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What Liabilities Can Flow From Storing Liquid Waste

2 minute read

In an entrepreneurial setting, clients often make business or real estate decisions without seeking legal advice. The Ontario Superior Court case of Reeves Land Corporation v Commercial Oil, et. al. provides a sober reminder regarding among other things, the need for legal advice about the obligations of a party disposing of a product that may be “waste” under the EPA. In this case, the plaintiff (“Reeves”) purchased a 75 acre farm property from the defendant William Allen (“Allen”), a farmer with “financial problems”. The other defendant, (“Commercial Oil”) had previously stored over 2,000-45 gallon drums filled with a “liquid substance” at its storage facility, and had agreed with a Mr. Finlay (‘Finlay”) to “purchase” over 2,000 barrels for $25 a barrel.

The Agreement of Purchase and Sale between Reeves and Allen provided that Allen would remain in possession of the property; and, would remove all farm-related buildings within a year of closing. Reeves didn’t inspect the buildings prior to closing, and unbeknownst to Reeves, Allen had permitted Finlay to rent the barn to store the more than 2,000 barrels and their contents. Unfortunately, Finlay then passed away without an estate or any money. A year after closing, Allen had not removed the buildings, nor found anyone to buy the barrels of liquid. However, as fate would have it, a wind storm blew over part of the barn, thereby exposing the barrels. This resulted in a MOE order to dispose of the barrels and decontaminate the property. This cost the owner Reeves about $250,000.00.

Reeves positon at trial was that Commercial Oil was liable on the basis that it did not “sell” the product, but rather paid Finlay to dispose of it. Commercial Oil’s position was that it had “sold” the product to Finlay pursuant to a written agreement that removed liability on Commercial Oil’s part.

The Court found that Commercial Oil had breached the EPA by disposing of waste without a certificate, and had “made a poor business decision to dispose on the cheap” through disposal operator Finlay. Noting that a statutory breach is merely some evidence of negligence, the Court went on to find that Commercial Oil should have contemplated that the waste “may end up on someone’s property”. The Court noted in passing that while “buyer beware” or caveat emptor may operate in contract, “it does not operate in negligence, trespass and nuisance”. In the result, judgment was granted against Commercial Oil for $250,173.50.

The case provides another reminder to get legal advice before making business or real estate decisions, and a useful summary of the law and some of the obligations relating to the handling of waste products.

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