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Too Little, Too Late: Court of Appeal Refuses to Consider New Defence in Environmental Contamination Case of Sorbam Investments

6 minute read

In a recent appeal decision in an environmental contamination case, Sorbam Investments Ltd v Litwack, 2022 ONCA 551,[1] the Court of Appeal for Ontario affirmed the trial judgment holding the appellant 1129292 Ontario Limited liable in nuisance and negligence for migration of chemicals. The Court of Appeal upheld the trial judge's approach to assessing competing expert evidence in environmental contamination cases, the finding of a landlord liable for contamination caused by a former tenant, and a calculation of damages in environmental contamination cases. The Court of Appeal also provided useful guidance on the general rule against raising new issues on appeal, which is the focus of this blog.

Trial Decision on Nuisance and Negligence

The main issue at trial was whether contaminants had migrated from the respondent's property to the appellant's property or vice versa.[2] The appellant and respondent owned neighbouring properties, and prior to the appellant purchasing the property, a dry cleaning business had operated there.[3] The trial judge concluded that the contaminants had migrated from the appellant's property to the respondent's property, but that the contaminants were likely from the dry cleaning business prior to the appellant's ownership.[4]

In finding the appellant liable in nuisance, the trial judge concluded that the physical damage, prolonged sale process, and decreased sale price caused by the migration met the threshold for substantial and unreasonable interference.[5]  The trial judge found that as an adjoining landowner, the appellant owed a duty of care to avoid acts or omissions that would cause harm to the respondent. She further found the appellant was negligent as it ignored a Ministry of Environment direction to investigate and address the migration of contaminants onto the respondent's property, which was not consistent with the standard of care of a reasonable landowner.[6]

The trial judge awarded damages based primarily on loss of market value to the respondent's property due to the chemical contamination and also awarded $91,307.21 for engineering expenses incurred by the respondent to obtain a risk assessment and record of site condition.[7]

Grounds of Appeal

On appeal, 1129292 Ontario Limited raised a number of grounds concerning a theory of incremental damage, ultimately arguing that the trial judge failed to properly assess whether some or all of the contamination had been caused before the appellant was aware of the issue in 2011.[8] The Court of Appeal observed that this was a new theory of defence not raised in the pleadings, or at trial.

Pleadings and Evidence Presented at Trial

The Court of Appeal started by analyzing the appellants’ pleadings. The appellants’ denied liability in their pleadings, in addition to introducing a cross-claim against the respondent. However, the appellants’ pleadings did not raise the issue of incremental damage.[9]

The Court of Appeal then analyzed the evidence at trial and found that the issue of incremental damage was not raised.[10] Both parties had expert witnesses for the movement of the contaminants, but the appellant did not ask any questions in their examination-in-chief or cross-examination relating to when the migration occurred.[11] The appellant also did not question the respondent's expert witness on damages to determine when the property's market value decreased.[12]

The appellant directed the Court of Appeal to a brief passage in its closing statement from the trial where it stated that if it were found liable, then the appellant should not be found responsible for all the damages since the property was contaminated when the appellant bought it. The Court of Appeal determined that this was "too little, too late" since the appellant did not plead the position.[13]

Conclusion of the Court of Appeal

The Court of Appeal concluded:

An appeal is not a forum for an appellant to advance a fundamentally different case than was advanced at trial. In the circumstances of this case, where the appellant did not plead or lead evidence at trial to support the arguments now raised, it is not appropriate for this court to exercise its discretion to allow the appellant to raise the new theory on appeal. It would be unfair to the respondent, and the evidentiary record from the trial is wholly inadequate to consider the issues: Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at paras. 18-24; Frohlich v. Ferraro, 2017 ONCA 978, 85 R.P.R. (5th) 175, at para. 5.[14]

This decision provides an important reminder that new issues cannot be raised at the appeal level. In order to be fair to both parties, an issue—whether a cause of action or theory of defence—must be pleaded and addressed at trial to be considered by the Court of Appeal. This will ensure that the other party has a chance to respond to the arguments, and there is a complete evidentiary record for the Court of Appeal to consider when making a decision.

[1] Sorbam Investments Ltd v Litwack, 2022 ONCA 551.

[2] Ibid, para 5.

[3] Ibid, para 4.

[4] Ibid, paras 6-7.

[5] Ibid, para 8.

[6] Ibid, para 9.

[7] Ibid, para 10.

[8] Ibid, para 12.

[9] Ibid, paras 14-15.

[10] Ibid, para 16.

[11] Ibid, para 17-18.

[12] Ibid, para 21.

[13] Ibid, para 22.

[14] Ibid, para 23.

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