COURT FILE NO.: CV-14-503035

DATE: 20151022

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

CROMBIE PROPERTY HOLDINGS LIMITED

Plaintiff

– and –

MCCOLL-FRONTENAC INC. (formerly known as TEXACO CANADA LIMITED), IMPERIAL OIL LIMITED, 172965 CANADA LIMITED, AVONDALE STORES LIMITED, DIMTSIS DENTISTRY PROFESSIONAL CORPORATION AND JOHN DOE

Defendants

Ivan Y. Lavrence, Talia Gordner, for the Plaintiff

Lana J. Finney, for the Defendants, Imperial Oil Limited, 172965 Canada Limited and McColl-Frontenac Inc. (formerly known as Texaco Canada Limited)

Barry Weintraub, Conner Harris, for the Defendant, Dimtsis Dentistry Professional Corporation

Linda C. Phillips-Smith, for the Defendants, Avondale Stores Limited and Third Party, Robert G. Stewart

HEARD: September 28, 2015 and October 22, 2015

K.P. WRIGHT, J.

Introduction

[1] The defendant, Dimtsis Dentistry Professional Corporation, along with the other defendants in this action, move for summary judgment dismissing the plaintiff’s action due to the expiration of the applicable limitation period prior to the action’s commencement. They argue that claim was commenced after the second anniversary on which the claim was discovered and is therefore statute barred by the Limitations Act.

[2] There are two issues on this motion. The principal issue is discoverability. The second is whether there is continuing damage.

The Law

Summary Judgment

[3] The jurisdiction of this Court to dispose of a claim on a summary judgment motion is set forth at Rule 20 of the Rules of Civil Procedure. The relevant provisions of Rule 20 are as follows:

20.04

(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment

(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent
3. Drawing any reasonable inference from the evidence

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[4] In Hryniak v. Maudlin, 2014 SCC 7, the Supreme Court of Canada noted that summary judgment must be granted where there is no genuine issue requiring a trial.

[5] The Court suggested a two-step approach to determining a summary judgment motion.

[6] The first step is for the Court to “determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-findings powers. There will be no genuine issue requiring trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure under rule 20.04(2)(a).”

[7] If the Court determines there is a genuine issue requiring a trial then the second step is to assess whether a trial can be avoided by using the new powers under Rule 20.04 subrules (2.1) and (2.2). The Court in Hryniak observed that these powers are discretionary and available if “their use is not against the interests of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.”

[8] I am also mindful that on a motion for summary judgment the onus is on the moving party to show that there is no genuine issue for trial, and the responding party must present its best case or risk losing. The Court is entitled to assume that both parties have put their best foot forward. If the moving party meets the evidentiary burden of producing evidence on which the Court could conclude that there is no genuine issue for trial, the responding party must either refute or counter the moving party’s evidence or risk summary judgment. (see Bolton Oak Inc. v McColl-Frontenac Inc.)

Limitations Act / Discoverability

[9] At the heart of this motion is section 5 of the Limitations Act which provides:

(1) A claim is discovered on the earlier of,

a. the day on which the person with the claim first knew,

i. that the injury, loss or damage had occurred,

ii. that the injury, loss or damage was caused by or contributed to by an act or omission,

iii. that the act or omission was that of the person against whom the claim is made, and

iv. that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[10] Justice Penny in Bolton Oak defines discoverability as follows:

The question as to when a plaintiff becomes aware of the material facts is determined by an objective standard, i.e., when the claim ought reasonably to have been discovered by a plaintiff exercising reasonable diligence. In assessing whether or not a plaintiff has acted with reasonable diligence, the court must consider whether a reasonable person, exercising reasonable diligence under the circumstances, would have discovered the material facts upon which to form an action. The obligation on a plaintiff to exercise reasonable diligence is a positive one, Soper v. Southcott (1998) 1998 5359 (ON CA), 39 OR (3d) 737 (C.A.) paras. 13 and 21.

Factual Background

[11] I will now give brief overview of the facts. I will further develop the facts when necessary in my analysis.

[12] Crombie’s action alleges that Dr. Dimtsis and the other defendants are responsible for environmental contamination of the soil and groundwater of the Crombie Property with petroleum hydrocarbons and related chemicals.

[13] Crombie alleges that the source of these chemicals is the Dimtsis property, which is owned by Dr. Dimtsis and abuts the Crombie property.

[14] The other defendants are former owners of the Dimtsis property.

[15] There is no dispute between the parties that the Dimtsis property was used as a gasoline service station for many years. When the gasoline service station was decommissioned the property was remediated in 2004, during which a substantial amount of contaminated soil was removed. Additional testing in 2005 confirmed that any remaining contaminants met the applicable Ministry of the Environment (MOE) standards at the time.

[16] In 2012, Crombie purchased the now Crombie property.

[17] The Crombie property abuts the Dimtsis property. The Offer to Purchase provided for a due diligence period to allow for investigation to determine if there were any risks, including risks of environmental contamination.

[18] Crombie hired Stantec, an environmental consulting firm to conduct an investigation to determine if the property was in fact contaminated.

[19] Stantec investigated and produced two reports to Crombie. The first report referred to as Phase I is dated March 2012 and the second report referred to as Phase II is dated September 2012.

[20] On March 9, 2012 Crombie chose to close the deal and waived the condition regarding environmental risks.

[21] The closing date for the purchase of the property was April 10, 2012.

[22] On April 28, 2014 Crombie issued a Notice of Action against Dr. Dimtsis and the other defendants.

Analysis

[23] The issue, as I see it, is a fairly narrow one.

[24] The defendants take the position the presence of the contaminants and chemicals were known by Crombie as a result of environmental reports and test results prior to April 28, 2012, or at the very least, ought to have been known by them.

[25] The plaintiff takes the position that they were not advised, nor did they know, that the Crombie property was contaminated, prior to April 28, 2012, and as such are not outside the two year limitation period. The say that it wasn’t until September 2012 when they received the final Phase II report that they became certain of their position.

[26] The plaintiff argues that it was not until the Phase II report dated September 17, 2012 that they could have reasonably known about the contamination on their property that they claim migrated from the defendants’ property.

[27] I find that the plaintiff’s claims were readily available and discoverable well before April 28, 2012.

[28] Here is why.

[29] After a thorough review of the evidence and material before me, I make the following findings of fact:

• Feb 9-10 2012 - Stantec submits their proposal for Phase I and is retained by Crombie;

• Feb 13 – 14 – Stantec commences investigation;

• Feb 29 - Mr. Landry (Crombie Director of Acquisitions and Dispositions) has received all previous reports on the properties;

• The reports received by Crombie and relied upon by Stantec are well documented in the Phase I report, as well as in the Affidavit of Jeff Carson;

• February 29, 2012 - Michael Geropoulous (Crombie Director of Acquisitions/ Mississauga) in an email advised that Stantec is recommending additional environmental testing. Drilling scheduled for March 12, 2012 and ground water sampling one week later, with verbal result scheduled to be available March 24, 2012;

• Feb 29, 2012 – Budget for Phase II approved –confirmed March 23, 2012 as the date for verbal report and April 9, 2012 for draft report – in addition, information that a 2.5 million environmental reserve has been established.

• Feb/ early March 2012 – Crombie is aware of Stantec’s concerns of potential contamination by petroleum hydrocarbons related to former gasoline station on the Dimtsis property;

• March 8, 2012 - Crombie waives conditions and proceeds with purchase of property;

• March 14, 2012 - Drilling of wells by Stantec – Soil samples taken. Petroleum Hydrocarbon (gasoline) odor noted;

• March 14 – 23 – Discussion between Stantec and Crombie about the “gas” smell – they decide to expand laboratory analysis;

• March 20, 2012 – Stantec sends final Phase I report to Michael Geropoulous at Crombie;

• March 21, 2012 – Stantec carries out groundwater monitoring;

• March 23, 2012 - Groundwater sampling results available and show exceedances;

• March 30, 2012 – Soil Sample results available and show exceedances;

• April 10, 2012 – Crombie completes purchase;

• May 9, 2012 – Stantec Draft Phase II report sent to Michael Geropoulous at Crombie;

• September 17, 2012 - Stantec final Phase II report;

• April 28, 2012 – Action commenced.

[30] It is obvious from my above findings of fact that the contamination issues attached to the Crombie property were a concern even at the time the initial Offer to Purchase was made. To address those concerns, Crombie hired Stantec.

[31] I find that by March 9, 2012, when Crombie waived the environmental clause, they had become aware of sufficient material facts to form the basis of an action. I am mindful that most of the material available to them on that date was a review of the property, but that does not make it any less actionable. It is the compilation of the material that was presented to them that armed them with sufficient knowledge at that moment to move forward with a claim. All the testing that followed simply confirmed their suspicions about what had already been reported on.

[32] Even if I am wrong on that, it is incontrovertible, on the facts as I have found them to be, that Crombie had more than a sufficient basis for an action by March 30, 2012. It is of no moment that the draft Phase II report is dated May 9, 2012. The crucial part of that report is the findings from the drilling and soil sample all of which was made available to Crombie in March 30, 2012. It is difficult to believe that Crombie did not know about these results given that they were directing and presumably paying Stantec to go ahead with the further testing.

[33] I am mindful that Mr. Landry in his affidavit claims that he had no contact with Stantec after the March 9 waiver. I don’t accept or rely upon his evidence in that regard. He said there were no status updates from Stantec between March 13 and April 12, 2012. The implication is that Crombie had no contact with Stantec during this time, which I simply cannot accept.

[34] The suggestion that Crombie ceased to have communication with Stantec during this crucial time period makes no sense and I do not accept it.

[35] Crombie admits that they had ongoing verbal communication with Stantec prior to the Phase I report, and were verbally notified of those results well before to the March 20, 2012 release date. It only makes sense that they also had ongoing communication with Stantec prior to the Phase II report. Given the serious nature of the investigation and the results that flowed from it, it is difficult to believe they were not given that information by March 30, 2012. Even if they did not request it, one would think Stantec would have made it available to them.

[36] I have considered the defendant’s submission that up until March 8, 2012, Stantec told Crombie that there was no issue with gasoline contamination in relation to this property. I find no evidence to support this argument. In fact, I find the evidence to the contrary to be overwhelming. The evidence clearly indicates that Stantec’s position from the beginning was that they were concerned with gasoline contamination and recommended further investigation.

[37] I am mindful that the plaintiff argues that they had no conclusions available to them prior to the closing of the property. They seem to suggest that certainty is the test.

[38] I disagree, and here is why.

[39] A party does not need to have concrete conclusions to start a cause of action. The threshold for discoverability of a claim for the purposes of the Limitation Act is a low one. A claim is discoverable when the material facts upon which it is based were discovered or ought to have been discovered by the plaintiff through the exercise of reasonable diligence. A claim is discovered when the party with the claim first knew, or reasonably ought to have known, that damage occurred, which was caused or contributed to by an act or omission by a person against who the claim is made, and a proceeding would be an appropriate means to remedy it.

[40] Even if I were to find that Crombie did not know about the drilling and soil sample results until May of 2012, I would still find that they ought to have known and did not exercise due diligence. Given all of the information and concerns they had about contaminants in relation to this property, to not avail themselves of the results under these circumstances amounts to turning a blind eye and is inconsistent with reasonable diligent conduct.

Continuing Damage

[41] I am guided by and grateful for Justice Penny’s summary of the law in relation to continuing damage:

The law is clear when a party claims a continuing nuisance, evidence of damages sustained during the limitation period is required. In the face of a limitation defence, the mere presence of contaminants in the soil or groundwater is not sufficient to found a claim for damages for continuing nuisance. Rather, there must be evidence of damage sustained within the limitation period, ML Plaza Holdings Ltd. v. Imperial Oil Ltd., [2006] B.C.J. No. 479, 2006 CarswellBC 520 (B.C.S.C.) at para. 72, aff’d 2006 BCCA 564.

[42] There is a paucity of evidence from the plaintiff regarding ongoing damage or nuisance, aside from the allegation in their Statement of Claim.

[43] In fact, there is some evidence to suggest that the water is running into the property from an easterly direction and the Dimtsis property on the west side.

[44] None of the environmental reports that have been generated speak to the issue of ongoing damage.

[45] The plaintiff argues that the ongoing damage is a separate cause of action and therefore a separate and distinct limitation period applies.

[46] Given the absence of evidence in relation to the allegation of continuing damage and my inability to distinguish it as such, I am not prepared to attach an artificial limitation period to it.

[47] The limitation period in question attaches to the entire claim. There is no evidentiary foundation that would support a bifurcation of the issues.

Conclusion

[48] I find that the limitation period in respect of any cause of action alleged by the plaintiff has expired.

[49] Certainly by the time the plaintiff acquired the property on April 10, 2012, the plaintiff knew or ought to have known through reasonable diligence, all of the material facts needed to discover its alleged cause of action. The Notice of Action was not issued until April 28, 2014.

[50] Accordingly, the plaintiff’s action is statute barred by the Limitations Act and is thereby dismissed.

Costs

[51] The defendants are the successful parties and are thereby entitled to costs. Given that the summary judgment motion resulted in a dismissal of the action, they are each entitled to their costs on the action.

[52] In determining those costs, I have taken into account those considerations set out in Rule 57 of the Rules of Civil Procedure in combination with unique factors that attach to this particular case.

[53] I find that all defendants are entitled to costs on a partial indemnity basis. This case does not warrant a cost award on a substantial indemnity basis.

[54] If find the defendant Dimtsis Dentistry Professional Corporation are entitled to costs in the amount of $110,000.00 inclusive.

[55] I find the defendants Imperial Oil Limited, 172965 Ontario Limited and McColl-Frontenac Inc. are entitled to costs in the amount of $40,000.00 inclusive.

[56] I find the defendants Avondale Stores Limited are entitled to cost in the amount of $40,000 inclusive.

K.P. WRIGHT, J.

Released: October 22, 2015

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

CROMBIE PROPERTY HOLDINGS LIMITED

Plaintiff

– and –

MCCOLL-FRONTENAC INC. (formerly known as TEXACO CANADA LIMITED), IMPERIAL OIL LIMITED, 172965 CANADA LIMITED, AVONDALE STORES LIMITED, DIMTSIS DENTISTRY PROFESSIONAL CORPORATION AND JOHN DOE

Defendants

REASONS FOR JUDGMENT

K.P. WRIGHT, J.

Released: October 22, 2015