COURT OF APPEAL FOR ONTARIO
CITATION: Donleavy v. Ultramar Ltd., 2019 ONCA 687
DATE: 20190904
DOCKET: C64817 & C64813
Rouleau, van Rensburg and Benotto JJ.A.
DOCKET: C64817
BETWEEN
Sheila Donleavy and Kenneth Edwards
Plaintiffs
(Respondents/
Appellants by way of Cross-Appeal)
and
Ultramar Ltd.
Defendant
(Appellant/
Respondent by way of Cross-Appeal)
and
Kilpatrick Fuels Limited and Joe Burns
Defendants
(Respondents by way of Cross-Appeal)
DOCKET: C64813
AND BETWEEN
Sheila Donleavy and Kenneth Edwards
Plaintiffs
(Respondents)
and
Ultramar Ltd.
Defendant
and
Kilpatrick Fuels Limited and Joe Burns
Defendants
(Appellants)
David Zuber and James Tausendfreund, for the appellants/respondents by way of cross-appeal, Kilpatrick Fuels Limited and Joe Burns
Todd J. Burke and Benoit M. Duchesne for the appellant/respondent by way of cross-appeal, Ultramar Ltd.
S. Daniel Baldwin and R. Steven Baldwin, for the respondents/ appellants by way of cross-appeal, Sheila Donleavy and Kenneth Edwards
Heard: January 23, 2019
On appeal from the judgment of Justice Sylvia Corthorn of the Superior Court of Justice, dated December 14, 2017, with reasons reported at 2017 ONSC 7438.
van Rensburg J.A.:
OVERVIEW
[1] Sheila Donleavy and Kenneth Edwards (together “the respondents”), commenced an action against Kilpatrick Fuels Ltd. and its employee, Joe Burns, (together “Kilpatrick”) and Ultramar Ltd. (“Ultramar”), as a result of a fuel oil spill at their home in June 2008. Ultramar supplied oil to the respondents’ fuel oil tank on at least 23 occasions. Kilpatrick inspected the tank three times, including prior to the first delivery of oil in 2002.
[2] The tank was approved for indoor use and marked as such. Its installation and use outdoors contravened regulatory requirements. The tank failed due to corrosion from the inside out.
[3] The principal issues at trial were whether Kilpatrick and Ultramar were negligent; whether such negligence caused, at law, the fuel oil spill; and the degree of respective fault of the parties, including whether there was contributory negligence. Although the bulk of the damages were agreed ($750,000 for the subrogated interest of the homeowners’ insurer), there was also a dispute about the respondents’ claim for additional damages, including a claim for lost rental income.
[4] The trial judge found Kilpatrick and Ultramar liable for the discharge, but she also found contributory negligence on the part of the respondents. Both appellants admitted various breaches of the applicable regulations. Ultramar’s witness testified that Ultramar would not have supplied oil to the non-compliant tank, had it been aware that this was an indoor tank installed outdoors. Mr. Burns, the Kilpatrick employee who conducted the initial inspection, acknowledged that the tank should have been tagged and identified for removal. The trial judge found, among other things, that the appellants failed to discharge their obligations to the respondents to inspect the tank and to identify this deficiency before the oil supply commenced. She also found that the respondents failed to discharge their obligations as owners to maintain the tank. The trial judge apportioned 40% liability to the respondents, and 60% liability to Ultramar, one half of which it was entitled to recover from Kilpatrick on its crossclaim. She awarded a total of $30,000 for the respondents’ general non-pecuniary damages and dismissed their claim for lost rental income.
[5] Kilpatrick and Ultramar (together “the appellants”) appealed. Although each appellant raises a number of other issues, the thrust of their appeals is that the trial judge erred in applying the “material contribution” test for causation. They say that, even if they were in breach of various regulatory obligations, they did not meet the “but for” test in relation to the damages caused by the fuel oil spill. Ultramar also attacks certain aspects of the trial judge’s liability findings, and both appellants take issue with her allocation of liability. In the cross-appeal, the respondents challenge, among other things, the finding of contributory negligence and the treatment of their claims for damages.
[6] For the reasons that follow, I would dismiss the appeals and the cross-appeal.
FACTS
The Events at the Donleavy Home
[7] In 2002, Sheila Donleavy purchased a house in Rideau Ferry, near Perth, Ontario. Her partner, Kenneth Edwards, moved into the home in 2006. In January 2008, they rented the house to another couple and moved into an addition to the house. The renters were living in the main house when the oil spill occurred in June 2008.
[8] A 900-litre fuel oil tank of an unknown age was located outdoors when Ms. Donleavy purchased the house in 2002. The tank bore an Underwriters Laboratories of Canada (ULC) label reading “INSIDE TANK FOR OIL BURNER FUEL”. This meant that the tank was manufactured for indoor use only. There was no legible date of manufacture on the ULC label, simply 19_9. The evidence at trial was that the tank was most likely manufactured in 1979 or 1989.
[9] Ultramar supplied oil throughout the relevant period, first under a fuel oil delivery contract with Ms. Donleavy, and then, starting in January 2008, under contract to the tenant, Edward Noftall. There were at least 23 deliveries of fuel oil by an Ultramar subcontractor, Glenn Nesbitt, with the last delivery on May 1, 2008, about one month before the fuel oil spill.
[10] A comprehensive inspection of the tank by the fuel oil supplier (Ultramar) was required before supply could commence. The objective of the inspection was to determine whether the tank complied with the regulatory regime then in force so as to permit fuel oil to be delivered to the tank. The inspection was performed by Ultramar’s subcontractor, Kilpatrick, under a burner service contract. The burner service contract was in place between 2002 and 2004, and provided for Kilpatrick to carry out any service required on an Ultramar customer’s fuel oil-burning heating equipment during the contract period, including inspections of oil tanks for Ultramar’s new customers.
[11] On October 1, 2002, Joe Burns, a Kilpatrick employee, and licensed oil burner technician (“OBT”), visited the Donleavy property to conduct the pre-delivery inspection of the tank. The tank inspection report was on a form for an indoor tank and Mr. Burns stated that the tank was “from the 1990s”. However, in the inspection reports submitted to Ultramar, Mr. Burns failed to indicate the year of manufacture of the tank (or that he was unable to determine this information) or that the tank was labelled for indoor use and installed outdoors. Although there were a number of deficiencies, the tank inspection report identified only two elements of non-compliance with the regime: that the tank rested on wood and that a new oil gauge was needed.
[12] Mr. Burns issued a “no charge” Ultramar invoice to Ms. Donleavy (this time indicating that the tank was “outside” and showing “1996” as its age), which indicated that the tank was on wood and that a new oil gauge was needed and then stated “Everything else up to Code!”, even though Mr. Burns had checked the box indicating that the tank was installed outdoors. As noted, the applicable regulations prohibited the outdoor installation of a fuel oil tank manufactured for indoor use.
[13] On October 8, 2002, another Kilpatrick employee, also an OBT, David Hitchcock, conducted a follow up visit. The invoice prepared that day recorded the age of the tank as “more than 20 years”, that the technician had “lifted oil tank and removed old wood underneath and replaced with patio stones, ran new line”; and stated: “Tank now up to Code – B139, section 14”. (As noted below, B-139 is a reference to the Installation Code for Oil-Burning Equipment.)
[14] Ultramar received the reports and invoices from Kilpatrick, did not identify any problems, and proceeded with the fuel oil supply. Ultramar’s subcontractor, Glenn Nesbitt, made at least 23 deliveries of fuel oil between October 2002 and June 2008, when the oil spill was discovered. Although on every delivery a visual inspection of the tank was required, at no time did Mr. Nesbitt notify Ultramar that the tank, though installed outdoors, was labelled for indoor use. Nor did he communicate any other concerns in relation to the tank.
[15] On March 9, 2007, following a no-heat call made by Mr. Edwards directly to Kilpatrick, a Kilpatrick employee attended at the residence. The employee replaced the blower motor and capacitor but did not inspect the fuel oil tank.
[16] On June 6, 2008, Mr. Edwards met with a sales associate from Stinson Propane, Thomas Carmichael, to discuss the possibility of converting to propane heat. On that occasion, Mr. Edwards noticed that the tank was approximately half-full.
[17] On June 12, 2008, Mr. Edwards received a call from Mr. Noftall, the tenant of the house, saying there was no oil in the tank. Mr. Edwards walked around the tank and noticed the oil spill, including discolouration of the soil, dead flowers near the tank, and a drip of oil from the bottom of the tank.
[18] There was no issue at trial (or on appeal) about the physical cause of the tank failure and oil discharge. Stein Pedersen, a professional engineer and metallurgist who testified for the respondents as an expert witness, tested the tank after it failed, and determined that the tank corroded from the inside out because of water that accumulated in the bottom of the tank. The corrosion caused a hole in the bottom of the tank from which the oil leaked.
[19] The homeowners’ insurer was immediately contacted once the oil spill was discovered. Ms. Donleavy and Mr. Edwards were required to move out of the addition to their home and the tenants moved from the main home. The respondents did not return to the Rideau Ferry home and relocated to Perth.
The Regulatory Regime
[20] The regulatory regime was and remains essential to the parties’ arguments and was the foundation of the trial judge’s analysis of the duty and standard of care. Although disputed at trial, there is no real question on appeal that the standard of care required, at a minimum, compliance with the regulatory requirements. And, although the regulatory regime changed over time, ultimately there is no dispute on appeal about what regulatory provisions were applicable in respect of the Donleavy oil tank. As I note later, the parties take issue with the trial judge’s interpretation of some of the regulatory provisions (in respect of the inspection duties of the subcontractor, Nesbitt, and of the respondents as owners of the tank) in their arguments about allocation of liability. I set out here the main regulatory provisions relied on by the parties, and referred to by the trial judge.
[21] The general scheme is set out in the Technical Standards and Safety Act, 2000, S.O. 2000, c. 16 (the “Act”). O. Reg. 213/01 (the “Fuel Oil Regulation”) was made pursuant to the Act. Fuel oil codes as they may be varied from time to time are adopted by reference: O. Reg. 223/01. CAN/CSA-B139-00 Installation Code for Oil-Burning Equipment (the “2000 Code”) was in force from October 1, 2001 to March 1, 2007, when the updated 2006 Code came into effect.
[22] Oil-burning equipment installed prior to the implementation of the Fuel Oil Regulation was required to have complied with the predecessor regulation - the Fuel Oil Code Regulation, R.R.O. 1990, Reg. 329 - at the time of installation. Under that regulation, the predecessor fuel oil codes, CSA Standard B139-1976 (the “1976 Code”) and CAN/CSA-B139-M91 (the “1991 Code”) were applicable and had the force of law.
[23] The Fuel Oil Regulation applies to the installation, testing, maintenance, repair, removal, replacement, inspection and use of appliances, equipment, components and accessories where fuel oil is to be used as a fuel: s. 2(1). Every person engaged in an activity or the use of fuel oil equipment governed by the Act or the Fuel Oil Regulation is required to comply with the regulation: s. 3(1).
[24] The Fuel Oil Regulation prohibits the supply of fuel oil by a distributor (in this case Ultramar) unless the distributor is satisfied that the installation and use of the appliance or work complies with the regulation, and unless the distributor has inspected the appliance or work at least once within the previous ten years or has inspected the appliance or work in accordance with a quality assurance inspection program: s. 7(1). The pre-delivery inspection conducted by Kilpatrick was an inspection intended to comply with s. 7(1). Section 19 of the Fuel Oil Regulation provides that “no person shall operate or permit to be operated an appliance or tank system unless it is maintained in a safe operating condition and it complies with [the] Regulation.”
[25] According to the Fuel Oil Regulation, certain procedures are required to be followed by any distributor who is informed or finds during delivery or an inspection that an appliance or tank system is in an unacceptable condition. “Unacceptable condition” includes where the appliance, container or work “is being used for a purpose other than that for which it was approved” or where the condition of the state of repair, the mode of operation or the operating environment of the equipment “is likely to impair its safe operation or does not meet the requirements of [the] Regulation”: s. 22(1).
[26] An appliance or tank system that is in an unacceptable condition must be tagged as an immediate or non-immediate hazard. If tagged as an immediate hazard, supply of fuel oil is prohibited until the distributor obtains written evidence of the correction of the hazardous condition. If there is a non-immediate hazard, the owner will be given a specified period of time of no more than 90 days to replace the tank or to make it compliant with the regime. After that time period, any delivery of oil to the non-compliant tank is prohibited: ss. 22-24.
[27] Similar duties apply to certificate holders (OBTs) and contractors who find an appliance or tank system to be in an unacceptable condition: ss. 25-26.
[28] Under each applicable Code, to be approved for installation and use, a fuel oil tank must be designed and constructed to the appropriate ULC Standard. Fuel oil tanks manufactured to the M77 Standard[^1] and M81 Standard[^2] were required to bear a label reading “INSIDE TANK FOR OIL BURNER FUEL”, or a similar notation, and could only be installed for use indoors. By contrast, fuel oil tanks certified to the M92 Standard[^3] (which applied only in and after 1992), could be installed and used both inside and outside, and would bear a different label.
[29] In March 2006, a Director’s Order, made pursuant to s. 36(3) of the Act, allowed indoor tanks that were installed outdoors to continue to be used, but only if the following two conditions were met:
Every calendar year, the external condition of the tank and the installation is visually inspected and accepted by the fuel oil distributor.
Following the tank and installation inspection, a written record of the inspection shall be provided to the tank owner/operator.
[30] Article 14 of the 2000 Code required maintenance, at least annually, of oil-burning appliances, including the requirement to inspect a fuel oil tank and lines for leaks, and to effect any required repairs. Under Article 13 of the 2006 Code, adopted March 1, 2007, the annual maintenance obligation was specified to be that of the “owner”, and required a dip test (to check for water in the tank) on metallic end-outlet tanks (such as the respondents’ tank), with the removal of any water found in the tank. In October 2007, the dip test requirement was limited to end-outlet tanks located outdoors. The document setting out this amendment was posted to the website of the Technical Standards and Safety Authority (the “TSSA”), the agency that has administered and enforced the regulatory regime since 1997.
[31] None of the appellants ever tagged the respondents’ oil tank as non-compliant with the regime because it was an indoor tank installed outdoors, or for other any reason. While owned by the respondents, the tank was never subject to inspection or maintenance, apart from the visits in October 2002 and March 2007.
The Trial
[32] At trial, the respondents argued that Ultramar and Kilpatrick were liable under both tort and contract law. They submitted that the appellants could have prevented the oil spill had they met their minimum obligations under the regulatory regime. They also asserted that the appellants had breached their contractual obligations: Ultramar under the oil supply contract with Ms. Donleavy, and Kilpatrick in March 2007 under its service contract with Mr. Edwards.
[33] The respondents claimed $750,000 for the homeowners’ insurer’s subrogated interest (this amount was agreed between the parties), $100,000 in general non-pecuniary damages for Ms. Donleavy, $75,000 in general non-pecuniary damages for Mr. Edwards, and $28,800 in loss of rental income.
[34] The appellants also crossclaimed against each other for contribution and indemnity. Ultramar relied on its burner service contract with Kilpatrick in place from 2002 to 2004, while Kilpatrick argued that Ultramar failed to satisfy its statutory and other requirements as the “distributor” under the regime.
[35] At the ten-day trial, Ms. Donleavy and Mr. Edwards testified. The following witnesses also testified on their behalf: Wayne Pilon (the TSSA Fuel Safety Inspector who attended at the property the day after the spill was discovered); Ralph Sumabat (an Engineer Specialist, Fuels Program with the TSSA); and Frank Amo (a former employee of the TSSA) and Stein Pedersen (a professional engineer and metallurgist), who testified as expert witnesses.
[36] Kilpatrick’s witnesses were its principal, Carl Kilpatrick, as well as technicians Joe Burns and David Hitchcock, Mr. Carmichael from Stinson Propane, and expert witness James Roberts, a former employee of a predecessor to the TSSA.
[37] Ultramar called its employee Larry Sauve, who, at the time was a service inspector with responsibility for the relevant region.
THE TRIAL DECISION
[38] The trial judge began her reasons by emphasizing the central role of the regulatory regime. She stated, at paras. 2 and 3:
The supply and use of fuel oil are governed by a series of provincial statutes, regulations, and other documents (“the regime”). At the heart of the regime is the protection of the public and of the environment. The regime reflects the complexity of regulating the use of and supply of oil to a fuel oil-burning heating system. Of necessity, the requirements of those involved in the fuel oil industry and of people who rely on fuel oil-burning heating systems change over time – so as to address advancements in the industry and an increased understanding of the hazards arising from reliance on fuel oil.
The outcome in this case turns on an assessment, in the context of the regime as it changed from 2002 to 2008, of the obligations of the homeowners, the fuel oil supplier, and a sub-contractor to the fuel oil supplier.
[39] The trial judge noted, at para. 21, the appellants’ admission that there was a regulatory or statutory breach in respect of the work completed at the Donleavy property on October 1 and 8, 2002. Their position was that proof of such breach was insufficient, and that the respondents had failed to establish a causal link between the breach and the oil leak. They also argued that the respondents had failed in their obligations, as owners, to maintain the tank, and, from 2007, to conduct an annual inspection that included a dip test.
[40] The evidence of the factual cause of the oil spill was uncontradicted. The tank corroded from the inside out due to water that had accumulated in the bottom of the tank. The corrosion created a hole in the bottom of the tank from which the oil leaked in June 2008: at para. 44.
[41] The trial judge concluded that the appellants all owed a duty of care to the respondents (this is not at issue in the appeal): at para. 53.
[42] The trial judge concluded that the standard of care was informed by the regulatory regime requirements, which changed over the years in question. She noted that, “given the regime requirements over time, the label on the tank, in combination with the appearance of the tank and the outdoor location of the tank, was sufficient to trigger obligations on the part of each of the parties to this action”: at para. 52.
[43] The trial judge held that the Kilpatrick employees were negligent in failing to address the lack of compliance with the regime and the potential for the tank needing replacement when they attended at Ms. Donleavy’s home on October 1 and 8, 2002: at paras. 77, 87. The non-compliant tank ought to have been tagged, which then would have required the homeowner to be advised and remedial steps to be taken: at paras. 75, 76. There was also negligence when the Kilpatrick employee who attended in March 2007 following a no-heat call failed to inspect the entire fuel oil-burning heating system, to identify the deficiencies and to tag the system: at paras. 101, 102.
[44] The trial judge found that, based on photographs of the heating system taken in the days following discovery of the oil leak, the heating system had a number of deficiencies apart from the location of the indoor fuel oil tank outdoors, including its location under a drip edge on the roof with no protection from snow and ice. She concluded that the failure of the Kilpatrick employees to identify any one or more of the other deficiencies was part of an overall pattern of work that fell below the standard required, contributed to the tank not being tagged and removed or subject to annual inspection, and was unreasonable in the circumstances: at paras. 104, 105, 107.
[45] Kilpatrick was found vicariously liable for the negligence of its employees during the three visits to the property, in failing to properly inspect and to tag the tank: at paras. 77, 87, 102, 147-149.
[46] The trial judge concluded that Ultramar was negligent in 2002 because it: (1) failed to review the Kilpatrick documents and from them identify and then address discrepancies as to the location of the tank; (2) failed to obtain a report of a comprehensive inspection following the October 1 and 8 attendances; and (3) failed to postpone oil delivery until there was confirmation that the tank was installed properly. Ultramar was also negligent in not having conducted annual inspections of the tank, which were required as a condition of the continued installation of an indoor tank outdoors after the 2006 Director’s Order. Finally, Ultramar was vicariously liable for the negligence of its subcontractor Mr. Nesbitt, who failed to conduct a basic visual inspection of the tank during all of his deliveries of fuel oil to the Donleavy home: at paras. 115, 129, 143, 150-152.
[47] The trial judge then turned to causation. She stated that, in determining causation, she was relying on the material contribution test: at para. 155. She concluded that the negligence of Kilpatrick and Mr. Burns in October 2002 in failing to tag the tank as non-compliant materially contributed to the respondents’ injuries and losses, as Ms. Donleavy would have replaced the tank had she been told she was required to do so: at paras. 157, 158. The trial judge also concluded that Ultramar’s failure to fulfill its obligations under the regime prior to the first delivery of fuel oil, and over time, along with the repeated failure of its subcontractor to inspect the tank, materially contributed to the respondents’ injuries and losses: at paras. 160, 166.
[48] Because of the absence of evidence of the timing of the corrosive process, and the presence of water in the tank at particular times, the trial judge did not find that the negligence of the Kilpatrick employee in March 2007 or of Ultramar in failing to inspect the tank in 2006 or 2007 (as required by the Director’s Order), materially contributed to the respondents’ losses: at paras. 159, 162.
[49] The trial judge found contributory negligence on the part of the respondents in their failure to maintain their heating system: at para. 173. The trial judge apportioned 60% liability for the respondents’ damages to Ultramar and 40% to the respondents: at para. 178. She then held that Ultramar was entitled to recover from Kilpatrick half of the amounts for which it was liable to the respondents and she dismissed Kilpatrick’s crossclaim against Ultramar: at paras. 182, 183.
[50] The trial judge refused to make findings on the terms of the contracts between Ms. Donleavy and Ultramar, and between the respondents and Kilpatrick, as the contracts were not in evidence: at paras. 186, 188.
[51] The trial judge assessed the damages as follows: $750,000, as the agreed amount for the homeowners’ insurer’s subrogated interest, $20,000 in general non-pecuniary damages for Ms. Donleavy, and $10,000 in general non-pecuniary damages for Mr. Edwards. She dismissed the respondents’ claims for loss of rental income: at paras. 190, 203, 208.
ISSUES ON APPEAL
[52] A number of issues are raised by the parties in the appeals and cross-appeal, the most significant being causation. In particular, the appellants say that the trial judge erred in applying the “material contribution” test. The appellants contend that the trial judge resorted to “material contribution” because she could not apply the “but for” test, that “but for” causation is precluded by certain specific findings of the trial judge, and that in any event there was a “missing link” in the trial judge’s causation analysis – that she did not, and could not find that, if the respondents’ tank had been replaced, the replacement tank would not have failed. While the respondents agree that the trial judge ought not to have said she was applying the material contribution test, they argue that in fact the trial judge applied the “but for” test, or alternatively that “but for” causation is readily found based on the trial judge’s findings of fact, or on an assessment of the evidence at trial. Further they say that the fact that a replacement tank would not have failed was, if not an explicit finding, implicit in the trial judge’s reasoning, and a common sense inference supported by the evidence.
[53] Ultramar also challenges the trial judge’s findings that it had duties to inspect the oil tank during fuel oil delivery, and duties to inspect under the Director’s Order, and that it was in breach of such duties. Instead, Ultramar contends that the duty of inspection was entirely that of the respondents, as part of the required annual maintenance that they as “owners” of the tank were required to perform, and under a proper interpretation of the Director’s Order.
[54] The parties also dispute the trial judge’s allocation of fault – both as between the appellants, and with respect to contributory negligence. The appellants argue that the respondents, as owners of the system, ought to have been found to be entirely or largely at fault. The respondents say that the trial judge erred in finding contributory negligence and that she ought to have found Ultramar and Kilpatrick jointly and severally liable. The apportionment of fault as between the appellants is also at issue.
[55] The respondents assert that the appellants ought to have been found liable for breach of contract, since breach of the regulatory regime would constitute a breach of an implied contractual term.
[56] Finally, Kilpatrick contends that the trial judge ought not to have awarded general damages for loss of property, while the respondents argue that she erred in refusing to award damages for their claim for loss of rental income.
ANALYSIS
Issue 1: Causation
[58] A finding of causation is typically reviewable for palpable and overriding error: Ediger v. Johnston, 2013 SCC 18, [2013] 2 S.C.R. 98, at para. 29. That said, the argument here is that the trial judge made a legal error in applying the wrong legal test for causation. That error would be reviewable on a standard of correctness: Housen, v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8.
[59] The parties agree that the trial judge articulated the wrong test for causation. They disagree about what happened next. The respondents argue that, after referring to the wrong test, the trial judge in fact went on to apply the “but for” test, and that in any event the evidence supports the application of that test for causation in this case.
[60] The appellants contend that the trial judge’s resort to the “material contribution” test occurred after she concluded that the “but for” test for causation could not be made out against them. Further, the appellants assert that the trial judge specifically stated that she could not make the necessary findings for “but for” causation – and that, if she had used the “but for” test, the respondents’ action against them necessarily would have failed.
[61] As I will explain, the trial judge appears to have misinterpreted the leading case, Clements v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181, and what is meant by the “but for” and “material contribution” tests for causation. It appears that she decided that she had to apply the “material contribution” test because there were multiple actors (including the respondents), whose conduct was at issue, and she may well have assumed that the “but for” test required the identification of a single negligent act that was the sole cause of the respondents’ loss or injury. When the trial judge spoke of each appellant’s “material contribution to the [respondents’] loss and injury”, she was in fact applying the “but for” test. The trial judge made certain findings of fact that are consistent with “but for” causation in this case, and her reasons, when read fairly and in their entirety, do not preclude, but rather support, a finding against all of the appellants of “but for” causation.
(i) “But for” is the correct test for causation in this case
[62] The “but for” test is generally applied in establishing causation in the tort of negligence. It requires a plaintiff to prove, on a balance of probabilities, that without the negligence of one or more of the defendants, the injury would not have occurred. A defendant’s negligence is thus a necessary factor to bring about the injury: Clements, at para. 8.
[63] The “but for” test applies even where a defendant’s negligence is not the sole cause of the plaintiff’s injury. A defendant will be liable for all injuries caused or contributed to by his or her negligence, even if other non-tortious causes are present: Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458, at paras. 12, 17. Indeed, there are usually a number of background factors that cause an injury and not only a single cause. A defendant only needs to be “a” cause of “some” harm to be found liable in tort: Erik S. Knutsen, “Clarifying Causation in Tort” (2010) 33:1 Dal. L.J. 153 at p. 159.
[64] The alternative, and exceptional, basis on which legal causation can be established is where the defendant’s act or omission “materially contributed” to the plaintiff’s risk of injury. As McLachlin C.J.C. pointed out in Clements, at para. 46, “material contribution” eliminates the need to prove factual causation, and it is the appropriate test only in exceptional cases:
Exceptionally, a plaintiff may succeed by showing that the defendant’s conduct materially contributed to risk of the plaintiff's injury, where (a) the plaintiff has established that her loss would not have occurred “but for” the negligence of two or more tortfeasors, each possibly in fact responsible for the loss; and (b) the plaintiff, through no fault of her own, is unable to show that any one of the possible tortfeasors in fact was the necessary or “but for” cause of her injury, because each can point to one another as the possible “but for” cause of the injury, defeating a finding of causation on a balance of probabilities against anyone.
[65] I emphasize here that the alternative basis for legal causation is the defendant’s material contribution to risk of injury (and not, as I point out below, material contribution to the plaintiff’s loss or damage). Material contribution is not a test of causation but a policy-oriented rule that imposes liability on the basis of tortious risk creation. The departure from the general “but for” rule is justified in these specific cases, because it satisfies the underlying goals of negligence law: Clements, at para. 41; Lewis N. Klar & Cameron S.G. Jefferies, Tort Law, 6th ed. (Toronto: Thomson Reuters, 2017), at p. 545.
[66] In this case the trial judge began her discussion of causation at paras. 153 and 154, where she correctly observed that, in the usual case, causation is determined on a “but for” standard, and that in exceptional cases, a defendant might be held liable on the basis of “material contribution” to the risk of injury or loss. The trial judge stated:
To succeed in an action in negligence, a plaintiff must demonstrate on a balance of probabilities that the defendant’s breach of the standard of care is causally connected to the injuries or losses alleged. In all but exceptional cases, the test for causation is the “but for” test: a plaintiff has the onus of establishing that their injuries or losses would not have occurred without the defendant’s negligence (see Clements v. Clements, 2012 SCC 32, at para. 8).
Exceptional cases include where there are negligent acts by multiple actors and it is established that one or more of them in fact caused the injuries or losses, but the plaintiff is unable to determine which of a number of negligent acts caused the injuries or losses. In such cases, a defendant may be held liable on the basis that his or her acts and omissions “materially contributed” to the risk of injury or loss (Clements, at para. 13).
[67] The trial judge then went on to conclude that this case fell within the meaning of “exceptional cases” and she stated that, in determining causation, she would rely on the material contribution test. Her explanation for resorting to the “material contribution” test was that there were three named defendants, and more than three actors whose conduct was considered, including the plaintiffs: at para. 155.
[68] The fact that there are multiple defendants, or more than one potential cause of an injury, is not a reason to depart from the “but for” test for causation: Resurfice Corp. v. Hanke, 2007 SCC 7, [2007] 1 S.C.R. 333, at para. 19. McLachlin C.J.C. emphasized in Clements that “but for” causation continues to apply as the default test in cases where there are multiple tortfeasors, and that something more is required before the material contribution to risk approach is warranted. She stated, at para. 43:
It is important to reaffirm that in the usual case of multiple agents or actors, the traditional “but for” test still applies. The question… is whether the plaintiff has shown that the negligence of one or more of the defendants was a necessary cause of the injury. Degrees of fault are reflected in calculations made under contributory negligence legislation. By contrast, the material contribution to risk approach applies where “but for” causation cannot be proven against any of multiple defendants, all negligent in a manner that might have in fact caused the plaintiff’s injury, because each can use a “point the finger” strategy to preclude a finding of causation on a balance of probabilities.
[69] The critical threshold, then, for the application of the material contribution to risk approach is the impossibility of proving which of two or more possible tortious causes is in fact a cause of the injury. Before resorting to material contribution, it is necessary to establish that fault or negligence caused the event and that there is more than one negligent actor, but that it is impossible for the plaintiff to tease out whose negligence was a “but for” cause.
[70] Professor Knutsen, in “Coping with Complex Causation Information in Personal Injury Cases” (2013), 41: 2 and 3 Adv. Q. 149, notes that the fact that there are multiple tortfeasors and an indivisible injury does not mandate the use of the “material contribution” test. Rather, he states, at pp. 153-154:
Nothing in the Clements case’s approach to the material contribution test alters traditional damages and contribution doctrinal analyses whereby multiple tortfeasor defendants may be partially responsible for some of a plaintiff’s injury, but not all of it (i.e., divisible and indivisible injuries) after they have been proven to be a cause of some of the plaintiff’s harm. The Clements analysis concentrates entirely on the causation threshold question – did the defendants cause the plaintiff’s injury, yes or no. It does not target the “how much” question. That is a damages question, not causation, and left for later on in the negligence analysis (along with joint and several liability issues about responsibility to pay for the harm).
In nearly all instances [of an indivisible injury involving multiple tortfeasors], it will be possible for the plaintiff to apply the “but for” test in proving that the target tortfeasors’ negligent conduct was a cause of some of the global total harm. If the question is about “how much” of that harm each target tortfeasor is responsible for, that is not a causation question but one of extent and damages, dealt with later in the negligence analysis. The fact that the injury is indivisible does not affect the workability of the causation test.
[71] Indeed, this point was made by McLachlin C.J.C. in Blackwater v. Plint, 2005 SCC 58, [2005] 3 S.C.R. 3, a case involving civil liability for sexual assault. The Chief Justice stated, at para. 78:
It is important to distinguish between causation as the source of the loss and the rules of damage assessment in tort. The rules of causation consider generally whether “but for” the defendant’s acts, the plaintiff’s damages would have been incurred on a balance of probabilities. Even though there may be several tortious and non-tortious causes of injury, so long as the defendant’s act is a cause of the plaintiff’s damage, the defendant is fully liable for that damage. The rules of damages then consider what the original position of the plaintiff would have been. [Emphasis added.]
[72] Even in the “but for” context, there are situations involving multiple defendants where courts have used “contribution” language to recognize that a defendant’s negligence is “a” cause of the plaintiff’s injury. This is a potential source of confusion. The phrase “caused or contributed” is used in the Negligence Act, R.S.O. 1990, c. N.1, s. 1. As Lauwers J.A. observed in Sacks v. Ross, 2017 ONCA 773, 417 D.L.R. (4th) 387, leave to appeal refused [2017] S.C.C.A. No. 491, at para. 117, this is the way the causation test has been described in several cases in the Supreme Court (including as I noted earlier in Athey), and in this court; see also White v. St. Joseph’s Hospital (Hamilton), 2019 ONCA 312, at para. 25. Causation is made out under the “but for” test if the negligence of a defendant caused the whole of the plaintiff’s injury, or contributed, in some not insubstantial or immaterial way, to the injury that the plaintiff sustained. Causation requires a “substantial connection between the injury and the defendant’s conduct”: Resurfice, at para. 23, Clements, at paras. 20-21, 28. As Paciocco J.A. noted in Smith v. Safranyos, 2018 ONCA 760, at para. 128, McLachlin C.J.C.’s reference to “a robust and common sense application of the ‘but for’ test of causation” is a “manifestation of this limit”. Used in this way, the conclusion that one or more defendants “materially contributed” to a plaintiff’s injury or loss simply recognizes that the defendant’s negligence was not the only cause.
[73] Accordingly, even in a case where there are multiple tortfeasors, the “but for” test presumptively will apply. In the case of a negligent omission, as in the present case, the application of the “but for” test requires the trier of fact “to attend to the fact situation as it existed in reality the moment before the defendant’s breach of the standard of care, and then to imagine that the defendant took the action the standard of care obliged [it] to take, in order to determine whether [its] doing so would have prevented or reduced the injury”: Sacks, at para. 46. The “but for” causation question in respect of each appellant, is whether, if that party had discharged its duty to the respondents, and had not been negligent, the oil spill would have been prevented.
(ii) The Trial Judge in Fact Applied “But For” Causation in This Case
[74] As I will now explain, the trial judge, after incorrectly identifying the test that she was to apply, effectively went on to apply the “but for” test, rather than the “material contribution” test. She found “but for” causation in respect of the negligence of each of the appellants, when she explained that the oil discharge would not have happened if they had done what they were supposed to have done, and then concluded that their negligence “materially contributed” to the respondents’ loss and damage.
[75] If the trial judge had truly applied a “material contribution” test, she first would have had to conclude that it was impossible to determine the factual cause of the fuel oil discharge (through no fault of the respondents), and then to have determined legal cause by considering whether the conduct of an appellant that could not be causally linked to the respondents’ injury materially contributed to the risk of injury. She would have had to conclude that each appellant was negligent, but that it was impossible to say whose negligence caused the injury.
[76] The trial judge did not proceed in this way. She did not conclude that it was impossible to say whose negligence caused the respondents’ injuries and losses resulting from the oil spill. Instead, the trial judge concluded that, if Kilpatrick had conducted a proper comprehensive inspection, the fuel oil tank would have been tagged, removed and replaced: at para. 156. In Ultramar’s case, the trial judge, after referring to its failure to receive a report of a comprehensive inspection that met the requirements of the regime, and the failings of its subcontractor when delivering fuel oil, stated that the spill was “precisely the end result that would have been avoided if Ultramar had fulfilled its obligations pursuant to the regime from the outset and over time”: at para. 166.
[77] These are findings of “but for” causation, although the trial judge stated her conclusions in “material contribution to injuries and losses” language (not “material contribution to risk”). She stated that the negligence of Kilpatrick’s employees in failing to conduct a proper inspection in October 2002, that would have resulted in the tagging of the fuel oil tank and the delivery of oil only if it was replaced by a new tank, “materially contributed to” the injuries and losses ultimately suffered by the respondents: at para. 158. Similarly, the trial judge described Ultramar’s negligence in failing to ensure it received a proper comprehensive inspection report, and in the repeated failure of its subcontractor to inspect the tank on each delivery, before concluding that Ultramar’s negligence also materially contributed to the respondents’ injuries and losses: at paras. 156-158, 160, 166.
[78] The appellants argue that the trial judge resorted to the “material contribution” test for causation, as she purported to do, because she recognized that she was unable to make the necessary factual findings for “but for” causation. They point to the absence of evidence about the specific condition of the tank in 2006 and 2007 and the timing of when water began to accumulate in the tank and the progress of the corrosive process. They refer to Gendron v. Thompson Fuels, 2017 ONSC 4009, aff’d 2019 ONCA 293, in which there was evidence with respect to the rate of corrosion leading to a discharge from a fuel oil tank, and they say that the absence of this type of evidence in this case was fatal to any finding of “but for” causation.
[79] I do not accept this argument, which is not supported by the trial judge’s reasons. The absence of evidence of the timing of the corrosive process meant that the trial judge could not find a causal link between the discharge and Ultramar’s failure in 2006 and 2007 to inspect the tank (as required by the Director’s Order), and Kilpatrick’s failure to inspect the tank in 2007, when it would have remained compliant as an indoor tank installed outdoors: at paras. 159, 162, 163. Because the timing of the corrosive process could not be established, it was impossible to know whether an inspection would have revealed water in the tank to the extent that it would have needed to be replaced. For this reason, the trial judge concluded that there was insufficient evidence to find that these negligent acts “in isolation” caused the respondents’ losses (or as she stated, that they “materially contributed to” such losses).
[80] The timing of the corrosive process however was not essential to the conclusion that the appellants’ other negligent omissions were a cause of the discharge (or using the trial judge’s wording, “materially contributed to” the respondents’ losses). If an appellant had identified that the tank was an indoor tank installed outdoors, Ultramar would not have supplied fuel oil unless that tank had been replaced, irrespective of whether it showed signs of corrosion or was still sound. This is why the trial judge observed, at para. 49, that the specific timing of the corrosive process was “not relevant to the outcome of the case”.
[81] As for the appellants’ reliance on Gendron (another case involving a fuel oil discharge from a tank that corroded from the inside), evidence about the rate of corrosion was part of the causation analysis in that case, because the tank was an indoor tank, installed indoors, and only eight years old. There was no regulatory requirement for removal or replacement of the tank, nor was it suggested that the age and location of the tank contributed to its failure. Rather, the question was whether the oil supplier ought to have detected the accumulation of water in the tank, and so prevented the discharge. The finding that water had accumulated over a lengthy period and would have been detected if the supplier had tested for water in 2006 or 2007 was part of the causal analysis: see Gendron (appeal), at para. 54.
[82] I therefore reject the appellants’ argument that the trial judge in fact applied the “material contribution” test after she had determined that it was impossible to find “but for” causation. Rather, she appears to have proceeded on a misunderstanding of the material contribution test, and concluded that it was required simply because there were multiple parties whose conduct was at issue. Her causation findings, although expressed in terms of “material contribution” to the respondents’ loss or damage, are “but for” findings: she concluded that the discharge would have been avoided if Ultramar or Kilpatrick had tagged the tank, thus preventing the delivery of fuel oil unless it was replaced. In these circumstances, where the trial judge made findings that demonstrate that the “but for” test was satisfied, her error in the identification of the applicable test is not a reversible error: see McKenzie v. Lloyd, 2018 BCCA 289, [2019] 3 W.W.R. 352, at paras. 50-52.
(iii) There is no missing link - “but for” causation was made out in this case
[83] Next, I turn to the submission of Kilpatrick in oral argument of the appeal that there was a fatal missing link in the trial judge’s causation analysis. Kilpatrick argues that, if the negligence of the appellants was in their failure to identify that the indoor tank required replacement, and in continuing to supply fuel oil to a non-compliant tank, causation could only be made out if any replacement tank for outdoor use that had been installed in 2002 would have been less susceptible to corrosion. Kilpatrick asserts that the trial judge made no such finding, and that such a finding is not supported by the evidence. It is unclear whether any such argument was made before the trial judge. In her detailed and comprehensive reasons, she did not specifically address any such argument.
[84] In my view, although she may not have expressly articulated the connection, when the trial judge concluded that the appellants’ failure to properly inspect and tag the tank “materially contributed to the loss” (in effect, that this conduct was a cause of the loss), it was implicit that, if the tank had been replaced by a new outdoor tank, it likely would not have corroded and leaked. This was a “common sense” inference available to the trial judge on the evidence and consistent with her findings.
[85] There was no direct evidence at trial, whether through an expert or otherwise, that a new tank installed in 2002 would have been just as likely to have failed as the respondents’ tank. Rather, all of the relevant witnesses agreed that the age, location and condition of a fuel oil tank correlate with its propensity for failure:
• Stein Pedersen, an expert witness for the respondents, confirmed that the longer a tank is exposed to an environment that includes corrosive elements, the more likely it is to develop internal corrosion, and that this tank was so old, a pit developed into a hole and oil leaked out. He testified that outdoor tanks that are subject to stress, such as changes of temperature, will develop problems earlier than tanks that are indoors, and that an indoor tank will take on less water so it will last longer. In his opinion a 25-year- old tank is more apt to fail than a six-year-old tank because it is subject to a lot more stress.
• Joe Burns, the Kilpatrick employee who conducted the initial and deficient inspection of the tank in October 2002, agreed with statements in a TSSA Oil Burner Technician Update Workshop Handbook (the “Handbook”) that “most [above ground steel oil tanks] corrode and ultimately fail from corrosion and the age at which tanks fail varies considerably” and “to protect against property and environmental damage caused by tanks leaking oil, tank owners should consider…replacing their tank before it starts leaking”. As an OBT, and based on his training, Mr. Burns agreed that the condition, location and age of a tank are important considerations to avoid environmental problems later on. He agreed that temperature changes contribute to condensation, that an outside tank has more opportunity to collect water from condensation, and that water coming off the eaves of a roof (as here) can introduce water into the tank. Mr. Burns agreed that the age of the tank is relevant to the presence of water, sludge and impurities in the bottom, and that a more recently installed tank would be less susceptible to water collection leading to corrosion.
• Larry Sauve, Ultramar’s representative, also agreed with the statements in the Handbook, and that tanks accumulate water through various means, including condensation, and that tanks located outside are more prone to collect water than inside tanks. He also confirmed that the longer an end outlet tank is outside the longer it will be holding water in the bottom of the tank and it could very well have an increased likelihood of rust or corrosion.
• Ultramar’s service invoice at the time of the pre-delivery service visits in October 2002 recognized that the age and ULC approval of a tank were important. It stated: “Ultramar recommends replacing any oil tank 20+ years old and/or not UL/ULC approved and all underground lines”.
• Kilpatrick’s expert witness, Mr. Roberts, confirmed that an outside tank is more prone to corrosion through the collection of water by condensation and otherwise. He also confirmed that a tank with a side outlet is even more prone to the collection of water, and that the condition and the environment are very relevant as well as the time period the tank is exposed to a particular set of circumstances. He agreed with the statement in the Handbook, that oil tanks corrode and ultimately fail from internal corrosion at the bottom of the tank. Importantly, Mr. Roberts endorsed the view that, because no one can predict exactly when a tank will fail, the regulatory measures are in place to prevent a leak before it happens. Although he has investigated tanks that have failed in as short as six months and others that have lasted as long as 30 years, he agreed that it is recommended practice to replace a tank after 20 years of use.
[86] Although the appellants attempted to sow doubt on the issue, they did not advance any evidence to contradict the common sense inference that a new replacement tank installed in 2002, would not likely have failed. The fact that some of the witnesses had seen newer tanks fail of course did not mean that the risk of failure for old and new tanks was the same. Nor would the absence of a maximum lifespan for fuel oil tanks under the regulatory regime (which was emphasized by Mr. Roberts) mean that the risk of failure was the same for newer and older tanks.
[87] The appellants assert that there was no difference between indoor and outdoor fuel oil tanks that would make an indoor tank any more vulnerable to the elements, and in turn could lead to corrosion. They did not, however, lead any expert evidence to the effect that all indoor tanks manufactured to the M81 (or earlier) standard were identical in construction to all outdoor tanks manufactured to the applicable standard for outdoor tanks. They led no evidence, for example, as to the thickness of the rolled steel used in the construction of the tanks. At its highest, the evidence was that none of the witnesses who were questioned on this point knew of any material differences between indoor and outdoor fuel oil tanks, other than that outdoor tanks had an extra layer of paint. When Mr. Sumabat of the TSSA was asked about the possible differences between tanks certified for indoor and outdoor use, he acknowledged that he “never became aware of” any material differences in construction between such tanks, however he indicated that the concern was that the standards were minimum requirements only and that manufacturers might have built a tank more robustly for outdoor use. He stated: “old manufacturers, we can’t specifically say what their intent was when they had their equipment certified for inside use”.
[88] The appellants also argued that there was no evidence that a new tank would be less prone to failure, because the corrosive process could start at any time. This argument is undercut by the evidence referred to above – that the corrosive process takes place over time as a result of the introduction of water into the tank. Again, the appellants did not offer any expert or other evidence to support the assertion that the age of the respondents’ tank did not correlate with its failure. Indeed, the full extent of their evidence on this point was that of Mr. Amo, the former TSSA employee, that, while most tanks fail after 30 years, he had been involved in cases where tanks failed below ten years, and of Jim Roberts (Kilpatrick’s expert) that it is impossible to determine at what date a tank will leak, and that tanks fail anywhere from six months to 30 years. Kilpatrick’s counsel noted at trial that it was “never his position” that the age of the tank was not relevant. The only defence witness to express any opinion on the issue, Mr. Sauve, said “I can’t tell you that a new tank installed in 2002 would not have leaked in 2008”. And, while Mr. Sumabat admitted that he had known of “a handful of tanks [failing] within five or ten years”, he stated that most reported tank failures in Ontario occurred after the tank was older than 30 years.
[89] Finally, the appellants’ argument that a new outdoor tank would be as likely to fail as an indoor tank used outside is inconsistent with the regulatory regime and its underlying environmental safety objectives. The regulatory regime prohibited the supply of fuel oil to a tank manufactured and labelled for indoor use that was installed outdoors. It required non-compliant tanks to be tagged, and prohibited the supply of fuel oil to such tanks. The Director’s Order permitted the continued use of such tanks only if there was an annual inspection, which as of 2007 required a dip test and removal of any water found in the tank. As the trial judge noted at para. 122, the purpose of this condition, according to Mr. Sumabat, who was employed by the TSSA throughout the relevant period, was to address the potential for internal corrosion of the tank, and ultimately, the failure of the tank. Again, Kilpatrick’s own expert witness, Mr. Roberts, confirmed that the regulatory measures are in place to prevent a leak before it happens because no one can predict exactly when a tank will fail.
[90] In my view, therefore, it was implicit in the trial judge’s conclusion that the negligence of the appellants in supplying fuel oil to a non-compliant tank (Ultramar) and in failing to properly conduct a pre-delivery inspection (Kilpatrick) were causes of the discharge (or, using her words, that the negligence was a “material contribution to the respondents’ loss and injury”), that a replacement tank would not have corroded or leaked. If either Ultramar or Kilpatrick had identified the tank as non-compliant, there would have been no delivery of fuel oil, unless the tank had been replaced. The trial judge’s conclusion, at para. 166, that the loss would not then have occurred means that she must have accepted on a balance of probabilities that a new replacement tank likely would not have corroded and failed.
[91] In the alternative, if I am wrong in my conclusion that the trial judge implicitly found that a new replacement tank would not have corroded and failed in 2008, which was an inference available to her, then in my view this is a case where the record – the evidence I have just reviewed - is sufficient for this court to draw such inferences and therefore to determine causation: see Martin-Vandenhende v. Myslik, 2015 ONCA 806, 343 O.A.C. 110, at paras. 57-58.
Issue 2: Ultramar’s Negligence Based on the Conduct of Its Delivery Person
[92] Ultramar says that the trial judge made a palpable and overriding error in concluding, at para. 143, that its subcontractor, Mr. Nesbitt, was negligent in carrying out the delivery of fuel oil.
[93] The trial judge’s finding was that Mr. Nesbitt had an ongoing obligation to inspect the tank and to communicate to Ultramar any concern he had with respect to the potential lack of compliance with the regime. Ultramar points to evidence that Mr. Nesbitt was not an OBT and, as such, any inspection of the oil burning system would be beyond his competence and the requirements of the regulatory regime. They say that it was the respondents as owners of the tank, and not Mr. Nesbitt, who were responsible for conducting a dip test as of 2006 or 2007. They also say that, even if Mr. Nesbitt had conducted a visual inspection, the tank was not in a condition that would have indicated the potential for internal corrosion.
[94] I would not give effect to this ground of appeal.
[95] The trial judge was entitled to conclude that, despite the fact that Mr. Nesbitt was not an OBT, he had certain obligations under the regulatory regime to ensure the safety of the fuel oil delivery. At para. 133, the trial judge referred to Mr. Sauve’s evidence that the basic visual inspection required on every visit would include looking at the tank label and for “obvious” signs of corrosion on the exterior of the tank. However, referring to s. 22 of the Fuel Oil Regulation, she concluded that the obligations went further. In particular, the trial judge carefully considered the distributor’s obligation to take certain steps on discovery of an unacceptable condition before she concluded that Mr. Nesbitt, as Ultramar’s subcontractor, had an ongoing obligation to inspect the tank and to communicate to Ultramar any concerns he had with respect to potential lack of compliance with the regime. This included the tank’s location under a drip edge on the roof with no protection from the ice and snow: at paras. 134-140.
[96] There was no evidence at trial about what Mr. Nesbitt might have observed, and why he did not identify or communicate to Ultramar any of the patent deficiencies with the respondents’ tank. Notwithstanding Ultramar’s indication at the outset of trial that he would testify, Mr. Nesbitt was not called as a witness. In all the circumstances the conclusion that Mr. Nesbitt was negligent in failing to identify obvious non-compliance with the regime, when he was delivering oil, and that Ultramar was liable for the negligence of its subcontractor, were open to the trial judge.
[97] As for the condition of the tank, although some of the witnesses agreed that the tank was not heavily rusted, there was evidence, accepted by the trial judge, that the tank showed signs of age, which likely indicated corrosion: at paras. 51-52. In my view, little turns on this however in relation to Mr. Nesbitt’s negligence. What Mr. Nesbitt was negligent in failing to identify (in addition to the location of the tank under a drip edge) was that the tank was labelled for indoor use. And it was Ultramar’s evidence that, even after the Director’s Order, if it had known that this was an indoor tank for outdoor use, it would not have delivered oil to the respondents unless the tank had been replaced.
[98] Similarly, Ultramar argues that the annual inspection obligation that would have permitted continued fuel delivery to an indoor tank installed outdoors under the 2006 Director’s Order, was that of the owner of the tank, rather than of Ultramar. The trial judge, at paras. 122 to 124 of her reasons, carefully explained why she rejected the very argument that is made here. I accept her analysis and conclusions.
[99] As already mentioned, the regulatory regime has required annual maintenance by an owner, including a dip test, at least since March 2007. The assertion that the owner had the obligation to inspect under the Director’s Order however is inconsistent with the plain language of the Order, which required the external condition of the tank and installation to be “visually inspected and accepted by the fuel oil distributor” and a written record of the inspection to be provided to the tank owner or operator. Plainly, the distributor had the obligation to both inspect and to accept the exterior condition and the installation of the tank, underscored by the obligation to provide a written record of such inspection to the tank owner or operator. The trial judge noted the evidence that as a practical matter, the TSSA saw the inspection obligation under the Director’s Order as that of the distributor: at para. 122. Even Ultramar’s own witness, Mr. Sauve, acknowledged that the distributor had the obligation to inspect under the Director’s Order.
[100] In any event, nothing turns on this point for the disposition of the appeal. As I have already noted, the trial judge did not find a causal link between Ultramar’s failure to inspect the tank in 2006 and 2007, and the respondents’ losses. Rather, the negligence was in failing to tag as non-compliant and in continuing to supply fuel oil to the indoor tank that was being used outdoors. Ultramar was negligent in failing to ensure a proper comprehensive inspection (a finding that was not attacked on appeal), and, on each occasion of delivery, in failing to identify that the indoor tank was being used outdoors. It was not Mr. Nesbitt’s failure to perform a dip test, or even to identify signs of corrosion on the tank, that was found to have caused the discharge – it was his failure, during the deliveries to identify and to communicate to Ultramar the potential lack of compliance with the regime, and in particular that this was an indoor tank being used outdoors, and that it was installed under a drip ledge: at paras. 134-137.
[101] Accordingly, I would not give effect to this ground of appeal.
Issue 3: Contributory Negligence and Apportionment of Liability
[102] The trial judge apportioned liability 60% to Ultramar. She then concluded that Kilpatrick was liable to Ultramar on its crossclaim for one half the amounts for which Ultramar was found liable to the respondents, and dismissed Kilpatrick’s crossclaim against Ultramar. The trial judge found contributory negligence of 40% on the part of the respondents.
[103] All parties take issue with the apportionment of liability in this case. Ultramar questions the conclusion that it was 60% responsible because, according to the trial judge, it was at the “top of the pyramid” under the regulatory regime. Ultramar argues that the respondents, as owners of the tank were at the top of the pyramid, and that it ought to have been able to rely on Kilpatrick under the burner service contract to conduct a proper comprehensive inspection. Kilpatrick asserts that the trial judge erred in dismissing its crossclaim against Ultramar, because Ultramar was in breach of its regulatory obligations. The respondents argue that the trial judge ought to have found Kilpatrick and Ultramar jointly and severally liable, and that she erred in finding contributory negligence.
[104] A decision respecting apportionment of liability is entitled to considerable deference. Interference on appeal requires a demonstrated error in the trial judge’s appreciation of the facts or applicable legal principles: Ingles v. Tutkaluk Construction Ltd., 2000 SCC 12, [2000] 1 S.C.R. 298, at para. 57. As Hourigan J.A. noted in this court’s decision in Gendron, the apportionment of liability remains a highly fact-specific exercise that is not an exact science: at para. 83.
[105] I agree with the respondents that, having regard to the findings made by the trial judge, in particular her specific findings that Kilpatrick owed the respondents a duty of care, breached that duty and that this was a cause of the respondents’ losses, it would have been appropriate for the trial judge to have allocated responsibility directly to Kilpatrick, rather than holding Ultramar 60% liable with a right of recovery over against Kilpatrick. It would have been more appropriate for the trial judge to have found the appellants jointly and severally liable.
[106] The end result however would have been the same, because of the circumstances of this case. The negligence of Kilpatrick that was causally related to the respondents’ losses was the failure to conduct a proper comprehensive inspection in October 2002. This was a task that was required of the fuel oil distributor that was delegated to Kilpatrick under its contract with Ultramar, and as such was the subject of the crossclaim. The trial judge approached the question by considering the respective degrees of fault, when, at para. 180, she indicated that she was balancing the conduct of the Kilpatrick employees in October 2002, with the conduct of Ultramar in failing to review the documents submitted by those individuals, failing to institute an annual inspection of the fuel tank, and failing to identify the visible deficiencies with the tank installation during the delivery dates.
[107] As for the question of contributory negligence, the respondents, in their cross-appeal, say that the trial judge, in finding 40% contributory negligence, based her decision on their obligations as operators of the system. They argue that the trial judge erred in concluding that they were required to conduct annual maintenance, when this was not brought to their attention by the distributor, and that their failure to maintain the tank was causally related to the discharge.
[108] By contrast, the appellants argue that the main cause of the respondents’ losses was their failure, as owners of the tank, to conduct annual maintenance, which would have included the inspection of the tank for internal corrosion, including conducting a dip test, before the discharge occurred.
[109] In my view, there is no error here. The trial judge’s decision reflects a fair assessment of the duties and responsibilities of the respondents as owners of the tank, Ultramar as the fuel oil supplier, and Kilpatrick in its inspection and service capacity, under the regulatory regime and within the factual context of this case. As I have already indicated, the trial judge carefully analyzed and rejected Ultramar’s argument that the respondents, as owners of the tank, had the obligation to inspect the tank in 2006 and 2007, under the terms of the Director’s Order, in order to permit its continued use as an indoor tank used outdoors. Nevertheless, she accepted that the respondents had the obligation under the regulatory regime to maintain the tank. The trial judge had to balance the respective negligence of the various parties.
[110] The trial judge accepted that the primary responsibility under the regulatory regime was that of the individuals and corporations working within the fuel oil industry. She also found that, although it was Ultramar’s stated practice to remind its customers of the obligation to conduct annual maintenance, there was no evidence that anything had been sent to the respondents. She found however that, the respondents “were not entitled to sit back and do absolutely nothing towards the maintenance of their fuel oil-burning heating system”: at para. 168. As persons who had previously owned homes with fuel oil-burning heating systems, they ought reasonably to have developed an appreciation for the importance of regular maintenance of the system. This informed her decision to allocate fault 40% to the respondents.
[111] As for the respondents’ argument that there was no causal link between the failure to conduct annual maintenance and the discharge, I disagree. As the trial judge emphasized repeatedly, each annual inspection would provide an opportunity to identify that the respondents’ fuel oil tank was not compliant with the regulatory regime. It would be speculative to conclude, as urged by the respondents, that if they had contracted for annual maintenance, the tank’s non-compliance with the regime would have been missed on each and every attendance, and that the discharge would still have taken place.
[112] I therefore see no reason to interfere with the trial judge’s apportionment of liability to the appellants or her decision to allocate 40% contributory negligence to the respondents.
Issue 4: Breach of Contract Claims
[113] The respondents argue that the trial judge erred in dismissing their claims that there had been a breach of the oil-burner contract they had with Kilpatrick, under which its employee made a “no-heat” call to the home in March 2007, and their delivery contract with Ultramar. They asserted at trial (and argue on appeal) that the contracts contained an implied term that work would be undertaken in a workmanlike manner, which would include compliance with the regulatory regime. The trial judge’s findings that there were regulatory breaches ought to have resulted in a finding of breach of contract.
[114] The trial judge rejected the breach of contract claims at paras. 184 to 189 of her reasons. The trial judge noted that no copy of any contract relied on by the respondents was introduced in evidence. She observed that the terms of the contracts may have included obligations on Ms. Donleavy’s part, or exclusion clauses, and that, in the absence of the written contracts, she was not prepared to make any findings as to their terms.
[115] I see no reason to interfere with this conclusion. The case before the trial judge (apart from the claims as between Ultramar and Kilpatrick, which engaged their own contract, which was in evidence) was about negligence: the failure to comply with regulatory requirements as evidence of a breach of the standard of care, whether the negligence of each party caused the oil spill, and the respective allocation of fault as between the appellants and the respondents. In the circumstances of this case, the trial judge reasonably refused to consider the breach of contract claims in the absence of the written contracts.
Issue 5: Damages
[116] The respondents assert that the trial judge erred in refusing their claim for $28,800 for loss of rental income, after accepting that they had been receiving rent of $800 per month for the main home. They say that she erred in characterizing the claim as speculative, and in denying this head of damages out of concern that they had already been compensated for the loss under their homeowners’ insurance, when they had refused to produce a copy of the policy. The respondents argue that the claim in fact was not speculative, that their claim for three years’ loss rental took into account the various contingencies and that, because the appellants had been provided with all of the details of the $750,000 subrogated claim, they could have satisfied themselves that there would be no double recovery for lost rentals.
[117] I see no reversible error here. The respondents had the onus of satisfying the court that they suffered damages in the form of lost rental income. The trial judge was not satisfied on the evidence, which was limited to the respondents’ oral evidence and not supported by any documents, that the claim was made out. She noted that, as of June 2008, the respondents had been renting the main house for only six months, and that a number of factors might in the future have contributed to a decision to cease being landlords, or to move into the main home and to rent the addition instead. The trial judge also pointed to a lack of evidence respecting mitigation - as to the efforts made by the respondents to replace their home with a similar home that could provide rental income. The trial judge was entitled, as she did, to take into account the respondents’ refusal to produce a copy of their insurance policy, which would have assisted in determining whether any part of the indemnity they had received from their own insurer was in respect of lost rental income.
[118] Kilpatrick submits that the trial judge erred in awarding general damages of $20,000 to Ms. Donleavy and $10,000 to Mr. Edwards because of their forced relocation from the home. Kilpatrick argues that it was prevented from testing this claim when the respondents refused to produce their home insurance policy, or information regarding whether they elected a buy-out as opposed to having been forced from their property.
[119] There is no merit to this ground of appeal. The trial judge rejected the basis for general damages that Kilpatrick says it was unable to test – that the respondents suffered as a result of their forced relocation from the home. She noted that “in the absence of better evidence as to the reasons why the [respondents] chose not to rebuild and of their inability to find a home that more closely measures up to the [subject] property”, she was not in a position to award damages associated with that aspect of the claims: at para. 195. Instead, the general damages were in respect of the disruption in the respondents’ lives following the oil spill, something that they testified about at trial, and which reasonably warranted the modest amounts awarded by the trial judge.
CONCLUSION AND DISPOSITION
[120] For these reasons, I would dismiss the appeals and the cross-appeal. If the parties are unable to agree on costs of the appeals and the cross-appeal, they may make written submissions, limited to five pages each, not including any costs outlines. The respondents shall deliver their costs submissions within 20 days of these reasons and the appellants within 15 days of receipt of the respondents’ costs submissions.
Release: “PR” September 4, 2019
“K. van Rensburg J.A.”
“I agree. Paul Rouleau J.A.”
“I agree. M.L. Benotto J.A.”
[^1]: CAN4-S602-77/ULC-S602076 “Standard for Steel Inside Tanks for Oil-Burner Fuel”. [^2]: CAN4-S602-M81 “Standard for Steel Inside Tanks for Oil-burner Fuel”. [^3]: CAN/ULC-S602-M92 “Standard for Aboveground Steel Tanks for Fuel Oil and Lubricating Oil”.