ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 46729
DATE: 2014-08-06
BETWEEN:
MARK FRENCH, A TRUSTEE OF THE CHIPPEWAS OF THE THAMES LAND CLAIM TRUST, ON BEHALF OF 1317424 ONTARIO INC., and MARK FRENCH, A TRUSTEE OF THE CHIPPEWAS OF THE THAMES LAND CLAIM TRUST
Plaintiffs
– and –
CHRYSLER CANADA INC., BENCHMARK REAL ESTATE SERVICES CANADA INC., CHARLES BRUDENELL, GEORGE MURRAY SHIPLEY & BELL, FRANK FAZIO, RSJ HOLDINGS INC. and THE D’ANDREA GROUP INC.
Defendants
– and –
176695 CANADA INC., CHESTER ENGINEERS, INC. (a.k.a. The Chester Engineers) and N.A. WATER SYSTEMS, LLC
Third Parties
Raymond F. Leach, for the Plaintiffs
Barry H. Bresner, for the Defendant Chrysler Canada Inc.
HEARD: July 23, 2014 at London
HEENEY R.S.J.:
[1] The plaintiffs are the moving parties on this motion, and seek leave to further amend their Fresh As Amended Statement of Claim to increase the amount of damages claimed, and to plead a claim in nuisance against the defendant Chrysler Canada Inc. (“Chrysler”). They also seek leave to file two expert reports prepared by D.E.G. Tapping of Valco Real Estate Appraisers & Consultants relating to their claim of “stigma” damages. Leave is necessary because the pre-trial was held on May 25, 2012 and the matter is scheduled for an 8 week trial commencing October 6, 2014, yet the reports were only served on June 9, 2014, well outside the time prescribed by the Rules.
[2] Only the defendant Chrysler filed responding materials on the motion. Other counsel were present for argument, but did not participate. They indicated that they were taking no position on the motion to amend.
[3] Mr. Bresner, for Chrysler, consented to the amendment of the following paragraphs of the Fresh As Amended Statement of Claim:
a) Paras. 1(a) and 2(a), increasing the amount claimed from $10 million to $25 million;
b) Paras. 1(d) and (f), increasing the amount claimed from $60,000 to $64,558.45.
[4] An order will go granting leave to amend these paragraphs on consent.
[5] Chrysler disputes the request to amend para. 1(a)(i)(D) to plead a claim in nuisance against Chrysler, as well as paras. 43.1 to 43.4 of the proposed pleading, which particularizes that claim.
[6] Chrysler also opposes the granting of leave to file the two expert reports on the eve of trial, because the claim that they purport to support is untenable at law, and because permitting them to be filed will necessitate the filing of responding reports which cannot be obtained in time for the scheduled trial. This would result in the adjournment of the trial and a delay of several years in disposing of this action.
The Claim in Nuisance:
[7] The lawsuit relates to the Holmes Foundry property in Sarnia. It was operated as a foundry from 1918 to 1982, and also produced asbestos insulation. It is a matter of public record that the property was highly contaminated.
[8] In October, 1987, Chrysler acquired the property as part of its acquisition of American Motors (Canada) Inc. In early 1988 Chrysler shut down all operations, and in September, 1988 they began the process of decommissioning the property. They apparently followed the then-applicable standards prescribed by the Ministry of the Environment, since they obtained a Certificate from the Ministry on November 30, 1989 confirming decommissioning of the property in accordance with current statutory and regulatory requirements.
[9] Also on or about November 30, 1989, Chrysler sold the property to the defendant The D’Andrea Group Inc. (“D’Andrea”). They provided the certificate of the MOE during the course of that transaction.
[10] Over 9 years later, the plaintiffs purchased the property from D’Andrea. Prior to closing, the plaintiffs were warned by their legal advisors, Lerners LLP, in a letter dated March 3, 1999, that the property was likely contaminated. It was recommended that they should have an environmental assessment performed prior to closing. They were also cautioned that any environmental warranties given by Chrysler when they sold the property to D’Andrea would have merged on the closing of that transaction.
[11] The plaintiffs ignored that advice, and closed the transaction without their own environmental assessment. They had been provided with the Certificate of the MOE dated November 30, 1989, and it would appear that they closed the transaction in reliance on that Certificate. However, the Certificate contains the following caveats, at pg. 7:
This statement is based on the information supplied by Chrysler including the details listed in the attached Schedule 1. This statement is for the use of Chrysler only and it should not be construed as either acknowledgement or acceptance by the Ministry of any liability for environmental problems that may arise at the site. Such responsibility rests with the responsible party(ies) according to law.
Any person who has concerns about any environmental matters related to the site should satisfy themselves as to the adequacy of the actions taken by Chrysler.
[12] According to the Fresh As Amended Statement of Claim, the plaintiffs received a report in November, 1999, which indicated that there were potential environmental problems with the property, particularly with respect to the areas below the concrete foundations of existing or demolished buildings. Further reports have been received since then indicating that the property remains contaminated and unsuitable for development without further remediation.
[13] The plaintiffs commenced these proceedings against Chrysler and the other defendants by Notice of Action issued March 30, 2005. The Statement of Claim was amended once and served on Chrysler in September, 2005. Chrysler filed its Statement of Defence on Dec. 22, 2005, and issued a Third Party Claim on Sept. 18, 2007.
[14] At a Status Hearing on March 14, 2008, Little J. set a timetable for the litigation. He ordered that the plaintiffs “shall make any amendments to the Statement of Claim no later than April 30, 2008”. Accordingly, the plaintiffs served a Fresh As Amended Statement of Claim on April 30, 2008, which raised new allegations against Chrysler, including a claim for negligent misrepresentation and/or negligent misstatement and a claim for stigma damages.
[15] The plaintiffs now seek to add a claim against Chrysler in nuisance. Paragraph 1(a)(i)(D) of the proposed Amended Fresh As Amended Statement of Claim claims damages for:
Nuisance in respect of the failure by Chrysler Canada to properly remediate the Property, which omission caused an unreasonable interference with the use and enjoyment of the Plaintiffs’ Property.
[16] That claim is fleshed out under the subtitle “Chrysler Canada’s Nuisance” at paras. 43.1 to 43.4 of the proposed pleading as follows:
43.1 The contamination of the Property constitutes a nuisance, which was caused by the Defendant Chrysler.
43.2 The Defendant Chrysler’s omission and failure to remediate the Property has caused an unreasonable interference with the use and enjoyment of the Plaintiffs’ Property.
43.3 The interference has been repeated and continuous.
43.4 The interference would not be tolerated by an ordinary occupier.
43.4 (sic) The interference is serious, as it relates to environmental contamination with possible future health effects, has continued since 1989, is located in a mixed use area of the Village of Point Edward which includes other residential uses, and is extremely costly to remediate.
43.4 (sic) Accordingly, the Defendant Chrysler is liable to the Plaintiffs in nuisance.
Analysis:
[17] Rule 26.01 of the Rules of Civil Procedure provides as follows:
26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
[18] Counsel agree that the leading authority that governs the exercise of the court’s discretion is Marks v. Ottawa (City), 2011 ONCA 248, at para. 19. The following factors are to be considered in determining whether to grant leave to amend:
- An amendment should be allowed unless it would cause an injustice not compensable in costs;
- The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious;
- No amendment should be allowed which, if originally pleaded, would have been struck; and,
- The proposed amendment must contain sufficient particulars.
[19] Chrysler takes the position that the proposed nuisance claim is not tenable in law and is not, therefore, worthy of trial nor is it prima facie meritorious. It also argues that the limitation period relating to this new cause of action has long since expired.
[20] In Halsbury’s Laws of Canada – Torts (2012 Reissue) contributed to by Allen Linden and Bruce Feldthusen, the following excerpt is found at “HTO-58 Nuisance defined”:
Nuisance describes a type of harm that is suffered, rather than a kind of conduct that is forbidden. In general, a nuisance is an unreasonable interference with the use and enjoyment of land by its occupier or with the use and enjoyment of a public right to use and enjoy public rights of way. For the most part, whether the intrusion resulted from intentional, negligent or non-faulty conduct is of no consequence, as long as the harm can be categorized as a nuisance. Underlying the present law of nuisance is the Latin maxim sic utere tuo ut alienum non laedas (use your own property so as not to injure that of your neighbours). This basic principle gives some coherence to the otherwise confusing case law in this area. Essentially, the courts are furnishing compensation to those whose use and enjoyment of private land or public rights are being interfered with by the unreasonable use of another’s land.
[21] This passage makes it clear that the source of the nuisance must originate outside the lands owned or occupied by the plaintiff. This is reinforced in Engemoen Holdings Ltd. v. 100 Mile House (Village), [1985] B.C.J. No. 267 (S.C.) at para. 28, where the following passage from Salmond, The Law of Torts, 18th ed. 1981, at pg. 48, was quoted with approval:
As nuisance is a tort arising out of the duties owed by neighbouring occupiers, the plaintiff cannot succeed if the act or omission complained of is on premises in his sole occupation. The nuisance must have arisen elsewhere than in or on the plaintiff’s premises. Liability in nuisance therefore usually arises from acts done on land in the occupation of the defendant, adjoining or in the neighbourhood of that of the plaintiff. The defendant need not necessarily be the owner or the occupier of that land; his liability will depend upon his degree of control in fact or in law for the state of affairs. [emphasis added]
[22] In Grace v. Fort Erie (Town), 2003 48456 (ON SC), [2003] O.J. No. 3475 (S.C.J.), Crane J. made the same point at para. 63:
Although the nuisance must originate outside property occupied by the plaintiff, it is not necessary that the defendant be in occupation of the land from which the nuisance emanates.
[23] On the facts as proposed to be pleaded, the source of the contamination which allegedly has caused interference with the plaintiff’s use and enjoyment of the land is on the plaintiffs’ own land. Whatever that may amount to in law, it clearly does not amount to a tenable claim in nuisance.
[24] Furthermore, liability for nuisance flows from conduct of the defendant that causes interference with the plaintiff’s use and enjoyment of his land. On the facts as pleaded and proposed to be pleaded, the interference with the plaintiffs’ use of its land is the inability to develop it due to environmental contamination. That contamination was caused by the operation of the Holmes Foundry over a period of many decades prior to Chrysler’s acquisition of the property. The nuisance, if there was one, was therefore caused by those who contaminated the property, and not by Chrysler.
[25] Chrysler’s only role during its brief period of ownership was to try to clean up the mess left behind by others. Their liability in nuisance is alleged to lie in their failure to do a proper cleanup. Nowhere is it alleged that they actually caused the environmental contamination that has resulted in the plaintiffs’ loss of use and enjoyment.
[26] Mr. Leach, for the plaintiffs, was unable to point to any legal authority where a party was held liable in nuisance for failing to properly clean up contamination created by others. The closest he was able to come is Morguard Real Estate Investment Trust v. ERM Canada Corp., 2012 CarswellOnt 8875 (S.C.J.), where pleadings that made such a claim survived a motion to strike.
[27] That action arose from environmental pollution to the soil and groundwater of properties belonging to Morguard and Okarlo, originating from the property of 116, a dry cleaner. Morguard, Okarlo and 116 entered into an agreement with the defendant ERM for remediation services. The properties were not remediated and Morguard, Okarlo and 116 took action against ERM for repudiation/abandonment for failure to complete and for failure to indemnify. Morguard and 116 also pleaded nuisance. ERM sought to strike out the nuisance claim as disclosing no reasonable cause of action.
[28] The motion judge, Moore J., noted at para. 4 that contamination from the drycleaning business at the 116 property “continues to be an ongoing source of contamination for the Morguard property and the Okarlo property”.
[29] In dismissing the motion to strike, the motion judge’s analysis focussed on whether it was necessary that a defendant own or occupy adjoining lands in order to make a claim in private nuisance. Moore J. said the following, at paras 50 to 53:
The respondents further insist that there is no requirement that a defendant own or occupy adjoining lands in order to make a claim in private nuisance. At a minimum, the case law is divided on this issue. What is clear is that:
- the courts have commented extensively on the difficulty in providing an exhaustive definition of the tort of nuisance;
- the categories of nuisance are not closed; and
- the principles of private nuisance are sufficiently elastic to deal with less typical cases of nuisance.
A working definition of private nuisance that is widely cited, including in the case law and relied on by ERM on this motion, is:
a person, then, may be said to have committed the tort of private nuisance when he is held to be responsible for an act indirectly causing physical injury to land or substantially interfering with the use or enjoyment of land or an interest in land, where, in the light of all of the surrounding circumstances, this injury or interferences held to be unreasonable.
As this working definition does not incorporate any requirement that the defendant owner occupy adjoining lands, the statement in ERM's amended notice of motion that nuisance is used to balance the interests of adjoining property owners or occupiers is only an example of a situation where nuisance can be found but not a complete statement of the scope of the law of private nuisance. Although ERM does reference case law that refers to adjoining land or conduct elsewhere, as expressed by the Alberta Court of Appeal as "the frequent reference in the cases to nuisance emanating from the land of the defendants reflects only the circumstances of the particular facts before the court, not an intentional limitation on the scope of the principle".
The respondents insist, and I agree, that there is ample support in the case law and in academic commentary for the proposition that there is no requirement that the defendant own or occupy adjoining lands, in order to make out a claim in private nuisance.
Further, upon the facts of this case, the three landowners own adjoining properties. The source of any contamination on the Morguard property is the 116 property. Morguard has pleaded that the continued presence of contamination on the Morguard property has substantially interfered with Morguard's ability to pursue business opportunities and constitutes a nuisance caused by ERM which was retained to remediate all three properties and that does not have the effect of negating the property line between adjacent properties. [footnotes omitted]
[30] I quite agree that there is no requirement that a defendant own or occupy adjoining lands in order to be liable in nuisance. This analysis does not, however, address the key point established by the authorities above that the nuisance must originate outside the property occupied by the plaintiff.
[31] With respect to the plaintiff Morguard, that requirement was established. The contamination originated on the 116 property, and that contamination continued to flow onto Morguard’s property. Since ERM was hired to clean it up and stop the flow of contaminates, and allegedly failed to do so, it is arguable that they caused or contributed to the ongoing flow of contaminants. It is not surprising, therefore, that the pleading was allowed to stand insofar as Morguard is concerned.
[32] The reasons, however, contain no analysis as to how it is that 116 could sustain a claim of nuisance when the source of the contamination is 116’s own land. This point was simply not addressed. To the extent that Morguard inferentially supports the argument that such a claim is tenable at law, I find it to be inconsistent with well-established authorities, and I decline to follow it.
[33] There is an additional reason for concluding that the proposed claim is not worthy of trial nor is it prima facie meritorious: the plaintiffs do not allege that the property was contaminated during their period of ownership. Instead, the pleadings make it clear that the property had been contaminated well before they purchased it. In Midwest Properties Ltd. v. Thordarson and Thorco Contracting Limited, 2013 ONSC 775, Pollak J. dealt with a claim in nuisance where the plaintiff had purchased a property that was already contaminated, and was unable to prove that the defendants caused any additional contamination during the plaintiff’s period of ownership.
[34] At paras. 26 to 28, Pollak J. said this:
With respect to this nuisance claim, the Defendants allege that the Plaintiff failed to prove requisite damages, which is similar to the argument made in respect to the EPA claim.
I agree with these submissions. There is no evidence that Midwest acquired a property which was not already damaged (as there is no evidence of the environmental state of the property when it was acquired). The Plaintiff, therefore, cannot establish that any chemical alteration in the soil and groundwater has occurred in its property. The Plaintiff did not take action against the vendor of the property, or the environmental company that did the Phase I testing on the property.
If Midwest purchased a contaminated property, it must prove that there has been an increase in the contamination level of property caused by the Defendants.
[35] I conclude that the proposed pleadings do not raise a claim in nuisance that is tenable at law. I therefore conclude that plaintiff has failed to show that proposed amendment raises an issue worthy of trial and prima facie meritorious. On that basis, leave to amend is denied.
[36] In light of this conclusion, it is not necessary to deal at length with Chrysler’s submission that the amendments raise a new cause of action long after the limitation period has expired. Suffice it to say that I reject the plaintiffs’ argument that this is a continuing cause of action. That would only be the case if contamination continued to flow onto the plaintiffs’ land during the running of the limitation period: see Bolton Oak Inc. v. McColl-Frontenac Inc., 2011 ONSC 6567 at para. 52.
[37] However, I accept the plaintiffs’ argument that the claim in nuisance is based on the same factual matrix as the claims previously made in the Fresh As Amended Statement of Claim, ie. the failure to properly remediate the property. As such, it amounts to an alternative theory of liability based on the same facts, as opposed to a new cause of action: see Gladstone v. Canadian National Transportation Ltd., 2009 CarswellOnt 4334 (S.C.J.) at paras. 37 to 44.
[38] I would not, therefore, have denied the amendment based on the limitations argument. However, since I have denied it for the other reasons outlined above, this is ultimately a moot point.
The Expert Reports:
[39] Pursuant to Rule 53.03(1), a party who intends to call an expert witness at trial shall, not less than 90 days before the pre-trial conference, serve on every other party to the action a report, signed by the expert and containing the information listed in subrule (2.1).
[40] The pre-trial conference took place on May 25, 2012. The plaintiffs served the two Valco reports on June 9, 2014, more than two years late. This is so despite the fact that the claim for “stigma damages” was included in the amendments reflected in the Fresh As Amended Statement of Claim dated April 30, 2008. Furthermore, plaintiffs’ counsel indicated at the pre-trial that they might obtain experts reports concerning stigma damages, but have provided no explanation for having waited more than two years to do so.
[41] Pursuant to Rule 53.08(1), if a party has failed to serve an expert report within the time required, “leave shall be granted” to admit the report in evidence “on such terms as are just and with an adjournment if necessary, unless to do so will cause prejudice to the opposite party or will cause undue delay in the conduct of the trial.”
[42] Chrysler argues, persuasively, that there is no legal basis for a claim for stigma damages. An Environmental Stigma is defined in the Valco reports as follows: “An adverse effect on property value produced by the market’s perception of increased environmental risk due to contamination (see Environmental Risk above).”
[43] “Environmental Risk”, in turn, is defined as follows:
The additional or incremental risk of investing in, financing, buying, or owning property attributable to its environmental condition. This risk is derived from perceived uncertainties concerning: 1) the nature and extent of the contamination; 2) estimates of future remediation costs and their timing; 3) potential for changes in regulatory requirements; 4) liabilities for cleanup (buyer, seller, third party); 5) potential for off-site impacts; and 6) other environmental risk factors, as may be relevant.
[44] As the reports make clear, this stigma continues to attach even after a cleanup has been completed.
[45] Chrysler argues that a party will only be liable for stigma damages if they caused or contributed to the stigma, and I agree. More importantly, the property was already stigmatised, to the knowledge of the plaintiffs, when they purchased it. They were advised of the environmental uncertainties attaching to the property by their lawyer, and chose to close the purchase despite them. There is no basis in law or in logic for holding Chrysler liable in damages for stigma attaching to the property that was willingly assumed by the plaintiffs at the time of purchase.
[46] If the reports were to be introduced into evidence, Chrysler would be compelled to retain their own experts to respond. Chrysler has attempted to do so, but has been advised that it is not possible to provide a responding report in the limited time available before trial. This means that the trial would have to be adjourned.
[47] This case was set down for trial on February 25, 2011. The trial date was set at Assignment Court in October, 2011 for October 6, 2014, fully three years into the future. There are six law firms involved in this case and in the related case that has been ordered to be tried immediately following. The estimated time for trial is 8 weeks. All of that explains why the earliest date that could be accommodated by the court for a trial of this length, and that fit within the busy schedules of all counsel involved, was three years down the road.
[48] If the trial does not proceed as scheduled, there is no reason to believe that another trial date can be obtained any sooner than two or three years in the future.
[49] This action is now almost 10 years old, and deals with events that transpired, insofar as Chrysler is concerned, 26 years ago. Given a passage of time of such magnitude, prejudice may be presumed from a further delay of such significance. Furthermore, I am satisfied that granting leave to file the reports will cause “undue delay in the conduct of the trial”. Given the patently tenuous nature of the claim that the reports seek to support, any further delay in the trial of this action is not justifiable.
[50] Leave to file the Valco reports is denied. This order is without prejudice to the plaintiffs’ right to seek leave again if the trial fails to proceed as scheduled.
[51] It is hoped that counsel will be able to arrive at an agreement on the issue of costs. If not, I will accept submissions from Chrysler within 20 days, with the plaintiffs’ response within 15 days thereafter, and any reply within 10 days thereafter. Failing that, the parties will be deemed to have settled the issue of costs as between themselves.
“T. A. Heeney R.S.J.”
T. A. Heeney R.S.J.
Released: August 6, 2014
COURT FILE NO.: 46729
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARK FRENCH, A TRUSTEE OF THE CHIPPEWAS OF THE THAMES LAND CLAIM TRUST, ON BEHALF OF 1317424 ONTARIO INC., and MARK FRENCH, A TRUSTEE OF THE CHIPPEWAS OF THE THAMES LAND CLAIM TRUST
Plaintiffs
– and –
CHRYSLER CANADA INC., BENCHMARK REAL ESTATE SERVICES CANADA INC., CHARLES BRUDENELL, GEORGE MURRAY SHIPLEY & BELL, FRANK FAZIO, RSJ HOLDINGS INC. and THE D’ANDREA GROUP INC.
Defendants
– and –
176695 CANADA INC., CHESTER ENGINEERS, INC. (a.k.a. The Chester Engineers) and N.A. WATER SYSTEMS, LLC
Third Parties
REASONS FOR JUDGMENT ON A MOTION
Heeney R.S.J.
Released: August 6, 2014