COURT FILE NO.: CV-15-63763 DATE: 2017/03/31 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN :
CONNIE BROWN and SCOTT BROWN Plaintiffs
and
W.O. STINSON & SON LTD. and PARRSBORO METAL FABRICATORS LTD Defendants
Counsel for Plaintiffs Tamara Farber Counsel for Defendant, W.O. Stinson & Son Ltd. Pierre Champagne
REASONS FOR JUDGMENT
Introduction
[1] Sometime on November 4 or 5, 2009, the oil tank in the basement of the Browns’ home began to leak. The Browns were away, but Mr. Brown’s father checked the home daily. When he arrived in the morning of November 5, 2009, he discovered oil leaking from the tank into the Browns’ basement. One of the calls made that morning was to the defendant, W.O. Stinson & Son Ltd. (“Stinson”), whose crew pumped out the oil remaining in the tank and notified the Technical Standards & Safety Authority (the “TSSA”), as required by law in the event of an oil spill.
[2] As a result of the leak, oil seeped into the concrete basement floor of the Browns’ home and was pumped to the outside of the home via the basement sump pump system. Because of the leak, portions of the concrete basement floor and underlying soil had to be removed. Portions of the interior of the home and some household contents had all had to be remediated or replaced. The oil fumes made the house unliveable for a time. Outside testing had to be conducted to determine the whereabouts and extent of the oil contamination. Where required, the soil and underground water had to be remediated or removed.
[3] The Browns’ home insurers, Grenville Mutual Insurance Company (“Grenville”), covered the cost of the clean-up; the cost of repair and/or replacement of the home and its contents; and the Browns’ living costs while the remediation was ongoing. Grenville brought this subrogated claim to recover those costs from Stinson and from Parrsboro Metal Fabricators Ltd., the latter having manufactured the oil tank. Parrsboro is no longer in business and this trial dealt only with the subrogated claim against Stinson.
[4] Stinson is in the business of supplying and delivering oil. It first delivered oil to the Browns in June 1995. Stinson also had service technicians who could install, inspect, service, and repair the Browns’ oil-fueled heating system, which included the oil tank.
[5] In August 2007, the Browns asked Stinson to move the basement oil tank so that they could renovate their basement. The oil tank had to be moved away from the basement wall for the renovations and put back when the renovations were done. Stinson moved the tank away from the wall on August 24, 2007 and moved it back on October 20, 2007. In these Reasons, the relocation of the tank is referred to as the “Repositioning”.
[6] The essence of the plaintiffs’ claim against Stinson is that it was negligent in the Repositioning and when it conducted an annual maintenance in February 2008.
[7] Summarized briefly, the plaintiffs claim is that, when Stinson removed some of the oil from the tank for the Repositioning, the tank was put at greater risk of corrosion, which is what led to the hole in the tank. The plaintiffs allege that Stinson should have performed a water dip test on the tank in August (which Stinson says it did), in October, 2007, and again on February 2, 2008, when Stinson performed an annual conditioning. Alternatively, the plaintiffs say that Stinson should have warned the Browns that the tank was at risk of developing a leak; recommended that the Browns install a pan underneath the tank (to catch oil in the event of a leak); recommended annual maintenance of the tank (which I find that Stinson did do); or take other steps, such as buying a new tank, to minimize the risk to the Browns of an oil leak. The plaintiffs also say that Stinson should have spotted the corrosion in the tank and known that it was at risk for a leak. Finally, when it conducted its annual maintenance in February 2008, Stinson should have conducted a water test, observed the exterior condition of the tank, and advised the plaintiffs that it required inspection by a corrosion expert to determine if the tank was fit for continued operation.
[8] Stinson says that it performed all service in accordance with TSSA regulations and industry standards. It says that the tank did not show outward signs of corrosion and that there were no other warning signs of water in the tank — rust in the filter, furnace malfunction, or otherwise. Stinson says that none of the TSSA regulations or applicable code or industry practices dictated that a water dip test be done as asserted by the plaintiffs. Stinson also says that it told the Browns to service their oil-fueled system annually and that, before the accident, the Browns had allowed 20 months to pass without an annual conditioning. Stinson also said, and the plaintiffs’ expert agreed, that it is impossible to predict when an oil tank is going to fail.
Disposition
[9] For the reasons set out below, I conclude that the plaintiffs have failed to establish that Stinson fell below the standard of care required of a fuel oil service contractor and supplier. I further conclude that the plaintiff has failed to establish on a balance of probabilities that, “but for” any act or omission admission on the part of Stinson, the oil tank would not have leaked and the Browns would not have suffered the loss for which their insurers seek compensation.
The Plaintiffs’ Claim
[10] The plaintiffs summarized their claim as follows:
(a) Stinson failed to test the tank for water after the Repositioning, when they knew or ought to have known that the Repositioning created conditions that were conducive to the development of condensation and when they knew or ought to have known that the tank contained sludge and possibly water, due to its age;
(b) Stinson failed to warn the plaintiffs of the risk of condensation when the tank had low levels of fuel during warmer temperatures;
(c) Stinson failed to warn the plaintiffs about the risk of a corrosion failure;
(d) Stinson failed to recognize signs of corrosion on the exterior of the tank, that should have been examined by a metallurgist or corrosion expert to determine if the tank was fit for continued operation;
(e) Stinson technicians were not trained in recognizing when surface corrosion or pitting corrosion could be a sign of something more significant;
(f) Stinson failed to install any protective measures to counteract conditions of condensation and/or corrosion such as a tank tray, recommending a water test be conducted, removing sludge and water from the tank, creating a condition in the tank of low fuel in hot temperatures making it conducive for the development of condensation; and
(g) Stinson failed to alert the plaintiffs to conduct annual maintenance.
Overview
[11] The Browns did not have an annual maintenance agreement with Stinson but twice hired Stinson to perform an annual maintenance on their oil-fueled heating system: once in December 2006 and once in February 2008. The Browns continued to purchase oil from Stinson after February 2008, but did not again ask Stinson (or anyone else) to perform an annual maintenance.
[12] On November 2, 2009, Stinson delivered oil to the Browns. As per usual, the oil was delivered via the outside fill-pipe and without entering the Browns’ home or seeing the tank. The leak in the oil tank began two or three days after this last oil delivery.
[13] The experts agreed that water and bacteria (i.e. microbiologically-influenced corrosion, or “MIC”), working together on the inside of the tank, likely caused the pinhole in the tank. The pinhole was not visible from the outside of the tank. It was covered by a rust “scab” on the interior of the tank that likely became dislodged when the fuel was delivered in November 2009.
[14] The plaintiffs assert that Stinson should have performed “water dip tests” on the oil tank. A water dip test is performed by removing the fuel gauge on the top of the tank and inserting a fiberglass stick with water-reactive paste into the tank. If there is water in the tank, the paste changes colour.
[15] The Plaintiffs assert that had a water dip test been performed after the Repositioning or when the annual conditioning was done on February 2, 2008, it would have revealed that there was water in the oil tank. That discovery would then have led to the tank being tagged as an “immediate” or a “non-immediate” hazard and fuel delivery being suspended until the water had been removed or, possibly, the tank replaced.
[16] From August 2007 to November 2009, the Browns experienced no problems with the oil tank or with the operation of their oil-fueled system. No problems were noted on the annual conditioning on February 2, 2008.
[17] On the day the leak was discovered, Grenville retained Peter R.A. Daley, MBA, P.Eng., (“Daley”) to look at the tank. Daley gave evidence at trial as the plaintiffs’ expert in oil tank failure analysis. Daley agreed that he thought the tank looked to be in good condition for its age and that there was nothing about its outward appearance that would cause concern or mandate the issuance of an immediate or non-immediate hazard tag. He stated that, even though he knew the tank was leaking, he could not find the pinhole until the tank was drained and cut in half for inspection.
[18] All the experts, and the Stinson witnesses, agreed that water in fuel oil tanks is an ongoing concern in the oil industry because of the damage water can cause, leading to leaks. While there was also general agreement that water and microbial activity in this oil tank led to the creation of the pinhole leak, there was no agreement or consensus of opinion among the expert witnesses about how, or when, the water entered the tank and how long it would have taken for the pinhole to have been created.
[19] The issues to be decided by this Court are:
(a) Did Stinson owe a duty of care to the Browns? (b) What is the standard of care expected of a fuel oil service contractor? (c) Did Stinson fall below that standard of care? (d) Did that breach cause damages to the plaintiffs? (e) What are the plaintiff’s damages?
Analysis
Issue 1: Did Stinson Owe a Duty of Care to the Browns?
[20] There is no dispute that Stinson owed a duty of care to the plaintiffs with respect to the services it rendered to the Browns. The services ranged from delivery of oil to inspection and maintenance of the oil-fuelled heating system to the repositioning of the Browns oil tank.
Issues 2 and 3: What is the Standard of Care Expected of a Fuel Oil Service Contractor and Did Stinson Fall Below that Standard?
[21] Counsel for both parties referred the Supreme Court of Canada’s decision in Ryan v. Victoria (City), [1999] 1 S.C.R. 201, at paras. 28–29, which guides the Court on how to determine the applicable standard of care:
Conduct is negligent if it creates an objectively unreasonable risk of harm. To avoid liability, a person must exercise the standard of care that would be expected of an ordinary, reasonable and prudent person in the same circumstances. The measure of what is reasonable depends on the facts of each case, including the likelihood of a known or foreseeable harm, the gravity of that harm, and the burden or cost which would be incurred to prevent the injury. In addition, one may look to external indicators of reasonable conduct, such as custom, industry practice and statutory or regulatory standards.
Legislative standards are relevant to the common-law standard of care, but the two are not necessarily co-extensive. The fact that a statute prescribes or prohibits certain activities may constitute evidence of reasonable conduct in a given situation, but it does not extinguish the underlying obligation of reasonableness. Thus, a statutory breach does not automatically give rise to civil liability; it is merely some evidence of negligence. By the same token, mere compliance with the statute does not, in and of itself, preclude a finding of civil liability. Statutory standards can, however, be highly relevant to the assessment of reasonable conduct in a particular case, and in fact may render reasonable an act or omission which would otherwise appear to be negligent. This allows courts to consider than legislative framework in which people and companies must operate, while at the same time recognizing that one cannot avoid the underlying obligation of reasonable care simply by discharging statutory duties. [References omitted.]
Applicable Legislative Standards
[22] At the time of the events relevant to this action, oil fueled equipment and the delivery of oil were regulated by the TSSA and Fuel Oil, O. Reg. 213/01, which incorporated Ontario Installation Code for Oil Burning Equipment, B139-00 (the “Code”). As set out below, except for a seven-month period between March 1, 2007 and October 11, 2007, there was no statutory requirement to conduct a water dip test.
[23] On March 1, 2007, TSSA regulations required that both indoor and outdoor end-outlet tanks be dipped for water. That requirement was removed for indoor end-outlet tanks on October 11, 2007 in response to resistance from the industry, which was unhappy with having to do water-dip tests because of their onerous nature and because indoor tank failure was a lot less common than for outdoor tanks.
[24] The rationale to change the requirement to test “metallic and outlet tanks for water” was explained at page 11 of the TSSA UPDATE- Fuels Safety Edition, Fall 2008:
Industry had indicated that the requirement to test “metallic and outlet tanks for water” is onerous if the tank is located indoors (i.e. in the basement). In order to meet this requirement, many contractors have to remove the tank gauge in order to dip the tank for water. There have been problems associated with having to reinstall the tank gauge after dipping (i.e. popping out if improperly threaded back).
Testing a tank installed indoors for water in the bottom is not feasible through the fill pipe (located outdoors) as no cost-effective tool can effectively manoeuvre through the turns of the piping.…
The risk involved in dipping indoor tanks versus outdoor tanks was taken into account during consultation with industry and the Office of the Fire Marshal Ontario. All parties agreed that it is important to dip outdoor tanks for water, as they are more susceptible to leaks due to bottom corrosion.
Comparatively, the ratio of failure with indoor tanks versus outdoor tanks is 1:5 (from tank manufacturer data for tanks that are 2200L in size).
TSSA has issued a Director’s Order to amend the code so the clause below applies to outdoor tanks only:
“Metallic end outlet tanks installed outdoors, test for water at the bottom of the tank. When water is found, remove the water.”
Knowledge and Custom in the Industry
[25] Many of the witnesses, both expert and lay, gave evidence at the trial regarding the risks associated with water and oil tanks. Taken as a whole, the evidence from these witnesses is as follows:
(a) Humidity on the outside of the tank can cause rusting and deterioration of the tank can lead to a leak;
(b) The greater risk to a tank’s integrity is from water found inside the oil tank, which can silently and invisibly eat away at the inside of the tank, create pinholes and, ultimately, result in a leak in the tank;
(c) There is no known way to prevent water or condensation from entering an oil tank;
(d) The risk of damage to an oil tank by water/condensation was well-known in the fuel-oil industry as at 2009, but was more well known in 2016;
(e) The industry developed practices aimed at reducing the likelihood of condensation in oil tanks, such as ensuring that the tank is full of fuel oil during the hot, summer months. This often means that homeowners are encouraged to purchase oil and to fill their oil tanks in late spring, notwithstanding that they are less likely to use the fuel oil until the cooler temperatures arrive in the fall and winter;
(f) Water could also be carried into a tank in the fuel oil itself. For that reason, careful attention is paid to ensure that the fuel oil delivered does not have water in it, such as ensuring that the pumping and oil storage equipment is kept dry and/or tested for water;
(g) Outdoor fuel oil tanks are more prone to the risk of condensation/water-caused holes/leaks because the temperature fluctuates more greatly outdoors. For that reason, the TSSA imposes different rules relating to the maintenance of outdoor fuel oil tanks than on indoor fuel oil tanks;
(h) The water dip test is a test by which a technician applies a paste to the end of a flexible rod which is then inserted through the top of an oil tank. If there is water in the tank, even a very small amount, the paste will change colour. The water dip test is the most reliable test for the presence of water in a fuel oil tank;
(i) For a brief time — namely, from March 1, 2007 to October 11, 2007 — the TSSA required that a water dip test be conducted for both indoor- and outdoor-end outlet tanks (such as the tank in this case) whenever an annual maintenance was conducted. As a result of lobbying from the industry, who objected to this requirement because of the time and effort it took to conduct a water dip test, the regulations changed. After October 11, 2007, water dip tests were not required to be conducted for inside fuel oil tanks except when the technician determined that the circumstances warranted such a test;
(j) Circumstances that might warrant conducting a water dip test include a concern or suspicion of water, for example, if there is a service call because the furnace has ceased operating or if rust is found in the oil filter;
(k) A water dip test is also a standard test when a tank is being decommissioned and a new tank installed: if the old oil is to be transferred to the new tank, it should first be tested for water so as not to transfer water with the oil being pumped into the new tank.
[26] Stinson’s evidence was that it complied with the TSSA and regulations conducted water dip tests as required.
Maintenance and Annual Inspections by Stinson
Basic Inspection: March 2004
[27] Stinson first delivered oil to the Browns in June 1995. At the request of the Browns, on March 23, 2004, Stinson first conducted a “basic” inspection of the oil fueled system. Stinson’s Chris Eades (“Eades”), a qualified and licenced oil burner technician (“OBT”), conducted the inspection. He identified a “non-immediate hazard” that required replacement of the Browns’ copper oil line and the need for a heat shield. In its pre-printed invoice to the Browns, Stinson recommended replacement of oil tanks over 20 years old. In its “Equipment Letter” to the Browns, dated April 20, 2004, Stinson told the Browns that there would be no further oil delivery until the “code issues” were resolved. That letter also notified the Browns of the provincial regulations requiring that their heating equipment meet minimum standards and be inspected by licensed technicians.
[28] On April 28, 2004, Stinson replaced the Browns’ copper line. The Browns chose to install the heat shield themselves. On that date, Stinson also visually inspected the oil tank, noting that it was “not leaking presently”.
Annual Conditioning: December 4, 2006
[29] The next service performed by Stinson was on December 4, 2006, when the Browns asked for an annual conditioning and cleaning of the Browns’ heating system. Eades was again the Stinson technician. On the Stinson pre-printed service form, Eades noted that the hot water heater needed replacing but confirmed that the equipment otherwise met TSSA requirements. It was Eades’ evidence that he did not observe anything on this inspection that caused him to be concerned that there was water in the system or in the tank and, therefore, no water dip test of the oil tank was required or conducted. The back of this two-sided document was never produced.
[30] The plaintiffs called Robert Smith (“Smith”) to give evidence as to the standard of care to be met by Stinson. He was qualified as an expert on the standards and procedures applicable to oil burner technicians; on the regulatory regime relating to oil burning technicians and distributors for oil heat and appliances; and as an expert in the service, installation, and maintenance of fuel oil heating equipment, including fuel oil storage tanks.
[31] Smith’s opinion was that it would have been preferable, and in keeping with industry standards, if Stinson’s checklist on its December 4, 2006 pre-printed service form had mentioned the water dip test. Notwithstanding those views, on cross-examination, Smith conceded that if Eades had completed his checklist, and, as indicated by his initials on the front of the form, had determined that he had met the comprehensive inspection requirements of the TSSA, then Eades (and thus Stinson) would have satisfied the requisite regulatory standards.
[32] Smith also agreed that, as at December 2006, there was no statutory requirement to conduct a water dip test and, as per industry practice, if the oil tank did not “raise any red flags” there was otherwise no need to conduct a water dip test.
[33] I accept the evidence of Eades that he completed the system inspection and that it met the TSSA requirements for oil delivery. I further conclude that Stinson met the requisite standard of care on the comprehensive inspection conducted on December 4, 2006.
No Comprehensive Inspection Required Again Until 2016
[34] On cross-examination, Smith agreed that, had a comprehensive inspection been carried out in 2006, there would have been no need for another comprehensive inspection until 2016. This is important evidence from which I conclude that, absent a “red flag” or circumstance that might otherwise call for it, there was no obligation upon Stinson to conduct another comprehensive inspection between 2006 and the date of the leak in 2009, including a water-dip test, of the Browns’ system.
Repositioning of the Oil Tank in August 2007
[35] Apart from its regular fuel deliveries, the next time Stinson attended at the Browns’ home was August 24, 2007, when Alfred Rosien (“Rosien”), a senior Stinson technician in Stinson’s Pembroke office, was sent out for the Repositioning. Rosien was met by another technician, Jonathan Mousseau (“Mousseau”).
[36] Rosien knew the tank would be too heavy to move without removing some of the oil. Rosien brought clean, empty barrels with him to store the removed fuel oil. Rosien decided to leave eight inches of oil in the tank, from which to fuel the furnace and hot water heater.
[37] Rosien’s evidence was that he asked Mousseau to remove the outside fill and vent pipes while he removed the inside pipes. Rosien inspected the exterior of the tank to determine if the tank could be moved. Rosien stated that if he had seen rust, he would have known that moving the tank could cause a leak. Rosien observed the tank to be good in shape, so he and Mousseau carried on.
[38] Rosien said that he took the fuel gauge off the top of the tank and inserted his dipping rod into the tank to measure the depth of the fuel. That told him how many barrels would be needed to store the oil removed from the tank. Rosien then wiped off the dipping rod, applied the water dip paste, and again inserted it into the tank to check for water. The paste did not change colour, which told Rosien that there was no water in the tank.
[39] The tank was 48 inches deep, so Rosien inserted the hose 40 inches into the tank. Rosien and Mousseau pumped out the oil, leaving eight inches. The oil was pumped into the barrels Rosien had brought. These were sealed and stored outside. Rosien and Mousseau then moved the tank — each man taking turns moving his end of the tank a couple of inches until the tank was approximately two feet from the wall. Before leaving, they capped the fill pipe so that no fumes would enter the basement. The vent pipe remained on the tank with a vent alarm, but an elbow was added so that it would go through the window, thereby avoiding any odours in the house.
[40] On cross-examination of Rosien, the plaintiffs suggested that the basement window might have been left open. This was relevant, as an open window would have contributed to the risk of condensation inside the near-empty fuel oil tank due to the warm outdoor air entering the cool basement. That suggestion was not supported by the evidence: no witness was called to say that the basement window had been left open and the evidence of Mrs. Brown was clear that she would not have allowed a basement window to remain open because of her fear of snakes.
Pump-Out Procedure on the Repositioning
[41] On cross-examination, Rosien conceded that he had never before repositioned an oil tank. The Code did not provide a procedure for a repositioning and he had no training on how to do it.
[42] Stinson has its own Policy and Procedure Manual that set out the procedure to be followed when installing a new tank and removing the old tank. Stinson’s Manual lists in detail the steps to be followed when pumping oil out of an old (decommissioned) tank and then into the new (replacement) tank. Stinson’s procedure for this pump-out operation contemplates first dipping the tank for water, then removing all but the bottom four inches of oil in the tank, and storing it in barrels until the new tank is in place.
[43] Rosien was specifically cross-examined on the Stinson pump-out procedure. Rosien was adamant that the procedure he followed on the Repositioning was not a “pump-out” but a “pump-down”. In the former, all but the bottom four inches of oil are removed from a tank. Rosien agreed that in a pump-out, the bottom four inches of the tank are separately removed, particularly when draining an older tank, as those bottom four inches can contain sludge. Sludge is a corrosion risk and Rosien agreed (as did both the plaintiff and defence experts) that the bottom four inches of an oil tank are generally not re-used but are pumped into a separate sludge container for disposal. In this case, eight inches were left in the tank and the tank was not taken out of service.
[44] Rosien was able to provide a step-by-step explanation of the Stinson pump-out procedure; something he had done before 2007. He stated that in determining how to effect the Repositioning, he considered any applicable Stinson procedures, the risks involved, and what the industry knew.
The Repositioning on October 30, 2007
[45] The tank could not be put back in its original location until October 30, 2007, when the Browns’ basement renovations were completed. Stinson sent Rosien to perform the Repositioning on October 30, 2007.
[46] On the October 30, 2007 service invoice, Rosien noted that he was at the Browns for four hours. He noted that he reinstalled the oil tank, drilled new holes (which he explained were holes drilled through the foundation of the Browns’ home to accommodate the new location of pipes), repositioned the tank, and changed the tank’s support from a saddle to legs. The legs were supplied by the manufacturer and attached to the brackets, which were original to the oil tank.
[47] Rosien explained that he decided to change from the saddle to legs because when a tank sits on a saddle it creates a place for moisture to collect and for a leak to be created. Moving the tank to legs mitigated the risk of corrosion. Also, one cannot see underneath the saddle to check for rust or corrosion. As a result of switching from the saddle to legs, the tank was slightly sloped toward the valve. This slope was intended by the manufacturer and facilitated the flow of any water toward the valve, improving the ability to detect water, which would show up in rust stains on the valve filter.
[48] Changing to legs was not requested by the Browns nor needed for the Repositioning. In making this change, Rosien demonstrated that, as a senior technician, he had turned his mind to the risk of a potential leak and was using his experience and judgment to reduce that risk. He acted in accordance with industry practice and with the expectation of the manufacturer, which had supplied the brackets and legs with the tank.
[49] Smith had no issue with replacing the saddle with legs and agreed that saddles were known to cause corrosion. Smith also acknowledged that there was nothing in the Code that prohibits a tank from being sloped.
[50] Smith agreed that the request to reposition a tank is unusual but is not prohibited by any regulation. Indeed, this case is the only time he had ever heard of a tank being repositioned.
[51] On the issue of the sloping of the tank, Smith also acknowledged that if the tank was sloped toward the valve end, as was done by Rosien, then any impurities would be directed toward the oil filter and, if those impurities reached the height of the valve, would go into the oil filter. Oil filters are inspected for traces of impurities such as rust. Smith agreed that on a “no heat call” the service technician would look at the oil line in the filter to try to find the cause of the problem and that, by tilting the tank toward the filter, a problem could be detected earlier because the impurities would flow toward the valve/filter end.
Water Dip Test of Barrels
[52] Rosien stated that on October 30, 2007, he removed caps from the storage barrels and dipped them for water using his dip rod and paste. The test revealed no water in the barrels, so the oil was pumped back into the tank once the Repositioning had been completed.
[53] Rosien stated that he had a memory of examining the outside of the tank on October 30, 2007 and that he had not observed any corrosion. He stated that he normally examines tanks for corrosion on all re-installations. He also noted that the lines were protected as unprotected lines are prone to corrosion. Rosien provided a very detailed account of the steps he took on the Repositioning.
[54] On cross-examination, Rosien acknowledged that he noted the water dip test of August 24, 2007 in his records. His explanation for that was that it was an automatic procedure that he did and that it was not his practice to record this test. He also added that he did not record the distance of the vent pipes from the window, although he asserted that he met the requisite Code requirements. In other words, his explanation for not making a note the water dip test was that he takes a multitude of steps on every service call but does not record each and every one of those steps which, to him, have become routine and automatic. I accept his evidence as to his usual practice regarding water dip tests and that he did perform a water dip test on August 24, 2007. Among other things, Rosien had already removed the fuel gauge to measure the level of the oil and it was an easy and obvious thing for him to conduct the water dip test while the gauge was off.
[55] While I do not accept that Rosien has a perfect memory of everything he did at the Browns, I do believe that this particular job stands out in his memory. I found Rosien to be a credible witness and accept that he did what he said he did, whether he had a direct memory of doing it or whether his memory is informed, in part, by what he does each time when pumping oil. I accept that Rosien was a person with a great deal of experience and that he followed a usual and careful routine when transferring oil.
[56] Rosien was cross-examined on whether he conducted a water dip test of the oil tank on October 30, 2007. Given his evidence that he did many things which he did not record, it would have been open to Rosien to assert that he had performed a water dip test of the tank. However, that was not his evidence: he acknowledged that he did not conduct a water dip test of the oil tank but only of the barrels in which the oil had been stored outside. That answer reinforced Rosien’s credibility.
[57] Smith was critical of the procedure followed by Stinson in the pump-down of the oil tank in August 2007 and its repositioning on October 2007. Smith asserted that the water dip test should have been performed on the oil tank in October 2007. However, Smith’s opinion was based, in part, on a misunderstanding of what had been done on October 30, 2007. In particular, he had understood that Rosien had drilled holes in the tank itself and it appeared that he only learned on cross-examination that the drilling of holes referred to the holes in the basement foundation.
[58] Significantly, Mr. Smith admitted that if there was no evidence of something on the exterior of the tank then no water dip test was required.
[59] Smith agreed that the fuel oil tank could not be moved when it was full of oil and that one would either have to wait to move it until the oil had been consumed or manually pump down the oil. If the owner chose to have the oil pumped, Smith agreed that it was reasonable to put the oil into barrels stored outside of the home.
[60] Smith stated that, with the benefit of hindsight, he would not recommend leaving only 100 litres in the oil tank and that it would have been better to empty it out completely. However, he conceded that there was no industry standard, regulation, or other protocol in existence that might have guided this procedure. He conceded that there was no TSSA-mandated procedure or certified instructions for a pump-down.
[61] While Smith gave his opinion as to how a tank should be pumped out, he acknowledged that he, himself, had never pumped out a tank. He acknowledged that leaving seven to eight inches of oil in the tank was very different from leaving the bottom three inches of oil as referenced in the Granby Bulletin (one of the industry guidelines) which sets out a procedure for a pump-over of oil.
[62] Smith agreed that the pumping-out of an oil tank usually occurs when a new tank is being installed. In such a case, the old tank is being removed either because it has failed or because it is no longer in satisfactory condition. In either case, it would be anticipated that the oil in the bottom of an old or damaged tank would not be usable.
Condition of the Exterior of the Tank
[63] Smith opined that, based on his observations of the tank, Rosien should have issued a non-immediate hazard tag on October 30, 2007. However, on cross-examination, Mr. Smith disclosed that he first saw the tank almost nine years later, in March 2016, one week before the trial. Smith’s conclusions about how the tank looked on October 30, 2007 were based solely on photographs taken of the tank by Daley in November 2009, two years after the Repositioning and 20 months after the last annual conditioning.
[64] On cross-examination, Smith acknowledged that if the Daley photos did not accurately depict the condition of the tank then his opinion on the need for a water dip test then would also need to be revisited. When confronted with Daley’s testimony that he thought the tank looked good for its age, Smith stated that whether or not a water dip test was required would depend on what was meant the words “looked good for its age” and that “some tanks look new yet fail”. Smith went on to say that the industry has not yet “one hundred percent” figured out what makes a tank fail. Smith agreed that it was fair to say that if the external appearance of the tank was good and there was no tell-tale sign of any problems then, applying a reasonable risk analysis, an OBT would not conclude that the issuance of an immediate or non-immediate hazard to be justified.
[65] As to the condition of the exterior of the oil tank, I prefer the opinions of those who actually saw the tank in August and October 2007, February 2008, November 2009, namely, the Stinson technicians and Daley. All of those eyewitnesses agreed that the tank looked good for its age. For that reason, I give no weight to Smith’s opinion as to whether on any of those dates an immediate or non-immediate hazard tag should have been issued and/or whether the condition of the tank mandated a water dip test.
[66] I accept the evidence of those who saw the tank at the relevant times both before and on the day of the leak. I conclude that there was nothing outwardly visible in the tank that would have given rise to a concern that there was corrosion or other condition issues that would either necessitate a water dip test or a tagging of the tank.
Did the Tank Become a “Used” Tank as a Result of the Repositioning?
[67] Smith opined that a water dip test was required by the Code on the basis that the tank was disconnected from the heating system during the Repositioning and became a “used” tank when it was reconnected. As a “used tank”, the Browns’ 1995 oil tank would then be required to meet 2007 standards, which it would not have met.
[68] On cross-examination, Smith agreed that it was possible that on a service call the oil line could be disconnected from the tank during the service of the equipment and that it would not thereafter be referred to as a used or re-used tank, nor would the portion of the Code that applies to a used tank apply.
[69] Rosien’s evidence was that the tank had remained hooked up to the furnace and hot water heater. The evidence was that the valve to the tank was only closed during repositioning to avoid a spill.
[70] The defendant’s responding expert, James A. Roberts (“Roberts”), was of the opinion that the Repositioning would not convert the Brown’s tank to a “used” tank. Roberts was qualified as an expert in fuel oil regulatory requirements and industry standards including the installation, service, and maintenance of domestic fuel tanks and fuel oil equipment. Robert’s evidence was that a “used” tank, as referred to in the regulations and Code, is one that was taken out of service, left unused, and then re-used at a later date. In this case, the oil tank was in service and connected at all times, save for when the valve was shut off during the Repositioning.
[71] I conclude that the regulations regarding “used” tanks are not applicable to this case.
Annual Maintenance in February 2008
[72] On February 2, 2008, Stinson’s Ryan Swartman (“Swartman”) conducted an annual conditioning and inspection of the Browns’ oiled-fueled heating system. He completed and signed Stinson’s pre-printed form. He also initialed beside the statement stating that the system met TSSA requirements for oil delivery.
[73] At trial, Swartman stated that in 2008 he conducted three to five annual conditionings per day, depending on the distance between customers. He described his routine in detail. It included conducting an in-depth visual inspection of the oil tank. He did this using a trouble light, and, on his hands and knees, looking under the tank and touching the tank, feeling for weeping or scabbing. He would inspect the oil filter, looking for discolouration or rust. He stated that he followed the TSSA (B139) checklist. If he found any issues, including things that might become issues in the coming year or two, he would tell the customer and make a note.
[74] On February 2, 2008, Swartman spent two hours performing the conditioning. He noted no issues. A water dip test was not required by the Code and was not conducted. On cross-examination, Swartman confirmed that he could identify and distinguish pitting corrosion from a scratch. He was unshaken in his evidence that he checked the oil tank for leaks and condition and that he would have made a note if he had seen anything of concern.
[75] I accept the evidence of Swartman that on February 2, 2008 he followed his usual routine for conducting an annual conditioning and that he would have made a note on the Stinson form of any condition concerns.
Stinson’s History of Complying with Regulatory Standards
[76] On cross-examination, Smith agreed that the history of the invoices to the Browns showed the importance that Stinson placed on compliance with the TSSA and applicable regulations and Stinson’s recognition of its obligation to meet those standards.
[77] The factual matrix is important to determine whether Stinson has met the requisite standard of care. The plaintiffs argue that, to meet the standard of care expected of it, the defendant must not only satisfy statutory or regulatory standards, it must also weigh the reasonably foreseeable risk, having regard to the likelihood of a known or reasonably foreseeable harm, against the burden or cost which would be incurred to prevent the harm.
[78] In this case, the plaintiffs assert that the water dip test was “a simple 1 minute test”, which ought to have been performed by Stinson, had they recognized the risk of having left the tank with low fuel for ten weeks during a period of hot temperatures.
[79] Stinson responds that the industry standard and practice dictates that the fuel tank should be filled in late spring, which it was, so that it is full during the warmer, summer months. The evidence of Stinson’s service manager, Robert Herres (“Herres”), was that the end of August signals the end of air-conditioning calls. I understand his evidence to infer that the end of August signals the end of the warmer, summer months.
[80] The plaintiff did put forth evidence of the temperatures in September and October 2007. There was no expert evidence called as to humidity on those days or as to whether these months were significantly warmer or more humid than in other years. While I accept that there were warm days in these months, without more evidence, I cannot conclude that September and October were intended to be included in the industry description of “warmer, summer months”. In any event, the evidence from all the industry witnesses, expert and lay alike, was that there is always an opportunity for condensation in a tank, which is impossible to prevent.
[81] Herres appeared very well-informed about his business and industry. He agreed that condensation is and has been a concern for the integrity of oil tanks for many years. He also agreed, consistent with the evidence of the other industry witnesses, expert and lay, that more is known about tank failures in 2016 then was known in 2007. Herres was less definitive about the infallibility of the water dip test as a means to identify and avoid tank failure — a point also somewhat acknowledged by Smith when he stated that the industry is not 100% sure why one tank fails after three months and another lasts for 40 years.
[82] In concluding that Stinson met the requisite standard of care, I place a great deal of significance on the relaxing of the water dip test requirement. That water dip tests were only very briefly required by the TSSA/Code speaks volumes about the knowledge and practice in the industry and about the likelihood of a known or foreseeable harm weighed against the burden of performing such tests in the absence of any “red flag” or usual custom.
[83] Smith acknowledged that the TSSA did not consider the waterdip test of indoor tanks as important as the water dip test of outdoor tanks. He also stated that the state of knowledge of the industry is much different in 2016 than it was in 2007: today, water dip tests are recommended for all tanks.
[84] Based on the evidence, summarized above, I conclude that Stinson complied with the applicable law and regulations in the Repositioning. I further conclude that the Stinson employees and, in particular, Eades and Rosien, used appropriate skill and judgment in performing the services requested by the Browns. Among other things, the plaintiffs have failed to prove on a balance of probabilities that a water dip test should have been performed on the oil tank in October 2007 or February 2008. I find that a water dip test was performed on the oil tank in August 2007 and on the storage barrels in October 2007.
[85] I further find that the plaintiffs have failed to show on a balance of probabilities that in any of August 2007, October 2007, or February 2008, Stinson knew or ought to have identified the need either for a water dip test or to call in an expert in metallurgy or corrosion.
[86] I conclude, therefore, that the plaintiffs have failed to show on a balance of probabilities that Stinson fell below the standard of care of a fuel oil service contractor and supplier. By contrast, the evidence shows that at all times Stinson complied with the TSSA and the applicable Ontario regulations.
Issue 4: Did Stinson Cause Damages to the Plaintiffs?
[87] In addition to a finding that Stinson met the standard of care, I also conclude that the plaintiffs have failed to establish on a balance of probabilities that anything Stinson did or omitted to something that caused damages to the plaintiffs.
[88] Daley gave clear and compelling evidence concerning the cause of the tank failure. I accept his evidence that the corrosion pattern on the interior of the tank showed that it began sometime after the tank was on a slope. I also accept his evidence that there was a second corrosion pattern visible in the interior of the tank, which showed corrosion caught caused by the presence of a greater volume of water.
[89] I accept his evidence that the wider pattern of corrosion was caused at a time when the tank was on a level. I must conclude that this corrosion occurred when the tank was supported by a saddle rather than the legs, which put the tank on a slope.
[90] None of the plaintiffs’ experts asserted that putting the tank on a slope was in breach of regulations or the cause of tank failure. None of the plaintiffs’ experts asserted that repositioning of the tank was, in itself, the cause of the tank failure. The plaintiffs seek to impose liability on Stinson in the absence of any statutory or regulatory obligation — in the absence of any system failure, that might have suggested the presence of water in the tank and led to a recommendation to drain or replace the tank; in the absence of any signs from the exterior of the tank, that would have dictated the issuance of an immediate of non-immediate hazard tag.
[91] In addition, the plaintiffs seek to impose liability on Stinson when the plaintiffs, having been told of their obligation to obtain annual maintenance of their oil-fueled system, failed to do so for over 20 months.
[92] There was no doubt that condensation is one source of water in the tank. I also accept that condensation likely occurred in and after October 2007. Daley’s evidence was that he could not confirm when the corrosion began and suggested a range of three months to three years. As the plaintiffs failed to have anyone inspect the tank for over 20 months, they cannot prove on a balance of probabilities when the water entered their tank.
[93] Without in any way criticizing the plaintiff’s experts, they were unable to identify how the or when water and MIC entered the tank. Moreover, Smith candidly acknowledged that no one knows with certainty why one tank fails after three months and another lasts for 40 years. In the face of the evidence showing that Stinson complied with the TSSA and Code and sent its most experienced and senior technician — who applied his best judgment to this unusual task — the plaintiffs simply have not met the onus imposed on them.
[94] Smith was cross-examined on his opinion that leaving the tank with only 100 litres of oil in it from August 24 to October 30, 2007 increased the risk of condensation. He acknowledged that a 910-litre tank is only filled to 850 litres and that there is always air in the tank. Also, between deliveries, the level of the oil always goes down to half or even lower than one half of the tank’s capacity.
[95] Also, on cross-examination, Smith acknowledged that condensation can occur even if a tank is full of oil and that condensation is a normal, natural process that no one can prevent.
Analysis
[96] In a negligence action the plaintiff must prove on a balance of probabilities that the breach of the standard of care is causally connected to the injury in question (Thornhill v. Hyland, 2014 ONSC 3018, at para. 96).
[97] I conclude that the “but for” test applies in this case and follow the reasoning in Thornhill v. Hyland, at para. 97:
The Supreme Court of Canada in Ediger v. Johnston, 2013 SCC 18, at para 28 described the “but for” test:
That is, the plaintiff must show on a balance of probabilities that “but for” the defendant’s negligent act, the injury would not have occurred: Clements, at para 8. “Inherent in the phrase ‘but for’ is the requirement that the defendant’s negligence was necessary to bring about the injury---in other words that the injury would not have occurred without the defendant’s negligence.” noting Clements v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181, at para. 8.
[98] Again, for the reasons set out above, even if I am wrong in concluding that Stinson did not fall below a reasonable standard of care, I conclude that the plaintiff has failed to show on a balance of probabilities that “but for” the defendant’s negligent act the injury would not have occurred.
Issue 5: What are the Plaintiffs’ Damages?
[99] As set out above, I have concluded that Stinson did not breach its standard of care and that there was no causal connection between the actions of Stinson and the injury to the plaintiffs. However, the sake of completeness, I have reviewed and determined the damages claimed by the plaintiffs.
[100] The plaintiffs claim damages of approximately $250,000 for remediation expenses and a further approximately $88,000 for the repair, replacement, or cleaning of household contents and other expenses incurred by the Browns. Stinson asserts that the damages are excessive: the impact of the oil spill was limited and the site could have been remediated at a cost of between $50,000.00 and $150,000.00.
[101] Stinson relies on the evidence of its expert, Mark Samis, who critiqued the work performed by D.L. Services Inc. (“DLS”), which was hired and paid by Grenville. In part, Stinson seeks to rely upon the finding in Thornhill v. Hyland that DLS’s fees were too high as proof that DLS’s fees have been recognized as “usually excessive”. I do not accept that approach.
[102] The damages claimed fall under two general categories: (i) remediation, and (ii) expenses reimbursable to the Browns for cleaning or replacement of damaged household items; accommodation while they were out of their home; extra hydro expenses incurred by the equipment used for the remediation; landscaping to repair damage caused by the remediation; and other related expenses.
[103] The remediation was completed by DLS. The evidence of Mona Foan of Grenville was that the remediation was completed for approximately $250,000.00, well under the original estimated budget of $336,000.00. She denied that DLS was the preferred contractor for Grenville and was pleasantly surprised at the lower than budgeted remediation cost.
[104] None of the DLS employees who had conducted the remediation were called as witnesses by the plaintiff. As result, the evidence as to what was done came from the Weekly Cost Update Reports and other Reports submitted by DLS to Grenville. Stinson did not take issue with the accuracy of the records but focused on whether the work done needed to be done and on the amounts charged for the services.
[105] Stinson retained Mark Samis (“Samis”) of Pario Engineering & Environmental Sciences to review the approach taken and the costs charged by DLS. In the opinion of Samis, the remediation approach taken by DLS was not warranted given the minimal impact to the site, the limited extent of the impact, and low concentrations of pollutants.
[106] The evidence is that approximately 125 litres of oil leaked from the tank and that the spill was discovered fairly soon after the leak began and remediation began almost immediately after discovery.
[107] The oil permeated the laminate flooring and the underlying concrete floor slab. The soil underneath the slab was also affected. It was silty clay, which has a low permeability and tends to inhibit the movement of fuel from the source. Samis opines that the soil type, combined with the lack of drainage stone under the Browns’ home, should have led DLS to conclude that impact to the ground would be limited. Samis supports that opinion, in part, by noting that DLS needed only one 20-yard roll-off bin and removed only six cubic metres of soil.
[108] Samis opines that, in the face of the quick cleanup of the spilled oil and the low permeability of the soil, DLS conducted expensive and ongoing monitoring, testing, and water and soil remediation beyond what was required.
[109] The main focus of Samis’ opinion was that DLS could and ought to have remediated the soil and groundwater “in situ”. That is, rather than removing and/or flushing the contaminants out of the groundwater or soil, it would have been acceptable and much less expensive for DLS to have treated the soil and water and then monitored over a period of perhaps six months.
[110] On cross-examination, Samis conceded that it would have been appropriate to remove discoloured soil; that there was no remediation done to the monitoring wells located outside the house; and that the approach taken by DLS offered a more certain outcome versus one in which the soil was treated and subsequently monitored to see if the treatment had been successful. Samis also agreed that, given that the spill had occurred in a family home that included two small children, it was reasonable to choose a remediation approach with the greatest certainty. Samis also conceded that, in the small area that was the affected portion of the Browns’ basement, the cost of removal was likely no more expensive than the cost of treatment and subsequent testing.
[111] On cross-examination, Samis conceded that a cost-benefit analysis might lead to the removal of the concrete floor and underlying soil but, in this case, more slab and soil was removed than necessary. Samis acknowledged that he did not compare the cost of cleaning the water using mobile cleaning equipment to the cost of pumping and removing the water in tanks. Samis also agreed that his report did not address the costs associated with the odours and vapours in the house.
[112] In Samis opinion, with respect to the rates charged by DLS, he criticized the 18% markup charged by DSL on its entire invoice. This markup was added to all employee hours, including time spent on project management. In his opinion, markup on project management is typically 5% to 7.5% of the total hours. Here, DLS charged 18% on the amount invoiced for project management. Samis was also critical of the truck charge of 182.75 hours at the rate of $17 an hour (plus 18% markup) and stated that the practice in the industry is to impose a mileage charge with no additional markup. He was also critical of DLS for having charged its 18% markup on top of the 10% markup charged to DLS by Ball Technical Service. In his opinion, marking-up and a marked-up invoice is not within industry standards.
[113] I accept some of the criticisms voiced by Samis about the amount charged by DLS. For example, DLS charged 428.75 staff hours in the first 14 days following the spill. Of that, 143.25 hours were charged for project management, representing 41% of the total staff hours charged for that time period. Given the nature and size of the job, I accept the opinion of Samis that there was excessive project management. I also accept the opinion of Samis that usual markup rates are 15% and not the 18% charged by DLS. I also accept the opinion of Samis that charging a markup on a marked-up invoice is not within industry standards.
[114] Notwithstanding Samis’ opinion, overall I accept that the work done by DLS was appropriate in the circumstances. While it might have been possible to have taken a different and less costly approach, when dealing with a family home occupied by two young children, the approach taken by DLS appears reasonable and appropriate.
[115] For the reasons set out above, I would reduce the plaintiffs’ damages associated with the costs paid to DLS by 3% of the markup charged by DLS and all of the markup charged by DLS on the Ball Technical Service invoice. I would also reduce the overall amount charged by DLS for “project management” by 5%.
[116] The evidence at trial was unclear as to the amount that was actually paid by Grenville for the interior repairs which fall under the second general category of the plaintiff’s damages. Morna Foan could not explain the confusion over the amount that was actually paid by Grenville to M. Sullivan & Son. Should it be necessary to determine the exact amount spent by Grenville, further submissions from the parties would be required to clarify the payment to M. Sullivan & Son.
[117] The amount paid by Grenville to the Browns included the replacement cost of items that had to be replaced. If the item was not replaced, then the amount paid to the Browns was the fair market value of that item, which included depreciation.
[118] Stinson argued that the plaintiffs’ damages should be based on the fair market value of the item, not its replacement cost. While I might agree with that approach, there is no evidence before me upon which I could determine the plaintiffs’ damages based on the fair market value of the replaced items. Stinson acknowledges that the onus was upon it to lead evidence on that issue. It has not. Accordingly, subject to the uncertainty about the M. Sullivan & Son invoice, I find that the damages incurred by the plaintiffs under the second category to be those claimed, without any reduction or allowance for depreciation. To do otherwise, without evidence, would be arbitrary.
Disposition and Costs
[119] For the reasons set out above, the plaintiffs’ claim is dismissed. As Stinson has been successful, it is entitled to its costs.
[120] If the parties cannot agree on costs then they may submit written argument to me, not to exceed three pages, together with any Offers and Bills of Costs, within 30 days of the release of these Reasons.
L. Sheard J. Released: March 31, 2017