It’s Not Dead, it’s Resting: Limitations and Undiscovered Historical Contamination

March 31, 2017 Robert K. Omura

The seemingly inexorable march is on. Following recent historical contamination cases such as (Attorney General) v. MacQueen, 2013 NSCA 143 and Windsor v Canadian Pacific Railway Ltd., 2014 ABCA 108, it has become slightly more difficult to litigate historical contamination cases.1 In the latest case, Brookfield Residential () LP (Carma Developers LP) v Imperial Oil Limited, 2017 ABQB 218, considering the extended limitations period provisions of the Environmental Protection and Enhancement Act, R.S.A. 2000, c. E-12 (“EPEA”), the duly diligent purchaser is left with no recourse against a solvent, “possible” polluter (the other “possible” polluters having disappeared from the jurisdiction) because of the prejudice to the historic “possible” polluter.

The Facts

The Plaintiff, Brookfield, was a residential developer in . One of the defendants, Imperial Oil Limited, operated an oil well, battery and sump on lands owned by the defendant, Larry C. M. Darling, between 1949 and either 1950 or 1954. The well produced crude oil between 1950 and 1957. For some period, Imperial had a salt water storage tank on the site. The well license was assigned to Bay in 1954, before passing to Bay’s successor, Tenneco, and then to Mr. Darling in 1961. From 1958 the well was used for salt water disposal. In 1961, Tenneco contracted with Mr. Darling to decommission, remove, and abandon the well.2 The land was later sold to William B.

1 It should be noted that MacQueen and Windsor were class proceedings which add a slight wrinkle to historic contamination cases as discoverability is an individual issue. 2 Tenneco is a Fortune 500 corporation operating in the U.S. It acquired Bay Petroleum, along with Sterling Oil and Del-Rey Petroleum in the 1950s, but appears to have divested itself of its petroleum assets in the 1990s. This left Imperial as the only possible polluter left in the jurisdiction. 2

McEachren who sold it to Robert and Ernest Hiller in 1965. A Reclamation Certificate was issued by the Province in 1968.3 Parts of the land were farmed by the Hillers until 2014.

In the fall of 2003, Carma Developers Ltd., the predecessor of Brookfield Residential (Alberta) LP, proposed to purchase the land from the Hillers. As a part of their due diligence, Brookfield hired Hoggan Engineering and Testing (1980) Ltd. to conduct a Phase I Environmental Site Assessment.4 Important extracts from the Hoggan Phase I ESA are cited by Graesser J. as follows:

[14] The Hoggan Report, issued November 19, 2003, concluded at p 9:

There is no documentation from regulatory/authoritative bodies encountered that indicate land use or the storage of substances on site which would be conducive to site contamination. As a result, the overall potential for environmental contamination at this site is considered to be low, and no further investigation is considered to be necessary. [15} The Executive Summary similarly stated at page 1:

The ESA Phase I research into available information revealed no significant environmental concerns with respect to the subject property. No further environmental assessment work is considered necessary for the subject property at the time of this report. [16] Within the Hoggan Report there were the following comments:

In the 1950 air photo…in the northwest portion of the study site, some site disturbance is noted. The nature of the site disturbance is unknown, although in the photo it appears that several small storage buildings are present. Approximately 200 meters north of this western portion of the study site, a cleared area with an associated access road can be seen. The configuration of this development is consistent with an oil lease or some similar activity (pp 4-5) There were no areas of significant environmental concern noted in the air photos reviewed. In addition, the disturbance to the soil noted in the northwest portion of the site in the 1950 air photo is noteworthy. (p 5) One other activity with a slight environmental concern is the disturbance to the soil noted in the northwest portion of the site in the 1950 air photo, which was not noted previously in the 1920 air photo, or in any other subsequent air photo. No explanation for this soil disturbance or the presence of small

3 Alberta, Reclamation Certificate No. 6284, August 3, 1968. The Reclamation Certificate is available for review from ESAR. 4 The Phase I ESA was unavailable for review from ESAR. 3

outbuildings is available at this time. However, these activities may be related to the possible oil lease activities which appear to be going on north of the study site in the 1950 air photo. Another possibility is that a second farm yard existed during the period between the 1920 and 1950 air photos. (pp 8-9) On the strength of the Hoggan Phase I ESA, Brookfield offered to purchase the land. The Hillers accepted the offer on February 10, 2004.

In 2006, Brookfield hired Stantec Consulting Ltd. to assist in the development of the neighbourhood plan. Stantec performed a Phase I ESA which identified an abandoned oil well and a dry abandoned well on adjacent lands and a water disposal well onsite.5 Stantec recommended that the former wells be located and further investigated because of the possibility of historic contamination.

Two years later, Brookfield hired the defendant, Ecomark Ltd., to perform a Phase II ESA.6 One test well indicated the presence of petroleum hydrocarbons requiring “further delineation” by AEP. Ecomark performed further soil tests, concluding in a follow up report that there were no exceedances for hydrocarbons or boron,7 the results from the initial report were “anomalous”, and “no further testing was required” (Brookfield, para. 23).

Throughout 2008 to 2010 Brookfield prepared the land for residential development. Strong and persistent hydrocarbon odours were reported, causing Stantec to conduct further soil tests. The soil tests revealed exceedances for hydrocarbons, and later results showed salt contamination.

The Claim Against the Solvent, “Possible” Polluter (Imperial Oil Limited)

Arguing the Limitations Act, R.S.A. 2000, c. L-12, Imperial moved for summary dismissal of Brookfield’s claim against them. Brookfield applied for an extension of the limitation period under s. 218 of EPEA.

5 The Phase I ESA was unavailable for review from ESAR. 6 The Phase II ESA was unavailable for review from ESAR. 7 This must refer to Tier 1 (Residential) Guidelines for soil samples. There is no indication whether groundwater samples were obtained. See Alberta Environment and Parks, Alberta Tier 1 Soil and Groundwater Remediation Guidelines (Edmonton: Alberta Environment and Parks, 2016). 4

Section 218 permits the court to extend the limitation period for adverse effects resulting from a substance release. Section 218 reads as follows:

218(1) A judge of the Court of Queen’s Bench may, on application, extend a limitation period provided by a law in force in Alberta for the commencement of a civil proceeding where the basis for the proceeding is an alleged adverse effect resulting from the alleged release of a substance into the environment. (2) An application under subsection (1) may be made before or after the expiry of the limitation period. (3) In considering an application under subsection (1), the judge shall consider the following factors, where information is available: (a) when the alleged adverse effect occurred;

(b) whether the alleged adverse effect ought to have been discovered by the claimant had the claimant exercised due diligence in ascertaining the presence of the alleged adverse effect, and whether the claimant exercised such due diligence; (c) whether extending the limitation period would prejudice the proposed defendant’s ability to maintain a defence to the claim on the merits; (d) any other criteria the court considers to be relevant.

In support of its position, Brookfield raised two cases on s. 218: Wainwright Equipment Rentals Ltd v Imperial Oil Ltd, 2003 ABQB 898 and Lakeview Village Professional Centre Corp v Suncor Energy Inc, 2016 ABQB 288. Two other s. 218 cases were brought to the attention of the Court by Imperial: Jager Industries Inc. v. Canadian Occidental Petroleum Ltd., 2001 ABQB 182 and Floate v Gas Plus Inc, 2015 ABQB 725.

In Jager, the Plaintiff bought 50% of the lands in 1979 and the other 50% in 1990. CanOxy operated a sour gas well on the lands from 1958 to 1978 but had reclaimed the well when they abandoned it. Subsurface testing in the 1980’s revealed elevated levels of soluble sulphate and corrosivity. In 1991, CanOxy agreed to lower the wellhead and remove pipelines if Jager agreed to remove the first 25 m³ of contaminated soil; CanOxy would be responsible for any additional contamination. A total of 50,000 m³ of contaminated soil were removed. In 1996, Jager sent CanOxy the bill which CanOxy promptly refused to pay. In 1998 Jager brought a claim against CanOxy. CanOxy argued that Jager’s claim was statute-barred as out of time under the relevant limitations periods. Jager sought 5 relief under s. 206.1 (now s. 218) of EPEA. Kent J. found that Jager had acted reasonably. Upon discovering hydrocarbon odours, Jager immediately notified CanOxy. From 1992 to 1995, Jager did significant investigation to determine the full extent of the contamination. In July, 1996, Jager was advised that the soil had to be removed and the land remediated. Throughout its investigation Jager kept CanOxy informed of its activities, so there was no prejudice to CanOxy. On the three factors in s. 206.1, the Court was unable to make any determination on when the adverse effect occurred, whether Jager was duly diligent, whether CanOxy was prejudiced, or any other factor such as the nature of the adverse effect. As a result, the Court dismissed Jager’s application, leaving final determination of the limitation issue to be decided at trial, or at least to a determination on further and better information.

In Wainwright, Imperial sold a former gas station to Wainwright in 1985. It was a condition of the sale that Imperial would remove the underground storage tanks (“USTs”) at its expense within 30 days of the closing. In 1989, a fire prevention officer told Wainwright to remove the USTs. Wainwright provided the fire prevention officer with two letters from Imperial, one in 1985 and one in 1989, that confirmed that the USTs had been removed. In 1999, Wainwright entered a contract to sell the property. As a condition of the sale an environmental audit was performed. The audit showed the presence of three USTs. Imperial had failed to remove them. Imperial argued that the limitation period had expired. Wainwright brought an application to extend the limitation period under s. 206.1 (now s. 218). Ouellette J. granted Wainwright’s application for an extension of the limitation period.

In Lakeview, the Plaintiff purchased a strip mall in 1998 where a former gas station had once operated. The vendor’s Phase II ESA concluded that there was no evidence of significant contamination, and on that advice, Lakeview waived conditions and closed the sale. Lakeview received an offer to purchase the lands in 2013. In contemplation of the sale, Phase I and Phase II ESAs were conducted which discovered contamination at a level requiring site remediation. A Phase III ESA followed and site remediation commenced. By 2016, Lakeview had spent $400,000 on remediation and expected to incur further cleanup costs. The claim was well beyond the ultimate 10-year limitation period under the Limitations Act. To obtain relief, Lakeview brought a s. 218 application. 6

Concerned that meritorious claims could be defeated or issues determined prematurely at this preliminary stage of inquiry, Martin J. adopted a “good arguable case” standard within a two-step procedure: Lakeview at para. 19. With this lens on the facts, the Court reviewed the s. 218 factors and found, on a preliminary basis only, that Lakeview had shown a good arguable case that there was an adverse effect, Lakeview had exercised due diligence, and there was no prejudice to the defendants. The matter could proceed. The Court granted the extension of the limitation period subject to a final determination at trial.

In Brookfield, there seems to have been confusion between substance release and adverse effect. Both parties argued for an adverse effect date more than 50 years ago. Brookfield argued for an adverse effect from 1949 to 1954. Imperial argued for a date as late as 1961. Neither had compelling evidence of either date. As a result, the Court was left with insufficient evidence to determine when the adverse effect occurred. However, the critical period should have been either 2006 or 2010, when hydrocarbons were discovered and when the smell of hydrocarbons became obvious, when AEP determined that the site required further investigation or remediation, and when the land was converted from farm land with no negative impacts to the environment, human health, safety, or the property, to a residential development project with present adverse effects.

On due diligence, the Court found that Brookfield had exercised due diligence in relying on the Hoggan Phase I ESA and the Ecomark Phase II ESA and follow up report. They could not have known of the contamination.

However, unlike the defendants in Lakeview, in this case Imperial argued that it had been prejudiced by the passage of time. The unwarranted focus on the period around 1949 to 1954 opened the door for Imperial to argue loss of witnesses and evidence. They argued Bowes v Edmonton (City of), 2007 ABCA 347, for the proposition that it was impossible to obtain evidence on the standard of care from 40 or more years ago. Without much chance of better evidence coming up for trial, Brookfield’s prospects of a successful claim were slim. Graesser J. summarily dismissed the claim against Imperial.

The Timing of the Wrong: Retrospectivity and the Past Polluter 7

If seems to me that the summary dismissal decision in this case is problematic. The problem with Graesser J’s characterization of the timing of the wrong, which the Court took to be between 1949 and 1954, is that it mistakes release for adverse effect. Section 218 emphasizes the adverse effect and not the substance release. While certainly consistent with the Court of Appeal’s reasoning in James H. Meek Trust v. San Juan Resources, 2005 ABCA 448 at para. 36, the Supreme Court of Canada in Ryan v. Moore, [2005] 2 S.C.R. 53 at para. 27, referred to at para. 151 of Bowes, pointed out that “[w]here the Legislature adopts a specific event to start time running, that displaces the former discoverability rule”. Here the Legislature chose to emphasize “adverse effect” as the starting point. I suggest that the relevant time should have been when the last adverse effect occurred. This is more consistent with the words of s. 218, given a generous and liberal interpretation of the phrase “where the basis for the proceeding is an alleged adverse effect resulting from the alleged release of a substance into the environment”. The last adverse effect, it seems to me, is the appropriate time to weigh the Lakeview factors. That was 2010.

In contamination cases, there may not be a discrete adverse effect at the time of the release, particularly where the release occurred over a period of months or years. The adverse effect might be cumulative; the result of years or even decades of toxic accumulation. When petroleum hydrocarbons leak from a gas station, for example, each discrete release may not create an adverse effect, but the accumulation of petroleum hydrocarbons in the subsoil and groundwater from a series of releases over the course of decades may create an adverse effect. The release and adverse effect, particularly in cases of historic contamination, are dyssynchronous.

The state of the land did not meet Tier 1 Guidelines. As a result, Brookfield was required to remediate the land. This amounts to an adverse effect within the meaning of EPEA. An adverse effect involves an impairment or damage connected with the environment, human health, safety or property. It is not limited by event or time. It is not limited to any one or series of substance releases. Thus, an adverse effect manifests whenever and each time there is impairment or damage to the environment, human health, safety, or 8 property.8 In Brookfield, the adverse effect is the failure to meet Tier 1 Guidelines for residential use, a level that is more stringent that the Tier 1 Guidelines for agricultural use because of the higher risk to the environment, human health, safety, or property. While Ministerial Guidelines do not supplant the common law rules for damages, they may serve as a useful proxy: Tridan Developments Ltd. v. Shell Canada Products Ltd., 2002 CanLII 20789 (ON CA) at paras. 10-11.

By way of illustration, let us take the example of two adjoining properties, Lot A, a gas station owned and operated by Mary, and Lot B, a house owned by Peter that is 100 m downgradient from Lot A.9 A diesel spill occurs on Lot A in 1970 when Lot A was owned and operated by Mary. In 1970 is there a substance release? Yes. Is there an adverse effect to Lot B? No. It may take months, years, or even decades for the hydrocarbons to migrate through the subsoil and groundwater to Lot B. Even when those hydrocarbons have migrated to Lot B they may not pose an adverse effect if the hydrocarbons do not seep up from the ground. In the meantime, Mary sells Lot A to Matthew in 1980. Matthew closes the gas station in 1990. Ten years later, Peter sells Lot B to Paula. Paula intends to subdivide the land and build residential “infills”. During excavation in 2010, Paula discovers diesel in the subsoil and groundwater. In 2010, is there a substance release? No. Is there an adverse effect to Lot B? Yes. The two events, the substance release in 1970 and the adverse effect in 2010, occur 40 years apart.

The argument that substance release and adverse effect may be dyssynchronous is supported by the suggestion that a “substance” in s. 1 of EPEA may exist in two states. The definition refers to any matter that is “capable of becoming dispersed” or is “capable of becoming transformed”. At the time of the release, there may only be a “potential” of an adverse effect which may or may not be realized over time. That potential is realized if, and not before, the substance results in an adverse effect.

8 Adverse effect is defined in s. 1 of EPEA as “impairment of or damage to the environment, human health or safety or property”. 9 Consider Huang v. Fraser Hillary’s Limited, 2017 ONSC 1500, where tetrachloroethylene (PERC) and trichloroethylene (TCE) from FHL, a nearby dry cleaning business, had contaminated two nearby commercial lots owned by Huang. The PERC and TCE were released sometime between the 1960s and 1970s to 1974. Huang purchased the lots in 1972 and 1978. In 2002, Huang had a Phase I and Phase II ESA performed in advance of redevelopment. More than 30 years had passed from the use of PERC and TCE and the filing of the claim. 9

What recourse is available so Paula can recoup her remediation costs? Matthew, who is the current owner of Lot A, was not the cause of the contamination. Further, he has not operated the gas station since 1990. The diesel spill by Mary in 1970 was the cause of the contamination. On its face, Paula has no claim against Matthew.10 Brookfield would deem the adverse effect to have occurred in 1970, when Mary spilled the diesel, leaving Paula with a serious limitation hurdle. Forty years has passed since the spill.

What about the case of the continuing tort? Does an adverse effect have to be a discrete event? Consider Smith v. Inco, 2010 ONSC 3790, rev’d for other reasons, 2011 ONCA 628; Stewart Estate v TAQA North Ltd, 2017 ABCA 357; Halifax (Regional Municipality) v. Willis, 2010 NSCA 76; Peter Ballantyne Cree Nation v Canada (Attorney General), 2016 SKCA 124; Green Mountain Holdings v. Merritt (City), 2011 BCSC 1183; and Moakler & Moakler v. Town of Conception Bay South, 2005 NLTD 206.11 The natural limit for a continuing tort is the limitation period, in this case, 2-years prior to the filing of the claim.12

EPEA is a public protection statute. As such EPEA is intended to be applied retrospectively to present wrongs that arise from past conduct: see Legal Oil and Gas Ltd. v. Alberta (Minister of Environment), 2000 ABQB 385 at para. 50 and McColl- Frontenac Inc. v. Alberta (Minister of Environment), 2003 ABQB 303 at para. 111.13 A substance release is a continuing wrong under EPEA, whether that release occurred in 1950 or 2017 makes no difference if the release creates a present adverse effect. This was the point the Court alluded to at paras. 6 and 8 of Wainwright when it said, “From

10 Although one might argue that diesel continued to migrate from Lot A to Lot B during Matthew’s operation and ownership, even if the spill occurred 10 years before Matthew acquired the land. Paula may yet have an action for nuisance, negligence, trespass, and Rylands-like liability against Matthew. For the sake of this illustration, I am focusing only on the temporal characteristics of the actual substance release and the adverse effect. 11 The B.C. Court of Appeal came to the opposite finding in Ml Plaza Holdings Ltd. v. Imperial Oil Limited, 2006 BCCA 564. The Ontario Court of Appeal refused to determine this issue in Crombie Property Holdings Limited v McColl-Frontenac Inc. (Texaco Canada Limited), 2017 ONCA 16. 12 See, for example, Roberts v. City of Portage La Prairie, [1971] S.C.R. 481 at pp. 491-492 and Allison v. Radtke, 2014 BCSC 1832 at paras. 148-159. 13 While these cases refer to regulatory enforcement of EPOs under ss. 113 or 114 of EPEA, in each of these regulatory cases the Court speaks to the general purpose of the Act and unequivocally states that the Act is a public protection statute with retrospective effect. 10 the information that is available, it is impossible to state with certainty when the adverse effect commenced. However, it is clear that it occurred and that it was existent in April of 1999” and “In this case, the contamination was not known until April of 1999 and that is precisely the purpose of the legislation; that harmful effects may not be evident for several years” [emphasis added].14 A similar finding was made by Martin J. at para. 39 in Lakeview, where she said that “the time frame for contamination is from 1969 to the mid- 1980’s at least, and potentially as late as 2013”. From a retrospective view, “[t]hat is consistent with imposing an obligation not on the present occupier, but upon those who caused the pollution in the first place”: Marceau J. at para. 111 in McColl-Frontenac. The polluter pays. As Nation J. observed at paras. 47-49 of Imperial Oil Limited v. Alberta (Minister of Environment), 2003 ABQB 388:

[47] Section 113 does refer to a release of a substance that “has occurred” and “has caused, is causing or may cause” an adverse effect. There was much argument by the parties as to whether that covered a release in the far past, or was only to cover a recent release, but one that had happened by the time the Director was notified. The language in itself does use the past tense. It is a reasonable interpretation of the language that s. 113 can deal with a present or ongoing effect of a past release [emphasis added]. [48] There is a general principle of statutory interpretation that a statute will not be applied retrospectively, unless there is express wording in the legislation that it is meant to be so applied. This general principle has been tempered by the considerations in Brosseau v. The Alberta Securities Commission, [1989] 1 S.C.R. 301 which held that the presumption may not be applicable to statutes that impose a penalty for a past event, if the purpose is not to punish offenders, but to protect the public, even though they may incidentally impose a penalty on a person related to a past event. The Act here, although it does have the ability to impose penalties, is predominantly a protective statue, with its aim to protect the environment and the health of Albertans, while facilitating economic development. [49] Caution has to be used when talking about retroactive application of legislation. R. Sullivan, ed. Dreidger on the Construction of Statutes, 3d ed. (Toronto: Butterworths, 1994) at p. 517 says the following: Legislation clearly is retroactive if it applies to facts al of which have ended before it comes into force. Legislation clearly is prospective if it applies to facts all of which began after its coming into force. But what of ongoing facts, facts in progress? These are either continuing facts, begun but not ended when the legislation comes into force, or successive facts, some occurring before and some after commencement. The application of legislation to

14 See also Martin J. at para. 7 of Lakeview. 11

ongoing facts is not retroactive because, to use the language of Dickson J. in the Gustavson Drilling case, there is no attempt to reach into the past and alter the laws or the rights of persons as of an earlier date. The application is prospective only to facts in existence at the present time. Such an application may affect existing rights and interests, but is not retroactive [emphasis added]. Thus, in both Legal Oil and McColl-Frontenac the Court held that EPEA had both prospective and retrospective effect. It also appears that s. 218 was specifically intended to have retrospective effect. As Graesser J. recognized in paras. 39-40:

[39] Ouellette J. noted (at para 5) [Wainwright] that the legislation was implemented to extend the limitation period “because the release of harmful substances into the environment may not be evident for several years,” (citing Alberta, Legislative Assembly, Hansard, 24th Leg, 2nd Sess. (April 6, 1998) at 1385). [40] The full quote from Hansard reads:

The addition extends the period during which the civil proceedings can be initiated for damages to the environment. We think this is sensible for some harmful effects may not be evident for several years. We’re seeing that occur on occasion. The amendment sets out the conditions that the judge must consider when deciding whether to extend the limitation period, so the system should not be open to abuse. Isn’t Paula’s claim against Mary the very reason for the s. 218 amendment to EPEA? The intention of s. 218 was to permit Paula to sue Mary for the 2010 adverse effect to her land as a result of Mary’s 1970 diesel spill despite the 10-year ultimate limitation period. Such an approach would better reflect the public protection purpose of EPEA and the way discoverability principles have been used in similar cases in other provinces.

In Smith v. Inco Limited, 2010 ONSC 3790, rev’d in part 2011 ONCA 628, a class action, Inco had operated a nickel refinery from 1918 to 1984 in Port Colbourne, Ontario. Concerns about nickel contamination were investigated by the Minister of the Environment (“MOE”) since the 1970s, leading to a strict guideline of 500 ppm in soil being adopted by the MOE in the late 1990s. Further investigation in 2000 showed a hot spot near the Smith property of between 4,300 and 14,000 ppm. Following a 2002 report, the MOE ordered that Inco clean up 25 properties where nickel levels were above 8,000 ppm. On the limitation issue, the Ontario Court of Appeal reversed the trial judge and held that the discoverability question was an individual one, not one based on when the 12 majority of claimants knew or ought to have known that the presence of nickel on their properties would adversely effect their property values. This would have been around 1990.

In Huang v Fraser Hillary’s Limited, 2017 ONSC 1500, the bank refused to extend to the owner of two commercial lots in downtown Ottawa the necessary financing to redevelop the lots or to extend his existing mortgage when a Phase II ESA showed high levels of TCE contamination under the land. A nearby laundromat had used PERC/TCE from 1960 to 1974. The PERC/TCE had seeped into the soil and groundwater. The claimant had purchased his lots in 1972 and 1978, which he rented out over the years. The Phase I and II ESAs were done in 2002. The Court retrospectively applied s. 99(2) of the Ontario Environmental Protection Act, R.S.O. 1990, c. E.19, holding FHL liable for the cost of remediation.15 Ontario’s EPA speaks of the owner or person having control of a pollutant.

Outside of s. 218, Imperial may be in breach of a statutory duty where its past release has a present adverse effect. On the face of the legislation, Imperial may have a continuing statutory duty under s. 112 to remediate the land. Section 112 states:

112(1) Where a substance that may cause, is causing or has caused an adverse effect is released into the environment, the person responsible for the substance shall, as soon as that person becomes aware of or ought to have become aware of the release, (a) take all reasonable measures to (i) repair, remedy and confine the effects of the substance, and (ii) remediate, manage, remove or otherwise dispose of the substance in such a manner as to prevent an adverse effect or further adverse effect, and

(b) restore the environment to a condition satisfactory to the Director.

(2) Where

15 This section is equivalent to s. 219 of EPEA. Section 219 permits a person to recover loss or damages as a result of an offence under EPEA from any one convicted under EPEA. 13

(a) a substance was released into the environment before September 1, 1993, and (b) the activity that resulted in the release was permanently discontinued before that date, The person responsible for the substance shall as soon as that person is aware that the substance may cause, is causing or has caused an adverse effect, take the action specified in subsection (1). Other relevant sections include:

1 In this Act,

(b) “adverse effect” means impairment of or damage to the environment, human health or safety or property; (tt) “person responsible”, when used with reference to a substance or a thing containing a substance, means (i) the owner and a previous owner of the substance or thing, (ii) every person who has or has had charge, management or control of the substance or thing, including, without limitation, the manufacture, treatment, sale, handling, use, storage, disposal, transportation, display or method of application of the substance or thing, (iii) any successor, assignee, executor, administrator, receiver, receiver-manager or trustee of a person referred to in subclause (i) or (ii), and (iv) a person who acts as the principal or agent of a person referred to in subclause (i), (ii) or (iii) … (hhh) “release” includes to spill, discharge, dispose of, spray, inject, inoculate, abandon, deposit, leak, seep, pour, emit, empty, throw, dump, place and exhaust; (mmm) “substance” means

(i) any matter that (A) is capable of becoming dispersed in the environment, or (B) is capable of becoming transformed in the environment into matter referred to in paragraph (A) …. Section 218 refers to the defined terms “adverse effect”, “release”, and “substance” which are also found in the Substance Release provisions of EPEA, but s. 218 refers to “proposed defendant” rather than “person responsible”. However, such a distinction might not make a difference if Imperial has a statutory duty to remediate a past release under 14 s. 112. The breach of a statutory duty may still give rise to a cause of action by Brookfield against Imperial.

This approach to s. 218 is consistent with the purpose of EPEA. As Marceau J. noted in McColl-Frontenac at paras. 26-27:

[26] The purpose of the legislation as a whole is reflected in s. 2 of the Act, and includes supporting and promoting the protection, enhancement and wise use of the environment, while recognizing (1) the need for Alberta’s economic growth and prosperity in an environmentally responsible manner and the need to integrate environmental protection and economic decisions in the earliest stages of planning, (2) the principle of sustainable development, (3) the importance of preventing and mitigating the environmental impact of development and of government policies, programs and decisions; (4) the need for Government leadership in areas of environmental research, technology and protection standards; (5) the shared responsibility of all Alberta citizens for ensuring the protection, enhancement and wise use of the environment through individual actions; (6) the opportunities made available through the Act for citizens to provide advise of decisions affecting the environment; (7) the responsibility to work co-operatively with governments of other jurisdictions to prevent and minimize transboundary environmental impacts; (8) the responsibility of polluters to pay for the costs of their actions; (9) the important role of comprehensive and responsive action in administering this Act. [28] The specific provisions of the Act that are relevant to these issues are found in Part 4 “Release of Substances”, and in particular Division 1, under which the EPO was issued, and Division 2, the division McColl-Frontenac argues should have been applied. The purpose of this part of the Act is to provide a means for the Director to order clean up of contamination and to fulfill the purpose in s. 2(i) that polluters pay for the costs of their actions. The purpose of s. 102 is, as Clackson J. noted in Legal at paras. 28 and 33: … to deal with pollution. Its scope is broad and directed toward the identification of pollution problems and rectification of those problems. Its primary concern is not ascribing fault, but rather determining an effective and efficient method of resolving a problem… 15

As explained earlier, this Act is about protection and remediation based upon policy concerns. The Act requires consideration of many competing interests and involves a variety of non-judicial strategies for resolution of interests. For these reasons, the matter should not have been summarily dismissed on the basis of the limitation period or on any prejudice to Imperial because of the loss of witnesses and evidence from the passage of time. The statutory duty under EPEA continues. EPEA is a public protection statute with retrospective effect. It is intended to reach back to the past polluter where there is a present adverse effect and the past polluter can be found.

The Timing of the Wrong as a Causation Problem

If anything, Brookfield’s claim should have been defeated at the summary dismissal stage, if at all, for causation and not limitation. This was the approach Shell Canada took in Floate. The gap between a substance release attributed to Shell and the adverse effect, particularly in light of the intervening releases and intervening parties, made it impossible for the claimants to show a good arguable case.

In Floate, Shell applied for summary dismissal of all claims against it with respect to a contaminated gas station. Shell owned and operated the gas station until 1988. In 1987, in preparation of the sale of the land, Shell decommissioned the gas station and remediated the site, including the removal of the underground storage tanks. There had been six owners of the gas station since Shell sold the land. Shell continued to supply fuel to the independent owners/operators until 2000. The defendant, Handel Transport (Northern) Ltd. took over the gas station in 2000. Shell provided two experts who both concluded that at the time Shell decommissioned the site in 1988 and its last involvement with the site in 2001, there was minimal contamination from Shell’s activities. Offsite F2 contamination was likely attributable to a diesel spill, but the plaintiffs’ own expert was not asked to given an opinion on that issue. Master Farrington found that any offsite F2 contamination must have been from a post-2010 spill, as there was no evidence that connected the offsite F2 contamination to pre-2000 residual Shell contamination. The Court noted at para. 34:

[34] At a trial, quite simply, the plaintiffs would need to satisfy a trial judge that, at least some of their contamination arose from contamination molecules that originated during Shell’s occupation and control of the site. There is no such 16

evidence. There were arguments extracting isolated facts from prior environmental reports, but the proof of causation element is missing. Submissions of counsel are not evidence. Dr. Sevigny’s report does not support the proposition that the plaintiff likely will be able to provide a connection to Shell in terms of the contamination. That approach, in my opinion, would have led to the more rational means to balance the retrospecitivity problem in this case. In other words, Brookfield may be a case of the right result for the wrong reasons.

Final Comments

What are we to take away from Brookfield? It seems to me that there is some confusion over the timing of the adverse effect that needs clarification. Certainly, if AEP may pursue a past polluter to clean up a past substance release and could prosecute the past polluter under EPEA, a person adversely effected could ride AEP’s coattails and bring a claim for loss and damages well past the ultimate limitation period under s. 219, where the past polluter has been prosecuted by AEP. The framers of s. 218 must have anticipated this possibility. Further, the purpose and words of EPEA suggest that the substance release and the adverse effect may be dyssynchronous, and the time gap may be years or decades between the two. Brookfield should not have been denied on the limitation issue.

On the other hand, were Brookfield permitted to proceed, Brookfield has a serious causation problem because of the intervening time gap and parties. Imperial was at best a “possible” past polluter. Had Imperial brought their summary dismissal on causation grounds, such as Shell had in Floate, the result would have likely been the same. The claim would have been dismissed but on more rational grounds.