Skip to content

Our Ontario Lawyers

When success matters, there is no substitute for the advantage that comes from experience.

Search for a lawyer below:

Office:

Search Results

We're sorry, We cannot locate any lawyers with that criteria. Please search again.

Sort By:

Experience and Expertise:

How Can We Help? We’ll be happy to match you to the right qualified Lerners Lawyer.
LERNx

Court of Appeal Clarifies Discoverability in Environmental Contamination Cases

11 minute read

In its recent decision in Albert Bloom Limited v. London Transit Commission,[1] the Court of Appeal for Ontario upheld a summary judgment decision dismissing a third party claim as statute-barred by limitation period in this historical property contamination litigation. The Court of Appeal’s judgment provides useful guidance regarding the application of discoverability principles in environmental contamination cases, the proper characterization of a contamination claim against the former property owner, and the general rule against raising entirely new issues on appeal.[2]

Relevant Timeline

The timeline of events is particularly important in limitation period cases and so key facts and dates are set out below:

  • In 1973, London Transit Commission (“LTC”) acquired property formerly owned and used by Eaton Industries (Canada) Company for automotive parts manufacturing from 1949 to 1973 (the “LTC Property”).
  • In 2011, neighbouring property owners, Albert Bloom Limited and Ramsden Industries Limited investigated and became concerned with Trichloroethylene (“TCE”) contamination on their properties. Phase I and Phase II Environmental Site Assessment (“ESA”) Reports identified that the LTC Property was a potential source of the contamination.
  • On February 3, 2012, Albert Bloom advised LTC that it had discovered environmental contamination migrating from the LTC Property. Albert Bloom provided LTC with five ESA Reports, three of which identified Eaton’s historical activities as a potential source of the contamination.
  • From 2012 to 2014, Albert Bloom repeatedly asked LTC to investigate the potential contamination on the LTC Property.
  • On April 30, 2013, Albert Bloom delivered a Notice of Action and Statement of Claim to LTC along with another environmental report. The pleadings were formally served on May 22, 2013.
  • On December 19, 2013, Albert Bloom provided LTC with a further environmental report supporting its claim.
  • In January 2014, LTC delivered a Statement of Defence and Crossclaim, specifically pleading that any alleged contamination was caused by the prior owner of the LTC Property.
  • In 2014, the Ministry of Environment and Climate Change (“MOE”) was notified, investigated, and ordered LTC to take certain actions. In response to MOE requests, LTC undertook testing in early 2015 which revealed that Eaton had previously operated a sludge pit on the LTC Property.
  • On March 16, 2016, four years after LTC was first notified of the contamination by Albert Bloom’s lawyer and nearly three years after it was served with Albert Bloom’s Statement of Claim, LTC commenced a Third Party claim against Eaton for contribution and indemnity.

Eaton moved for summary judgment to dismiss LTC’s Third Party Claim asserting that LTC's claim was statute-barred by operation of the Limitations Act. The Honourable Madam Justice Mitchell granted summary judgment, dismissing LTC’s Third Party Claim. She held that LTC actually knew, or ought to have known, all of the necessary information to support its claim against Eaton by no later than May 22, 2013.[3]

LTC appealed, arguing that its suspicion of a claim against Eaton was only confirmed by subsurface testing completed in March 2015 and that it reasonably relied on its consultant’s opinion that the contamination was not spreading from the LTC Property. LTC also argued that the motion judge mischaracterized its claim against Eaton, which it said were based on “continuing torts”, or failed to address the different limitation periods which might apply to its other claims.

Discoverability Applied to Environmental Contamination

As a starting point, Justice Hourigan of the Court of Appeal observed that pursuant to s. 18 of the Limitations Act, the presumptive limitation period applicable to contribution and indemnity claims expires two years from the date the defendant is served with the plaintiff’s Statement of Claim. He emphasized that “once the second anniversary of the service of the claim passes, the onus shifts to the party seeking contribution and indemnity to establish why its claim was not discoverable.”[4]

Actual Knowledge in Environmental Claims

LTC relied on Crombie Property Holdings,[5] a 2017 Court of Appeal decision, arguing that actual knowledge of contamination does not arise in environmental claims until subsurface testing has been carried out.[6] Justice Hourigan rejected this argument, clarifying that:

The determination of when a claimant obtains actual knowledge of a claim is case-specific. Little is to be gained from comparing the unique circumstances of one case to another. There is no bright-line test that establishes when a party has actual knowledge of a claim. Instead, the totality of factual circumstances will dictate how and when a claimant obtains actual knowledge.[7]

Justice Hourigan also noted that LTC had pleaded that the alleged contamination was caused by the prior owner, but during the motion and on appeal LTC attempted to back track on this pleading by claiming that it was a standard boiler plate pleading and did not reflect its actual state of knowledge at the time of the filing of the Statement of Defence and Crossclaim. In rejecting this argument, Justice Hourigan held that in the circumstances, LTC had an obligation to adduce compelling and admissible evidence that this pleading was boilerplate and thus could be ignored— it failed to adduce such evidence.”[8]

Constructive Knowledge in Environmental Claims

The Court of Appeal decision also provides guidance regarding the due diligence obligations imposed on parties to investigate potential claims. Justice Hourigan noted that once “the due diligence obligation has been triggered, the party with the obligation (LTC) has a duty to investigate and the limitation period will not be tolled while it sits idle”.[9] In this case, the onus was on LTC to adduce admissible evidence that it took necessary due diligence steps in the circumstances, which it failed to do.[10] Justice Hourigan further explained:

The due diligence obligation imposes a heavier burden than simply hiring professional advisors. The proof of due diligence requires more detailed information than a simple assertion. The particulars of the information and advice provided to and by the consultant must be adduced to enable a court to assess whether the actions were reasonable in the circumstances.[11]

Anything less would permit a claimant to simply assert that it hired a lawyer, claim solicitor-client privilege, and insulate itself from the operation of a limitation period. Justice Hourigan rejected LTC’s arguments and upheld the motion judge’s findings on constructive knowledge and due diligence.

Characterizing the Claim

LTC also argued on appeal that the motion judge erred by concluding that LTC’s claim against Eaton was not based on a continuing tort. Justice Hourigan rejected this argument, noting LTC’s position mischaracterized the nature of its claim against Eaton. Justice Hourigan explained that for a claim to be “continuing”, “the legal injury itself must continue, not merely the ill effect of the prior legal injury”. In other words, the alleged act or omission causing the damage must be continuing.[12]  LTC’s Third Party Claim was based on Eaton’s manufacturing activities and improper waste management practices at the property, which had ended in 1973. The acts which caused the damage had ceased long ago. The fact that Albert Bloom’s claim against LTC may be characterized as being founded upon a continuing tort could not transform LTC’s claim against Eaton into a continuing tort.[13]

New Issues on Appeal

On appeal, LTC suggested that it had advanced a statutory claim against Eaton pursuant to s. 99 of the Environmental Protection Act (EPA),[14] and a standalone claim against Eaton as its neighbour in relation to migration of the contaminants from the former Eaton property to the lot already owned by LTC when it purchased Eaton’s property.

In relation to the s. 99 claim under the EPA, Justice Hourigan noted that the argument was not advanced before the motion judge or in LTC’s appeal factum. He summarized the general rule against raising new issues on appeal as follows:

The rationale for the rule is that it is unfair to spring a new argument upon a party on appeal when evidence might have been led in the court below had it been known that the matter would be an issue on appeal. The burden is on the appellant advancing a new argument to persuade the court that the new issue should be heard. Ultimately, the decision of whether to grant leave to allow a new argument is a discretionary decision guided by balancing the interests of justice as they affect all parties.[15]

Justice Hourigan declined to entertain the argument, noting that the Court of Appeal “is primarily an error-correcting court” and that “entertaining this argument would unfairly deprive Eaton of the opportunity to respond in the court below and in its written arguments before this court.”[16]

In similarly rejecting the argument on the standalone claim, Justice Hourigan noted that the prejudice to Eaton would be even greater as LTC’s counsel raised the argument for the first time in reply submissions at the hearing of the appeal, leaving Eaton with no opportunity to respond to the argument at all.[17]

Conclusion

The Court of Appeal’s decision in Albert Bloom Limited and the underlying summary judgment decision warrant careful review by environmental litigators or parties dealing with environmental contamination issues and potential claims. The decisions provide useful guidance on the discoverability of environmental claims and the obligation of due diligence imposed by law upon potential claimants with environmental issues. The Court of Appeal also provides clarity regarding when an environmental contamination claim is properly characterized as a “continuing tort” for limitation period purposes. Finally, the Court of Appeal decision reaffirms the well established rule against raising entirely new arguments and issues on appeal.

 

[1] Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74.

[2] On this general rule against raising new arguments on appeal, see: Jacob Damstra, “Becker v. Toronto: Coulda, Woulda, Shoulda” (October 6, 2020).

[3] London Transit Commission v. Eaton Industries (Canada) Company, 2020 ONSC 1413.

[4] Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74, para. 24.

[5] Crombie Property Holdings Limited v. McColl-Frontenac Inc. (Texaco Canada Limited), 2017 ONCA 16

[6] Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74, paras. 27-32.

[7] Ibid, para. 31.

[8] Ibid, para. 34

[9] Ibid, para. 38; Longo v. MacLaren Art Centre, 2014 ONCA 526, para 42.

[10] Ibid, para. 39.

[11] Ibid, para. 40.

[12] Ibid, para. 50.

[13] Ibid, para. 51.

[14] R.S.O. 1990, c. E.19.

[15] Ibid, para. 46.

[16] Ibid, para. 47.

[17] Ibid, para. 59.

LERNx Sidebar

LERNx

LERNx is committed to making the law easier to access for all by publishing high-quality and industry-leading content.

Jacob R. W. Damstra

We are here to help.

Do you have any questions about your unique scenario? Feel free to reach out directly by visiting my Lerners Profile View My Full Profile
Jeffrey R. Risdon

We are here to help.

Do you have any questions about your unique scenario? Feel free to reach out directly by visiting my Lerners Profile View My Full Profile