Court File and Parties

COURT FILE NO.: CV-14-499195 DATE: 20160429

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

METRUS PROPERTIES 2004 LIMITED PARTNERSHIP, METRUS PROPERTIES INC. and METRUS PROPERTIES LIMITED Plaintiffs/Responding Parties – and – WRIGLEY CANADA INC. Defendant /Moving Party

Counsel: Andrew Winton and Christine Muir, for Metrus, Responding Party Jennifer Danahy and Brent J. Arnold, for Wrigley, Moving Party

HEARD: April 22, 2016

Judge: R.F. Goldstein J.

[1] Metrus and Wrigley are next-door neighbours in Toronto. Metrus’s address is 1121 Leslie Street. Wrigley’s address is 1123 Leslie Street. Wrigley has made chewing gum there since 1959. Metrus purchased the Metrus Property (as I will refer to it) in 2005 from Sony Music Canada and leased it back to Sony. Sony carried out extensive environmental testing and remediation of the Metrus Property after it surrendered it back in 2011 as part of the terms of its lease.

[2] In 2011 Metrus discovered the extent of the contamination of the Metrus Property as a result of the testing and remediation. In 2013 Metrus sued Sony over its failure to properly remediate. In 2014 Metrus also sued Wrigley, alleging that hazardous waste had seeped onto the Metrus Property from what I will refer to as the Wrigley Property. In early 2016 Wrigley asked for permission to enter the Metrus Property to conduct its own testing. Metrus refused.

[3] In March of this year Metrus began to excavate and demolish the property in anticipation of preparing it for sale, rent, or development. Wrigley, fearing that it would lose an opportunity to do its own testing, asked Metrus to stop. Metrus refused. Wrigley now asks for an interim injunction, a preservation order, and an inspection order so it can carry out its own testing. Metrus argues that Wrigley can use the samples taken as part of Sony’s remediation project. Wrigley, not surprisingly, wants to employ its own consultant and take its own samples.

[4] In my view, Wrigley should have the opportunity to test. For the reasons that follow, I grant the interim injunction and order that testing be permitted pursuant to Rule 32 of the Rules of Civil Procedure.

FACTS:

(a) History Of The Metrus Property

[5] In 2005 Metrus purchased 1121 Leslie Street from Sony Music Entertainment Canada Inc. Sony (or a previous incarnation, CBS Records) operated a factory there from the 1960’s until 2011. As of the 1980’s, the factory manufactured compact disks and digital video disks. The manufacturing included “injection molding, electroplating, mask washing, printing, packaging, etc.”

[6] On January 31 2005 Metrus leased the Metrus Property back to Sony. Sony continued to use the Metrus property for manufacturing operations. The lease was extended several times. Sony continued to lease the Metrus Property until it was surrendered on June 30 2011.

(b) Contamination And Remediation Of The Metrus Property

[7] As might be expected, Sony’s manufacturing processes generated hazardous wastes. Halogenated solvents are a type of hazardous waste. Halogenated solvent waste is the waste class that includes volatile organic compounds, or VOCs. One of these VOCs is perchloroethylene, or PCE, as it is referred to in Wrigley’s materials. (The affidavit of Prem Manicks, an expert retained by Metrus, refers to the chemical tetrachloroethylene as PCE. For the purposes of these reasons I will assume that tetrachloroethylene and perchloroethylene are the same thing. Both the Metrus and Wrigley pleadings refer to tetrachloroethylene.)

[8] The Ministry of the Environment maintains a database of hazardous wastes. The Metrus Property was a designated generator of halogenated solvents from 1986 (when the database was started) until 2005.

[9] In 2011 Metrus discovered that the Metrus Property was contaminated with VOCs. Under the terms of the lease and associated agreements, Sony was required to remediate the property and remove hazardous wastes that had been located, generated, or stored on any part of the Metrus Property. This term of the lease was to survive the termination of the lease, meaning that Sony was still responsible even after it vacated the Metrus Property. Sony and its contractors were to have access to the Metrus Property for the purpose of remediation.

[10] In January 2011 Sony hired Leggette, Brasheares & Graham Inc. (which I will refer to as LBG) to conduct an environmental investigation and remediation of the Metrus Property. LBG is a firm of environmental consultants. LBG drilled boreholes, took samples, tested soil and groundwater, and generated reports.

[11] Metrus also hired EXP Services Inc. to conduct an environmental investigation and do a peer review of LBG’s work. EXP also witnessed and monitored work conducted by LBG. EXP took its own samples and reviewed data and reports prepared by LBG.

[12] LBG determined that there were two “plumes” of VOCs on the Metrus property: one plume was along the northern boundary of the property, next to the Wrigley property. The other plume was in what the environmental consultants referred to as the Wet Matrix Area of the Sony factory building (I will therefore to the plumes as the Northern Plume and the Wet Matrix Plume).

[13] By March 2012 LBG and Metrus came to disagree about the source of the plume in the wet matrix area. LBG determined that the source of the wet matrix plume was VOC seeping from the northern boundary of the property – in other words, from the Wrigley Property. EXP determined that the source of the wet matrix plume was industrial storage and manufacturing on the Metrus Property. Both LBG and EXP agreed that the source of the northern plume was the Wrigley Property. Further testing was carried out in January 2015, but Sony began the remediation work in November 2012. Since then, the remediation work has continued. Metrus hired EXP to go beyond its original mandate of environmental investigation and to conduct remediation. EXP submitted a proposal to Metrus on March 17 2016.

[14] To greatly simplify, then, this is the position: Sony’s environmental consultant says that Sony is not responsible for any of the VOC plumes on the Metrus Property. Metrus’s environmental consultant disagrees and says Sony is the source of one of the two plumes. They both agree that Wrigley is the source of the other plume.

[15] Wrigley’s environmental consultant has yet another view. In November 2015 Golder Associates produced a report for Wrigley. Golder ultimately determined that VOC, and in particular PCE, were never produced or stored on the Wrigley Property. On April 7 2016 Golder produced a proposal for an offsite groundwater inspection in the vicinity of 1123 Leslie Street. Golder noted that:

Further, to date a coordinated assessment of groundwater flow conditions, considering data from both 1121 and 1123 Leslie Street, has not been completed.

[16] Golder proposed that it be permitted to conduct groundwater monitoring, membrane interface probe investigation, and monitoring wells installation. Golder requires access to the Metrus Property for this purpose.

(c) Metrus’s Litigation Against Sony

[17] On July 23 2013 Metrus issued a statement of claim against Sony. Metrus alleged that Sony failed to carry out the remediation as required under the lease and other agreements. Sony defended on the basis that it had indeed carried out the remediation as required.

[18] An analysis of the statement of claim, defence, and reply show that the main issue in the litigation is whether Sony properly remediated as required under the lease and the various other agreements. The litigation concerns not just VOC, but other hazardous wastes. In the pleadings Metrus does not directly allege, and Sony does not directly deny, that the manufacturing activities carried out on the Metrus Property are the source of the VOC and the other hazardous wastes. The various agreements are incorporated into the pleadings by reference. I do not have those various agreements before me. It seems a reasonable inference those agreements require Sony to remediate because everyone accepted that Sony’s manufacturing activities were, in fact, the source of the hazardous wastes on the Metrus Property.

[19] The pleadings do not specifically mention PEC or VOC or any particular chemical. There is an excerpt from the lease in the Metrus statement of claim. The excerpt mentions “toxic or hazardous substances or materials” and specifically notes (without limiting it to these) “asbestos, urea formaldehyde, foam insulation, radon gas, PCB’s, or any other contaminant defined in the Environmental Protection Act…”

(d) Metrus’s Litigation Against Wrigley And The Current Motion

[20] On March 24 2014 Metrus issued a statement of claim against Wrigley. The claim alleged that:

Environmental contaminants, including Tetrachloroethylene and other volatile organic compounds (the “Contaminants”) are present on the Metrus Property at levels above Site Condition Standards for industrial land use in non-potable groundwater conditions as a result of entering the Metrus Property from the Wrigley Property at the northern upgradient boundary of the Metrus Property by groundwater or other means.

[21] Metrus pleaded negligence, trespass, nuisance, strict liability, and/or breach of statutory duty by Wrigley.

[22] Wrigley defended on the basis that it the Wrigley Property could not have been the source of the VOCs because it was only ever used to manufacture food products. Specifically, Wrigley pleaded:

Wrigley has never used tetrachloroethylene or any of the other volatile organic compounds defined as “Contaminants” in paragraph 5 of the statement of claim (together, “VOCs”) at the Wrigley Property.

Wrigley denies that VOCs were brought onto, used, handled, stored, or permitted to be used, handled or stored and/or to remain on the Wrigley Property.

[23] Wrigley also pleaded that Metrus was statute-barred from proceeding against it, and that Metrus failed to conduct proper due diligence when it bought the Metrus Property in 2005.

[24] In February 2016 counsel for Wrigley raised the issue of inspecting the Metrus Property. Initially, Wrigley only sought access to the existing wells to take water samples. Metrus refused. Counsel for Wrigley then indicated that if access was refused Wrigley would likely bring a motion for a full intrusive inspection.

[25] After much back and forth between counsel about dates, and mutual recriminations about disclosure and adjournments, Wrigley eventually brought this motion on short notice.

[26] The short notice motion came about when Wrigley observed that Metrus had begun conducting excavation on the Metrus Property. Wrigley had not been aware that excavation was about to begin until that point. Wrigley says that if the excavation takes place then it will be unable to conduct an inspection, and will have to rely on the work done by LBG and EXP. Metrus’s position is, in essence, that it is not necessary for Golder, Wrigley’s consultant, to carry out sampling and testing. There are thousands of samples and pages of data that it can examine from LBG. Metrus says that it needs to have the excavation work carried out so that it can finally rent or otherwise develop the Metrus Property. In any event, Metrus says that there is no expert evidence that the excavations will disturb Golder’s future ability to carry out testing.

ANALYSIS:

[27] In my view, there are really only two issues here: first, whether I should make an order under Rule 32 of the Rules of Civil Procedure for the inspection of the property? If the answer is yes, then the second issue is whether I ought to issue an interim an injunction to prevent Metrus from continuing with its site preparation. I do not think I need to make an order for the preservation of property under Rule 45 of the Rules of Civil Procedure and I will not deal with that issue.

(a) Should a Rule 32 inspection be ordered?

[28] The court may order an inspection of real or personal property pursuant to Rule 32.01 of the Rules of Civil Procedure “where it appears necessary for the proper determination of an issue.”

[29] Mr. Winton, for Metrus, argues forcefully that nowhere in the Golder proposal is there to be found an opinion that the inspection is necessary. He says that this is a glaring omission. He says that I should draw an adverse inference against Wrigley on the issue of necessity and therefore dismiss the motion on that basis alone: Boehringer Ingelheim Canada Ltd. v. Pharmacia Canada Inc., , 200428573 (Ont.Div.Ct) at para. 22, citing with approval from Sopinka and Lederman, The Law of Evidence in Canada.

[30] I must respectfully disagree. I see nothing in the authorities requiring an expert opinion on the issue of necessity. Necessity simply means “useful” or “probative of an issue”: Brick Warehouse Inc. v. B. Gottardo Construction Ltd., 2011 ONSC 5933 at paras. 17-18.

[31] Necessity is something that can be inferred from the materials, or even the pleadings. In my view, Metrus’s allegation alone that the VOCs seeped from the Wrigley Property to the Metrus property is enough to establish necessity. Rule 32 should be applied liberally, without reference to the balance of convenience: Farhi v. Wright, 1987 CarswellOnt 569, [1987] O.J. 1241, 26 C.P.C. (2d) 88 at para. 22 (Ont.H.C.). As long as there is a reasonable possibility that the inspection will reveal something useful to a trier of fact the inspection should be ordered: I.C.R. General Contractors Ltd. v. Broadview Developments Ltd., 2011 NBQB 20.

[32] In any event, it is abundantly clear that the Golder proposal assumes that the proposed groundwater flow testing must be done on both sides of the property line between the Metrus Property and the Wrigley Property – which is, to my mind, an obvious assertion of necessity.

[33] The purpose of Rule 32 is to give an opposing party an opportunity for conducting an inspection in order to relieve him or her from the necessity of being entirely dependent on the other side’s evidence: Donnelly v. Fraleigh, 2001 CarswellOnt 2381, [2001] O.J. No. 2731, 9 C.P.C. (5th) 271 (Sup.Ct).

[34] That is exactly what has happened in this case. Sony’s consultant says the contamination in the Wet Matrix Plume isn’t Sony’s fault at all, but Wrigley’s fault. Metrus’s consultant says that the contamination in the Wet Matrix Plume is Sony’s fault. They both agree that Wrigley is responsible for the Northern Plume. If the testing is not allowed, Wrigley is stuck with the testing, samples, and data underlying those conclusions. Testing will level the playing field between experts: Brick Warehouse Inc. v. B. Gottardo Construction Ltd. at para. 18.

[35] I also point out that the issue in the Metrus/Sony litigation as framed by the pleadings is not the source of the VOCs but whether Sony properly remediated. The environmental testing by LBG and EXP must be seen in that light. The issue in the Metrus/Wrigley litigation is not remediation but the source of the VOCs. It is therefore no answer to say that Wrigley can simply rely on the work of LBG and EXP. That work was done for a different purpose in relation to different litigation with different (albeit related) issues.

[36] I find that testing should be ordered.

(b) Should an interim injunction be granted in order to carry out the inspection?

[37] In the leading case of RJR – MacDonald Inc. v. Attorney General of Canada, , [1994] 1 S.C.R. 311 the Supreme Court of Canada set out a three-part test for granting an interim or interlocutory injunction:

• Is there a serious issue to be tried?
• Will the moving party suffer irreparable harm if the injunction is not granted?
• Does the balance of convenience favour granting the injunction?

Is there a serious issue to be tried?

[38] There are no specific requirements to be met under this heading. The application judge must make a preliminary evaluation of the merits of the case, although a detailed analysis is unnecessary. It is enough that the claim is not frivolous and vexatious: RJR – MacDonald at paras. 54-55.

[39] Mr. Winton argues for Metrus that there is no serious issue to be tried because the evidentiary record does not disclose one: Western Larch Limited v. Di Poce Management Ltd. et al., 2010 ONSC 3046. This goes back to the necessity issue: Wrigley’s failure to obtain an expert opinion regarding necessity is enough to defeat the claim of a serious issue to be tried. Ms. Muir (also for Metrus) pointed out in dealing with some of the more technical aspects of the evidence that there is some question about whether Golder, Wrigley’s consultant, is correct in its assertion that the Wrigley Property is not the source of the VOCs.

[40] Respectfully, and notwithstanding Ms. Muir’s helpful and clear explanations, I again must disagree. Wrigley’s application is clearly not frivolous. As I noted above, the record (including the pleadings) makes it clear that the source of the VOCs on the Metrus Property is at the heart of the Metrus/Wrigley litigation. The expert evidence before a trier of fact will almost certainly decide the question of liability. That means the issue is obviously a serious one. Necessity is clear from the pleadings and from the totality of the evidence.

[41] It is unnecessary to get into significant detail as to the actual merits of the litigation for the purposes of this application. The evidence, however, that Wrigley might actually be the source of the VOCs on the Metrus Property is weak, at best. The Golder report is clear that Wrigley never produced VOCs. The Metrus response on that issue is found in the affidavit of Mr. Manicks, an environmental consultant from EXP:

The 1993 document attached at Tab 2-U of the motion record, indicates only that Wrigley generated halogenated solvent waste in the form of spent chloroform and trichloroethane in or about May 1993 (as opposed to PCE). However, this does not conclusively mean that Wrigley never, at any other point in its fifty-odd years of property ownership, produced or handled PCE during the course of its manufacturing operations onsite at the Wrigley property.

[42] Obviously there will be further expert evidence regarding the generation of waste material at the Wrigley Property before a trier of fact at a future trial. That said (and recognizing that this is not a summary judgment motion where Metrus is required to put its best foot forward), Mr. Manicks’ statement is surely not enough to cast doubt on whether the issue is a serious one.

Will the moving party suffer irreparable harm if the injunction is not granted?

[43] Irreparable harm refers to harm that cannot be quantified in monetary terms or compensated by an award of damages: RJR – MacDonald at para. 64; Western Larch at para. 38.

[44] Mr. Winton argues that the evidence of harm in this case is speculative and not grounded in the evidence: Kanda Tsushin Kogyo Co. Ltd. v. Coveley, 1997 CarswellOnt 80, [1987] O.J. No. 56, 96 O.A.C. 324 (Div.Ct.) at para. 14. Rather than sworn affidavit evidence, he says that Wrigley simply relies on speculation about the harm that would occur if the injunction were not granted.

[45] This argument is not without some merit. There is no specific evidence as to how the excavations and site work at the Metrus property will prevent Wrigley’s environmental consultant from carrying out the field work. As well, Mr. Manicks reviewed the Golder proposal and opined in his affidavit that the excavations will not alter the movement of the groundwater contaminants.

[46] Ultimately, however, I must again disagree. As I have already explained, no specific assertion of irreparable harm is required. A trial judge must examine the totality of the evidence. The Golder proposal is not limited to one part of the Metrus Property. In any event, Metrus’s proposal appears to reveal plans for fairly extensive excavations. Furthermore, the irreparable harm is not simply that Wrigley’s environmental consultant (Golder) will not be able to carry out some testing. It might be able to. The irreparable harm is that the Metrus Property will be in a very different state when Golder carries out its testing from when LBG and EXP carried out their tests. Quite literally, the playing field will not be level. That alone may well undermine the validity of Golder’s tests. I recognize that there might be an estoppel issue at trial if Metrus tries to make such an argument, but that will still leave the expert evidence in a state that disadvantages Wrigley. There will be no way to quantify that disadvantage.

[47] Mr. Manicks also set out his criticisms of the Golder proposal and his reasons why testing is unnecessary. I must reject his view on this point. His criticism simply amounts to a different way of saying that Wrigley ought to rely on the earlier testing. I have already explained why I do not agree.

[48] I therefore find that Wrigley will suffer irreparable harm if the injunction is not granted.

Does the balance of convenience favour granting the injunction?

[49] In RJR – MacDonald the Court adopted at para. 67 the language in its previous decision in Attorney General of Manitoba v. Metropolitan Stores, , [1987] 1 S.C.R. 110 regarding the balance of convenience: it is “a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits.” The factors to be assessed will vary in each individual case.

[50] Mr. Winton argues with much force, and not without some justification, that the balance of convenience favours Metrus because an injunction will disrupt its ongoing efforts to improve the Metrus Property. He points to the fact that Metrus has hired contractors, has already begun the excavations, and will lose a significant amount of money in penalties while the work does not go ahead.

[51] Those are all valid concerns, but balanced against that is the fact that Wrigley’s environmental consultant has no other means of testing the property while it is in the same state that it was when EXP and LBG did their testing over the course of several years.

[52] Furthermore, while I understand that the property is currently generating no income for Metrus (and is likely a financial drain) this has been the situation for almost five years while testing and remediation has been going on. I am aware that in this case time is definitely money but I cannot see that another eight weeks is especially material in light of that length of time.

[53] Furthermore, as I will explain below when dealing with the equities of the situation, to a significant extent Metrus put itself in this position.

[54] I find that the balance of convenience favours granting the injunction.

(c) Conclusion

[55] I am aware that an injunction is a drastic and extraordinary remedy. A judge should not exercise his or her civil power to restrain the lawful activities of citizens except where it is warranted: Kanda Tsushin Kogyo Co. Ltd. at paras. 3-4. In my view, an interim injunction is warranted in these circumstances.

[56] Mr. Winton argues that Wrigley brought this application under “dubious circumstances” and that the equities therefore do not favour granting the injunction. A lengthy series of emails and correspondence have been submitted (in both records) designed to show that the other party has failed to comply with disclosure obligations, or failed to make full and fair disclosure to the Court. Having (reluctantly) reviewed the correspondence, I am not persuaded that there is any merit to what amounts to an allegation of bad faith. On the other hand, it is abundantly clear that in early February 2016 Wrigley requested permission to inspect at least the wells that had already been dug on the Metrus property in early February 2016. Metrus refused. Wrigley then (as it suggested it would do) expanded the request to a full inspection. Metrus refused again.

[57] Furthermore, if anyone can be accused of non-disclosure, it is Metrus. Metrus did not disclose to Wrigley the fact that the Sony litigation was still ongoing, surely something relevant when determining the credibility of the various experts. When it refused Wrigley’s February request Metrus did not disclose the fact that it had already scheduled excavations to begin. Metrus’s argument that Wrigley waited until late in the day to ask to test has no merit. It is abundantly clear from the record that Wrigley surely would have asked earlier if it had known of Metrus’s plans.

[58] It is difficult to understand why Metrus refused Wrigley’s February request for access to test, especially when Sony had been allowed access (although, in fairness, Sony was entitled to do so pursuant to the terms of the lease and other agreements). Surely there is no prejudice to Metrus to allow Wrigley’s consultant to conduct a supervised environmental site inspection – other than the prejudice of Wrigley’s consultant finding evidence that does not favour Metrus.

[59] At the end of the day, this application comes down to simple fairness. Metrus has sued Wrigley on the basis that VOCs seeped from the Wrigley Property to the Metrus Property. Metrus has refused to allow Wrigley to access in order to test. Wrigley asked for access at a time when it did not know that Metrus was about to excavate – but Metrus obviously did. Metrus could have allowed Wrigley to test at that time without disrupting the construction schedule. I am aware that Metrus is anxious to do something with the Metrus Property, but the Metrus Property has not been generating income since 2011. Although I certainly do not have to decide this issue on the injunction, the evidence is thin, at best, that Wrigley ever generated any VOCs while making chewing gum. Fairness requires that Wrigley be given the opportunity to conduct its own tests. I also find it would be unfair to make Wrigley pay for whatever penalties and costs Metrus incurs with its construction sub-contractors as a result of this interim injunction when this situation is to a significant degree, the result Metrus’s own making.

DISPOSITION:

[60] An interim injunction is granted from today’s date until six weeks from May 9 2016. An order pursuant to Rule 32 of the Rules of Civil Procedure is granted, allowing Wrigley’s consultant access to the Metrus Property in order to conduct tests. Wrigley will be required to obtain the appropriate insurance and clearances. Metrus’s expert, EXP, is authorized to attend while Wrigley’s expert has access to the Metrus Property.

[61] An order will be drafted in substantially the same terms as those set out in the draft order at Tab 9 of Wrigley’s motion materials, with the following modifications:

• As there is no need to make preservation and maintenance a term of the order, paragraph 2 will be omitted;
• Metrus’s consultant will be permitted to be present and to monitor while Wrigley’s consultant carries out testing. Metrus’s consultant will not be permitted to prevent or interfere with testing or sampling by Wrigley’s consultant;
• As this application is not about affidavits of documents or productions or disclosure, paragraph 3 will be omitted. That issue will be left for another day.

[62] If counsel have difficulties settling the terms of the order, they may make an appointment to see me.

COSTS:

[63] Counsel may each make costs submissions of no more than two pages within 30 days of the release of this judgment. I will make a separate costs order.

R.F. Goldstein J. Released: April 29, 2016