaration that the defendants are responsible for c'ontamination of the soils and

groundwater at the plaintiffs lands which has migrated from 1235 Bank and 36

Cameron;

(b) damages from the defendants in the amount of $4,374,000.00 for the cost to

remediate the plaintiffs lands;

(c) damages from the defendants in the amount of $201,726.71 for engineering costs

incurred by the plaintiff to date;

(d) a mandatory order that the defendants be required to implement control and

remedial measures at their lands to prevent the continued migration 'of

contamination under, into or through the plaintiffs lands, by remediating the

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source area as may be agreed by the plaintiff, the defendants and the MOECC, or,

in the alternative, by remediating the source area in accordance with the report of

Geosyntec, dated January 15, 2014;

(e) a declaration that the defendants are bound to indemnify the plaintiff for any and

all claims, orders or directions by any third parties, including the MOECC, with

respect to the contamination.

Declaration that defendants are responsible

[171] As mentioned in more detail later m my analysis, declarations should be granted

sparingly and with caution.

[172] In this action, I have already made a number of findings, including, that:

• the original source of the PCE/TCE is the dry-cleaning operation carried on by FHL

at 1235 Bank between 1960 and 1974;

• the plaintiff is entitled to compensation against FHL under s. 99(2) of the EPA as

FHL was both the owner of the pollutant and the person having control of the

pollutant immediately before the first discharge; and

• the plaintiff has established the tort of private nuisance against FHL.

[173] · Furthermore, available damages are dealt with below and constitute an adequate remedy

for the plaintiff.

[174] Consequently, the declaratory relief sought by the plaintiff at paragraph (a) above would

serve no useful purpose and such an order is therefore not made.

Damages

[175] The Court of Appeal has made it clear that courts may, in environmental cases, award

damages not only based on the traditional view of diminution in value but also based on

restoration costs, even if those exceed the amount of the decrease in property value. On this, it

mentioned that the restoration approach might, in some circumstances, be superior from an

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environmental perspective to the diminution of value approach as it could be better at properly

funding clean-ups (see Midwest Properties at paras. 61-62, 69-70).

[176] Section 99 of the EPA provides for the availability to the plaintiff of compensation for

loss or damage incurred as a direct result of the spill of a pollutant. Loss or damage is defmed

quite broadly in that section. Quite similarly, the general focus of tort compensation, involving

damage to land, is to put the plaintiff in the position he or she would have been in had the harm

not occurred. This generally involves either the diminution in value of the plaintiffs property or

the reasonable cost of restoration.

[177] Further, it seems axiomatic that, while restoration damages must allow for the full

remediation of the property, this exercise must nonetheless be bound by reasonableness

considering the facts of each case.

[178] Finally, when assessing damages, a court must do its best based on available evidence

even if a precise mathematical calculation is uncertain (see Hollowcore Inc v. Visocchi, 2016

ONCA 600, at paras 53 - 54).

[179] The plaintiff presented, through his experts Mr. Byerley and Dr. Reynolds, eight different

remedial scenarios. The costs associated with each of these scenarios vary considerably and

some of these scenarios assume conflicting hypotheses. For example, some scenarios clean the

source zone on all contaminated properties, including, in addition to those of the plaintiff, 1235

Bank, 36 Cameron, and even those of some unidentified non-parties (part of some of the

residential properties to the east of the plaintiff). Some build a barrier to isolate the source zone

and then treat the plaintiffs properties through various methods including bioremediation. Other

scenarios assume the excavation of all of the plaintiffs properties, as contemplated by their

development and cost for the incremental costs resulting from the contamination. To make it

even more challenging, some assume that the applicable remedial standard is the residential and

coarse soils standard for full depth, while other scenarios assume that the standard is the

commercial and medium and fine textured soils for a stratified site condition.

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[180] After having assessed the evidence and the various scenariOs, I have eliminated the

scenarios requiring the remediation of the entire source zone with no barrier to isolate the source

zone.

[181] The source zone is located on 1235 Bank, 36 Cameron, 1255 Bank, and also on some of

the easterly properties (see Exhibit Fat Tab 51 of Exhibit 5, and the evidence of Dr. Reynolds).

Scenarios addressing the entire source zone are not realistic or workable solutions for a number

of reasons, including that, invariably, they will involve some of the unidentified easterly

neighbours who have not been sued by the plaintiff and may resist such an intrusion on their

property.

[182] Experts identified, early on, that some barrier system could be implemented to isolate the

plaintiffs properties, as a much more practical alternative to the remediation of the entire source

zone. The logic of this approach is, in the circumstances of this case, inescapable. Considering

the evidence, alternatives that isolate and remedy the plaintiffs properties present, in these

circumstances, as the most reasonable and appropriate to adopt when assessing the various

scenarios as they are practical and will reasonably and effectively put the plaintiff in the position

he would have been in had the harm not occurred.

[183] From my perspective, this leaves the following remedial alternatives to consider:

A- Byerley alternative 3 (Exhibit 5, Tab 45- but limited to the plaintiffs properties)

[184] Mr. Byerley's alternative 3, when limited to the plaintiffs properties, involves isolation

of the source zone by the construction of an impermeable barrier along the perimeter of the

source zone at 1235 Bank and 36 Cameron Avenue and remediation of the plaintiffs properties

by ISCO followed by enhanced bioremediation of impacted groundwater. Mr. Byerley priced

this alternative on the basis of Table 3 for residential and coarse soils standards. It would require

10 to 15 years and would cost 1.95 million, plus groundwater monitoring:

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• $450,000 for an impermeable barrier along 1235 Bank Street and 36 Cameron

Avenue (excluding groundwater monitoring- he accepted the midpoint between

400,000 and $500,000);

• $1.50 million for the ISCO and bioremediation treatment to 1255 Bank and

1263 Bank Street (he indicated between 1.2 to 1.7 million but during cross

examination indicated that if you built a wall around the source zone for

$450,000, as he proposes, you could clean 1255 and 1263 Bank for $1.5 million),

plus groundwater monitoring.

B- Byerley's excavation during redevelopment alternatives (Exhibit 5, Tab 48)

[185] In a subsequent report of January 29, 2014, Mr. Byerley approached remediation of the

plaintiffs lands by way of excavation and disposal, with excavation occurring during a

redevelopment of the plaintiffs properties. He assumed that the footprint of the underground

parking would occupy the total site area and that the above ground structure would have a rear

yard setback of 7.5 metres. He considered two alternatives for a watertight foundation: a

geomembrane liner or a concrete diaphragm wall. He calculated the cost of the foundation of the

building, as if the properties were not contaminated, at $4,332,000. He calculated the cost of the

foundation, with a water tight geomembrane liner and dewatering system, scenario 2, at

$8,416.000, and he calculated the cost of the foundation with a watertight concrete diaphragm

wall, scenario 3, at $8,706.000. The difference with the base cost would represent the

incremental cost of remedial efforts: $4.084 million for scenario 2 and $4.374 million for

scenario 3 (the latter is the scenario preferred by the plaintiff).

C- Reynolds' GS-2 alternative (Exhibit 5, Tab 51)

[186] Dr. Reynolds suggested two alternative remediation strategies: GS-1 and GS-2. He priced

for their current land use of industrial/commercial, using stratified geology (Table 5) and for fme

to medium grained soils. He agreed that it would be more expensive for residential land use at

Table 3 (full depth) using coarse soils.

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Analysis

[187] I eliminated Mr. Byerley's alternative 3, described above at (A), on the basis of the

comments and the more up to date recommendations of Dr. Reynolds and make reference to the

criticism of that alternative contained in the August 21, 2012 report of Dr. Reynolds at pages 18-

19.

[188] I eliminated Dr. Reynolds' GS-1 alternative as it involves treatment of the source zone

which, as indicated above, I find not to be a practical or workable solution. Further, I found that

the arguments raised by FHL in support of the GS-1 alternative, that the Court should assume

that all properties will be remedied together, are contradicted by the evidence and by the lack of

cooperation by FHL since 2013. Indeed, it seems somewhat disingenuous for FHL to ask this

Court to pick the less expensive option (after required adjustments to GS-1) on the assumption

that the MOECC will compel FHL to do what FHL has not done to date.

[189] GS-2 would cost $1.21 million and require eight to ten years. It isolates the source zone

and treats 1255 Bank with injections. It seems by far to be the most carefully thought out, as well

as the most technologically advanced and most efficacious alternative. However, it assumes

slightly aggressive remedial standards which, as will be seen later, I find to be contradicted by

the evidence. As a result, although it clearly presents as the most reasonable and best alternative,

considering the particular circumstances of this case, adjustments to the projected cost will be

required if it is to be used for purposes of assessing damages.

[190] I disagree with the contentions of the plaintiff that GS-2 is a starting point, prepared and

predicated upon what remediation might be accomplished for a total cost of $1.8 million, being

the value of the Fraser Hillary's Limited site plus 50% and that it would not fully remediate the

plaintiffs properties. This is not at all what is indicated in Dr. Reynolds' report and this is not

what he indicated in his evidence. Rather, it is a reasonable alternate remediation approach that is

extremely focused on the available evidence.

[191] I also disagree with the plaintiffs arguments that GS-2 is not a workable solution,

including particularly that the presence of the ZVI permeable reactive barrier, proposed by Dr.

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Reynolds, would permanently prevent the redevelopment of the plaintiffs properties in a manner

which reflects the highest and best use of the property. The plaintiff presented no evidence in

support of these contentions. Rather, the plaintiff presented Dr. Reynolds as part of his case and

evidence, including Dr. Reynolds 2012 GS-2 alternative.

[192] Dr. Reynolds' evidence is that scope of GS-2 contemplates the installation of a 25-metre

long ZVI PRB, which would start at a point where the plaintiff's property intersects the Janeway

that is owned by Fraser Hillary Limited - which is the lane way that separates the plaintiffs

properties from 36 Cameron. The PRB would then extend down toward Bank Street, acting as a

filter for all PCE contaminated water that crosses its path, to a point where there would be no

further concern of contamination. I have no evidence that this cannot be incorporated into the

plaintiff's contemplated redevelopment. The same comments would generally hold true for Mr.

Byerley's alternative 3, described above, which also involves isolation of the source zone via the

construction of an impermeable barrier along the perimeter of the source zone.

[193] I eliminated the excavation during redevelopment alternatives, described at (B) above, for

a number of reasons. These alternatives involve a number of uncertainties that could drastically I

impact the indicated differential cost. They assume that the underground parking would occupy

the entire lot which seems uncertain considering the evidence of Mr. Juteau and Mr. Phillips.

Further, they assume a two-level parking garage which seems at odds with earlier architectural

drawings. Mr. Byerley also had difficulty explaining parts of his pricing for these alternatives.

For example, he used $13.00 per metric tonne to dispose of clean or background soils as opposed

to the $17.00 amount indicated in an earlier quote. The above issues could have been addressed

and adjusted, as required, from the evidence of this witness. However, what follows is much

more problematic and, in my opinion, renders this alternative unreasonable.

[194] As well, these alternatives do not consider that the plaintiff is unable to develop his

properties until 2024, the end of the last lease - Mr. Byerley was unaware of this. As indicated,

the plaintiff provided no evidence of any concrete plan to deal with his tenants in the event of a

redevelopment and I do not accept his vague answers that somehow he could be permitted to

redevelop these properties any earlier than at the expiration of the leases. As such, the cost

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associated with any of these scenarios would as well likely over-compensate the p\aintiff as

neither is discounted for time. Moreover, and more importantly, I reference the following three

points: (1) these excavation scenarios make no use of this available time- almost seven years

to consider and implement more effective and less expensive alternatives; (2) the plaintiff

provided no convincing evidence of how these excavation options could be coordinated with his

leases; and (3) the plaintiff provided no evidence of any prejudicial financial impact of selecting

a remediation approach that could last ten years and require a permanent underground barrier (as

that proposed by his expert witness, Dr. Reynolds).

[195] Dr. Reynolds explained that the criterion that determines speed is risk. He indicated that

it is not unusual to prefer a slow and less expensive option for a site that poses no risk to human

health and ecology, which the experts agreed is currently the case for the plaintiffs properties.

This seems to have been disregarded by the plaintiff and by Mr. Byerley in the elaboration of the

excavation during redevelopment alternatives (Exhibit 5, Tab 48) and, as indicated, the plaintiff

presented no evidence of any prejudicial financial impact related to time. Dr. Reynolds explained

that if there was imminent risk to human health he would have considered faster options but

here, as there is no risk to human health known to date, ten years seemed a reasonable timeframe.

I agree.

[196] Consequently, when considering the evidence in assessing the reasonableness of the

excavation options presented by the plaintiff, described above, I find that they are not reasonable.

[197] The above comments are generally reflective of my appreciation of Dr. Reynolds as a

witness. He was by far the most impartial witness. He answered all questions in the most

straightforward manner, irrespective of whether he was answering in chief or in cross, and made

appropriate concessions. He genuinely tried to be helpful to all, in a manner that should inspire

all expert witnesses. Mr. Byerley was also a credible witness but, by opposition to Dr. Reynolds,

he was often too protective of the plaintiff and quite reluctant to concede the obvious.

[198] Dr. Reynolds holds a PhD in hydrogeology and is a specialized expert in the relevant

fields. His focus is on contaminant hydrogeology, rather than hydrogeology in general, and Dr.

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Reynolds' work in the field ofDNAPL and contaminants is extensive and perfectly applicable to

the present situation. Likely due to his superior expertise in the area of contaminant remediation,

he recommended applying state-of-the-art technologies to the situation. For example, he applied

zero-valent iron (ZVI) to his GS alternatives in place of more traditional potassium

permanganate, which Dr. Reynolds testified had been in use for over 200 years and would not

work well on this site. As a further example, he suggested the use of membrane interface probes

to gather required information, in place of boreholes. I place a lot of weight on his evidence.

[199] However, as indicted above, Dr. Reynolds assumed that the plaintiff's properties would

retain their commercial zoning and use, and therefore he used the commercial standard which, I

agree with the plaintiff, is not appropriate considering the evidence.

[200] If the contamination was not present, the plaintiff testified he would have redeveloped his

lands and would construct a mixed commercial/residential complex. I accept that reinstating his

properties to the residential standard is reasonable in the circumstances as it is supported by the

evidence of Mr. Juteau and Mr. Phillips that this would constitute the highest and best use of the

plaintiff's properties and would likely be approved by the City.

[201] Consequently, it is reasonable and appropriate to apply the residential standard.

[202] As set out above, the MOECC has determined, on a preliminary basis back in 2003, that

the appropriate generic standards for the plaintiff's properties is Table 3 Full Depth Generic Site

Condition Standards in a Non-Potable Ground Water Condition for industrial/commercial

property use (found at Exhibit E). Section 168.3.1 of the EPA prohibits a change of the use of a

property from commercial use to residential use unless a record of site condition has been filed in

the Environmental Registry in respect ofthe property. Section 168.4(1) of the EPA sets out the

criteria which must be met to submit for filing a record of site condition, and includes

certification by a qualified person that the property meets either generic site criteria (as set out in

the applicable Table) or the standards specified for the property in a risk assessment accepted by

theMOECC.

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[203] According to Mr. Heeringa, the MOECC would be unlikely to approve a risk assessment

for a site which has free phase products present, which is the case with the plaintiffs properties.

[204] Mr. Heeringa and Dr. Reynolds confirmed the four (4) geological units on the site

(Exhibit 6, Tab 73 and Exhibit 5, Tab 51- from surface downward: fill; fme to medium sand;

silty and till, interbedded with medium to coarse sand or gravel layers; and fractured limestone

bedrock). However, Mr. Heeringa testified that if the soil comprises coarse grain, then the

MOECC geologist will apply coarse grain to the entire site. He indicated further that in the

absence of requested information, the MOECC will require full depth rather than stratified.

While FHL challenged the evidence of Mr. Heeringa during his cross-examination and in their

written submissions, the above remains the evidence of the MOECC before this Court.

[205] Dr. Reynolds, being again quite candid in his answers, indicated that a case could be

made for either Table 3 or Table 5, and that in his opinion the medium to fine standard is the

appropriate standard but he cautioned that this should be confirmed with the regulator (see as

well pages 20 and 21 of his August 21, 2012 report- Exhibit 5, Tab 51).

[206] The evidence of the regulator (MOECC) is as stated above. Further and in that regard, I

note that Mr. Byerley recommends and used for all of his alternatives the Table 3 standards for

residential property with coarse soils, which I agree better reflects the evidence of the MOECC

and the evidence of the plaintiff related to contemplated use.

[207] Consequently, for purposes of assessing damages in this action, I find that the applicable

standards are those found at Table 3 of Exhibit E, applicable for residential property use with

coarse soils.

[208] In trying to adjust the cost of the GS-2 option to reflect the above applicable standards, I

consider the following:

• The standards for non-potable groundwater are the same for either type of property

use (commercial or residential) and they are the same in both Table 3 and Table 5 for

either type of property use.

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• However, the standards for non-potable groundwater are quite different (the same

difference in either Table) for coarse textured soils (1.6) compared to medium and

fine textured soils (17) -by an order of 10.

• The standards for soils are comparatively more demanding between the two tables for

differently textured soils.

• This was addressed by Dr. Reynolds. He indicated that it would be more expensive

for residential land use and coarse soils at Table 3, that his prices for GS-2 are for

commercial use with medium and fine soils and that as such they would very much

underestimate the cost for residential land use with coarse soils.

• However, later in his cross-examination, Dr. Reynolds, in reference to questions

about the difference in cost of Table 3 vs. Table 5 criteria when considering the In

Situ Chemical Oxidation (ISCO) method of source zone remediation, which method

of source zone remediation was discussed in Dr. Reynolds' January 15, 2014 report

(Exhibit 5, at Tab 52), indicated that if he re-calculated his estimates using the more

demanding standards of Table 3 for coarse soils, for some of his options relating to

source zone the cost would increase while for some it would be the same price.

• In that same context (while addressing ISCO and ZVI!clay approaches), Dr. Reynolds

indicated, while addressing a source zone remediation, that: "I'm not going to say that

it would be identical but it would vary by a couple of percent" and later, while

addressing the difference in standards between 21 and 0.28 (Table 5 for commercial

and medium and fine soils vs. Table 3 for residential and coarse soils), he indicated

that while these are significant differences, they are not significant from a cost

perspective. He stated that it may be about 5 to 10% more, he could not give an exact

number but he indicated that it is not double for instance and later indicated, still

while addressing source zone remedies, that there will be some difference but it will

be less than 50%, it will not be 100% and it will be less than 50%- to treat the source

zone to these standards.

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• Dr. Reynolds also inferred that it would be less for the not source zone remedies, or to

remediate the parts of the properties not within the source zone, and in this context he

made reference to his report at Exhibit 5, Tab 51, where at p. 10, he indicates:

It is important to realize that the majority ofPCE soil exceedances reported in the various site investigation reports are not indicative of free phase PCE contamination. It is reasonable to assume that once the groundwater plume is remediated, the majority of soil at the site will no longer exceed MOE criteria.

• In this same context, inferring that it would be less for the not source zone area of the

properties, he also explained that if you remove the source what is left is a very small

fraction and it is unlikely to put you above the MOE standards - all of them, that it

would then be very unlikely that you would exceed any of the standards.

• I note further that in his August 21, 2012 report (Exhibit 5, Tab 51), Dr. Reynolds

explains at page 23 that the ZVI approach is similar to the ISCO approach, such that

by inference his reasoning relating to required increases in his cost outline may be

applied to the ZVI approach.

[209] Given that Dr. Reynolds' report provides that the ZVI approach is similar to the ISCO

approach, and that the ISCO approach would cost between 5% and 10% and later in his evidence

but less than 50% more to treat the source and get from the Table 5 to Table 3 standards, as

indicated above, and given his inference that it would be at the lower end for the remedial costs

associated with the parts of the property not within the source zone, I will make the following

adjustments to the GS-2 alternative:

• 45% increase to the cost of the ZVI injection to treat the portion of the source zone on

the plaintiffs properties ($290,000 plus 45%);

• 10% increase on the other costs of the GS-2 alternative; and

• considering the lack of cooperation of FHL since 2013, despite the many efforts and

orders to date of the MOECC and considering the resulting high level of uncertainty

associated with FHL's future remedial efforts- no evidence was presented by FHL,

including none that it intends to remediate the source zone on any of the contaminated

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properties- I will allow a further amount of $200,000 as a contingency for the repair

or replacement of the ZVI PRB barrier, which replacement may be required in 1 5

years.

[210] I have applied adjustments at the high end of what was suggested by Dr. Reynolds and

have allowed an important contingency in a conscious effort at ensuring that the plaintiff is fully

compensated for the reasonable remedial alternative allowed, such that he may proceed with his

contemplated redevelopment.

[211] Applying the above adjustments to the cost amounts for the GS-2 alternative brings the

total cost of this alternative from $1,210,000 to $1,432,500, and adding the contingency

associated with the replacement of the PRB barrier brings the total amount allowed for that

alternative to $1,632,500.

[212] In addition to the above, Mr. Huang has to date paid the following for the involvement of

various experts and engineers at his properties: $20,923.96 to Paterson, $166,309.08 to Golden

($161,094.82 + $5,214.26) and $14,493.67 to Geosystem (Exhibit 7, at Tabs 5, 6 and 7), totalling

$201,726.71 which shall be added to the amounts otherwise available for damages, plus any

applicable pre-judgement interest.

[213] I am not allowing any reduction for the Brownfields Grant as the evidence is too

uncertain to warrant any reduction for this possibility. Similarly, I am not allowing any reduction

for the alleged contributory negligence of the plaintiff as the evidence does not establish that any

of the alleged negligence on the part of the plaintiff, even if established, caused or contributed in

any way to the plaintiffs losses, and I make reference to my earlier causation analysis.

Order for Remediation

[214] With respect to the relief sought at (d) above, a request for a mandatory order, I find that

such an order would be inappropriate for two reasons: first, the plaintiffs ongoing concerns are

met as a result of my award of damages, which includes a barrier, and, second, any orders for

source zone remediation should be sought by the prosecutorial arm of the MOECC and enforced

in the appropriate proceedings.

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[215] Given that I have awarded damages to allow the plaintiff to remediate and isolate his

properties, I find that the requested relief is not required. The barrier isolating the plaintiff's

properties alleviates his concern about the continued contamination as the evidence of Dr.

Reynolds was that a barrier would protect the plaintiffs lands from further contamination.

[216] Equitable relief, such as a mandatory order, is only available where damages are not an

adequate remedy (see Pointe East Windsor Ltd v. Windsor (City), 2014 ONCA 467, 374 D.L.R.

(4th) 380, at para. 17). Here, the damages I have awarded constitute an adequate remedy, as the

presence of PCE/TCE on the defendants' properties could not affect the plaintiff if his properties

are isolated as recommended by the experts.

[217] Further, as sought, the remediation order would be too broad and could interfere with the

legitimate rights of some owners not involved in this matter, including homeowners that live

within the source zone, whom the plaintiff did not join as parties to these proceedings.

[218] I agree with the defendants that Midwest Properties does not assist the plaintiff in its

submissions on this point. In Midwest, the plaintiff did not seek a remediation order; instead, it

sought compensation under s. 99 of the EPA and the defendant argued that compensation could

result in double recovery for the plaintiff given that an MOECC order had already been imposed.

Here, the plaintiff is seeking a remediation order, which is properly within the role of the

MOECC and not the courts (see esp. EPA, ss. 4-5, 17-18).

[219] I adopt the statements of Justice Bryant in Newmarket (!'own) v. Halton Recycling Ltd.

(2006), 274 D.L.R. (4th) 447 (Ont. C.A.), at para. 109: "Courts do not have the ability or

expertise to supervise the performance of ongoing complex technical matters and it is not the

function of the courts to become the regulator".

[220] For these reasons, I decline to make the remediation order requested at (d) above.

Order for Indemnification

[221] With respect to the order sought by the plaintiff at (e) above, namely, one that

indemnifies it "for any and all claims, orders or directions by any third parties, including the

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Page: 51

MOECC, with respect to the contamination", I find that such an order is premature and

hypothetical and, as such, I decline to make same.

[222] Any declaratory orders made under s. 97 of the Courts of Justice Act, R.S.O. 1990, c.

C.43, are discretionary and should only be made in appropriate circumstances:

The court's discretion to make a declaration should be exercised sparingly and with extreme caution: Re Lockyer, [1934] O.R. 22 (C.A.). As a general policy, the court will not make a declaratory order or decide a case when the decision will serve no practical purpose because the dispute is theoretical, hypothetical or abstract, and the remedy of declaratory relief is not generally available where the dispute or legal right may never arise: Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342; Green v. Canada (Attorney General), 2011 ONSC 4778 (S.C.J.).

Being a discretionary remedy, the court will withhold the exercise of its discretion to grant a declaration in circumstances in which a declaration caunot meaningfully be acted upon by parties; a declaration must have some utility: Solosky v. The Queen, [1980] 1 S.C.R. 821[;] Giacomelli v. Canada (Attorney General), 2010 ONSC 985.

(Glaspell v. Ontario, 2015 ONSC 3965, at paras. 28-29)

[223] Here, the declaration sought by the plaintiff concerns hypothetical issues that may never

arise. There is no evidence before me that any third parties have a claim against the plaintiff.

This is not a case where the declaration sought will serve a practical purpose; it caunot

meaningfully be acted upon by the parties.

[224] Furthermore, and quite importantly, a determination of whether the plaintiff ought to be

indemnified by one or by both of the defendants is better left to the ultimate trier of fact if or

when a later proceeding is ever commenced, based on all the available evidence at that time.

Without a concrete factual matrix upon which to decide the appropriate degree of

indemnification, if any, that may exist as between the plaintiff, an uukuown third party or parties,

and the defendants (FHL and/or Mr. Hillary), I decline to make such an order and find that it

would be inappropriate at this time and in these circumstances to pronounce on the legal

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Page: 52

conclusions that may or may not follow upon one or both of the defendants in such undefined

future proceedings.

[225] Based on the foregoing, I decline to order the declaratory relief requested by the plaintiff

at (e) above.

Conclusion

[226] An Order may issue against the defendant Fraser Hillary's Limited for damages in the

amounts of $1,632,500 and $201,726.71, together with any applicable pre-judgment and post

judgment interest available on any parts thereof pursuant to ss. 128 and 129 of the Courts of

Justice Act, R.S.O. 1990, c. C.43. All other claims are dismissed.

[227] I am quite hopeful.that the parties will be able to resolve the issue of costs. Otherwise,

brief written submissions not to exceed five pages, together with a copy of any required

documents, shall be delivered on the following schedule: (1) by the plaintiff by April28, 2017;

and (2) by each of the defendants within 20 days of receiving the plaintiffs submissions. Kindly

advise should a brief extension be required to facilitate your resolution of this issue. Costs

submissions, if any, may be sent to me by email. Unless extensions are granted, I will assume

that the issue of costs has been resolved if submissions are not received by th

[228] My thanks to counsel for their professionalism throughout.

Released: March 6, 2017

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CITATION: Huangv. Fraser Hillary's Limited, 2017, ONSC 1500 COURT FILE NO.: 07-CV-39359

DATE: 2017/03/06

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

EDDY HUANG

Plaintiff

-and-

FRASER HILLARY'S LIMITED and DAVID HILLARY

Defendants

REASONS FOR DECISION

P. E. Roger J.

Released: March 6, 2017

TAB 14

Consultation with Indigenous Communities on Environmental

Approvals

Susan Morgan, Counsel, Legal Services Branch, Environment and Climate Change (MOECC),


October 4, 2017


1

Consultation with Indigenous Communities on Environmental Approvals

The Six-Minute Environmental Lawyer 2017 October 4, 2017

Susan Morgan, Counsel


The views expressed in this presentation are my own and not that of the Ministry of the Environment and Climate Change. The Ontario Government has resources and information to guide the regulated community on indigenous consultation. For the list of resources please see the end of this outline.

Environmental Approvals

For the purpose of this presentation, the environmental approvals that I am referring to include:

Environmental Assessment

• Individual environmental assessments and Class Environmental Assessments (e.g. Municipal Class Environmental Assessment.)

Environmental Compliance Approvals

• Sections 9 air and 27 waste (EPA) and 53 wastewater/sewage (OWRA) which may be made to the Director under Part II.1 of EPA, unless the activity has been prescribed for the purposes of the Registry (20.2 (1) EPA).

• Director may require consultation with persons specified by the Director in a manner specified by the Director (20. 9 EPA).

Consultation

Consultation on Environmental Approvals

Consultation on approvals may arise as a result of the legal Duty to Consult (DTC) and may also arise as a result of:

• Statutory Requirements (Legislation e.g. EAA) • Consultation Protocols (e.g., Aamjiwnaang)

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2

• Relationship-building, reconciliation – interest in the area or project. • Agreement – Government committed to consult on all permits and approvals.

• DTC Aboriginal communities (Section 35 of the Constitution Act, 1982) • DTC is triggered when the Crown contemplates an action or decision that could

adversely affect established or credibly asserted Aboriginal or treaty rights.

• The Supreme Court of Canada (SCC) has said that ‘procedural’ aspects of consultation can be delegated to proponents, while ‘substantive’ aspects cannot be delegated.

Community Identification and Delegation

Consultation List

The provincial government prepares a list of communities whose Aboriginal or treaty rights may be adversely impacted by a project. In addition, the list may sometimes include a list of communities who may have an interest in the project. This list is generally agreed to by all government ministries but is a document that may change as consultation unfolds.

Delegation letter

• A delegation letter is a letter sent by the Crown to a proponent of a project that identifies communities whose rights may be adversely impacted by the project and explicitly delegates the procedural aspects of consultation to the proponent. The letter also lists the proponent’s responsibilities in carrying out the procedural aspects of consultation.

• A letter may also be sent directly to the communities to notify them of the delegation of the procedural aspects of consultation in respect of the project.

Objectives of Consultation

• Provide information to the Indigenous community on the proposed project; • Obtain information on how the proposed project may affect the exercise of a

right; • Listen to any concerns raised by the Indigenous community; • Consider adverse impacts to determine how to address these concerns,

including attempting to avoid, minimize and/or mitigate adverse impacts on communities and Aboriginal or treaty rights; and

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• Incorporate traditional knowledge, where possible.

Consultation

Consider the Community’s Interests

• Consultation is a two-way process – proponents will educate the community about the project, and the community will educate the proponent about their interests, concerns or rights

• Indigenous communities can have a range of interests and views to offer; their knowledge & experience can add value to a project

• Applicants conducting community visits should be flexible, responsive, and sensitive to the community’s concerns as well as prepared

• Sometimes a particular consultation may not be the community's priority – being sensitive to larger issues helps demonstrate good faith & build stronger relationships

Use Appropriate Communication Techniques & Tools

• Most communities are interested in developing a relationship – personal meetings can help build the relationship & demonstrate good faith

• Take language preferences into account – materials may need to be translated • Consider Indigenous-run newspapers, community radio, websites & other

communication tools

Scope of Consultation

• Nature, scope and content of the duty to consult varies with the circumstances o “… the scope of the duty is proportionate to a preliminary assessment of

the strength of the case supporting the existence of the right or title, and to the seriousness of the potentially adverse effect upon the right or title claimed.”

• Key is not the quantity but the quality of the consultation.

Record of Consultation

• Record-keeping by a proponent is an important component of any approval application.

• Record of consultation or engagement should be organized by community. • Important to record responses or resolutions to issues raised • Provides an ongoing record of outstanding issues or commitments that can be

flagged for possible conditions of approval

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4

• Comments related to Aboriginal rights to hunt, fish, trap or gather, and any impacts on rights or traditional, cultural, spiritual, or ceremonial activities or sites (e.g. sacred or burial sites). It is especially important that responses/resolutions be described in detail (do not merely state “comment addressed”)

• Important to document communication attempts, evidence of notices/documents sent to, and received by, communities, etc.

• See “Record of Engagement Template” for an example of how to organize community input and responses.

• If a community raises an impact to an Aboriginal or treaty right we ask that a proponent notify the Ministry of the Environment and Climate Change.

Recording & Using Community Information

Recording and Using Community Information

• Applicants should thoroughly document the engagement process • Clear & concise records can help avoid misunderstandings & provide structure to

progress on agreed-to plans • Many Indigenous communities pass knowledge down through generations orally

& this knowledge may be considered sacred. It is highly recommended that proponents discuss and respect a community’s wishes regarding what information can be shared and how it can be used for the project.

Traditional Knowledge

• Traditional information shared with the government is subject to the Freedom of Information & Protection Privacy Act (FIPPA); discuss any concerns about this issue with Indigenous communities early in the process

Accommodation

• Accommodation involves taking steps to address the potentially adverse impacts of a proposed government action.

• May be required where a strong case exists for an asserted right and the proposed action may adversely affect the right in a significant way.

• Involves a balancing of interests.

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5

Impact Benefit Agreement

• An Impact and Benefit Agreement (IBA) is a formal contract outlining the impacts of the project, the commitment and responsibilities of both parties, and how the associated Indigenous community will share in benefits of the operation through employment and economic development.

• They are private agreements – between the community and the proponent and the Government does not have access or review these agreements.

• Usually negotiated with communities that will be impacted by the proposed project.

Trends and Issues

• Indigenous communities are increasingly more involved in approval applications. • They have traditional knowledge to share but also often have their own

monitoring data etc. • Case law around rights is rapidly evolving and this can lead to uncertainty. • UN Declaration on the Rights of Indigenous Peoples is an influence e.g.,

UNDRIP/ FPIC.

Resources:

• MOECC. 2017 (draft). Operational Guidance for Rights-Based Consultation with Indigenous Communities.

• MAA. 2011. The Duty to Consult: Operational Guidance on Delegation to Third Parties.

• Ministry of Indigenous Relations & Reconciliation, https://www.ontario.ca/page/ministry-indigenous-relations-and-reconciliation

• Indigenous and Northern Affairs Canada, http://www.ainc-inac.gc.ca/index-eng.asp

• Chiefs of Ontario (COO), http://www.chiefs-of-ontario.org • Métis Nation of Ontario, http://www.metisnation.org • Environmental Assessment Code of Practice and the Guide to Applying for

Environmental Compliance Approvals, MOECC.

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TAB 14

Consultation with Indigenous Communities on Environmental

Approvals

Susan Morgan, Counsel, Legal Services Branch, Environment and Climate Change (MOECC),


October 4, 2017


Record of Engagement Template

RoE Tracking #

Project Phase(s) Community/Organization

Date Method of Engagement From To Summary of Engagement Issues Recorded Response to IssueHow Issues Have Been Addressed or

Propose to be Addressed

Status of Issue Date Action Completed

Relevant Documents (correspondence, meeting

notes, emails, etc.)1

1 Identify the applicable project phase(s) for this engagement activity: e.g., ToR, EA or 'Other' if topic outside of EA process but may inform Crown assessment

Name of the Indigenous community or organization being engaged

Chronological order (or reverse chrono)

For example: Meeting, Email, Letter, Phone Call, Site Visit, Open House, Community Event, Mass Mailout, Drop-in Visit/Casual Meeting, Workshop, Hand Delivery, etc.

Include all names and affilitations (e.g., Chief Joe Smith (X First Nation), Sasha McLeod (MOECC))

Include all names and affilitations

Brief summary (including purpose) of the engagement -- 1-4 sentences

If any issues were raised in the engagement, provide brief summary of the issues raised related to the EA or the project -- 1-10 sentences

Summary of response from proponent, including any answers provided to questions, commitments to provide additional information/follow-up, changes to project, mitigation or EA process/documentation

Indicate whether the issue has been resolved and follow up has been completed or ongoing

2345

Notes:1 The Crown will require proof of communities receiving project notices and other key documents, follow-up engagement efforts, etc.

Fill out these columns if specific issues were raised in the engagement

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TAB 15

Auctions, Offsets and Linkage: An Ontario Cap-and-Trade Update

Travis Allan Cary Ferguson

Jonathan McGillivray DeMarco Allan LLP

October 4, 2017


1

Auctions, Offsets and Linkage: an Ontario Cap-and-Trade Update

Travis J. Allan,1 Cary Ferguson and Jonathan McGillivray, DeMarco Allan LLP. After years of work by policymakers, Ontario's cap-and-trade system to reduce greenhouse gas (GHG) emissions is operational. This paper provides a short background on the system and updates on emission allowances, investment of proceeds, offsets and carbon market linkage with the Province of Québec and the State of California.2

Background

Mandatory and voluntary participants in Ontario's cap and trade system are required to submit, for a compliance period, emission allowances3 and credits (including offsets)4 equal to the aggregate amount of all GHG emissions attributed to them under Ontario's cap and trade legislation and associated regulations.5 Mandatory participants include owners or operators of a facility at which a specified GHG-emitting activity6 is engaged in that must produce a verified emissions report, meaning they have produced 25,000 tonnes of carbon dioxide-equivalent (CO2e) gas during a year.7 Mandatory participants also include importers of electricity, distributors of natural gas (associated with over 25,000 tonnes of CO2e emissions during a year) or persons who have supplied petroleum products for consumption in Ontario (over 200L).8 If a facility is below the mandatory (i.e. verified emissions report) threshold, but above the threshold

1 Contact information: e-mail: [email protected]; Twitter: @sivartnalla. 2 We do not address the Government of Canada's "Pan Canadian Framework on Clean Growth and Climate Change", online: <https://www.canada.ca/en/services/environment/weather/climatechange/pan-canadian-framework.html> or "Technical Paper on the Federal Carbon Pricing Backstop", online: <https://www.canada.ca/en/services/environment/weather/climatechange/technical-paper-federal-carbon-pricing-backstop.html>. Readers may find it useful to review these materials for a better view of federal climate change law and policy developments. 3 Emission allowances are defined as "an Ontario emission allowance or an instrument created by a jurisdiction other than Ontario that, under section 38, is to be treated as an emission allowance for the purposes of this Act"; see Climate Change Mitigation and Low-carbon Economy Act, 2016, SO 2016, c 7, s 1(1) [Cap and Trade Act]. 4 Credits are defined as "an Ontario credit or an instrument created by a jurisdiction other than Ontario that, under section 38, is to be treated as a credit for the purposes of this Act." "Ontario Credit" is defined to include offsets created in accordance with section 35; see Cap and Trade Act, s 1(1). 5 Cap and Trade Act, s 14. 6 Ontario's emissions reporting regulation contains a list of 27 specified GHG activities, which includes: adipic acid production; ammonia production; carbonate use; cement production; coal storage; copper and nickel production; electricity generation; ferroalloy production; general stationary combustion; glass production; HCFC-22 production and HFC-23 destruction; hydrogen product; indirect thermal energy use; iron and steel production; lead production; lime production; magnesium production; nitric acid production; operation of equipment for an electricity transmission or distribution system; operation of equipment related to the transmission, storage, and transportation of natural gas; petrochemical production; petroleum refining; phosphoric acid production; primary aluminum production; pulp and paper production; refinery fuel gas use; soda ash production; and zinc production; see O Reg 143/16, Sched 2: Specified GHG Activities, Column 1: Activity. 7 The specific requirement under O Reg 144/16, s 23, is that a person that was (1) required under the 2016 EPA Regulation to prepare a 2016 EPA report and to have the report verified and (2) not a person described in paragraph 1 of subsection 22(1) of the regulation was required to register no later than September 1, 2017. We have included the verification thresholds in the body of the paper for convenience. 8 O Reg 143/16, s 13 (Table) "Duty to Report and Verify". Readers should review thresholds because there is significant nuance in determining whether an individual facility is covered.

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for submitting a GHG report, the owner or operator may register as a voluntary participant.9 This includes owners or operators of a facility engaging in a specified GHG activity if it exceeds 10,000 tonnes of CO2e emissions in a year10 and distributors of natural gas associated with over 10,000 tonnes of CO2e emissions in a year.11 The first compliance period is January 1, 2017 to December 31, 2020.12 In addition to mandatory and voluntary participants, "market" participants who meet regulatory requirements are permitted to register and participate in the cap and trade system, including participating in auctions and purchasing and selling compliance instruments.13

Participation in the market is limited to registered participants (mandatory, voluntary and market). The Climate Change Mitigation and Low-carbon Economy Act, 2016, SO 2016, c 7 (the Cap and Trade Act) specifies that "[n]o person other than a registered participant shall purchase, sell, trade or otherwise deal with emission allowances and credits"14 and "[n]o registered participant shall hold in the participant’s cap and trade accounts an emission allowance or credit that is owned, directly or indirectly, by another person."15

Auctions and Allowances

Section 58 of O Reg 144/16: The Cap and Trade Program (the Cap and Trade Regulation) requires the Minister of the Environment and Climate Change to auction Ontario emissions allowances on four separate occasions each year, starting in 2017.16 The Cap and Trade Regulation requires the Minister to create Ontario emission allowances according to the following schedule:

• 142,332,000 allowances for 2017; • 136,440,000 allowances for 2018; • 130,556,000 allowances for 2019; and • 124,668,000 allowances for 2020.17

Ontario held its most recent emission allowance auction on September 6, 2017. The auction sold all available 2017 and 2020 vintage emission allowances, with 25,296,367 current (2017) allowances sold at a settlement price of $18.56 and 3,116,700 future (2020) allowances sold at

9 O Reg 144/16, s 31. 10 O Reg 143/16, s 5(2). 11 Ibid, s 13 (Table) "Duty to Report and Verify". Readers should review thresholds because there is significant nuance in determining whether an individual facility is covered. 12 O Reg 144/16, s 3(1). 13 Conditions for registration are set out in O Reg 144/16, s 17. 14 Cap and Trade Act, s 21(1). 15 Ibid, s 28(2). 16 O Reg 144/16, s 58. 17 Ibid, s 54.

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3

a settlement price of $18.03.18 The auction generated an estimated $525,694,672 in proceeds.19 To date, the Province is estimated to have raised over $1.5 billion from cap and trade auctions.20 Proceeds from the emission allowance auctions have funded or will fund the following programs:

• up to $377 million to establish the Green Ontario Fund (home and business programs and rebates);

• up to $657 million for repairs and improvements to social housing apartment buildings over five years, contingent on carbon market proceeds;

• up to $100 million to support municipalities through projects such as renewable energy and energy efficiency improvements;

• $25 million to establish the Low Carbon Innovation Fund to help create and commercialize new low-carbon technologies;

• $8 million to launch a pilot program to help fund the purchase of electric school buses designed to reduce GHG pollution; and

• over $1 million to improve ecosystem health in urban and rural communities across the province.21

Offsets

The Cap and Trade Act allows participants to submit offset credits to meet their compliance obligation under Ontario's cap and trade program and provides a framework for developing an offset regulation governing Ontario's offset market. A regulation specifying the types of initiatives that will be eligible for the creation of offset credits did not exist at the time of writing. The Ministry of the Environment and Climate Change has advised that it is developing a regulation to allow for compliance offset credit creation.22 Treatment of offsets created in Québec and California is addressed in a regulatory proposal following an agreement between Ontario, Québec and California to link their carbon markets.

18 Ministry of the Environment and Climate Change, News Release, "Ontario Announces Results of September Cap and Trade Program Auction" (13 September 2017), online: <https://news.ontario.ca/ene/en/2017/09/ontario-announces-results-of-september-cap-and-trade-program-auction.html>. 19 Ibid. See also Ontario, Ministry of the Environment and Climate Change, "Summary Results Report: Ontario Cap and Trade Program Auction of Greenhouse Gas Allowances September 2017 Ontario Auction #3", (Ontario: September 2017) at 2. 20 Figure computed by DeMarco Allan LLP by summing figures from Ministry of the Environment and Climate Change, "Ontario Post-Auction Public Proceeds Report: Ontario Cap and Trade Program Auction of Greenhouse Gas Allowances June 2017 Ontario Auction #2" (June 2017), online: <https://files.ontario.ca/post-auction_public_proceeds_report_june_2017_-_english.pdf> and Ministry of the Environment and Climate Change, News Release, "Ontario Announces Results of September Cap and Trade Program Auction" (13 September 2017), online: <https://news.ontario.ca/ene/en/2017/09/ontario-announces-results-of-september-cap-and-trade-program-auction.html>. 21 Ministry of the Environment and Climate Change, News Release, "Ontario Announces Results of September Cap and Trade Program Auction" (13 September 2017), online: <https://news.ontario.ca/ene/en/2017/09/ontario-announces-results-of-september-cap-and-trade-program-auction.html>. 22 Ministry of the Environment and Climate Change, "Cap and Trade: Compliance Offset Credits and Protocols" (15 November 2016), online: <https://www.ontario.ca/page/cap-and-trade-offset-credits-and-protocols>.

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Western Climate Initiative Linkage

The governments of Québec, California and Ontario signed the Agreement on the Harmonization and Integration of Cap-and-Trade Programs for Reducing Greenhouse Gas Emissions (the Linking Agreement) on September 22, 2017.23 The Linking Agreement provides the groundwork for Ontario to participate in the California-Québec carbon market starting January 1, 2018, setting the stage for the world's second-largest carbon market,24 which will cover more than 60 million people and an approximate $4 trillion in GDP.25

The Linking Agreement does not create or modify existing statutes of the subnational parties,26 but it contains an agreed-upon objective to "work jointly and collaboratively toward the harmonization and integration of the Parties' greenhouse gas emissions reporting programs and cap-and-trade programs for reducing greenhouse gas emissions."27 On September 22, 2017 the Ministry of the Environment and Climate Change posted proposed amendments to Ontario's Environmental Registry targeted at (1) providing for linkage, (2) setting 2021-2030 caps and (3) promoting fair and equitable treatment amongst program participants.28 The Ministry is also proposing an administrative penalties regulation.29 Comments on the proposed amendments and regulations are due by November 6, 2017. This will involve harmonization and integration across a range of GHG reporting30 and cap-and-trade programs, such as equivalence and interchangeability of compliance instruments,31 transfer and exchange of compliance instruments using a common secure registry,32 joint auctions of compliance instruments33 and a variety of actions to support the effective functioning of the joint market.34 The Linking Agreement contains a notification obligation regarding compliance instruments that should not

23 Agreement on the Harmonization and Integration of Cap-and-Trade Programs for Reducing Greenhouse Gas Emissions (22 September 2017), online: <https://news.ontario.ca/opo/en/2017/09/agreement-on-the-harmonization-and-integration-of-cap-and-trade-programs-for-reducing-greenhouse-gas.html> [Linking Agreement]. 24 After the European Union Emissions Trading System. 25 Office of the Premier of Ontario "Québec, Ontario and California Join Forces to Fight Climate Change" (News Release September 22, 2017), online: <https://news.ontario.ca/opo/en/2017/09/Québec-ontario-and-california-join-forces-to-fight-climate-change.html> [September 22 News Release]. 26 Linking Agreement, art 14: "[t]he Parties acknowledge that this Agreement does not modify any existing statutes and regulations nor does it require or commit the Parties or their respective regulatory or statutory bodies to create new statutes or regulations in relation to this Agreement, and agree that the provisions of the Agreement shall not be interpreted by the Parties as amending any agreement or provision of an agreement entered into or to be entered into by any Party". 27 Linking Agreement, art 1. 28 Ministry of the Environment and Climate Change "Amendments to the Cap and Trade Program and Reporting Regulations & Service Regulation & Administrative Penalties Regulation" (Environmental Registry), online: <https://www.ebr.gov.on.ca/ERS-WEB-External/displaynoticecontent.do?noticeId=MTMzNTQx&statusId=MjAzMDcx&language=en>. 29 Ibid. 30 Linking Agreement, art 1(a). 31 Ibid, art 1(b). 32 Ibid, art 1(d). 33 Ibid, art 1(f). 34 See e.g., Linking Agreement, art. 1(c): "develop and implement an accounting mechanism that provides for a transparent and data-driven calculation that attributes to each Party its portion of the total greenhouse gas emission reduction achieved jointly by the Parties' linked cap-and-trade programs, the results of which will be used to avoid double claiming of emission reductions by the Parties".

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have been issued or must be voided as well as recognition of the authority of parties to recover or void such compliance instruments, including when they have been surrendered or are held by registry participants.35 Parties have also agreed to notify one another of investigations under the programs and any violation, penalty, fine, or decision rendered following such investigations.36 The Linking Agreement also contains a commitment to endeavour to provide 12 months' notice of intent to withdraw37 and an agreement that unanimity will be required to permit a new party to accede to the Linking Agreement.38

35 Linking Agreement, art 6. 36 Ibid, art 7. 37 Ibid, art 17. 38 Ibid, art 19.

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TAB 16

Cap and Trade in Post Auction Ontario

Patrick Hamilton, Counsel, Legal Services Branch, Ministry of the Environment and Climate Change (MOECC)


October 4, 2017


Cap and Trade in Post Auction Ontario

Patrick Hamilton, Counsel, Legal Services Branch,

Ministry of the Environment and Climate Change (MOECC)


The Environmental Registry

Regulatory Proposals provided:

1) Proposed amendments to the Cap and Trade program and Reporting regulations and 2) A proposed Administrative Penalty program for the Climate Change Mitigation and Low-

carbon Economy Act, 2016 and regulations thereunder

Link to proposals:

https://www.ebr.gov.on.ca/ERS-WEB-External/displaynoticecontent.do?noticeId=MTMzNTQx&statusId=MjAzMDcx&language=en

16 - 1



Proposed Amendments to the Cap and Trade Program and Reporting Regulations & Proposed Service

Regulation

September 22, 2017

1

PROPOSED AMENDMENTS TO

THE CAP AND TRADE

PROGRAM AND REPORTING

REGULATIONS & PROPOSED

SERVICE REGULATION

September 22, 2017

16 - 2


Regulation

September 22, 2017

2

Cette publication hautement spécialisée Proposed Amendments to the Cap and Trade Program and

Reporting Regulations & Proposed Service Regulation under the Climate Change Mitigation and

Low-carbon Economy Act, 2016 (CCMLEA) n'est disponible qu'en anglais conformément au

Règlement 671/92, selon lequel il n’est pas obligatoire de la traduire en vertu de la Loi sur les

services en français. Pour obtenir des renseignements en français, veuillez communiquer avec le

ministère de l’Environnement et de l’Action en matière de changement climatique (MEACC) au

416-314-1215 ou par courriel à [email protected].

16 - 3


Regulation

September 22, 2017

3

Table of Contents

Introduction ................................................................................................................................................... 4

Linking with Quebec and California ............................................................................................................. 5

Timing for Linking of Programs............................................................................................................... 5

Recognition of Compliance Instruments from California and Quebec .................................................... 5

Joint Auctions ........................................................................................................................................... 6

Related Persons......................................................................................................................................... 7

Same Entity with Multiple Capped Participants are Related Persons .................................................. 8

Clarifying Related Persons ................................................................................................................... 8

Holding and Purchase Limits ................................................................................................................... 8

Allowing Registration in Multiple Jurisdictions ....................................................................................... 9

Amendments to Support Fairness and Equity ............................................................................................. 10

Treatment of Non-Combustion Process Emissions for Voluntary Participants ...................................... 10

Distribution of Allowances Free-of-Charge for Certain Industrial Users of Electricity from

Cogeneration ........................................................................................................................................... 10

Amendments to Improve Accuracy and Program Efficiency ..................................................................... 10

Verification Amendments ....................................................................................................................... 10

Changing the Date for Applying for Allowances and for the Transfer of Allowances Distributed Free-

of-Charge ................................................................................................................................................ 11

Deadline for Registration of Voluntary Participants .............................................................................. 11

2021-2030 Caps under the Program............................................................................................................ 12

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Proposed Amendments to the Cap and Trade Program and Reporting Regulations & Proposed Service Regulation

September 22, 2017

4

Introduction Climate change is a global problem that requires taking collective action. Ontario, Quebec and California have

worked together since 2007 to develop a regional program design that will reduce greenhouse gas emissions and

spur the development of clean technology. When Ontario decided to establish a cap and trade program as the

primary mechanism for addressing climate change, it indicated its intent to link with the cap and trade programs

of California and Quebec in 2018. This decision was based on third party economic modelling, which shows that

linking Ontario’s cap and trade program with California and Quebec would help Ontario meet its greenhouse gas

emission reduction targets at the lowest cost.

The Ministry of the Environment and Climate Change (MOECC) is now proceeding with a proposal that includes

the necessary regulatory amendments to link its cap and trade program with the cap and trade programs of

California and Quebec starting January 1, 2018.

The MOECC is also proposing to make several additional amendments to the cap and trade program aimed at

providing clarity to stakeholders, as well as providing fair and equitable treatment among participants. These

amendments include:

o The establishment of emission caps for the years 2021 to 2030. Extending the emission caps will

help provide more certainty to both the regulated community and the market, and allow the

government to continue offering advance auctions in 2018.

o A number of amendments to the existing program regulations aimed at providing fair and equitable

treatment. This includes administrative amendments to improve data reliability and program

efficiency.

Each of the policies proposed above affect changes to the core regulatory pieces of Ontario’s cap and trade

program including:

o The Cap and Trade Program Regulation, O. Reg. 144/16 (Cap and Trade Regulation) and

incorporated Methodology for the Distribution of Ontario Emission Allowances Free of Charge, dated

July 2017 (the Methodology).

o The Quantification, Reporting and Verification of Greenhouse Gas Emissions Regulation, O. Reg.

143/16 (Reporting Regulation) and incorporated Guideline for the Quantification, Reporting and

Verification of Greenhouse Gas Emissions (dated July 2017) (Reporting Guideline).

The following sections discuss the specifics of each proposal in more detail to inform your feedback to the

Ministry. Following the 45-day consultation period, the Ministry will consider comments received and decide on

the proposal.

In addition to the amendments outlined in this document, the Ministry is proposing a new service of documents

regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016 (CCMLEA) to provide the

regulated community with certainty and clarity as to how documents can be given or served under the Act. This

includes the method of giving or serving documents (e.g., by courier, email or fax), the individuals who may be

given or served a document (e.g., individuals, types of businesses, Directors appointed under the Act, the Minister

of Environment and Climate Change) as well as requirements on the deemed day of service. This would be

similar to the service of documents regulations found under the Environmental Protection, Safe Drinking Water,

Pesticides, Nutrient Management, Clean Water, and Ontario Water Resources Acts.

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Linking with Quebec and California The Cap and Trade Regulation will require a number of changes to provide for the linking of Ontario’s program

with the joint Quebec-California program. These include:

o Recognizing compliance instruments from California and Quebec so these may be used to meet

compliance obligations in Ontario, and to make them eligible for trading in the market by Ontario

participants;

o Holding joint auctions of emission allowances with California and Quebec;

o Adjusting holding limits for allowances and credits and purchase limits for allowances to account for

linking of all three jurisdictions;

o Requiring related persons in Ontario to share holding and purchase limits with related persons in

California and Quebec; and

o Allowing some entities to register in more than one jurisdiction.

Note

The Ministry will likely need to make complementary amendments to other provisions to give effect to the above

policies. This could include cross-referencing, using consistent terminology, providing clarity (e.g., concerning

compliance and enforcement provisions for traded instruments), and aligning with California and Quebec where it

is necessary to be identical.

Similar amendments would be needed in California and Quebec in order to give effect to linking. This includes

recognizing Ontario compliance instruments and allowing Ontario participants to purchase and trade California

and Quebec compliance instruments.

As part of this process, the Ministry will be considering changes to the circumstances under which the Director

may cancel the registration of a voluntary or market participant in order to enhance protection of market integrity.

For example, following a conviction of a serious offence under the Commodity Futures Act, or Securities Act.

Timing for Linking of Programs The Ministry is proposing that Ontario’s cap and trade program joins the California-Quebec joint program

effective January 1, 2018. On this date, allowances and credits from all jurisdictions will be completely fungible.

This means Ontario registered participants will be able to purchase allowances and credits from registered

participants in Quebec and California or from joint auctions held by Ontario, California and Quebec, and

subsequently submit these allowances and credits to meet compliance obligations in Ontario. Conversely,

registered participants in California and Quebec will be able to do the same with Ontario allowances and credits

once similar amendments are in effect in Quebec and California, as is planned.

Recognition of Compliance Instruments from California and

Quebec The Ministry is proposing to recognize the compliance instruments from California and Quebec, identified in

Table 1 below, by prescribing these instruments in the regulation. By prescribing California and Quebec

instruments in regulation, Ontario participants would be able to purchase or sell these compliance instruments

along with Ontario’s. Participants in California and Quebec will be able to do the same with Ontario allowances

and credits once Quebec and California make similar amendments to their regulations, as is planned.

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6

Table 1: Acceptable Compliance Instruments from California and Quebec

Designated Jurisdiction Compliance Instrument Equivalency

Quebec

Greenhouse Gas Emission Unit One tonne of CO2e

Reserve Emission Unit (issued

for free)

One tonne of CO2e

Offset Credit One tonne of CO2e

Early Reduction Credit One tonne of CO2e

California California GHG Allowance One tonne of CO2e

ARB Offset Credit One tonne of CO2e

In addition to recognizing these compliance instruments, the ministry will also allow Ontario capped emitters to

submit these instruments to comply with their compliance obligations under section 14 of the Climate Change

Mitigation and Low-carbon Economy Act, 2016 (CCMLEA).

The ministry is proposing to treat emission allowances and credits from other jurisdictions similarly to Ontario

instruments when removed from accounts of registered participants by the Minister for compliance purposes in

the regulation. For example, emission allowances from California and Quebec will be removed irrespective of

jurisdictional origin and according to the same algorithm applied to Ontario emission allowances, e.g., for

removal of instruments for meeting the November 1 compliance deadline of section 11(1).

To support changes regarding the recognition and use of these instruments, the Ministry will need to adjust

provisions in the regulation, including adding new terms or definitions, to distinguish between allowances or

credits created by designated jurisdictions or allowances and credits created by the Minister in Ontario. These

provisions will also clarify obligations for Ontario entities related to the purchase of offset credits created by

California.

California’s regulation places an obligation on the purchaser of offset credits created in California to replace those

credits in the event they are invalidated. The entity holding the credits at the time of invalidation (or the entity

that surrendered them for compliance purposes) maintains this obligation for a specified period of time. Ontario’s

Cap and Trade Regulation will recognize this obligation and identify the process to support the replacement of

invalidated California offset credits held by Ontario entities.

MOECC also intends to clarify compliance and enforcement rules with regard to allowances and credits from

California and Quebec.

Joint Auctions Minimum Price

Currently, the minimum price, also commonly known as the auction reserve price, is set based on the most recent

WCI joint auction reserve price, converted into Canadian dollars on the day of Ontario’s auction. In joining the

linked market there would be a single common price used by all jurisdictions participating in the joint auction. To

enable this, the Ministry is proposing to change its auction reserve price to align with the process detailed below.

On an annual basis, as is done in Quebec and California, Ontario will raise its auction reserve price by 5% plus

changes in its Consumer Price Index. On the day of each joint auction, the auction reserve price will be set at the

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7

highest reserve price from all jurisdictions, applying the Canadian dollar exchange rate published by the Bank of

Canada on the previous day. If the Bank of Canada did not publish an exchange rate on the previous day, then the

Ministry will use the most recent exchange rate published by the Bank of Canada prior to the date of the auction.

The Ministry is proposing to calculate Ontario’s annual minimum price using the following formula:

MPt = MPt-1 x (1+0.05+Ir)

Where:

MPt = Ontario’s auction reserve price for year t

Ir = the percentage change (expressed as a fraction) in average Consumer Price Index for Ontario for

the 12-month period ending on September 30 of t-1, from the preceding corresponding 12-month

period, as published by Statistics Canada under the Statistics Act (Canada).

The Ministry is proposing to make other complementary amendments needed to enable joint auctions, including:

o Issuing joint notices for joint auctions;

o Allowing eligible bidders from California and Quebec to purchase Ontario allowances at joint

auctions; and

o Allowing for payment for allowances in U.S. dollars.

In joint auctions, each lot of a thousand allowances offered for sale would include allowances from Quebec,

California and Ontario.

Additionally, some terminology in the regulation may need to be adjusted in order to align with terminology in

California and Quebec or terminology used in the auction platform to ensure clarity.

Related Persons Related persons are defined in the cap and trade program based on business relationships, common account

representatives who are employees, and share of control of the business. Currently, under the cap and trade

program, registered participants who are related persons must share holding and purchase limits. To maintain

market integrity once the programs are linked, these requirements would need to be extended to related persons

who are registered in California and Quebec.

The Ministry is proposing to amend the Cap and Trade Regulation to require registered participants to share the

holding and purchase limits with related participants registered in Quebec and California and to provide

information on the nature of their relationship in accordance with Schedule I of the Cap and Trade Regulation.

Registered participants would need to provide the Ministry with any updated information on business

relationships with registered participants in California and Quebec no later than 40 days before the day of the first

joint auction. These updates would be required by all participants who have related persons in California or

Quebec, regardless of the participant’s intention to participate in the first joint auction.

Notwithstanding these deadlines, MOECC requests that registered participants provide this information as soon as

possible so that necessary updates to participants’ accounts can be completed promptly.

Changes to the Cap and Trade Regulation, including the use of new terms, will be necessary to identify capped

participants and market participants in other jurisdictions where there are interactions.

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Same Entity with Multiple Capped Participants are Related Persons MOECC is proposing to treat mandatory and voluntary participants that have registered in Ontario’s program that

are also registered as a capped participant in either California or Quebec as related persons. This means that they

would be required to share holding and purchase limits.

Clarifying Related Persons The Ministry is proposing to make it clear that related persons who have a common related person are also related

persons. Specifically, if a first person (participant) has a related person business relationship as described in

Section 2 (2) of the Cap and Trade Regulation with a second person, then that first person is also a related person

with any registered entity to whom the second person is a related person.

For example, Person A owns 60 percent of the securities of Person B and Person B owns 70 percent of the

securities of the Person C. All three of the entities are registered. Under the proposed amendments, Person A and

Person C would be related persons regardless of which of the three jurisdictions in which they are registered.

Holding and Purchase Limits Holding Limit

The current holding limits established by the formulas in section 40 of the Cap and Trade Regulation for current

vintage allowances and section 42 for future vintage allowances in the Cap and Trade Regulation are based on the

size of Ontario’s annual cap.

To account for the size of a linked market, the Ministry is proposing to adjust the holding limit formulas to

include the combined amount of the annual caps from Ontario, California and Quebec for each year. This will

raise the holding limits for current vintage and future vintage allowances as set out in Table 2.

Holding limits would also be revised to reflect the updated related persons information outlined in section 2.4 of

this proposal.

Table 2: Holding Limits for a Linked Program

Calendar

Year

Current Vintage Holding Limits Future Vintage Holding Limits

2018 15,717,500 for emission allowances with

vintage years 2018 and earlier

15,217,650 for emission allowances with a

vintage year of 2019



Additional limit for emission allowances

with a vintage year of 2021*





Additional limits for emission allowances

with vintage years of 2021 and 2022*



Additional limits for emission allowances

with vintage years of 2021, 2022, and

2023*

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* To be determined once each jurisdiction in the linked market has finalized emissions caps for years post-

2020

Per the existing program rules, all participants should note the requirement to ensure that their allowance holdings

do not exceed the current vintage holding limit in the year when a future vintage allowance becomes a current

vintage allowance. For example, in 2018, current vintage allowances (2018 and earlier) would be subject to the

current vintage holding limit of 15,717,500, and 2020 vintage allowances would be subject to a separate future

vintage holding limit of 14,715,200. In 2020, these latter allowances are no longer a future vintage and count

towards the current vintage holding limit of 14,715,200 for allowances from 2020 and earlier. The ministry is not

proposing to change these requirements.

Purchase Limit

Currently, capped participants are limited to purchasing up to 25 per cent of the total number of allowances

offered for sale at a stand-alone Ontario auction. Market participants are limited to four per cent. The absolute

value of these limits would change under a linked market, as the 25 per cent would be applied to the total number

of allowances offered at a joint auction by Ontario, California and Quebec.

The effect of this amendment increases the number of allowances that an Ontario registered participant or a group

of related persons of that participant may be eligible to buy at an auction.

Purchase limits would also be revised to reflect the updated related persons information outlined in section 2.4 of

this proposal.

Allowing Registration in Multiple Jurisdictions In a linked program, it is possible for some participants to have compliance obligations in more than one

jurisdiction (for example by virtue of ownership of multiple facilities by the same company). The Ministry is

proposing to amend the Cap and Trade Regulation to allow capped participants to register in multiple jurisdictions

so they can meet all of their compliance obligations in each jurisdiction.

Market participants may only be registered in one jurisdiction. As such, market participants who are registered in

multiple jurisdictions will be required to select which registration(s) will be withdrawn upon linking.

However, market participants that also register to be offset sponsors would be allowed to register in multiple

jurisdictions, as they may have offset initiatives in multiple jurisdictions.

To support registration in multiple jurisdictions, the ministry is proposing to share registration information across

jurisdictions upon request by the participant. Registration requirements for each jurisdiction would continue to

apply. The sharing of registration information between jurisdictions is intended to streamline the registration

process and reduce duplication, not to replace the application process.

Market participants required to consolidate their registrations into a single market participant account would be

required to transfer all allowances to their remaining account within the timelines outlined in section 2.4, and to

submit a request to the appropriate jurisdiction to cancel the other market participant registration.

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10

Amendments to Support Fairness and Equity

Treatment of Non-Combustion Process Emissions for Voluntary

Participants Currently, the allocation of allowances free of charge to voluntary participants is mostly based on the energy use-

based allocation method. This method does not provide allowances for non-combustion related emissions (e.g.,

fixed process emissions) for which the participants bear a compliance obligation. The current approach treats

these capped emitters differently than other capped emitters who do receive allowances free-of-charge for fixed

process emissions.

The ministry will consult in the Fall with affected facilities on developing an approach that would provide

allowances free-of-charge on account of non-combustion related emissions.

Distribution of Allowances Free-of-Charge for Certain Industrial

Users of Electricity from Cogeneration Certain customers of a regional cogeneration system in the Sarnia area are currently paying for the natural gas

(including a carbon price) that is used to generate electricity, which is then transferred to the IESO-controlled

grid. These customers then purchase all their electricity from the IESO controlled grid. These customers are also

capped facilities, but they are not eligible to receive free allowances for the electricity that they purchase from the

IESO grid since it is not transferred directly from the regional cogeneration system to the customer’s facility.

To support equitable treatment of participants, the Ministry is considering providing free allowances to these

capped facilities that are customers of this regional cogeneration system in the Sarnia area and possibly imposing

a direct compliance obligation on them for emissions from the natural gas used in the cogeneration system. This

proposed amendment would be specific to these customers of the cogeneration system in the Sarnia area.

Amendments to Improve Accuracy and Program Efficiency

Verification Amendments The Ministry is proposing amendments to the Reporting Regulation requiring reporters to submit verification

reports. These reports are important for the purposes of compliance, and for supporting applications for free

allowances. The verification report prepared in accordance with section 33 of the Reporting Regulation will be

required to be submitted along with the verification statement.

These verification reports are critical for the review of the emissions reports by the Ministry. Without these

proposed changes, it is likely that the Ministry would need to make requests to facilities to submit these reports –

and the facilities would then need to comply with the request.

This change will reduce the administrative burden for the Ministry to individually request these verification

reports, and the companies to comply with the requests. The proposed change would streamline the submission of

the verification reports and facilitate the review of the emission reports by the Ministry.

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Changing the Date for Applying for Allowances and for the

Transfer of Allowances Distributed Free-of-Charge The Ministry currently transfers allowances free of charge at the beginning of the year for the following 12

months, including the allowances that are based on the production adjustment provisions (under Section 3.2 of the

Methodology)1.

The requirement to submit compliance instruments in an amount equal to emissions (true up) for the compliance

period takes place in November of the year following the compliance period (e.g., November 1, 2021 for the first

compliance period of 2017-2020).

Under current rules, the transfer of production adjustment allowances for 2020 would occur on January 15th 2022,

which would mean they would not be available to be used in the true-up on November 1, 2021.

The Ministry is proposing to change the deadline for the transfer of allowances distributed free of charge for only

the second year following the compliance period (e.g., change from January 15, 2022 to October 25, 2021 for

allocating allowances for 2022). The ministry will consider whether other adjustments to submission deadlines

for the 2021 year are needed to facilitate processing of allowances free of charge for delivery by October 25th.

Providing allowances before the true-up deadline would allow capped facilities to use production adjustment

allowances (i.e., allowances that reflect changes in production) for compliance purposes.

For the other years in the compliance period, the timeline for the distribution of free allowances would remain the

same.

The Ministry is also proposing to change the deadline of September 1 for submitting an application for free

allowances by up to four weeks (i.e., to no later than October 1) effective for the 2018 application year for 2019

allowances, and all following years. This will provide the regulated community with additional time to submit an

application for free allowances, and for new voluntary participants to complete their registration in the cap and

trade program.

Deadline for Registration of Voluntary Participants The Ministry is proposing amendments to the Cap and Trade Regulation that would require voluntary participants

to register by September 1 of the year they intend to apply to participate in the program. This would provide

certainty and clarity to the regulated community on when voluntary participant registration is required and would

provide an opportunity for theses participants to apply for allowances free of charge by the revised deadline of

October 1 proposed in section 4.2 above.

1 Production adjustment allowances are intended to account for the difference between the estimated production

(or energy use based on historical values) and the actual production (or energy use) that are used to calculate the

free allowances. Historical production data are used initially to calculate allowances for the future year. If the

actual production is higher than the estimated production, then addition allowances will be provided through the

production adjustment provisions. On the other hand, if the actual production is lower than the estimated

production, then allowances will be reduced for the year.

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2021-2030 Caps under the Program The Ministry is proposing to establish caps for the years 2021 to 2030, to provide greater long-term policy

certainty and to enable the continued auctioning of future vintage allowances into 2018 and beyond.

The Ministry proposes to set the 2030 cap using a method similar to that used for the first compliance period.

Using this approach, the 2030 cap will be set at a level to facilitate the achievement of Ontario’s 2030 GHG target

under Section 6(1) of the Climate Change Mitigation and Low-carbon Economy Act, 2016 (37% below 1990

levels) once emissions not covered by the cap and trade program and emissions from electricity importation have

been taken into account.

Ontario’s emission reduction targets under the Act apply to all emissions in Ontario, including emissions not

covered by the cap and trade program. This means that the cap level in 2030 must be set with regard to these

uncovered emissions to ensure that Ontario’s total emissions (covered and uncovered) achieve the province’s

emissions reduction target2.

The caps must also consider emissions from generation of imported electricity, which are covered under Ontario’s

cap and trade program, but are not included for the purposes of Ontario’s emission reduction targets. Emissions

from imported electricity are excluded from the assessment of the province’s emission reduction targets because

these emissions occur outside of the province.

The final regulatory amendments will set annual caps to 2030 based on Ontario’s 2020 cap, declining at a

constant annual rate to the 2030 cap, while taking anticipated emissions from electricity importation into account.

Given the longer period of time to achieve the required reductions, relative to the first compliance period, the

annual rate of decline is anticipated to be lower between 2021-2030 than during the first compliance period.

Achieving Ontario’s 2020 target requires an approximate 10 per cent reduction in total provincial emissions in the

first compliance period (2017 – 2020). Achieving Ontario’s 2030 target will require a further reduction of

approximately 26 percent from 2021 to 2030.

2 Once compliance instruments that are traded amongst the participants in the linked jurisdictions are taken into account.

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Proposed Administrative Penalties Regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016 (CCMLEA) Regulatory Proposal

For the purpose of public consultation, this document outlines what is proposed to be included in an administrative penalty regulation established under the CCMLEA, in order to allow the Ministry of the Environment and Climate Change to issue administrative penalties for non-compliance with the CCMLEA and its regulations.


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Cette publication hautement spécialisée Proposed Administrative Penalties Regulation under the Climate Change Mitigation and Low-carbon Economy Act, 2016 (CCMLEA) n'est disponible qu'en anglais conformément au Règlement 671/92, selon lequel il n’est pas obligatoire de la traduire en vertu de la Loi sur les services en français. Pour obtenir des renseignements en français, veuillez communiquer avec le ministère de l’Environnement et de l’Action en matière de changement climatique (MEACC) au 416-327-0054 ou par courriel à [email protected].

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Contents Introduction ................................................................................................................................ 1

Legislative and Regulatory Context ........................................................................................ 1

Compliance and Enforcement and Administrative Penalties ................................................... 2

Amounts from Administrative Penalties .................................................................................. 3

Purpose of the Regulatory Proposal ....................................................................................... 3

Regulatory Proposal .................................................................................................................. 4

Overview of the Proposed Process for Issuing an Administrative Penalty ............................... 4

Determining the Penalty Value ............................................................................................... 7

Illustrative Example ...................................................................................................................10

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Introduction

Legislative and Regulatory Context

On May 18, 2016, the Climate Change Mitigation and Low-carbon Economy Act, 2016 (CCMLEA) received Royal Assent and came into force. The CCMLEA is landmark climate change legislation that builds on and supports Ontario’s Climate Change Strategy. A key purpose of the CCMLEA is to establish a carbon price, through a cap and trade program, that will change behaviour across the Province in order to reduce greenhouse gas emissions; including, driving low-carbon innovation. In addition, a cap and trade program will allow Ontario to link to other regional cap and trade markets as part of the international, national and interprovincial responses to reduce greenhouse gases.

Specifically, the CCMLEA:

• Sets provincial targets for reduction of greenhouse gas (GHG) emissions for 2020, 2030 and 2050

• Establishes reporting and verification requirements for certain emitters of GHGs • Establishes a framework for the reduction of GHGs through implementation of a cap

and trade program

On May 19th 2016, two regulations under the CCMLEA were filed:

• O. Reg. 143/16, Quantification, Reporting and Verification of Greenhouse Gas Emissions, (the Reporting Regulation); and,

• O. Reg. 144/16, The Cap and Trade Program (the Cap and Trade Regulation)

The Reporting Regulation sets out the detailed requirements for the quantification, verification and reporting of GHG emissions for certain emitters of GHGs and incorporates, by reference, the Guideline for Quantification, Reporting and Verification of Greenhouse Gas Emissions. The information obtained through this regulation is foundational to establishing a successful cap and trade program.

The Cap and Trade Regulation sets out the framework and specific legal requirements for implementing the cap and trade program; including, requirements relating to the purchase and sale of allowances.

The Ministry of the Environment and Climate Change (MOECC) has a number of key functions to ensure effective implementation of the cap and trade program, including:

• Management and oversight of the overall program (e.g., establishing a cap, distribution of allowances, establishing the auction of allowances, creation and issuance of credits, market oversight, etc.)

• Development and implementation of processes for the use, management and tracking of auction proceeds and associated reporting

• Preparation of the Climate Change Action Plan and associated public reporting • Compliance and enforcement of legal requirements

Ministry of the Environment and Climate Change Regulatory Proposal for Administrative Penalties under the CCMLEA 1

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Compliance and Enforcement and Administrative Penalties

Key functions that the MOECC will have to undertake under the CCMLEA are compliance and enforcement – specifically as it relates to implementation of the cap and trade program and the quantification, reporting and verification of GHG emissions that underpin the program. Strong oversight and governance is required to ensure effective implementation and compliance with the CCMLEA and associated regulations.

A range of compliance and enforcement tools have been established under the CCMLEA to ensure MOECC is able to maximize compliance with legal requirements. These tools include inspection and investigation powers and the ability to issue compliance orders and administrative penalty orders. The majority of these compliance and enforcement tools were available for use by MOECC when the CCMLEA came into force. The CCMLEA also includes enabling provisions for the issuance of administrative penalty orders – which require a regulation to enable implementation.

An administrative penalty is a monetary penalty that can be imposed to achieve the following purposes (see s. 57(1) of the CCMLEA):

1. To ensure compliance with legislative or regulatory requirements 2. To prevent a person1 from deriving economic benefit from non-compliance with legal

requirements

In general, the administrative penalties framework established under the CCMLEA includes, among other things, details on the following:

• The scope of the contraventions for which administrative penalties can be issued • Establishment of an absolute liability regime for the requirement to pay an

administrative penalty (i.e., there is no “due diligence” defence) • The total maximum penalty amount (i.e., an administrative penalty for a contravention

cannot exceed $1 million) • The limitation on how long after a contravention that an administrative penalty can be

issued (i.e., the latter of 1 year after the date the contravention occurred or after evidence of the contravention came to the attention of the ministry)

• That the issuance of an administrative penalty order does not prevent prosecution for the same contravention

• To whom an administrative penalty order can and cannot be issued • Rights for appeal of a penalty order (i.e., right to seek an appeal within 15 days to the

Environmental Review Tribunal) • Where money paid for administrative penalties goes (i.e., to the Greenhouse Gas

Reduction Account)

1 Under the CCMLEA, a person is defined to include “an individual, corporation, partnership, sole proprietorship, association or any other organization or entity”; but, in the case of a corporation an administrative penalty order cannot be issued to a director, officer, employee or agent of the corporation.


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Amounts from Administrative Penalties

The CCMLEA requires that an account, known as the Greenhouse Gas Reduction Account, be established and that any proceeds from the distribution of allowances under the cap and trade program, any amounts from the payment of administrative penalties and any amounts or fees payable under the CCMLEA to the Crown, must be recorded within this account (see s. 71(1) of the CCMLEA).

In addition, the CCMLEA authorizes the use of funds recorded in the GGRA, including amounts from the payment of administrative penalties, for specific purposes – including investments in projects and programs that are reasonably likely to reduce, or support the reduction of, greenhouse gas (see s. 71(2) of the CCMLEA).

Under the CCMLEA, Ontario must establish a 5-year Climate Change Action Plan (CCAP) that sets out the steps Ontario will take to fight climate change. In general, the actions under CCAP that reduce or support the reduction of greenhouse gas emissions will be eligible for funding from the GGRA. Each year, Ontario will be required to report publicly on the progress of CCAP, as well as funds tracked in and out of the GGRA.

Purpose of the Regulatory Proposal

This document is intended to be a consultation paper on what is being proposed to be included in an administrative penalty regulation established under the CCMLEA, in order to allow MOECC to issue administrative penalties for non-compliance with the CCMLEA and its regulations.

Comments received as a result of public consultation on this document will be considered when drafting and finalizing an administrative penalties regulation under the CCMLEA.

Note: To ensure transparent and appropriate application of administrative penalties, the ministry will be developing guidance material to be used by the ministry when applying and calculating administrative penalties. The ministry intends on posting this draft guidance material on the Environmental Registry, for consultation, as part of the process of implementing administrative penalties.


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Regulatory Proposal

Overview of the Proposed Process for Issuing an Administrative Penalty

The following table outlines, as a summary, the process for issuing an administrative penalty order. The sections that follow provide a more detailed discussion on each step of the process and what is proposed.

Table 1: Process for Issuing an Administrative Penalty Order

# Step Description

1 Notice of Intent

An MOECC director provides a notice of intent to issue an administrative penalty for non-compliance with legal requirements under the CCMLEA. The notice would be issued to the person who is in non-compliance and would include a preliminary calculation of the penalty amount.

2 Submissions

The person receiving the notice of intent would have an opportunity to make submissions to the director regarding the following:

• The facts of the contravention, as stated in the notice of intent

• Actions the person took to prevent the contravention

• Actions the person has taken or will take to correct the contravention and prevent it in the future

3 Administrative Penalty Order

The MOECC director considers the submissions and decides whether to issue an administrative penalty order. Where a decision is made to issue the order, the director calculates the final penalty amount based on the requirements in the regulation, submissions provided and how long the contravention has continued.

Step 1: Notice of Intent

Upon identification by MOECC of a potential CCMLEA contravention or contraventions, the MOECC director would be required to serve a notice of intent to issue an order to that regulated

Ministry of the Environment and Climate Change Regulatory Proposal for Administrative Penalties under the CCMLEA 4 16 - 20

person, prior to issuing an administrative penalty order. The notice indicates the intention of the director to issue an administrative penalty order based on the information available to the director regarding a contravention or contraventions. It is proposed that the notice of intent would include the following information:

• The name of the person receiving the notice • A description of the contravention or contraventions • The days, or partial days, over which the contravention or contraventions occurred or

continue • The initial assessment of the value of the administrative penalty; including:

o Amount of the base penalty, as identified in the regulation, and whether it may be increasing on a daily basis if it is a continuing contravention; and,

o Amount of economic benefit, if any, as a result of the non-compliance • Any considerations that were taken by the director when determining the initial value of

the administrative penalty • Information about the right of the person to make a written submission to the director in

regards to the facts of the contravention, actions that were taken to prevent the contravention, and actions the person has taken or will take to correct the contravention and prevent it in the future

• The date by which a submission must be provided to the director. It is proposed that the person receiving the notice of intention may make a written submission to the director within fifteen (15) days of the notice of intention being served.

Step 2: Submissions

It is proposed that the submission to the issuing director may include one or more of the following:

• Statements in regards to the facts of the contravention • Statements regarding actions that were taken by the person to prevent the

contravention from occurring in the first place • Statements regarding actions the person has taken or will take to correct the

contravention and prevent it in the future

It is proposed that the director may, upon request, provide a written extension to the 15 day submission period.

Any submissions made by the person within the required timeframe would need to be considered by the director when determining the final penalty amount.

Step 3: Administrative Penalty Order

It is proposed that after submissions have been received, or the period to provide submissions has ended, the director may choose to do one of the following:

1. Not issue the administrative penalty order 2. Issue the administrative penalty order without changing the initial penalty value

described in the notice of intent 3. Issue the administrative penalty order with an adjusted penalty value based on one or

more of the following: Ministry of the Environment and Climate Change Regulatory Proposal for Administrative Penalties under the CCMLEA 5

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o Revise the initial penalty that was in the notice of intent (i.e. adjust one or both of the base penalty or economic benefit components) based on updated facts relating to the contravention (e.g., duration of the contravention, nature of the contravention, etc.)

o Reduce the initial or revised base penalty based on actions taken by the person to prevent the contravention

o Reduce the initial or revised base penalty based on actions the person has taken or will take to correct the contravention and prevent it in the future

When making the above decision, the director must take into consideration submissions, if any, that were provided by the person receiving the notice of intent.

Where the regulated person has made a submission stating actions taken to prevent the contravention, it is proposed that, based on the submission, the director would have the discretion to maintain the base penalty value or reduce it by either 15% or 30%.

Where the person has made a submission stating actions taken to come back into compliance and/or prevent future contraventions, it is proposed that, based on the submission, the director have the discretion to maintain the base penalty value or reduce it by 10% or 20%.

It is proposed that the administrative penalty order, if issued, must have the following information:

• Description of the contravention, or contraventions; including, the name of the person receiving the order and the dates of the contravention or contraventions

• Value of the penalty • Description of the considerations that went into determining the final penalty amount • Details on how and when the penalty amount must be paid • Details on the person’s right to appeal the administrative penalty order to the

Environmental Review Tribunal under s. 60 of the CCMLEA – and the date by which such an appeal must be made

It is proposed that, the director will notify the person to whom a notice of intent was given, if the director decides not to issue the administrative penalty order.


Determining the Penalty Value

Penalty Value Calculation

It is proposed that the penalty amount be calculated using the following formula:

Penalty Value = Base Penalty + Economic Benefit

where,

• “Base Penalty” is proposed to be calculated using the following formula:

As a result of the submissions provided, the base penalty value may be adjusted based on a clarification of facts or reduced for preventive and mitigative actions taken by the regulated person.

• “Economic Benefit” is the monetary benefit that the person gained as a result of the non-compliance. This may include costs that were avoided or deferred, or may include revenue/profit that was gained as a result of the non-compliance. It is proposed that the economic benefit amount may only be adjusted based on clarification of facts provided by the regulated persons. The economic benefit portion of the penalty would not be subject to reductions as a result of preventive and mitigative actions taken by the regulated person.

Base Penalty Determination

It is proposed that all contraventions that are subject to an administrative penalty order be classified in one of two penalty categories based on the relative seriousness of the contraventions. The more serious contraventions would have a penalty range with higher values. For example, record keeping contraventions may be classified in the category with lower penalty range values versus a contravention that relates to protecting the market from manipulation. When determining the base penalty, the MOECC director would have the discretion to set the base penalty value, up to a maximum amount in the range. In addition, the


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applicable penalty range would differ depending on whether the person subject to the penalty is an individual or a corporation.2

When setting the daily penalty value in the range, it is proposed that the director consider the following factors:

• Impact of the contravention on the integrity and delivery of the program, the environment or other persons

• Compliance history of the regulated person in relation to relevant provincial legislation and their respective regulations; including, any orders issued or convictions

• Whether the contravention was deliberate

The following table identifies the proposed base penalty ranges for individuals and corporations, and for illustrative purposes provides an example of the type of contravention that would be subject to this penalty category.

Table 2: Base Penalty Ranges

Category Daily Base

Penalty Range (Individuals)

Daily Base Penalty Range (Corporations)

Example Contravention

1 Up to $1,000 Up to $5,000 Failing to retain records, as required, for seven years (O. Reg. 143/16, s. 37)

2 Between $1,000 to

$2,000

Between $5,000 to $10,000

Conducting a trade/transaction with insider knowledge. (CCMLEA, s. 29(5))

It is proposed that, where the director determines the contravention is occurring over multiple days, the above base penalty may be applied to each day it continues up to a maximum base penalty cap.

The following table identifies the base penalty caps for the above categories.

2 The “individual” category would include all persons that are not corporations


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Table 3: Multi-day Base Penalty Maximum Caps

Category Multi-day Base

Penalty Cap (Individuals)

Multi-day Base Penalty Cap

(Corporations)

1 $30,000 $150,000

2 $60,000 $300,000

Economic Benefit

It is proposed that the economic benefit portion of the penalty value is calculated in addition to the base penalty. The director would have the discretion to determine any monetary benefit that a regulated person gained as a result of non-compliance. For example, the director may consider one or more of the following economic factors when determining the value to apply to an administrative penalty:

• Increased revenue or profit that is directly or indirectly gained by the regulated entity as a result of the non-compliance

• Costs that are avoided, and as a result not incurred at all, by being in non-compliance • Costs that are deferred to a later date as a result of a non-compliance

It is proposed that no specific cap for the economic benefit portion of the penalty value be specified in the regulation. However, under the CCMLEA, an administrative penalty cannot exceed $1 million in total (see s. 57(8) of the CCMLEA).


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Illustrative Example

The following example is provided for illustrative purposes only, and reflects the proposed approach outlined in the “Regulatory Proposal” section of this document.

# Step Description

1 Notice of Intent

An MOECC director determines that a corporation is contravening a Category 2 contravention. The contravention has been going on for 8 days and has not been corrected.

The director estimates that there was approximately $100,000 in economic benefit gained from the contravention.

Category 2 contraventions have a daily penalty value range of between $5,000 to $10,000 for corporations. Due to a poor compliance history and the fact that the contravention had an impact on the integrity of the program and other participants in the program, the director decides to calculate the penalty using the maximum daily value in the range (i.e., $10,000).

The director determines the initial value of the penalty as follows:

Initial Penalty Value = Intial Base Penalty + Initial Economic Benefit Initial Penalty Value = $10,000/day x 8 days + $100,000 Initial Penalty Value = $180,000

Prior to issuing the notice of intent, the director makes sure the base penalty is below the cap of $300,000 for a Category 2 contravention for a corporation, which it is. The director also confirms that the penalty value is below the absolute cap of $1 million, which it is.

In the notice of intent, the director includes the initial penalty value, details of who is receiving the penalty, the details of the contravention, the fact that the penalty is increasing daily as the contravention continues and the right of the person to provide a submission to the director within 15 days.

2 Submissions

The person receiving the notice of intent decides to make a submission to the director that includes:

• A statement that the contravention was remedied after 10 days • Clarification of facts around the economic benefit that was gained • The fact that the person took actions to prevent the contravention, but

factors took place that were out of its control • Some actions the person has taken to prevent the contravention from

happening again

The submission was provided within the 15 day submission period.


# Step Description

3 Administrative Penalty Order

After considering the submission, the director decides to issue the administrative penalty order and calculates the final penalty amount.

First, the director considers the facts related to the economic benefit and determines that the economic benefit estimate should be revised to $75,000.

Revised Economic Benefit = $75,000

Second, the director considers the revised facts related to the contravention – which in this case is an adjustment on how long it continued:

Revised Base Penalty Value = $10,000/day x 10 days Revised Base Penalty Value = $100,000

Third, the director decides to give a full reduction for actions that were taken to prevent the contravention – the reduction only applies to the base penalty portion:

Preventive Measures Reduction = $100,000 x 30% Preventive Measures Reduction = $30,000

Fourth, the director decides to give a partial reduction of 10% for actions that were taken to mitigate and prevent a future contravention – the reduction only applies to the base penalty portion:

Mitigative Measures Reduction = $100,000 x 10% Mitigative Measures Reduction = $10,000

Next, the director calculates the base penalty as a result of the reductions determined above:

Revised Base Penalty Value = $100,000 – $30,000 - $10,000 Revised Base Penalty Value = $60,000

The director then determines the penalty value based on the previous calculations:

Penalty Value = Revised Base Penalty + Revised Economic Benefit Penalty Value = $60,000 + $75,000 Penalty Value = $135,000

Prior to issuing the administrative penalty order, the director again makes sure the base penalty is below the cap of $300,000 and the overall penalty value is below to $1 million absolute maximum, which it is in both cases.

The director issues a final penalty order for $135,000, detailing the considerations that were taken in determining the value and the right of the person to appeal the order to the Environmental Review Tribunal.


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THE SIX-MINUTE · Michael Hebert, Beament Hebert Nicholson LLP. 11:18 a.m. – 11:26 a.m....

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