ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: CV-09-382649
Date: 20130228

BETWEEN:

Midwest Properties Ltd.
Plaintiff

– and –

John Thordarson and Thorco Contracting Limited
Defendants

Evert Van Woudenberg, for the Plaintiff
Frank Zechner, for the Defendants

HEARD: January 7, 8, 9, 10, 11, 14, 16, 17, 18, 2013 and Febru8ary 15 , 2013

Pollak J.

[1] Midwest Properties Ltd. (“Midwest” or the “Plaintiff”) became owner of 285 Midwest in December 2007. Midwest claims damages against Thorco Contracting Limited (“Thorco”), and its’ principle, John Thordarson (collectively, the “Defendants”), emanating from the migration of contamination from 1700 Midland Avenue onto 285 Midwest. 1700 Midland Avenue has been used by the Defendants as a storage site for petroleum hydrocarbon waste since 1973. Midwest alleges that such contaminants have permeated their soil and groundwater.

[2] The Plaintiffs’ claims against the Defendants are brought on three different bases: statutory remedy under the Environmental Protection Act, R.S.O. 1990, c. E.19 (“EPA”), damages for nuisance and negligence, and punitive damages.

[3] The Plaintiffs allege that the Defendants have been in continuous breach of their obligations under the EPA since 1988. The Plaintiffs’ experts have opined that PHC contaminants have migrated from 1700 Midland onto 285 Midwest into the soil and groundwater, and “free product” has been found on the property. The Ministry of the Environment (“MOE”) standards are exceeded at some tested locations on their property, and 285 Midwest must ultimately be remediated and protected from more migrating contamination. The Plaintiff submits that damages for the cost of their proposed remediation should be awarded.

[4] The MOE has ordered the Defendants to investigate the extent of the contamination of 285 Midwest and to correspondingly remediate the property.

[5] The Defendants submit that there is no recoverable loss by the Plaintiff, as they are under an Order of the MOE to remediate 285 Midwest from any contaminants originating from 1700 Midland.

[6] The Defendants also submit that it is reasonable, on the evidence, to conclude that a significant portion, or all, of the contamination on 285 Midwest occurred before July 2007, prior to the Plaintiffs’ owning 285 Midwest. The Defendants specifically rely on evidence that there were large quantities of liquid waste on 285 Midwest from the late 1990’s until 2001. As of 2000, the evidence suggested that liquid waste quantities on 285 Midwest were decreased as a result of the winding down of the Thorco business.

[7] There was no evidence on whether the property exceeded MOE standards, with respect to the relevant contaminants, when the Plaintiffs bought the property in December 2007. The evidence was that the Plaintiffs had a Phase I environmental assessment performed at this time, but there was no testing of the soil or the groundwater.

[8] I accept the expert evidence of Mr. Bob Tossell for Midwest, who testified that, on the basis of all of the material and testing produced and reviewed by Pinchin Environmental Ltd., the groundwater would flow from 1700 Midland onto 285 Midwest and that the known contamination at 1700 Midland would necessarily migrate onto, and has contaminated, 285 Midwest. There is, however, no evidence as to when such contamination has occurred.

[9] The Defendants do not dispute the evidence that shows contamination of certain chemicals on the Midwest property beyond MOE standards. They do, however, dispute the fact that such contamination was caused by contaminants escaping from their property. I do not accept their submission in this regard. Although they advanced a theory that the contamination could have been caused by another property, they did not provide evidence to substantiate such an allegation.

[10] The crux of the Defendants’ position is that Midwest has not proven any alleged damages. The issue is whether the Plaintiff:

(a) have/ing proven that there are readings of contaminants on some parts of the property in excess of the MOE standards;

(b) but not having proven when such contamination occurred;

(c) is entitled to be awarded damages in the amount that will pay for what it submits is a reasonable remediation plan.

[11] The Defendant submits that a common requirement underlying the different causes of action claimed by Midwest is proof of actual damage to the property caused by the Defendants.

[12] The Defendants submit that there is no evidence that the alleged spill of pollutants has caused an “adverse effect”, as contemplated by the EPA, or that the Plaintiff has suffered any damages. More particularly, a chemical alteration in the soil content does not establish harm or damage to the property. The fact that certain contaminants in the soil exceed the relevant MOE standards is not evidence of physical harm or damage to the property. Further, there is no evidence that there was any chemical alteration of their property after they acquired it. In the same vein, the Defendants submit that there is no evidence of any impairment of the use that Midwest is making of its property, no harm or material discomfort to any person, no adverse impact on the health of any person, no evidence that the property is unfit for continued use as a commercial/industrial property for the manufacture of clothing, and no evidence of interference with the normal conduct of business at the property. Midwest has not shown any interference with its operation of business, and no loss of profits or other financial loss associated with the presence of the contaminants at 285 Midwest. They argue that, without proof that there has been actual, substantial, physical damage and harm to the property, all of the Plaintiff’s claims cannot succeed.

[13] Midwest, on the other hand, submits that to succeed, it must prove that:

(d) Contamination exists at 1700 Midland;

(e) That contamination is migrating onto 285 Midwest;

(f) The remediation plan proposed by the Plaintiff is reasonable; and

(g) The reasonable costs of implementing that remediation plan.

[14] Midwest submits that under the various causes of action in its claim, proof of contamination of the Midwest property unequivocally entitles it to an award of damages equivalent to the cost of a reasonable remediation plan. Midwest similarly argues that the “adverse effect” on the property, or damages they have suffered, are proven by the testing results that show levels of pollutants above acceptable MOE standards after they purchased 285 Midwest.

EPA Claim

[15] Midwest relies on the following sections of the EPA, which provide right of action for compensation in favour of any person incurring loss or damage as a result of neglect or default in carrying out a duty imposed by the EPA or any orders made under its authority:

(continues exactly as in source text…)

Pollak J.

Released: February 28, 2013

CITATION: Midwest v. Thordarson, 2013 ONSC 775

COURT FILE NO.: CV-09-382649

DATE: 20130228

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Midwest Properties Ltd.

Plaintiff

– and –

John Thordarson and Thorco Contracting Limited

Defendants

REASONS FOR JUDGMENT

Pollak J.

Released: February 28, 2013