John Thordarson, et al. v. Midwest Properties Ltd.

(Ontario) (Civil) (By Leave)


Environmental law - Damages, Unjust enrichment.


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Environmental law — Interpretation of s. 99 of the Environmental Protection Act, R.S.O. 1990, c. E.19 — Caveat emptor — Damages — Unjust enrichment — Whether s. 99 applies to historical contamination — Whether s. 99 of the Act should be interpreted to apply to historical contamination even where there is no identifiable spill event — Whether historical contamination is properly classified as a “spill” — Whether a purchaser can circumvent caveat emptor by suing its neighbour — Whether purchasers are relieved from conducting due diligence and investigating — Whether a plaintiff can recover both civilly and statutorily for the same restoration costs — How are damages measured in environmental contamination cases — Whether a plaintiff is entitled to have its property remediated by administrative order and to receive damages for the cost of remediation — Whether courts can take “stigma,” restoration costs, and diminution in property value into consideration — What weight each factor should be given.

In 2007, the respondent Midwest Properties acquired property zoned “industrial”. The neighbouring property had been owned by the applicant Thorco Contracting Limited, which is owned and operated by the applicant John Thordarson, since 1973. Thorco used the property for servicing petroleum handling equipment and lining tanks. Various materials and wastes, including petroleum hydrocarbons (“PHCs”) were stored on Thorco’s property. Prior to the purchase, Thorco provided Midwest with environmental reports on the Thorco property. It also allowed Midwest to conduct environmental studies. PHC contamination was disclosed and Thorco was found to have been convicted of offences under the Environmental Protection Act in 2000. Thorco had not complied with the resulting orders and had continued to store waste improperly. Midwest then completed an environmental assessment of its own property and discovered PHC contamination of the soil and groundwater, along with a risk that PHCs could pose a health risk in its building. Experts indicated that remediation would cost $1,328,000. In 2012, the Ministry of the Environment ordered Thorco to take the steps necessary to restore the contaminated property, including Midwest’s property. When Thorco did not comply, Midwest sued Thorco and Mr. Thordarson for damages in negligence and nuisance, damages under s. 99(2) of the Act, and punitive damages. The action was dismissed at trial, but the respondents succeeded on appeal.