ONTARIO SUPERIOR COURT OF JUSTICE
CITATION: 340268 v Rohcan, 2017 ONSC 6676
COURT FILE NO.: C-312-12
DATE: 2017-11-07
BETWEEN:
340268 Ontario Limited
Applicant (Respondent by Counter Application)
– and –
Rohcan Investments Limited
Respondent (Applicant by Counter Application)
Greg Murdoch - Counsel for the Applicant
Heather C. Devine & Anna Sledziecka - Counsel for the Respondent
HEARD: September 26 and October 30, 2017
The Honourable Justice James W. Sloan
reasons for judgment
[1] 340268 Ontario Limited (340) agreed to purchase contaminated property from Rohcan on June 5, 2009, with a closing date of October 7, 2009. The purchase price was 6 million dollars.
[2] A portion of the subject property remains contaminated and the parties do not agree on how the situation should be remedied.
[3] 340 brings it’s application seeking:
(1) Declaration, that Rohcan is in breach of the agreement to remediate the property.
(2) An order, directing Rohcan to complete the remediation of the property to the current Ministry of Environment standards, (340 says in accordance with table 2, Rohcan says it’s not in the prayer for relief).
(3) In the alternative for an order permitting 340 to use trust monies currently being held by 340’s counsel to remediate the property, along with an order that Rohcan be responsible for any additional money required to fund the remediation, in excess of those monies held in trust by 340’s counsel.
(4) Costs of this application on a substantial indemnity basis together with disbursements and HST.
[4] Rohcan brings its application seeking:
(1) A declaration that 340 has breached Revised Article 4 of the agreement of purchase and sale.
(2) A mandatory order directing Rohcan:
(a) to retain McKee, Executive Vice President for Atlantic, Central and Western Canada at e
(b) exp.Services Inc. to replace Watters Engineering Group Inc. (Watters) within the agreement of purchase and sale;
(c) to instruct McKee to take all reasonable steps to complete a Site Specific Risk Assessment (SSRA) in accordance with Ontario Regulation 153/04 which may include performance, completion or obtainment of;
(i) site assessment including the preparation of both a Phase I and Phase II Environmental Site Assessment in accordance with Schedule D and E of O. Reg 153/04;
(ii) pre-submission form;
(iii) completion of the human health and ecological risk assessment;
(iv) design of risk mitigation measures as appropriate;
(v) development of Property Specific Standards (PPS);
(vi) preparation and submission of the Risk Assessment Report;
(vii) acceptance of the risk assessment by the Ministry of Environment; and
(viii) if deemed necessary by Exp., issuance by the Ministry of the Environment of the Certificate of Property Use (“CPU”).
(d) directing Counsel for 340 to pay invoices for the above work until the monies and interest currently held in trust are depleted, for the purpose to complete a Site Specific Risk Assessment, which shall be paid as follows:
(i) exp. shall render its invoices to counsel for Rohcan;
(ii) Rohcan shall review and remit same to counsel for 340;
(iii) payment out of the monies held in trust will be paid to exp. within 30 days of receipt of invoice; and
(iv) when the trust monies, including interest are paid out, Rohcan shall pay the remaining invoices until the CPU is issued.
(3) In the alternative to paragraph (2) above, a declaration that the remaining remediation work as defined in Revised Article 4.7(a) has been successfully completed by Rohcan.
(4) A declaration that Rohcan’s obligations in Revised Article 4.6 are complete and at an end.
(5) A declaration that Rohcan’s obligations in Revised Article 4 are complete and at an end;
(6) A declaration that the sum of $300,000, plus interest, being held by 340 pursuant to Revised Article 4 be released to Rohcan, including all accrued interest.
(7) Costs on a substantial indemnity basis plus applicable taxes.
[5] Prior to transferring the property, Rohcan successfully remediated 5 of the 6 contaminated areas, leaving what was identified in the interim Watter’s report, as the Northwest Corner.
[6] Two Watters reports were given to 340 prior to the agreement being entered into. They were an April 11, 2008, report titled Post–Occupancy Phase II and an August 29, 2008 report titled Supplemental Phase II.
[7] On June 15, 2009, the parties entered into what I will refer to as a “Revised Article 4” agreement to deal with the remaining contamination.
[8] While the remediation was under Watter’s supervision, remediation was attempted by “in situ” oxidation also referred to as the injection technique.
[9] Approximately nine extra rounds of injections were carried out in the Northwest Corner, but it may still remain contaminated.
[10] Environmental work continued on the Northwest Corner under Watter’s supervision into November 2011, under the auspices of one Mr. Kevin French, who since that date has failed to communicate with Rohcan.
[11] As a result Rohcan hired a replacement company Exp.Services Inc., and specifically an expert by the name of John McKee, on March 28, 2012.
[12] 340 commenced its application on April 3, 2012.
[13] Rohcan alleges 340 would not allow McKee access to the property, which 340 denies.
[14] By 2016, Rohcan’s environmental experts had concluded that further injections would serve no useful purpose and that more testing and evaluation was needed, since the condition of the property had not been investigated by anyone in four years.
[15] At this point in time, McKee has opined that there are two plausible approaches to complete the remediation, being either, the excavation and removal of the contaminated soil or the completion of a Site Specific Risk Assessment (SSRA).
[16] McKee further opines that the more cost effective, appropriate, and practical option is the SSRA.
[17] $300,000 is currently being held in trust by 340’s lawyers until compliance with the remediation has been complied with.
[18] At least one of the issues in this case is what does the word “remediation” mean in the context of Revised Article 4.
340’s Position
[19] In short, it is 340’s position that the remediation called for in its agreements, do not envision remediation by means of an SSRA.
[20] Where Rohcan is the Seller and 340 is the Buyer, 340 states that the standard of remediation to be achieved is set out in paragraph 4.3 of Revised Article 4 which reads:
4.3 The seller hereby agrees that it will undertake the remediation of the property in accordance with the Watters Reports. Said remediation work will result in the property conforming to the current (March 9, 2004) Ontario Ministry of Environment Table 2 site condition standards for commercial/industrial sites. To be more specific any exceedences identified by the Watters reports of MOE Table 2 commercial/industrial standards for soil and groundwater with medium to fine textured soil will be remediated.
[21] Rohcan’s remediation obligations did not merge on closing.
[22] Paragraph 4.9(b) of Revised Article 4 obligates 340 to indemnify Rohcan against any “environmental claims” after it is satisfied that the property has been remediated.
[23] Paragraph 4.9(b) reads as follows:
The Buyer shall sign and deliver to the Seller’s solicitor in escrow prior to Completion a form of release, indemnity and defence regarding environmental issues drafted by the Seller’s solicitor acting reasonably pursuant to which; (i) Buyer releases Seller (including current and former officers, directors and agents) from all liability, claims or contribution in respect of contamination and environmental matters arising from or associated with the property whether referenced or not in the Watter’s Reports; and (ii) Buyer covenants to indemnify and save Seller harmless and defend Seller at its cost in respect of any third-party claims or orders from government authorities regarding environmental matters and pending Buyers peer review and acceptance of Watters Environmental Inc. reports as per 4.6. Such acceptance shall not be unreasonably withheld
[24] 340 states that Rohcan has now brought two new engineers forward in an attempt to change the agreement. It states that neither engineer spoke to 340, the owner of the property and neither engineer says remediation cannot be achieved.
[25] 340 submits, based on McKee’s report dated September 24, 2012, (over 5 years ago) that it will be necessary to conduct an investigation and delineation phase prior to initiating further remedial activities. The report at page 12 goes on to state:
“Given the length of time that has passed since injections were completed (2.5 years), there is potential that residual oxidation from previously injected materials together with natural degradation and dispersant processes will have worked to effectively reduce contaminant concentrations. Since the last measured concentrations were not significantly above objective criteria and were in fact closer to the new (MOE 2011) criteria, current soil and groundwater data is essential to confirm the requirement for further remedial activities and allow the development of a plan for further remedial works.”
[26] 340 submits that at page 13 of the McKee report, where McKee has set forth three remedial options, that the third option of a SSRA is new and not contemplated in the contract.
[27] 340 further submits that Rohcan’s second expert, Jeff McBride, also agrees that “residual oxidation might have happened following the last injections” and he agrees that further sampling is required in order to determine the stage of the contamination at this time.
[28] 340 submits that the SSRA may not be successful and even if it is, the documents with respect to the SSRA will be publicly available and decrease the value of the subject property.
[29] It further submits, pursuant to section 168.6 of the Environmental Protection Act, R.S.O. 1990, c. E.19, that the director may issue a certificate of property use, limiting the use that the owner may make of the property and can impose ongoing obligations on the owner and or revoke the certificate.
[30] Since McKee cannot say that the SSRA would be successful, it would leave 340 in a precarious position.
[31] 340 argues that it is entitled to specific performance because damages cannot afford an adequate and just remedy and the contract between the parties is unique. It relies on the case of Matthew Brady Self Storage Corporation v. Instorage Limited Partnership, 2014 ONCA 858, where the Ontario Court of Appeal stated the following:
[29] In its essence, specific performance is a discretionary equitable remedy granted where damages cannot afford an adequate and just remedy in the circumstances … Courts of Equity decree the specific performance of contracts, not upon any distinction between reality and personality, but because damages at law may not, in the particular case, afford a complete remedy.
[36] In our view, in the context of vendor claims…The following passage from the Sharpe text, at paras. 7.210 and 7.220 is instructive:
Where the subject matter of the contract is “unique”, a strong case can be made for specific performance. The more unusual the subject matter of the contract, the more difficult it becomes to assess the plaintiff’s loss.
An award of damages presumes that the plaintiff’s expectation can be protected by a money award which will purchase substitute performance. If the item bargained for is unique then there is no exact substitute.
[37] Two considerations emerge from that passage. First, it is a subject matter of the contract, not the land alone that must be unique or unusual. Second, the measure of the adequacy of the money award is whether it “will purchase a substitute performance”. These considerations help shed light on the analysis where the vendor is the plaintiff.
[32] 340 submits that the subject property is specific and that the damages to 340, if the property is not cleaned up, are unknown.
[33] Alternatively, 340 suggests that the court could order that the $300,000 currently being held in trust could be used to commence remediation on the property but that Rohcan would remain responsible for whatever the ultimate cost might be over and above that amount.
[34] 340 further argues, that while the contract did not specify the exact type of remediation, it likewise did not specify an alternative to remediation, which would result in registration of the property with an environmental problem being listed on a public site.
[35] 340 submits the contract is clear and that Rohcan is responsible to clean the property to a specified standard.
[36] It submits that Rohcan is trying to switch the method of remediation for the object to remediate.
Rohcan’s Position
[37] Its initial position, which was later abandoned, was that the contract is frustrated at law.
[38] It next takes issue with the fact that 340’s environmental consultant has not filed any material to assist the court and that the only experts before the court are those from Rohcan. It states this is important because the remaining contaminants are under the building, currently being used by itself.
[39] By June 15, 2009, the date of Revised Article 4, Watters had already completed remediation in areas 1 through 5, leaving only area 6 to be completed, and the closing date for the transaction was October 7, 2009.
[40] It submits that the word “remediation” is not defined in the contract or in the Watters reports. It further submits that the word remediation applies to any work done on the property in an effort to lessen the contamination.
[41] Therefore, it suggests the court must answer the question, what does it mean to remediate in accordance with the Watters reports?
[42] It submits that paragraph 4.3 of Revised Article 4, clearly states that remediation is to be done in accordance with the Watters reports.
[43] Rohcan further states that the Ontario Ministry of the Environment standards changed in 2011 and that any remediation that needs to be done should have to conform to that standard and not to the March 9, 2004 standards set out in Revised Article 4.
[44] Rohcan further submits that the standards were changed because there is now more understanding with respect to remediation.
[45] It further states that remediation is changing soil to another state and that if you go through a risk assessment process you are doing remediation.
[46] Rohcan further submits that sediment is not soil, as that term is used in paragraph 4.3 of Revised Article 4.
[47] It further submits that both parties thought that the injections would work however, since, it has not worked.
[48] Rohcan states that no specific remediation was suggested for area 6, unlike paragraph 4.5 which calls for the removal of the underground storage tank.
[49] It further submits that although the parties in 2009 contemplated injections, it is clear in paragraph 4.6 that they contemplated that the MOE would be involved.
[50] It also points to paragraph 4.7(a), which in the last sentence states, “For certainty, Seller shall not under any circumstances be required to provide a Record of Site Condition.”
[51] Rohcan complains, that it was not until the cross examination of Mr. George that access for McKee was allowed, and even then 340 had equipment installed on the floor of the building that would have to be removed to permit testing.
[52] While the Rohcan experts did not consult with 340, it asks how they could have meaningful consultation, without access to the property.
[53] Rohcan submits that while paragraph 4.8(a) seems to suggest that the cost of remediation is unlimited, it is limited by the Watters reports.
[54] Rohcan submits that if 340 wants specific performance, it would be limited to injections at area 6 and the financial limit would be the $300,000, currently in trust.
[55] It further submits, because the property is known as a brownfield, that contaminants on the property could in future affect other lands and if that happened it could leave both 340 and Rohcan possibly libel, but they submit if remediation proceeds by way of a SSRA, neither party would be libel to any third party in the future.
[56] It submits more injections are not the way to proceed, since two experts have opined that they probably will not work and therefore given the number of injections to date and the fact that they do not seem to be working, the contract may be frustrated.
[57] It further submits that the word remediation in Revised Article 4 means what the Watters report proposes, which is injections. It also notes that there is no evidence from 340’s experts, that digging under the building is an appropriate method to use to remediate area 6.
[58] Rohcan submits that 340 has no clear plan of how to, or the cost of moving forward to remove and replace the soil under the building, and suggests that all it wants is more money and that Rohcan has already spent more than $700,000 remediating the property.
[59] By comparison, it submits that its experts have opined, that risk assessment is remediation and is sanctioned by the government.
[60] In further submits that there is nothing in the agreement to deal with the eventuality if the injections did not work and that neither party contemplated lifting up the building and digging out and replacing the soil.
[61] Rohcan submits, based on a May 28, 2010 letter from Watters, that states;
Potential causes of the injection issues encountered at the site put forward by The Cannington Group were:
• mobilization of sediment within the soil profile resulting in plugging of the bore spaces between the soil particles; and
• precipitation of manganese oxide from the permanganate oxidizing solution resulting in plugging of the bore holes.
That sediment is not soil and because the grain size of the sediment is so small that further injections will not alleviate the contamination.
[62] Rohcan submits, based on an email from 340’s solicitor dated June 7, 2011, that 340 is stating that Rohcan is obligated to clean the property, which is incorrect because the agreement does not speak of cleaning the property, it speaks of “in situ” injections to remediate the property to 2004 standards.
[63] Rohcan further submits, based on the Watters September 15, 2009 report, that there was no discussion about excavation at area 6, where the report talks about the preferred remediation approach in this area to be by injection and it further submits that the report goes on to talk about risk assessment.
[64] It further submits that the parties did not set a specific standard, they were simply following the applicable standards of the day.
[65] It points to the Watters Post Occupancy Phase II report dated April 11, 2008, and in particular pages 1 & 2, to show the court that area 6 was one of the areas “considered to represent the highest potential environmental risk”.
[66] Rohcan therefore argues that 340 knew of this particular contamination and yet no other process was discussed, other than to try injections.
[67] It also points to the Watters Supplemental Phase II report dated August 29, 2008, and in particular page ii of the report which states:
Watters Environmental noted that the Post Occupancy Phase II ESA was primarily designed to investigate the absence or presence of environmental impacts in relation to the areas and/or activities representing relatively higher risks of potential environmental concern at the site. As such Walters Environmental noted that additional areas representing a moderate to low risk of potential environmental concern at the site were not investigated as part of the Post Occupancy Phase II ESA and therefore the reader is cautioned in this regard.
And because of this, it submits that 340 accepted that it may have to indemnify Rohcan in the future, because some areas of the property were not being investigated, yet no further proposals with respect to dealing with the problem were discussed.
[68] Rohcan submits that nothing turns on the old verses the new environmental standards and that what 340 really wants is more money. It further submits that 340 has not shown the court that the new standards are worse than the old standard.
[69] Rohcan wants to remediate the land in accordance with the law in force at the time of remediation.
[70] It further points to the Watters Supplemental Phase II report dated August 29, 2008, and in particular page 33 of the report which states, with respect to area 6:
The preferred approach to remediating these impacts would most likely comprise using in situ treatment using either potassium permanganate or a combination of zero valence iron and an organic carbon substrate. The treatment solution would be introduced into the subsurface through a series of temporary injection points drilled on a grid pattern in the area of the Main Site Building. Additional bench scale testing would be required to determine the preferred treatment approach and anticipated remediation time frame.
to submit that it was contemplated that some other type of remediation may have to be resorted to if the “preferred treatment approach” did not achieve the desired result.
[71] Rohcan submits that all parties agree that the injections so far have failed to appropriately remediate the property.
[72] Rohcan submits that its experts should prevail, because 340 has not placed any expert evidence before the court to suggest that the injections should continue.
[73] They further submit that 340 accepted what was in the Watters reports and the reason for Watters suggesting injections for under the building, was because excavation was not feasible.
[74] In addition to the two Watters reports dated April 11 and August 29, 2008, which alerted the parties to the potential contamination problems before the agreement of purchase and sale was entered into, Rohcan submits that the following environmental experts all agree that a risk assessment is the appropriate way to proceed:
(1) A report from Gregory Brooks of Conestoga Rovers and Associates dated June 9, 2011, prepared for the former tenant of the property, that caused the contamination, states that in many borehole (BH) locations no PCE was detected and that at BH4 and BH5 located in the northwest corner of the building, the PCE impacted soils are located under the plant floor with no exposure to humans or the environment.
The report goes on to state, “Overall, the extent of impact to soils and groundwater due to the operation of a degreaser in the northwest corner of the plant is very limited. The measured concentration of PCE in soil and groundwater were marginally above the MOE standards. It is well known that PCE degrades naturally over time into harmless products.”
Conestoga Rovers goes on to state that the MOE has approved projects with similar circumstances, with minimal requirements for ongoing monitoring.
Page 8 of the report ends with the following quotation, “This approach would have been particularly appropriate for the Site, since the soils impact was located beneath the plant floor, and there was minimal impact to groundwater, and no evidence of any significant contaminant migration. The Watters report does not provide a technical or regulatory basis for undertaking any remedial action with respect to the minor PCE impact identified under the northwest corner of the plant.
(2) A report from John McKee of exp (who was retained by Rohcan) in a report dated August 10, 2011, agrees with the report from Conestoga Rovers, suggesting a risk assessment is appropriate.
(3) A report from Jess McBride of Advisian dated September 1, 2016, goes through some of the history of the legislation leading up to the Brownfields Statute Law Amendment Act of 2001 and later legislation. It states there was a need to review the standards and update them with the current science.
The report states that the development of effects – based criteria for the guideline was based on 4 major guiding principles including:
(i) Remediation of contained sites will take place to levels which will protect against potential adverse effects …
(ii) The protection of human/ecological health the natural environment will be predicated on effects–based criteria for soil, water and sediment quality …
(iii) The generic site condition standards represent levels of containments at which no further remedial response actions would be required …
(iv) The generic site condition standards represent one of the three assessment/remediation options, the other two being, to apply site specific criteria derived through the Tier 2 and Tier 3 risk assessment processes.
[75] Rohcan submits that the evidence from the Conestoga Rovers report about the concentrations of PCE’s being below or slightly above the MOE standards is uncontradicted.
[76] In the Watters report dated April 11, 2008, the author also does an assessment with respect to the then current legislation. The report also concludes that the “Site is not considered to be “environmentally sensitive” as defined by the Regulation.”
[77] The report also states that the site is an industrial site and as such commercial/industrial land use standards apply to the site. Therefore Rohcan argues that since the property was not to be converted for a more sensitive use such as residential, and the parties had this report at the time they entered into the agreement of purchase and sale, neither of them contemplated that there would be excavation under the building.
[78] The report goes on to state that there are no generic assessment standards for volatile organic compounds (VOC) or petroleum hydrocarbons (PHC) parameters in sediment, or for sludge or liquid waste that are applicable to the Site and therefore the samples have been compared to soil and/or ground water quality standards for preliminary assessment purposes.
[79] Rohcan argued that MTE, the environmental engineers for 340 would have known what VOC & PHC are. MTE would also have understood what was meant in the Watters report when it states “Data interpolations between physical testing points are open to interpretation. As such, it is not feasible to conclude absolutely the conditions that may exist in the subsurface”.
[80] Rohcan states that the Watters report dated August 29, 2008, reinforces many of the above mentioned points.
[81] It submits there is no evidence, expert or otherwise, to suggest that site specific modifications to the property would affect its value. They also submit that there is no confidentiality in the agreement of purchase and sale, at least in part because 340 never intended to remediate the land under the building.
[82] It submits that neither party ever contemplated that there would be excavation done under the building.
[83] Rohcan submits that the total cost to prepare for a risk assessment, including a phase 1 and phase 2 environmental site assessment, would cost $108,485 and to proceed to the MOE for a record of site condition caused a further $91,520.
[84] It further submits that the estimated time from start to finish, including revision of the risk assessment and further review by the MOE, would likely take a total of 40 weeks.
[85] Rohcan submits that people already work in the building, including Mr. George’s brother, so 340 knows that there are no risks to the employees working there.
[86] It submits that a risk assessment has been going on from the start between the parties and it was hoped that the injections would work however they did not.
[87] They also submit that if the MOE does not like the proposed risk assessment they can order the property to be excavated.
Article 4 - Environmental
[88] The starting point of the court’s analysis would appear to be some of the wording used in Article 4. The title is “Article 4 – Environmental”. Paragraph 4.1 acknowledges that both parties were in receipt of the April 11 and August 29, 2008 Watters reports.
[89] Other germane paragraphs are as follows:
4.3 The seller agrees that it shall undertake the remediation of the property in accordance with the Watters reports. Said remediation work will result in the property conforming to the current (March 9, 2004) Ontario Ministry of Environment Table 2 site condition standards for commercial/industrial sites. To be more specific any exceedences identified by the Watters Reports of MOE Table 2 commercial/industrial standards for soil and groundwater with medium to fine textured soils will be remediated.
4.5 Remediation will also include removal of the Underground Storage Tank (UST) placed by the Seller’s previous Tenant.
4.6 Remediation work shall be completed … and certified by Watters … confirming that the remediation work has been successfully completed in accordance with clause 4.3 with the only exception the reading mediation work required in the area of the Northwest corner of the building (where Watters … Is recommending the use of In-Situ Treatment). The Seller agrees to commence remediation of that area as quickly as possible after any required MOE approvals for the remediation technology are obtained and to complete such remediation in an expeditious manner having regard to the time required for the in-situ treatment to be effective.
4.7 (a) Deals with the $300,000 escrow fund and states: “Such escrow funds and interest shall be released to the seller only upon presentation to the buyer’s solicitor of a final environmental report authorized by Watters … Directed to the buyer, confirming that the remaining remediation work has been successfully completed and that the property (including soils and groundwater) meet the Ministry of Environment standards referred to in clause 4.3. For certainty, seller shall not under any circumstances be required to provide a Record of Site Condition.
(b) In order that the Seller may carry out the in-situ remediation in the area of the north-west corner of the building the Buyer agrees after Completion to allow the Seller’s consultant and remediation contractors and their equipment reasonable access to and into the building for the purpose of carrying out the in-situ remediation, including such matters as installing injection points, injecting remediation media and monitoring the progress of the remediation. The Buyer agrees to take measures to ensure that the Seller’s consultant and remediation contractor shall have the ability to carry out the remediation without delay caused by the Buyer or the Buyers tenant and for that purpose to keep the area of free from permanent equipment for storage until the remediation is complete.
4.8 (a) The Seller’s financial liability with respect to the cost of remediation mandated under this section shall not be limited to the amount held in the escrow account, it being the intent of that seller shall bear all the costs of remediation and reports as required by this Article 4.
4.9 (a) The Seller accepts and agrees that its remediation obligations pursuant to this Section 4 shall not merge on closing but shall continue and survive the complete and of this transaction as provided in this Article 4.
Findings
[90] Both parties had legal and environmental expertise available to them at the time of the agreement of purchase and sale.
[91] During the hearing, both counsel agreed, that whatever remediation the court found was appropriate, should be completed to the current standards.
[92] Unfortunately, despite the passage of time, the most current contamination readings are from approximately 2012. Since the evidence before the court appears to be that remediation of the contamination would likely continue just from the passage of time, it is almost unbelievable that the parties could not get together to assist both themselves and the court by having up-to-date readings available from boreholes that are already drilled.
[93] It is also disappointing, notwithstanding 340’s position on remediation, that there is no evidence before the court with respect to the feasibility and probable cost of excavating under whatever portion of entire building may have to be excavated. It appears evident from the Conestoga Rovers’ report of Mr. Brooks that there may only be contamination above government guidelines in the northwest corner of the building. Unfortunately the court was not directed to any evidence which would suggest, under what square footage of the building, excavation may be required.
[94] Does the contract call for clean-up/remediation at any cost?
[95] Would it be reasonable to spend millions or tens of millions of dollars to excavate the soil from under the building?
[96] There is also no evidence before this court that excavation is an appropriate form of remediation, however the court is proceeding on the basis that if all the contaminated soil beneath the building was removed and replaced with uncontaminated soil, contamination would no longer exist in that area.
[97] It is further disappointing, notwithstanding 340’s position on remediation, that there is no evidence before the court about how the market value of the subject property might be affected if the matter were resolved by excavation verses a risk assessment.
[98] Although Rohcan submitted that the word remediation applies to any work done on a property in an effort to lessen its contamination, the court was not directed to any case law on this point.
[99] It was also submitted by Rohcan that remediation is changing soil to another state and that going through a risk assessment process is remediation, however the court was not directed to any case law on this point.
[100] It appears obvious that neither party specifically turned their mind to what should be done to deal with the issue of contamination/remediation in the event that the in-situ injections did not work. I make this finding because no alternative procedures are outlined in Article 4.
[101] It is also obvious, that both parties were aware that the most serious contamination and the most difficult contamination to remediate was under a portion of the building.
[102] Although the in-situ injections were not working as planned in 2012, it is not possible to make a finding on the level of contamination at this date without new testing. The court was not directed to any evidence about what the cost of testing the level of contamination in the appropriate boreholes would be, but the court is proceeding on the basis that it would not be significant when viewed beside the other options.
[103] The current level of concentrations of PCE’s is something the court needs to know since the Conestoga Rovers report of June 9, 2011 states that the contamination levels then were only marginally above MOE standards.
[104] Before making its final decision the court is entitled to know the following:
(1) The current level of contamination under the building at those boreholes where the contamination was previously in excess of MOE standards. Hopefully the parties can agree on what boreholes require testing so that an environmental engineer(s) will be in a position to opine about the area of floor, under which the soil may have to be excavated, such that all soil under the floor will meet MOE standards.
(2) Whether or not, after the above testing is completed the environmental engineer(s) feels that further injections and or the passage of a reasonable period of time will further lower the contamination levels to below MOE standards.
(3) The cost of the proposed excavation (pursuant to paragraph A) if any and replacing the soil with uncontaminated soil.
(4) An opinion from a commercial/industrial realtor or commercial/industrial real estate appraiser with respect to the probable effect on the value of the land, if it is remediated by lowering the levels of contamination to within the MOE guidelines vs. if the property is “remediated” by means of a risk assessment.
[105] It is hoped that the parties can agree on one engineer, one contractor and one realtor to obtain this information.
[106] I am hoping that the information I have requested can be obtained for less than $50,000 and so that the matter can proceed as quickly as possible I authorize that up to $50,000 may be used out of the current trust fund of $300,000 to obtain the requested opinions.
[107] I will remain seized of this matter in the event that the further information I have requested does not lead to a resolution.
[108] If the parties feel that a conference call would be of assistance at any time they may arrange same through the Kitchener trial coordinator’s office.
James W. Sloan
Released: November 7, 2017
CITATION: 340268 v Rohcan, 2017 ONSC 6676
COURT FILE NO.: C-312-12
DATE: 2017-11-07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
340268 Ontario Limited
Applicant (Respondent by Counter Application)
– and –
Rohcan Investments Limited
Respondent (Applicant by Counter Application)
REASONS FOR JUDGMENT
J.W. Sloan J.
Released: November 7, 2017