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Flash: First Environmental Class Action Damages Award in Ontario

July 9, 2010

On July 6, 2010, the Ontario Superior Court of Justice awarded $36 million in damages to a class of approximately 7,000 residential property owners living in the vicinity of the Inco refinery in Port Colborne, Ontario. Other than in Québec, this is the first successful environmental class action in Canada.

The claim originally included damages for human health impacts but was scaled back to focus on property damages.

In finding for the plaintiffs, the Court found that property values had decreased following the issuance of a Ministry of Environment ("MOE") study which identified health concerns due to elevated nickel levels in soil caused by emissions from the Inco refinery. The Court awarded damages equal to the total decrease in residential property values despite accepting that nickel levels on the affected properties did not exceed MOE mandatory clean-up standards.

The refinery was confirmed to have had all requisite permits during operation and was in all relevant respects compliant with applicable laws and regulations. However, the successful claims were based in private nuisance and on Rylands v. Fletcher (i.e., non-natural use of property which leads to an escape causing damage), for which there is no due diligence defence. The Court concluded that the utility of Inco's operations to the community was either irrelevant or outweighed by the extent and degree of the damage to the affected residential neighbourhoods.

This award could have significant implications with respect to emissions from industrial operations that are otherwise considered to be immaterial and/or compliant with regulatory requirements, and will be of particular interest to legacy operations.

It is anticipated that Inco will appeal to the Ontario Court of Appeal.

If you have any questions regarding the foregoing, please contact Sarah Powell (416.367.6931), Alexandria Pike (416.367.6989) or Davit Akman in our Toronto office or Marc-André Boutin (514.841.6527) in our Montréal office.

Davies Ward Phillips & Vineberg LLP, with over 240 lawyers, practises nationally and internationally from offices in Toronto, Montréal and New York and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and international clients.

The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.

Expertise:
Environmental / Litigation

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