Firm News Alert

February 2021

Being Proactive with Environmental Claims

Case Study: Albert Bloom Ltd. v. London Transit Commission1

Howard Borlack
Howard Borlack,
Partner

Adam Ostermeier
Adam Ostermeier,
Associate Lawyer

by Howard Borlack and Adam Ostermeier

This matter involves the appeal of a third party's motion for summary judgement on the grounds of a claim being statute barred. The defendant, in this case, attempted to join the third party to the action several years after the claim began on the basis that they had no knowledge of their involvement until well after they replied to the plaintiff's claim. This case demonstrates, however, that what constitutes knowledge of a potential claim, and a party's obligation to further investigate potential claims when evidence is presented to them.

Facts

The case revolved around a dispute between the London Transit Commission (“LTC”) and Eaton Industries (“Eaton”). The LTC operated on a property comprised of three lots conveyed to it by the City of London (“London”).

          • In 1949, two of those three lots were conveyed by London to a predecessor of Eaton.
          • Eaton operated an auto part manufacturing facility on the property from 1949 to 1973.
          • Eaton then transferred the property back to London.
          • London, then transferred the property to LTC to form the three lot parcel it has today.
          • Albert Bloom Limited (“Bloom”) owns the property to the west of the LTC’s lots.
          • Ramsden Industries Limited (“Ramsden”) owns the property to the south-west of the Bloom property.

On February 3, 2012, LTC was notified of the results of a number of environmental reports that indicated Trichloroethylene (“TCE”) had contaminated the Bloom and Ramsden properties through the flow of groundwater. A majority of the reports claimed the LTC property was the likely source of the pollution. A statement of claim was later filed against LTC on April 30, 2013. LTC responded with a statement of defence and crossclaim in January 2014, denying any responsibility for the contamination.

... it had been determined that Eaton had operated a sludge pit on the property...

Throughout this process, Bloom repeatedly requested LTC to investigate its property and perform environmental testing which LTC refused to do. Eventually, this prompted counsel for Bloom to contact the Ministry of the Environment and Climate Change (“MOE”) who then launched an investigation in the summer of 2014. By March 2015, following the environmental studies, it was determined that Eaton had operated a sludge pit on the property, resulting in the most likely cause of the TCE pollution.

On March 16, 2016, LTC commenced a third party claim against Eaton for their contribution and indemnity as well as damages. In reply, Eaton moved for summary judgement stating the claim against them was past the limitation period. The motion judge agreed and dismissed the third party claim stating LTC had actual knowledge of a potential claim against Eaton as early as May 22, 2013, when they were provided with the environmental reports. Furthermore, just because LTC referenced claims against Eaton in their statement of defence, this did not create a new starting point for a limitation period to bring a claim against them, because LTC’s claims all arose from the same tortious conduct of Eaton prior to 1973.

Analysis

Upon appeal, LTC took the position from Crombie Property Holdings v. McColl-Frontenac Inc.2 which held that actual knowledge of the possibility of a claim is not the same as actual knowledge of a claim. Essentially claiming that because they never fully investigated the potential pollution by Eaton on the property until March 2015, there was no way they could have had actual knowledge of a claim until that point. As for constructive knowledge, LTC claimed that they relied on a consultant’s opinion, in good faith, that there was no contamination on their property, and they only found out that this was inaccurate upon the MOE’s request to commence testing. Additionally, they claimed that the prior owner allegations from their statement of defence were boilerplate language and not denoting knowledge in any way.

The Court did not find these arguments persuasive. In response to the matter of actual knowledge, the court found that Crombie was clearly distinguishable from the matter at hand. In Crombie, although phase one environmental testing produced no obvious indications of environmental concern, out of an abundance of caution at the recommendation of a consultant, the party proceeded to phase two testing which led to finding the contamination. LTC, on the other hand, received numerous reports saying that their property was a potential source of contamination with Eaton’s prior operations noted specifically as a concern in the majority of the reports. As well, they knew about the groundwater and Eaton’s operations on the property, which the court held constituted actual knowledge. As such the Court held that there was no need for phase two environmental testing for LTC to have actual knowledge of the contamination on a case-specific analysis.

Further to LTC’s position that there was no evidence demonstrating their "boilerplate" pleading represented actual knowledge of a potential claim, the court claimed this was the incorrect standard of review. Rather, LTC had an obligation to produce evidence that the pleading was boilerplate and could be ignored, which they failed to do. As such this point was unsuccessful.

... merely hiring professional advisors constituted meeting their burden...

On the point of constructive knowledge, LTC conceded upon appeal that they had an obligation to investigate the potential claim against Eaton earlier than it did, However, they still claimed they met their due diligence obligation by relying on the advice of their environmental consultant. The court immediately dismissed the advice of the environmental consultant as inadmissible hearsay, following the ruling of the motions court, and firmly rejected LTC’s stance that merely hiring professional advisors constituted meeting their burden. The Court stated that because LTC failed to provide any non-hearsay evidence of the consultant’s recommendations, they failed to provide any evidence upon which the Court could find that their actions were reasonable in the circumstances. As such, the court affirmed the position of the motion court that LTC had constructive knowledge of the potential claim.

Finally, LTC attempted several arguments with regard to extensions of the limitations period. In oral arguments, LTC stated that they intended to bring a claim under section 99 of the Environmental Protection Act which carries with it an extended limitation period. The Court swiftly rejected this argument as LTC failed to demonstrate intent to bring this claim in any prior pleadings and the Court noted it was against the interests of justice for an appellate court to consider a new argument on appeal. LTC also claimed that the motion judge erred in concluding that the claim against Eaton was not a continuing tort as the migration of contaminants from the sludge pit on the property was ongoing to present day. The Court held that this was a misrepresentation of the claim, as Eaton had not engaged in constant pollution of the property. RVB Managements Ltd. v. Rocky Mountain House (Town)3 was cited to illustrate that the legal injury must continue for a claim to be deemed continuing, not just the ill effects.

Conclusion

The Court ultimately dismissed the appeal and ordered LTC to pay Eaton costs of $25,000. This case highlights the importance of being proactive when an environmental claim arises. Failing to act when provided evidence of potential contamination arising from your property can lead to serious issues when trying to hold the proper parties accountable.

Read the full decision.


  1. Albert Bloom Limited v. London Transit Commission, 2021 ONCA 74
  2. Crombie Property Holdings Limited v. McColl-Frontenac Inc. (Texaco Canada Limited), 2017 ONCA 16 (CanLII)
  3. RVB Managements Ltd. v Rocky Mountain House (Town), 2015 ABCA 304 (CanLII)

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