Donleavy v. Ultramar Ltd., 2017 ONSC 7438

CITATION: Donleavy v. Ultramar Ltd., 2017 ONSC 7438

COURT FILE NO.: CV-09-0097-00

DATE: 2017/12/14

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Sheila Donleavy and Kenneth Edwards

Plaintiffs

– and –

Ultramar Ltd., Kilpatrick Fuels Limited and Joe Burns

Defendants

R. Steven Baldwin and S. Daniel Baldwin, Counsel for the Plaintiffs

Gordon Douglas, Counsel for the Defendant, Ultramar Ltd.

Joseph Villeneuve and Melanie Prise, Counsel for the Defendants, Kilpatrick Fuels Limited and Joe Burns

HEARD: June 20–24 and 27–30, 2016 and July 5, 2016

REASONS FOR JUDGMENT

CORTHORN J.

Overview

[1] In June 2008, the plaintiffs experienced an oil spill at their residential property in Rideau Ferry. The defendants were involved for a number of years in the supply of fuel oil to the plaintiffs’ property and in the maintenance of the plaintiffs’ fuel oil-burning heating system.

[2] The supply and use of fuel oil are governed by a series of provincial statutes, regulations, and other documents (“the regime”). At the heart of the regime is the protection of the public and of the environment. The regime reflects the complexity of regulating the use of and supply of oil to a fuel oil-burning heating system. Of necessity, the requirements of those involved in the fuel oil industry and of people who rely on fuel oil-burning heating systems change over time—so as to address advancements in the industry and an increased understanding of the hazards arising from reliance on fuel oil.

[3] The outcome in this case turns on an assessment, in the context of the regime as it changed from 2002 to 2008, of the obligations of the homeowners, the fuel oil supplier, and a sub-contractor to the fuel oil supplier.

Background

[4] Mrs. Donleavy, who is in her early seventies, purchased the Rideau Ferry home in 2002. She resided in the home alone until 2006. That year, her partner Mr. Edwards moved into the home. The couple have been living together since that time.

[5] Together, Mrs. Donleavy and Mr. Edwards had an addition built to the home. They moved into the addition and began renting out the main home. They planned to use the rental income to assist in paying for annual, five-month, winter sojourns in Texas. The couple began renting the main house to Mr. and Mrs. Noftall in January 2008. The Noftalls were renting the main home when the oil spill occurred in June 2008.

[6] Ultramar began delivering fuel oil to the property in October 2002, pursuant to a contract with Mrs. Donleavy. That contract was replaced on January 1, 2008 with a contract between Ultramar and Mr. Noftall. Regardless of the individual whose name was on the contract, Ultramar was responsible for the delivery of fuel oil to the property.

[7] The records produced identify 23 dates between 2002 and June 2008 on which Ultramar delivered fuel oil to the property. Ultramar relied on a sub-contractor (Glenn Nesbitt) to carry out each of the 23 deliveries of fuel oil made to the property prior to the discovery of the oil spill. The final delivery of fuel oil, prior to the discovery of the oil spill, was on May 1, 2008.

[8] From 2002 until 2004, Ultramar had a burner service contract with Kilpatrick. In that period, if an Ultramar customer required service to their fuel oil-burning heating equipment, Kilpatrick would carry out the service call on Ultramar’s behalf.

[9] Between 2002 and June 2008, there were three non-delivery calls to the property:

Oct. 1/02 A pre-delivery attendance at the property. Joe Burns, a Kilpatrick employee (and a defendant in this action) carried out the work on this occasion.

Oct. 8/02 A return attendance, pre-delivery, in follow-up to the items identified on Oct. 1/02. David Hitchcock, a Kilpatrick employee, carried out the work on this occasion.

Mar. 9/07 A response to a “no-heat” call, with work done inside the house on the furnace blower. The name of the Kilpatrick employee who carried out the work on this date is not known.

[10] The calls on October 1 and 8, 2002, were made pursuant to the burner service contract between Ultramar and Kilpatrick. The March 2007 call was made independent of the burner service contract; it was arranged directly between Mr. Edwards and Kilpatrick.

[11] At no time between 2002 and June 2008 did either of Mrs. Donleavy or Mr. Edwards arrange for any maintenance on or inspection of the fuel oil-burning heating system, including the fuel tank. There is no evidence that any maintenance was carried out independent of the homeowners.

[12] In early June 2008, Mr. Edwards met with a sales associate from Stinson Propane (Mr. Carmichael) at the property. Mr. Edwards arranged the appointment because he wanted a quote for the cost of converting from fuel oil to propane heat. The appointment occurred six days prior to the date on which the oil spill was discovered. Mr. Edwards’ evidence is that the fuel oil tank was approximately half-full on the day he met with Mr. Carmichael.

[13] Mr. Carmichael did not conduct an inspection of the fuel oil tank. There is contradictory evidence as to whether, in response to a question posed by Mr. Edwards, Mr. Carmichael estimated how much longer the fuel oil tank would last before it needed to be replaced. Mr. Edwards’ evidence is that Mr. Carmichael responded with an estimate of one to two years. Mr. Carmichael denies providing an estimate.

[14] At no time prior to the discovery of the oil spill did Mrs. Donleavy see or smell oil at the property. Mr. Edwards did not see oil on the property when meeting with Mr. Carmichael.

[15] On June 12, 2008, Mr. Noftall contacted Mr. Edwards and asked what he had done with the fuel oil. Having observed the tank to be half-full a number of days earlier, Mr. Edwards was concerned. He went outside, walked around the tank, and saw:

• Discolouration of some of the soil;

• That lilies planted near the tank were dead; and

• A drip of oil from the bottom of the tank.

[16] The Donleavy / Edwards homeowner’s insurer was contacted. A representative from the insurance company attended the next day. Arrangements were made to have the tank removed and an investigation conducted as to the cause of the oil spill.

[17] Mrs. Donleavy and Mr. Edwards were required to move out of the addition to their home and the tenants out of the main home. The plaintiffs lived in a trailer for six to eight weeks. They then moved to Portland and thereafter to Perth, Ontario. The plaintiffs purchased a new home in Perth, where they continue to reside and do not receive rental income at that home. They never returned to live at the Rideau Ferry property.

[18] The plaintiffs’ claims are in both negligence and breach of contract. The plaintiffs allege negligence on the part of Ultramar, Kilpatrick, and Mr. Burns in failing to prevent the oil tank from leaking. The plaintiffs allege that the negligence of the defendants resulted in damage to the environment and caused the plaintiffs to move from the property. The plaintiffs also allege breach of contract by Ultramar in the supply of oil and by Kilpatrick with respect to the no-heat call in March 2007.

[19] There are two components to the damages claimed. First, the homeowners’ insurer has a subrogated interest in the amount of $750,000. That portion of the damages to be assessed is agreed upon between the parties. Second, the plaintiffs personally claim damages arising from the oil spill:

a) General non-pecuniary damages for Mrs. Donleavy in the amount of $100,000;

b) General non-pecuniary damages for Mr. Edwards in the amount of $75,000; and

c) Loss of rental income in the amount of $28,800 ($800/month x 36 months).

[20] The claims for non-pecuniary general damages are based on the upset and stress from the oil leak, the disruption to the couple’s life, and ultimately the loss of lifestyle the couple were living and planned to continue to live for a number of years.

Defences to the Claims

[21] The defendants acknowledge that based on the manner in which work was completed at the property on October 1 and 8, 2002, there was a regulatory or statutory breach. They submit that proof of such a breach, without more, is insufficient to support a finding in favour of the plaintiffs. The defendants submit that the plaintiffs failed to establish a causal link between the regulatory or statutory breach and the oil leak (and, in turn, the losses suffered).

[22] The defendants submit that the plaintiffs are entirely responsible for their respective losses because they failed to arrange for regular maintenance of the fuel oil-burning heating system. The defendants also rely on a requirement (as of 2006) for n outside fuel oil tank to be inspected on an annual basis.

[23] The fuel oil tank was installed on the property before it was purchased by Mrs. Donleavy in 2002. The defendants acknowledge that the tank was (a) built prior to 2000, (b) labelled for indoor use, and (c) installed outside. The defendants also acknowledge that from the late 1990’s forward, the Technical Standards and Safety Association (TSSA) was taking steps to address the continued use of indoor tanks that had been installed outside. Those initiatives included Director’s Orders and amendments to the relevant regulations and other documents.

[24] The defendants say that nothing about those initiatives or amendments enhances the merits of the plaintiffs’ claims. The defendants deny that their conduct falls short of the TSSA and/or regulatory requirements, even when the changes to the framework of the fuel oil delivery business are considered. If anything, the changing framework serves to emphasize the obligations on the plaintiffs to have their fuel oil-burning heating system regularly maintained and the fuel oil tank annually inspected.

[25] The defendants submit that even if it is found that their conduct did not meet the requirements of the changing framework, the plaintiffs have not established a causal connection between that conduct and the fuel oil leak in June 2008.

[26] The cause of the fuel oil leak is said by the defendants to be corrosion of the tank, to the point that a hole developed from the inside out. The method by which to assess the potential for or the existence of corrosion is a “dip test”. A dip test allows an inspector to determine whether water, from condensation and other sources, is present inside the tank. Fuel oil delivery persons have never been required to, nor do they, perform dip tests. Such tests are performed as part of an annual inspection of a tank.

[27] The defendants say that unless the homeowner arranges for annual inspection of their fuel oil tank, the presence of water inside the tank and the potential for corrosion from the inside out cannot be identified. The results of the dip test, in combination with other aspects of the annual inspection, allow an inspector to (a) assess the overall condition of the tank, and (b) make recommendations to the homeowner regarding the continued use versus removal of the tank. The defendants submit that it is the homeowner’s obligation to secure that information.

[28] With respect to damages, the defendants point to a lack of documentary evidence and minimal viva voce evidence in support of the claims made by the plaintiffs personally. The defendants submit that the general non-pecuniary damages are minimal, if in any amount at all. The psychological and emotional upset experienced by the plaintiffs is said not to rise to the level of personal injury that warrants compensation.

The Crossclaims

[29] Although the defendants in principle collectively defended the action, they also advanced crossclaims against each other. The crossclaims are for contribution and indemnity.

[30] The crossclaim by Ultramar against Kilpatrick is based on the terms of the burner service contract in place from 2002 to 2004. The crossclaim by Kilpatrick / Burns against Ultramar is based on the alleged failure of Ultramar to satisfy the statutory and other requirements in the context of the changing framework for the continued outside use of tanks labelled for indoor use.

Issues

1. Is one or more of the defendants liable to the plaintiffs in negligence?

2. If one or more of the defendants is found to be liable to the plaintiffs in negligence, did negligence on the part of the plaintiffs contribute to the oil spill in June 2008?

3. What is the apportionment of liability as between the defendants and the plaintiffs?

4. Did Ultramar breach the fuel oil delivery contract it had with Mrs. Donleavy?

5. Did Kilpatrick breach the service contract it had with Mr. Edwards when it attended for the no-heat call in March 2007?

6. If the answer to (4) or (5) is “yes”, are the plaintiffs entitled to damages for breach of contract?

7. What is the assessment of damages, if any, to which the plaintiffs personally are entitled?

Issue No. 1 – The Claim in Negligence

a) Regulation of Fuel Oil Delivery

[31] The delivery of fuel oil and the reliance on fuel oil as a source of energy are subject to the regime established by statute, regulation, and a labyrinth of other documents. A significant portion of trial time was devoted to a review of the regime and the relevant documents.

[32] The purpose of the regime is clear: the prevention of injury to persons and harm to the environment. The outcome of this action turns in part on which of the parties had an obligation, under the 21st century regime, to address the condition of the plaintiffs’ fuel oil tank.

[33] As has already been identified, the tank was installed at the property before Mrs. Donleavy purchased it. The plaintiffs rely on historical elements of the regime (pre-2001) in support of their position that the installation of the fuel oil tank on their property did not comply with the governing regulation at that time. The plaintiffs argue that (a) their fuel tank could not, in 2001, be grandfathered as compliant with the regime when the current legislation came into effect, and (b) one or more of the defendants was responsible to address the lack of compliance with the regime.

[34] Ralph Sumabat, an Engineer Specialist, Fuels Program with the TSSA, was called as a witness on behalf of the plaintiffs. He testified as to the requirements to be met for a tank labelled “inside use” to be installed and used outdoors.

[35] In summary, Mr. Sumabat’s evidence was as follows:

• Because the label on the plaintiffs’ fuel oil tank specified that it was for indoor use, and based on an estimated manufacture date between 1979 and 1999, the tank was constructed and certified as compliant with the M81 Standard (applicable to “inside tanks”);[^1]

• The installation of an M81 tank in an outdoor location was a violation of the regime;

• In 1997, the TSSA issued a Regulatory Bulletin in which it confirmed that tanks certified to the M92 Standard (for aboveground tanks) may be installed indoors or outdoors;[^2]

• The 1997 Regulatory Bulletin did not affect the status of M81 tanks installed outside—they continued to be non-compliant with the regime;

• In May 2002, the TSSA issued an Advisory to answer frequently asked questions. The final question, of seven questions posed and answered, was:

7. Can aboveground tanks labelled “Inside Tank” be installed outdoors?

No. These tanks were certified for indoor use and installing them outdoors would void its approval;

• Even as of the date of trial, the TSSA website section titled “Frequently Asked Questions” includes the same question and answer; and

• The May 2002 Advisory did not affect the status of M81 tanks installed outdoors—they continued to be non-compliant with the regime.

[36] In the first part of the 21st century, fuel oil distributors were continuing to encounter M81 (or earlier) standard tanks installed for outdoor use. The TSSA was aware of this situation. It was also aware of the practical implications of requiring or mandating that all such tanks no longer be used and that they be replaced with tanks built to the M92 standard (i.e. for aboveground tanks indoors or outdoors).

[37] In an effort to address this situation in a practical way, the TSSA issued a Director’s Order. Tanks labelled for indoor use and installed outdoors could continue to be used outdoors if two conditions were met:

a) “[E]very calendar year, the external condition of the tank and the installation is visually inspected and accepted by the fuel oil distributor”; and

b) A written record of the inspection of the tank and installation is provided to the tank owner or operator.

[38] The Director’s Order was issued in March 2006. It included the following “Additional Information” at the end of the document:

There are existing fuel oil tanks that are approved and labeled for indoor use but are installed outdoors. Indoor and outdoor tanks are tested and certified to the same ULD Standard. This Director’s Order allows these indoor approved tanks to be used outdoors provided they are inspected annually.

[39] The Director’s Order is identified as having been sent to “Petroleum Council, Fuel Oil Risk Reduction Group” and posted on the TSSA website.

[40] In 2007, an amendment was made to the Ontario Installation Code for Oil-Burning Equipment (the “Code”). The amendment set out specific instructions with respect to the annual inspection of tanks installed outdoors. Effective October 11, 2007, the annual inspection of a metallic, end-outlet, outdoor tank had to include a test for water at the bottom of the tank (i.e. the dip test). If, on inspection, water is found in the tank then the water is to be removed. The document setting out this amendment was posted to the TSSA website.

[41] No further changes to the regime, relevant to the issue of liability in this action, were made from October 2007 to June 2008.

[42] The conduct of each of the parties, and their potential negligence or contributory negligence, is assessed in the context of the regime as it changed from 2002 to 2008.

b) Failure of the Tank in June 2008

[43] Before considering what conduct, if any, caused or contributed to the failure of the tank, it is important to understand how it failed. Only one witness was qualified to give opinion evidence with respect to how the tank failed. Stein Pedersen, a professional engineer, was called on behalf of the plaintiffs. He was qualified to give opinion evidence as to the condition of and reason for failure of the tank. My ruling qualifying Mr. Pedersen as an expert and as to the scope of his opinion evidence is on the record.

[44] Mr. Pedersen inspected the tank in February 2009. He first inspected the outside of the tank. The tank was then cut in half and the inside of the tank was inspected. From his internal and external inspection of the tank, Mr. Pedersen concluded that the tank corroded from the inside out because of water that accumulated in the bottom of the tank. It was as a result of corrosion that there was a hole in the bottom of the tank from which the oil leaked in June 2008.

[45] Mr. Pedersen’s evidence as to how the tank failed is uncontradicted. I accept his evidence and find that the tank failed due to corrosion from the inside out. That finding addresses “how” the tank failed.

[46] I distinguish between “how” the tank failed and the “cause” of the tank failure. I do so because the defendants’ position is that the plaintiffs have failed to establish that the negligence (if any) of the defendants caused or contributed to the failure of the tank. In that regard the defendants rely on Mr. Pedersen’s evidence in cross-examination, including that:

• Water is present in every fuel oil tank;

• Corrosion can begin even with the accumulation of a small amount of water in a tank; and

• Corrosive elements include dirt, fluctuation in temperature, and water.

[47] Mr. Pedersen did not express any opinion as to when the process of internal corrosion began in the plaintiffs’ tank. He did not provide an opinion as to the internal condition of the tank in 2002 (when Ultramar began to deliver fuel), in 2007 (when Kilpatrick carried out a no-heat call), or generally from 2002 to 2008.

[48] Mr. Pedersen testified that the longer a tank is exposed to an environment that includes corrosive elements, the more likely it is to develop internal corrosion. He also testified that the more corrosive elements to which a tank is exposed, the more likely it is to develop internal corrosion.

[49] I find that the specific timing of the corrosive process is not relevant to the outcome in this case.

[50] Mr. Pedersen did not give any evidence as to the appearance of the outside of the tank from October 2002 until June 2008. There is no evidence from anyone who was at the property between 2002 and June 2008 as to the appearance of the outside of the tank. There is, however, evidence as to the condition of the exterior of the tank on June 13, 2008—the day after the failure of the tank.

[51] Taking into consideration the evidence of Mr. Pedersen as to the condition of the exterior of the tank in February 2009, the evidence of the condition of the exterior of the tank on June 13, 2008, and that the tank was built sometime prior to 2000, I find that from 2002 to 2008 the appearance of the tank was such that it was showing some signs of age.

[52] There can be no doubt that, at all times between 2002 and 2008, the tank bore the same label: a label specifying that the tank was for indoor use. The label also clearly identified that the tank was manufactured before 2000—even though the exact year of manufacture was not identified. Given the regime requirements over time, the label on the tank, in combination with the appearance of the tank and the outdoor location of the tank, was sufficient to trigger obligations on the part of each of the parties to this action. In the next sections of these Reasons, I address which, if any, of the parties failed to satisfy their respective obligations.

c) Duty of Care Owed to the Plaintiffs

[53] The case law is clear that fuel oil suppliers and service technicians owe a duty of care to their respective customers (see Thornhill v. Highland Fuels Dundalk Ltd., 2014 ONSC 3018, at paras. 38-39, and Maddock v. McRobert Fuels Ltd., [2009] O.J. No. 3167 (S.C.)). I find that:

a) Mr. Burns and Kilpatrick owed Mrs. Donleavy a duty of care in October 2002;

b) Ultramar owed Mrs. Donleavy a duty of care from October 2002 to June 2008;

c) Ultramar owed Mr. Edwards a duty of care from 2006 (when he moved into the home) until June 2008; and

d) Kilpatrick owed Mrs. Donleavy and Mr. Edwards a duty of care in March 2007.

d) Standard of Care

[54] For each of Burns, Kilpatrick, and Ultramar, the standard of care imposed on them is that set by the Technical Standards and Safety Act, 2000, S.O. 2000, c. 16 (the “Act”), and the regime created pursuant to the statute. The Act serves specific and important purposes—the protection of public safety and the regulation of fuel oil use and storage in Ontario (Brown v. Davis and McCauley Fuels Ltd., 2010 ONSC 4674, at para. 30).

[55] The general requirement for compliance with the Act is set out in s. 3 of O. Reg. 213/01:

(1) Every person engaged in an activity, use of equipment, process or procedure to which the Act and this Regulation apply shall comply with the Act and this Regulation.

(2) For the purposes of subsection (1), the reference to activity, use of equipment, process or procedure includes, but is not limited to, design, installation, alteration, repair, service, removal, purging, activation, storage, handling, modification and use of equipment.

[56] As noted above, regime requirements changed over time. There was evidence on behalf of the defendants that industry practice was not always in step with changes to the regime. At times the industry practices were ahead of and at times behind changes to the regime.

[57] The defendants point to industry practices with respect to the removal (or not) of fuel oil tanks labelled for indoor use installed outside. To the extent such practices lagged behind the requirements of the regime, the defendants ask the Court to consider the industry practices in determining whether the defendants were negligent.

[58] The defendants rely on the case law to the effect that not every breach of a statute or regulation amounts to negligence. The plaintiffs acknowledge the existence of that line of cases. The plaintiffs submit, however, that the principles established by those cases do not preclude a finding of liability in negligence against one or more of the defendants.

[59] In assessing the conduct of the defendants, I deal first with the issue of whether their respective conduct fell below the standard of care the plaintiffs were entitled to expect. After addressing the conduct of each of the defendants, I address the issue of causation (see sub-section (f) below).

e) Conduct of the Defendants

i) Kilpatrick Fuels and Burns

[60] One or more employees of Kilpatrick attended the property on three occasions: October 1 and 8, 2002 and March 9, 2007. The October 2002 appointments were (a) prior to fuel oil being delivered, and (b) pursuant to the burner service contract between Kilpatrick and Ultramar. The March 2007 appointment was arranged directly between Mr. Edwards and Kilpatrick (the no-heat call).

▪ October 1, 2002

[61] Joe Burns attended the property on October 1, 2002. He was an Oil Burner Technician (“OBT”) employed by Kilpatrick. There is no dispute that: (a) the purpose of Mr. Burns’ attendance at the property on that date was to carry out a pre-delivery inspection of the fuel oil tank, and (b) Kilpatrick was carrying out the work pursuant to the burner service contract with Ultramar.

[62] As of 2002, the requirements for the supply of fuel oil were set out in ss. 7(1) and 20 of the O. Reg. 213/01:

7. (1) No distributor shall supply fuel oil to a container or tank system that is connected to an appliance or work unless the distributor is satisfied that the installation and use of the appliance or work comply with this Regulation and,

(a) unless the distributor has inspected the appliance or work at least once within the previous 10 years; or

(b) unless the distributor has inspected the appliance or work in accordance with a quality assurance inspection program.

20. No person shall supply fuel oil to or use an appliance, container, equipment, tank system or other thing employed in the handling or use of fuel oil or used oil unless it complies with this Regulation.

[63] No evidence was called or documentary evidence tendered as to the history of inspections carried out on the tank prior to 2002. I find that the inspection carried out by Mr. Burns on October 1, 2002 was part of the inspection Ultramar required, pursuant to ss. 7 and 20 of O. Reg. 213/01, before Ultramar could deliver fuel oil to the tank.

[64] Mr. Burns generated three documents as a result of the appointment on October 1, 2002:

1. Fuel Oil Distributor Inspections Aboveground Tanks – Inside (a document bearing the TSSA logo);

2. Fuel Oil Distributor Inspections Appliances – Comprehensive (a document bearing the TSSA logo); and

3. An invoice for services (a document bearing the Ultramar logo).

[65] Mr. Burns’ signature is on all three documents. Mrs. Donleavy’s signature is on the third document only.

[66] Mr. Burns had no independent recollection of attending at the property. Almost 14 years had passed between the date of his attendance at the property and the dates on which Mr. Burns appeared as a witness at trial. When testifying, Mr. Burns relied entirely on the contents of the documents.

[67] My findings with respect to the work done by Mr. Burns on October 1, 2002 are based on his evidence and the evidence of the following witnesses:

• Carl Kilpatrick, the owner of Kilpatrick Fuels;

• Larry Sauve, employed as a Service Inspector with Ultramar as of the fall of 2002;

• Frank Amo, a former employer of the TSSA, who was called as an expert witness on behalf of the plaintiffs; and

• Jim Roberts, a former employee of the Ministry of Consumer and Commercial Relations (a predecessor to the TSSA), who was called as an expert witness on behalf of Kilpatrick and Mr. Burns.

[68] I also take into consideration the admission of the defendants that, as of October 2002, the installation of the tank (labelled for indoor use) outside was not compliant with the regime requirements (s. 1(3), O. Reg. 213/01).

[69] The plaintiffs allege that Mr. Burns failed to carry out “an inspection” or a “competent inspection” within the meaning of those sections. Regardless of the characterization given to the inspection, I find that Mr. Burns failed to carry out an inspection, as required by ss. 7 and 20 of O. Reg. 213/01.

[70] First, Mr. Burns did not (a) provide Ultramar with a specific year of manufacture of the tank as would typically be found on the tank label, and (b) identify for the reader(s) of the documents that he was unable to determine the year of manufacture of the tank. That failure alone may not otherwise amount to negligence. In the context of this particular inspection, however, that failure is an element of Mr. Burns’ negligence on October 1, 2002.

[71] Second, Mr. Burns failed to complete the two reports so as to identify to the reader(s) of the reports that the tank on the property was (a) labelled for indoor use, and (b) installed outside:

• Mr. Burns completed an “Inspection Report” on a TSSA form titled “Tanks Inside”. Nowhere on this form is it identified that the tank, although labelled for indoor use, was installed outside; and

• The completed “Comprehensive Inspection” Report correctly identifies that the installation does not comply with the regime. However, the lack of compliance is identified as (a) needing a new garage, and (b) the tank sitting on wood. Mr. Burns did not identify the outdoor location as a failure to comply with the regime.

[72] Third, on the invoice he prepared, Mr. Burns specifically stated, “Inspection on Equipment”. Although there is some question as to portions of the invoice completed in Mr. Burns’ handwriting, I find that when completing the invoice Mr. Burns (a) identified the two deficiencies discussed above, and (b) recorded “Everything else up to Code!” That statement was made even though Mr. Burns checked the box on the invoice identifying the tank as installed outside.

[73] The Ultramar invoice includes the following statement, pre-printed on the document: “Ultramar recommends replacing: any oil tank 20+ years old and/or not UL/ULC approved; and all underground lines.” It was clear to Mr. Burns that the oil tank was installed outside—he checked that box on the invoice. Even with the assistance provided by Ultramar’s pre-printed wording, Mr. Burns failed to address the lack of compliance with the regime and the potential for the tank to be replaced.

[74] As I have already noted, Mrs. Donleavy signed the invoice. Although no one gave evidence on this point, I draw an inference and find that Mrs. Donleavy was provided with a copy of the invoice. I also find that there was nothing in the invoice that would have alerted Mrs. Donleavy to the lack of compliance with the regime specifically because of the installation of the indoor tank in an outdoor location.

[75] The evidence collectively of the witnesses involved in the fuel oil industry and in the oversight of the fuel oil industry was that when a tank is identified as failing to comply with the regime, it is to be tagged. It can be tagged as a non-immediate hazard or as an immediate hazard. In either situation, the homeowner is to be advised and remedial steps are to be taken (ss. 25-26, O. Reg. 213/01). The remedial steps may, in some circumstances, include removal of the tank.

[76] Based on his review of the tank label (an exhibit at trial), it was Mr. Burns’ evidence that (a) the tank was labelled for indoor use, (b) the installation of the tank outside was not compliant with the regime, (c) the tank required tagging on October 1, 2002, and (d) had the tank been tagged it would have been identified as a tank that needed to be removed. Mr. Burns’ evidence was that as of October 2002 it was his longstanding practice to tag tanks in that manner.

[77] No doubt that was Mr. Burns’ longstanding practice—that practice complied with the regime. Mr. Burns admitted that his conduct on October 1, 2002 fell short of his personal standard. I find that Mr. Burns’ conduct also fell below the standard required of him by the regime. His conduct was unreasonable in the circumstances. I find that Mr. Burns was negligent in the manner in which he (a) carried out the inspection of the tank on October 1, 2002 and (b) reported the results of the inspection. As Mr. Burns’ employer, Kilpatrick is vicariously liable for his negligence.

▪ October 8, 2002

[78] David Hitchcock was the Kilpatrick employee who attended at the property on October 8, 2002. Mr. Hitchcock testified at trial. He had no independent recollection of whether he was by himself or with a colleague at the appointment.

[79] The only document produced with respect to the October 8, 2002 appointment is an invoice of that date. The invoice includes the Ultramar logo.

[80] Mr. Hitchcock’s handwriting on the invoice is not entirely legible. Based on the follow-up nature of his attendance at the property, I draw an inference and find that Mr. Hitchcock recorded the work done in follow-up to the two items identified by Mr. Burns’ inspection—replacing the wood on which the tank rested and running a new oil line. Mr. Hitchcock also wrote “Tank now up to Code – B139, section 14”.

[81] There is no evidence as to whether Mr. Hitchcock had with him a copy of the two TSSA forms completed by Mr. Burns on October 1, 2002. I draw an inference and find that Mr. Hitchcock had at least the Comprehensive Inspection Report with him as a form of instruction for the work he was to carry out.

[82] Mr. Hitchcock acknowledged that as an OBT attending at the property, due diligence on his part required that he assess whether the tank complied with the regime at the time of its installation. I find that Mr. Hitchcock was not entitled to rely exclusively on the documents provided or on other instructions given to him to determine the work required at the property.

[83] It is clear from the invoice prepared by Mr. Hitchcock that he failed to carry out an assessment of whether the tank complied with the regime at the time of its installation. He had the opportunity, when completing the “Visual Inspection” section of the invoice, to identify that the tank was not an indoor tank (contrary to what is stated in the title to one of the documents completed by Mr. Burns). Mr. Hitchcock also had the opportunity to identify that the tank was installed outdoors and, as a result, was not compliant with the regime. These steps did not require any complex or detailed work on Mr. Hitchcock’s part. He merely had to consider the label on and location of the tank. He did neither.

[84] In addition, because he “ran a new oil line”, Mr. Hitchcock was required to disconnect the existing oil line and connect the new one. He acknowledged that having done that work alone was sufficient to require that he carry out an inspection of the system (i.e. once re-connected) to ensure compliance with the regime.

[85] The invoice prepared by Mr. Hitchcock includes the same pre-printed recommendation with respect to replacement as appears on the October 1, 2002 invoice. Like Mr. Burns, Mr. Hitchcock failed to appreciate the significance of that recommendation with respect to the tank.

[86] Mr. Hitchcock acknowledged that when the installation of a tank is found not to comply with the regime, the tank must be tagged. The tank was not tagged when Mr. Hitchcock arrived at the property, nor did he tag the tank.

[87] I find that Mr. Hitchcock’s conduct fell below the standard required of him by the regime and was unreasonable in the circumstances. I find that Mr. Hitchcock was negligent in the manner in which he carried out and reported on his work on October 8, 2002. As Mr. Hitchcock’s employer, Kilpatrick is vicariously liable for his negligence.

[88] I note that the only reports of an inspection provided to Ultramar in October 2002 were the documents prepared by Mr. Burns on October 1, 2002. There is no evidence that Mr. Hitchcock completed any similar documents on October 8, 2002. The significance of the documents submitted to Ultramar, as they relate to the potential liability of Ultramar, is discussed below.

▪ March 9, 2007

[89] The documentary evidence includes a Kilpatrick Fuels Limited invoice dated March 9, 2007 for work done on that date. The invoice identifies as a “Description of Work” that there was a “noisy blower motor on horizontal air forced furnace”. The Kilpatrick employee who attended on that date did not give evidence at trial.

[90] The work done is identified as “change blower motor and capacitor” and “checked limits and safeties”. The charge for the services and labour was $535 (rounded figure). There is no reference to any other steps being carried out by the Kilpatrick employee. The invoice contains no information about whether the oil-burning equipment is operating in compliance with the regime.

[91] The definition of “oil-burning equipment” is “one or more oil-burning appliances together with their fuel tanks, full piping, wiring, controls and accessories” (see page 11 of the Code). This definition speaks to the fuel oil-burning heating system in its entirety and not on a component-by-component basis.

[92] The requirements to be met when carrying out work on oil-burning equipment are set out in section 3.3.1 of the Code. It reads:

At the time of installation, or alteration or addition to, oil-burning equipment, the installer shall make certain that such equipment is operating in a safe manner and as required by the manufacturer in the instructions and as required by this Code, and that all safety devices are functioning properly.

[93] The plaintiffs submit that the Kilpatrick employee who carried out the work on the blower motor in March 2007 was required to assess the function of oil-burning equipment as defined by the regime and not simply the function of the blower motor.

[94] In Thornhill the parties agreed and the trial judge found that an OBT who carries out a repair to a heating system has an obligation to inspect the system during the repair (see paras. 85 and 231). The basis for that agreement and finding are not addressed in the decision. The agreement and finding are, however, a common sense interpretation of the relevant sections of the Code and, more broadly, the regime.

[95] Repair to one component of oil-burning equipment may affect the operation of another component or the system as a whole. The integrity of the system must be maintained. In addition, the repair attendance provides individuals working within the fuel oil industry yet another opportunity to determine whether the installation is compliant with the regime. The existence of these opportunities is reflective of the potential hazards arising from the supply of fuel oil to and the reliance on a fuel oil-burning heating system.

[96] It was the evidence of Jim Roberts, the expert witness called on behalf of the defendants, that when an OBT attends at a property to conduct service on a burner, the OBT is required to make certain that the equipment, including the fuel tank, is in “safe working order”. Mr. Roberts also acknowledged that on the document completed with respect to the work done in March 2007, the Kilpatrick employee (a) specifically referred to the work done with respect to the blower motor, and (b) did not provide any evidence that he had done an inspection of the equipment other than the blower motor.

[97] It was Mr. Roberts’ evidence that rarely does an OBT provide a written notation of an inspection done on any part of the fuel oil-burning heating system other than for the specific equipment repaired or maintained during a call. Mr. Roberts’ evidence in that regard is un-contradicted. This may be an example of industry practices lagging behind or simply failing to satisfy the requirements of the regime.

[98] In any event, I reject Mr. Roberts’ evidence in that regard. When they attended at the property on October 1 and 8, 2002, Mr. Burns and Mr. Hitchcock respectively used a short form notation in an effort to record that the fuel oil-burning heating system was compliant with the regime. Mr Burns recorded, “Everything else up to Code!” Mr. Hitchcock recorded “Tank now up to Code – B139, section 14.” I appreciate that the short-form notation was in addition to the reports prepared by Mr. Burns. There was, however, nothing to prevent the OBT who attended the property on March 9, 2007 from relying on a short form notation as evidence of an inspection of the system in its entirety.

[99] On the basis of the lack of such a short form notation on the March 2007 invoice, I draw an inference and find that there was no inspection done of the oil-burning equipment other than the blower motor, safeties and limits.

[100] As discussed in the section of these Reasons that follows immediately below, any number of deficiencies (other than location of installation) existed as of March 2007. I find that there were bases upon which the OBT could and should have tagged the system on March 9, 2007.

[101] I find that on March 9, 2007, the Kilpatrick employee failed to:

a) Conduct an inspection of the entire fuel oil-burning heating system during the repair work for the blower motor;

b) Identify the deficiencies in the system (other than location of installation); and

c) Tag the system as either a non-immediate or an immediate hazard, taking into consideration the deficiencies identified on that date.

[102] I find the conduct of the employee fell below the standard expected of him, was unreasonable in the circumstances, and amounts to negligence on his part. Kilpatrick is vicariously liable for the negligence of its employee on that date.

▪ Other Deficiencies

[103] A number of the witnesses, including Mr. Burns, Larry Sauve, Frank Amo, and Jim Roberts, were asked to consider fuel oil-burning heating systems generally and to consider matters other than the location of the fuel tank. I agree with the submission on behalf of the plaintiffs that the evidence of one or more of those individuals supports a finding that there were deficiencies with the heating system in addition to the location of the installation of the fuel tank.

[104] The other deficiencies identified include the following:

a) The oil supply line ran directly through a boarded window and there was no provision for settlement or expansion;

b) The oil supply line lacked the necessary physical protection to prevent damage to it;

c) The vent and fill pipes on the oil tank were located within the two-foot minimum distance (from a window that could open) prescribed by the regime;

d) The T-junction exhaust pipe was very close in proximity to wood (a combustible material); and

e) The vent pipe fell towards the furnace rather than rising away from it at a minimum of one-quarter inch per inch of rise (potentially resulting in incomplete combustion and emissions going into the home).

[105] These deficiencies were identified from photographs taken of the heating system in the days following discovery of the oil leak. The evidence is that from October 2002 to June 2008, the only maintenance done on the heating system was for the no-heat call in March 2007. The plaintiffs’ evidence is that they personally did nothing to the system while they owned the home.

[106] I draw an inference and find that some or all of the deficiencies listed above existed in October 2002 and/or March 2007. I agree with the submissions on behalf of the plaintiffs that the failure of the Kilpatrick employees to identify any one or more of the deficiencies that existed in either October 2002 or March 2007 is demonstrative of a lack of competence on their part in carrying out their work.

[107] I find that the failure of the Kilpatrick employees to identify any one or more of the other deficiencies that existed in October 2002 or March 2007 (a) is part of an overall pattern of work that fell below the standard required, (b) contributed to the tank not being tagged and removed or subject to annual inspection, the latter as discussed below, and (c) was unreasonable in the circumstances.

ii) Ultramar

▪ The October 2002 Inspection

[108] I start with October 2002, when Mrs. Donleavy contracted with Ultramar for the delivery of fuel oil to her home.

[109] The inconsistencies in the documents received by Ultramar from Kilpatrick following the attendance by Kilpatrick employees on October 1 and 8, 2002 are detailed above. What was Ultramar to make of the contents of those documents? Did the documents constitute a report of the inspection required pursuant to s. 7 of the O. Reg. 213/01?

[110] Ultramar chose to rely on a sub-contractor, Kilpatrick, to carry out the inspection to determine whether it would be safe to Ultramar to deliver fuel oil to the tank. The consequences of that reliance, in relation to the crossclaims between Ultramar and Kilpatrick, are dealt with below. In this section of my Reasons, I deal with Ultramar’s potential liability to the plaintiffs as the fuel oil supplier.

[111] At the top of the pyramid of those involved in the delivery and use of fuel oil is the supplier. Fuel oil is not to be delivered unless a supplier is satisfied that it can supply fuel oil in accordance with the regime.

[112] The importance of the initial inspection is highlighted by the fact the fuel oil supplier is only required to inspect the tank every 10 years (or otherwise pursuant to a quality assurance program) (s. 7(1)(a)-(b), O. Reg. 231/01). A fuel distributor must, for every tank to which it is going to begin distributing fuel oil, inspect the tank before it starts to deliver the oil—regardless of whether or not another distributor inspected the tank within the previous 10 years. A distributor is not entitled to rely on any inspection carried out by another distributor within that ten-year period.

[113] Ultramar admits that the tank was not compliant with the regime as of 2002. At the same time, the individual called to give evidence on behalf of Ultramar (Mr. Sauve) testified that the documents received from Kilpatrick in October 2002 were sufficient to constitute a report of a comprehensive inspection. It is difficult to reconcile Ultramar’s admission that the tank was non-compliant with Mr. Sauve’s evidence with respect to the documents.

[114] There is no evidence, from another fuel oil distributor, as to what a “reasonable” supplier would do upon receipt of documents containing the inconsistencies seen in the October 2002 documents prepared by the Kilpatrick employees. There is, however, Mr. Sauve’s evidence with respect to the discrepancies arising from the manner in which the documents were completed. In cross-examination, Mr. Sauve acknowledged that following Mr. Burns’ attendance at the property on October 1, 2002, fuel oil should not have been delivered to the property.

[115] I find that Ultramar’s conduct fell below the standard of care Mrs. Donleavy was entitled to expect in October 2002. Ultramar was negligent in 2002 because it failed to:

a) Review the documents and from them identify the discrepancies as to the location of the tank and, once identified, address the discrepancies as to location (i.e. indoor versus outdoors);

b) Obtain a report of a comprehensive inspection following the October 1 and 8, 2002 attendances by Kilpatrick; and

c) Postpone delivery of fuel oil to the Donleavy property until such time as Ultramar had a report of a comprehensive inspection confirming that the tank to which fuel oil was to be delivered was installed in accordance with the regime.

▪ Changes to the Regime Between 2002 and 2008

[116] In the early part of the 21st century, the TSSA addressed the continued outside use of tanks manufactured for indoor use. It did so in two steps: (a) a Director’s Order dated March 2006, and (b) an amendment to the regime in 2007.

[117] In March 2006 the TSSA Director ordered as follows:

1. Existing ULC certified S602 tanks installed outdoors bearing a ULC label for indoor use may continue to be used outdoors provided that, every calendar year, the external condition of the tank and the installation is visually inspected and accepted by the fuel oil distributor.

2. Following the tank installation inspection, a written record of the inspection shall be provided to the tank owner/operator.

3. This Order is effective immediately.

[118] The tank at the plaintiffs’ property fell within the scope of the tanks identified in item 1 above.

[119] The Director’s Order included Additional Information with respect to the continued use of indoor-approved tanks outdoors and again identified the requirement for annual inspections (see paragraph 37 above).

[120] There is no evidence that the Director’s Order was disseminated to the public—either directly by the TSSA or indirectly through fuel oil suppliers (including Ultramar). There is no evidence that Ultramar provided a copy of the Director’s Order to either Mrs. Donleavy or Mr. Edwards.

[121] It was Mr. Sauve’s evidence that a fuel oil distributor has an obligation to communicate to a homeowner the requirement, pursuant to the regime, to have a fuel oil tank inspected annually. He testified that Ultramar sent and continues to send letters to customers advising them of the protection plan (a service plan) available through Ultramar for a fee. There is, however, no documentary evidence of any letters of that kind sent to Mrs. Donleavy. There is also no evidence that such letters, if sent, included notifications to customers of the requirement for annual inspection of fuel tanks labelled for indoor use and installed outdoors.

[122] The evidence of Mr. Sumabat, the Engineer Specialist with the TSSA, with respect to the annual inspection was that (a) the March 2006 Director’s Order places the obligation on the fuel oil distributor, and (b) the purpose of the Order was to address the potential for internal corrosion of the tank and, ultimately, the failure of the tank.

[123] There is nothing in the wording of the Director’s Order that places the obligation on the tank owner/operator to arrange for the annual inspection and/or to obtain from the distributor a copy of the report of the inspection. The Director’s Order must be read in the broad context of the regime. I find that to interpret the Director’s Order as placing an obligation on the tank owner/operator to arrange the annual inspection would strain the language of the document.

[124] I find that the Director’s Order places the obligation on the fuel oil distributor, not the customer, to annually visually inspect the tank and provide a copy of the report of the inspection to the tank owner/operator.

[125] The importance of carrying out an annual inspection is further demonstrated by a 2007 amendment to the Code. The amendment, effective October 1, 2007, specifies that “[m]etallic and outlet tasks installed outdoors, test for water at the bottom of the tank. When water is found, remove the water.” This reference is to the dip test. All tanks installed outdoors, whether labelled for indoor or outdoor use, have to be dip tested on an annual basis.

[126] It was Mr. Sumabat’s evidence that the annual dip test was introduced to address the potential for the accumulation of water inside a tank that could lead to internal corrosion and ultimately tank failure.

[127] There is no evidence that the TSSA, Ultramar, or anyone else communicated to the plaintiffs the requirement for a dip test of their tank.

[128] Each annual inspection gives the fuel oil distributor an opportunity to inspect the tank and consider whether its continued use presents an imminent or non-imminent hazard. The annual inspection is but a single part of the regime governing the fuel oil industry to ensure that the use and supply of fuel oil is carried out in a safe manner—protecting both the public and the environment. This new obligation (as of 2006) is in keeping with the obligation of the fuel oil supplier to inspect the tank before commencing delivery of fuel oil.

[129] Based on the date of the Director’s Order, there was an opportunity for Ultramar to conduct two, possibly three, annual inspections of the tank (2006, 2007 and possibly 2008). I find that Ultramar was negligent in failing to carry out any annual inspections of the plaintiffs’ fuel oil tank.

▪ Delivery of Fuel Oil (2002 to 2008)

[130] Delivery of fuel to the property commenced in October 2002 and continued to the spring of 2008. Ultramar relied upon a sub-contractor, Mr. Nesbitt, for all fuel oil deliveries to the property.

[131] A fuel oil delivery person has an obligation to ensure the condition of the tank system before filling the tank on any given delivery date. A delivery person is required to assess the tank to determine whether it is in an “unacceptable condition” and presents as either an immediate or non-immediate hazard. An “unacceptable condition” is defined in s. 22 of O. Reg. 213/01 as follows:

(1) In sections 23, 24, 25 and 26,

“unacceptable condition” means,

(a) with respect to an appliance, container or work, that it is being used for a purpose other than that for which it was approved,

(b) with respect to an appliance or work, that a device, attachment, alteration or deterioration of it is likely to impair its safe operation,

(c) with respect to an appliance or work, that the conditions of the tank, piping, tubing or hoses, the venting of products of combustion, the supply of air for combustion or the clearance from adjacent, combustible matter is likely, in the director’s opinion, to impair its safe operation, or does not conform to this Regulation, or

(d) with respect to equipment, that the condition of its state of repair, its mode of operation or its operating environment is likely to impair its safe operation or does not meet the requirements of this Regulation.

[132] Sections 23 and 24 of O. Reg. 213/01 identify what is to be done by “[a] distributor who is informed or who finds, during delivery operations or during an inspection”, that a tank system is in an unacceptable condition presenting either an immediate or non-immediate hazard. In either circumstance, the system is to be tagged.

[133] It was Mr. Sauve’s evidence that delivery drivers have an obligation to conduct a basic visual inspection of the tank. The basic visual inspection would include looking at the tank label and for “obvious” signs of corrosion on the exterior of the tank. It is clear from s. 22 of O. Reg. 213/01 that the obligations of the delivery drivers extend beyond the scope described by Mr. Sauve.

[134] On every delivery to the plaintiffs’ property, the delivery person had the opportunity to see that the tank was labelled for indoor use and that the tank was being used for a purpose other than that for which it was approved (O. Reg. 213/01, s. 22(a)). In fairness to Mr. Nesbitt, the delivery person in this case, he might have assumed that Ultramar would not have instructed him to deliver fuel oil to the plaintiffs’ tank without first carrying out a comprehensive inspection of the tank. He might also have assumed that Ultramar fulfilled its obligations over time with respect to other opportunities to inspect the tank. Those assumptions, if made, fall short of fulfilment of Mr. Nesbitt’s obligations as the delivery person.

[135] The sections of O. Reg. 213/01 dealing with “[p]rocedures on discovery of unacceptable conditions” are helpful in understanding why each and every opportunity to inspect the tank system is important. The wording of the relevant sections (ss. 22-26) makes it clear that it is assumed that a fuel oil distributor may from time to time sub-contract some elements of its work. The sections anticipate that a distributor may receive notice of an unacceptable condition from individuals carrying out delivery operations, from certificate holders, and from contractors.

[136] Sub-contractors must provide the requisite information to the distributor so that the latter is in a position to fulfill its obligations before, in some cases, resuming the supply of fuel oil to the tank system or to the customer (i.e. following removal and replacement of the tank system). The requirement for ongoing communication between the sub-contractors and a distributor serves to emphasize the importance of Ultramar’s conduct on a continuous basis from 2002 to 2008 (as opposed to assessing each event in isolation).

[137] The requirement for communication between the various entities within the fuel oil industry is reflective of the hazardous nature of the substance with which they are dealing and the significant harm to the public and the environment that can result from mishandling the substance. Mr. Nesbitt had an ongoing obligation to inspect the tank and communicate to Ultramar any concerns he had with respect to potential lack of compliance with the regime.

[138] For example, there was at least one patently visible problem with the installation of the tank other than its use as an outdoor tank: the location of the tank in relation to the home. In that regard, evidence was given by Wayne Pilon, a Fuel Safety Inspector who has been employed with the TSSA since 1991. Prior to working as a Fuel Safety Inspector, Mr. Pilon had worked as an OBT in private industry.

[139] Mr. Pilon was assigned to investigate the fuel oil spill at the plaintiffs’ property. He attended the property the day after the spill was discovered.

[140] Mr. Pilon observed the tank to be installed under a drip edge on the roof with no protection from snow and ice; on that basis alone, the tank was not compliant with the regime. Each time a delivery of oil was made to the property, Mr. Nesbitt was required to consider whether the “operating environment is likely to impair [the tank’s] safe operation or does not meet the requirements of this Regulation” (O. Reg. 213/01, s. 22(d)). Every time Mr. Nesbitt attended at the property, he failed to identify that the lack of protection afforded to the tank meant that the tank system was not compliant with the regime.

[141] Based on the evidence of Mr. Pilon, it is clear that Mr. Nesbitt never tagged the tank system as in an unacceptable condition based on the lack of protection from snow and ice—a patently obvious lack of compliance with the regime.

[142] At the outset of trial, counsel for Ultramar advised the Court that Mr. Nesbitt would be one of the witnesses called as part of Ultramar’s case. In the end, Mr. Nesbitt was not called to give evidence. As a result, there is no evidence before the Court as to how deliveries were carried out by Ultramar. I agree with the submission on behalf of the plaintiffs that in the absence of evidence from Mr. Nesbitt, an adverse inference may be drawn and findings made with respect to the quality of the work done by him.

[143] I find that (a) Mr. Nesbitt was negligent in carrying out the delivery of fuel oil, and (b) Ultramar is vicariously responsible for the acts and omissions of Mr. Nesbitt.

iii) Summary – Negligence of the Defendants

[144] The parties are in agreement that breach or violation of legislation alone is not a basis for a finding of liability in negligence. Conversely, mere compliance with legislation does not, in itself, preclude a finding of liability in negligence (Ryan v. Victoria (City), 1999 CanLII 706 (SCC), [1999] 1 S.C.R. 201, at para. 29).

[145] The following passage from Lewis Klar in his well-known text on tort law is helpful in understanding the discretion given to a trial judge when considering a statutory or regulatory breach:

A trial judge is free to give whatever weight seems appropriate to evidence of statutory breach. This may result in requiring an explanation from the defendant, but this is a matter for the discretion of the trier of fact. It is clear, however, that trial judges will not be able to find defendants liable for negligence merely because statutory standards were breached, where the court is not convinced that the breach is evidence of unreasonable conduct (Tort Law, 5th ed. (Toronto: Carswell, 2012), at p. 308).

[146] The regime places the obligation on individuals working within the fuel oil industry to draw hazards to the attention of the tank owners/operator. Individuals working within the industry have the ability to tag a tank or the fuel oil-burning heating system as a whole. The opportunities to inspect and tag a tank include the initial inspection, on each delivery of fuel oil, the annual inspection of the tank, and service calls.

[147] Kilpatrick is vicariously liable for the conduct of its employees on October 1 and 8, 2002 and March 9, 2007. Whether viewed individually or collectively the conduct of Mr. Burns and Mr. Hitchcock was unreasonable in particular given the importance of an initial inspection of a fuel oil tank. Had the initial inspection been carried out properly, the tank would have been tagged. The failure to tag the tank on that occasion was not a minor deviation from a minimum standard; it was a failure to carry out one of the most important functions mandated by the regime.

[148] March 2007 presented Kilpatrick with another opportunity to tag the fuel oil-burning heating system. A service call might be considered less significant than an initial inspection. Regardless, for each category of work the opportunity presented remains the same—to tag a fuel oil-burning heating system if it is found to not comply with the regime. In that context, the conduct of the OBT on March 9, 2007 was unreasonable.

[149] I find that Kilpatrick and Burns failed to meet the standard of care required of them (whether directly to the plaintiffs or to Ultramar pursuant to the burner service contract). The finding of negligence on the part of Mr. Burns and Kilpatrick is based on:

a) The failure of Mr. Burns to carry out a comprehensive inspection of the tank on October 1, 2002;

b) The manner in which Mr. Burns reported on the results of the inspection carried out on October 1, 2002;

c) The manner in which Mr. Hitchcock carried out and reported on the results of his work on October 8, 2002; and

d) The manner in which the Kilpatrick employee carried out and reported on his or her work on March 9, 2007.

[150] I turn to the conduct of Ultramar. It repeatedly failed to comply with the regime with respect to the inspection of the tank—starting with the initial inspection in October 2002 and continuing with each of the 23 dates on which fuel oil was delivered to the property. In addition, each annual inspection (had they been conducted) would have provided an opportunity to inspect the tank, including the particulars of its installation.

[151] Multiple opportunities to inspect the tank form part of the regime, because of the importance of the integrity of the tank.

[152] I find that Ultramar failed to meet the standard of care it owed to the plaintiffs. In summary the finding of liability in negligence on the part of Ultramar is based on:

a) Its failure to carry out a comprehensive inspection of the tank prior to commencing delivery of the fuel oil in October 2002;

b) The lack of initiation of an annual inspection of the system (once required after 2006); and

c) A pattern over more than six years of failing to comply with the regime when delivering fuel oil (23 occasions).

f) Causation

[153] To succeed in an action based in negligence, a plaintiff must demonstrate on a balance of probabilities that the defendant’s breach of the standard of care is causally connected to the injuries or losses alleged. In all but exceptional cases, the test for causation is the “but for” test: a plaintiff has the onus of establishing that their injuries or losses would not have occurred without the defendant’s negligence (see Clements v. Clements, 2012 SCC 32, at para. 8).

[154] Exceptional cases include where there are negligent acts by multiple actors and it is established that one or more of them in fact caused the injuries or losses, but the plaintiff is unable to determine which of a number of negligent acts caused the injuries or losses. In such cases, a defendant may be held liable on the basis that his or her acts and omissions “materially contributed” to the risk of injury or loss (Clements, at para. 13).

[155] In the matter before me, there are three named defendants and more than three “actors” whose conduct, over a period of six years, is considered in addressing the plaintiffs’ claims in negligence. The actors include Mr. Hitchcock, Mr. Nesbitt, and the Kilpatrick employee who attended the property in March 2007. The defendants allege contributory negligence on the part of the plaintiffs; therefore, the actors whose conduct is considered include the plaintiffs. I find that this case falls within the meaning of “exceptional cases”. In determining causation, I rely on the material contribution test.

i) Kilpatrick and Mr. Burns

[156] The importance of the initial comprehensive inspection cannot be over-emphasized. That inspection provided the best opportunity for an assessment of the fuel oil-burning heating system and the tank in particular. Had the tank been tagged as non-compliant, the only remedial action at that time was to remove the tank and replace it.

[157] Mrs. Donleavy’s evidence was that, despite any frugality on her part, she would have replaced the tank had she been told she was required to do so. I accept her evidence in that regard.

[158] I find that the negligence of Kilpatrick and Burns in October 2002 materially contributed to the injuries and losses ultimately suffered by the plaintiffs.

[159] I turn to the negligence of the Kilpatrick employee in March 2007. There is no evidence that if the system had been tagged in March 2007, an inspection done at the time would have revealed erosion of the tank to the point of (a) requiring its removal or (b) resulting in the plaintiffs replacing the tank with another fuel oil tank or with a propane heating system. In the absence of evidence in that regard, I am unable to find that the negligence of the Kilpatrick employee on March 2007, in isolation, materially contributed to the losses suffered by the plaintiffs.

ii) Ultramar

[160] I find that had Ultramar ensured that it received a report of a comprehensive inspection that met the requirements of the regime at that time, it would have (a) identified the tank as not compliant with the regime, (b) refused to deliver fuel oil to the tank, and (c) identified to Mrs. Donleavy that the tank required replacement.

[161] There is no evidence as to precisely when the corrosion of the tank began or the rate at which water accumulated inside the tank. Neither Mr. Pilon (who inspected the tank on June 13, 2008) nor Mr. Pedersen (the plaintiff’s expert, who inspected the tank, including the inside of it, in February 2009) speculated as to the timing and rate of the corrosion process. The defendants submit that in failing to address when water began to accumulate and the corrosive process began, the plaintiffs failed to fully address the issue of causation.

[162] I agree with the defendants that the plaintiffs did not lead any evidence as to the specific condition of the tank in 2006 and 2007 (and 2008, other than as of June 13, 2008). There is no evidence to support a finding that if an annual inspection, including a dip test, had been conducted in either of 2006 or 2007 the tank would, solely because of water accumulation, have been tagged as either an immediate or a non-immediate hazard leading ultimately to its replacement. To that extent, there is no evidence connecting the failure of Ultramar to carry out an annual inspection of the tank in 2006 and 2007 to the oil spill that occurred in June 2008.

[163] The defendants’ submission with respect to the lack of evidence on the timing of the corrosive process, however, overlooks the frailties of Ultramar’s position. In particular:

• Ultramar looks in isolation at each alleged failure to comply with the regime;

• It gives minimal, if any, importance to the overall purpose of the regime: the protection of the public and the environment; and

• It does not consider the overall pattern of behaviour of its employees and sub-contractors in the context of the regime governing the use and delivery of a hazardous substance.

[164] For example, did the failure of Mr. Nesbitt (and, in turn Ultramar) on any one delivery of fuel oil cause the fuel oil spill in June 2008? The answer is “no”. However, the repeated failure of Mr. Nesbitt (and in turn Ultramar) to fulfill his obligations at the time of delivery of fuel oil is part and parcel of a pattern of neglectful behaviour as it relates to the requirements of the regime.

[165] To consider Ultramar’s negligence on an event-by-event basis would subvert the purpose of the regime. One requirement created by the regime is connected to the next. Entities and individuals working within the fuel oil industry are required to communicate effectively with one another. When a requirement is not met and/or communication fails, fuel oil is supplied in a potentially hazardous setting.

[166] The fuel oil spill on June 2008 is precisely the end result that would have been avoided if Ultramar had fulfilled its obligations pursuant to the regime from the outset and over time. I find that Ultramar’s negligence materially contributed to the injuries and losses suffered by the plaintiffs as a result of the oil spill in June 2008.

Issue No. 2 – Contributory Negligence

[167] The starting point for consideration of the conduct of the plaintiffs is s. 19 of O. Reg. 213/01. It provides that “[n]o person shall operate or permit to be operated an appliance or tank system unless it is maintained in a safe operating condition and it complies with this Regulation.” The word “person” is not defined in the regulation; it is defined in s. 3 of the Act. “Person” means “an individual, an association, a partnership or a corporation”. Mrs. Donleavy and Mr. Edwards were each a “person” within the meaning of the regulation.

[168] Despite the heavy onus on individuals and corporations working within the fuel oil industry, Mrs. Donleavy and Mr. Edwards were not entitled to sit back and do absolutely nothing towards the maintenance of their fuel oil-burning heating system.

[169] Mrs. Donleavy was a frugal woman, mindful of expenses. She may, for financial reasons, have chosen not to have any maintenance done on her heating system from 2002 to 2008 (other than the March 2007 repair to the blower). I find, however, that she and Mr. Edwards were in a position to afford annual maintenance to the heating system—both before and after March 2006 (the date of the Director’s Order). From 2006 to 2008 both Mrs. Donleavy and Mr. Edwards were contributing to the operation of the household. They were able to afford to build an addition to their home. They were generating sufficient income from the rental of the main home that they intended to spend several months each year in Texas.

[170] The plaintiffs, Mrs. Donleavy in particular, explain their lack of attention to maintenance of the fuel oil-burning heating system on the basis of a lack of knowledge of the requirement to maintain the system in any way. Yet, Mrs. Donleavy was aware that she had to have the fuel oil tank inspected upon purchase of the home and prior to the delivery of fuel oil. Mrs. Donleavy professed concern about the state of her home, but did nothing other than to determine that she needed an initial inspection of the tank.

[171] Mrs. Donleavy was emphatic as to her total reliance on Ultramar to inform her of anything that needed to be done on the system. Mrs. Donleavy’s evidence was that she paid little, if any, attention to written communication received over time from Ultramar.

[172] Mr. Edwards’ evidence was that once he moved to the property he (a) did not become responsible for maintenance of the fuel oil-burning heating system, and (b) he never even thought about it.

[173] Both Mrs. Donleavy and Mr. Edwards had previously owned properties that included fuel oil-burning heating systems. It is difficult to comprehend that two individuals who had previously owned homes with such systems had not, through that previous ownership, developed an appreciation for the importance of regular maintenance of the system. I find that both Mrs. Donleavy and Mr. Edwards (a) failed to comply with their obligations pursuant to O. Reg. 213/01, and (b) in any event, failed to act as would a reasonable person in their respective circumstances. I find that their negligence materially contributed to the injuries and losses they suffered.

Issue No. 3 – Apportionment of Liability

a) As the Defendants and the Plaintiffs

[174] I find that the bulk of the liability rests with Ultramar because it was the party that, in 2002, was responsible for ensuring that the fuel tank met the regime requirements for the delivery of fuel oil. There were sufficient deficiencies in the documents provided to Ultramar by Kilpatrick in October 2002 to cause Ultramar to require more and better information before commencing delivery of the fuel oil. In addition, Ultramar failed during any one of the 23 occasions on which fuel oil was delivered to the property to address any one or more of the manners in which the tank was not compliant with the regime.

[175] Having sub-contracted to Kilpatrick, Ultramar was entitled to rely on the sub-contractor to carry out the initial inspection of the tank in accordance with the regime. The apportionment of liability as between Ultramar and Kilpatrick is dealt with in the section that follows (Crossclaims Between Defendant Corporations).

[176] At paragraph 99 of his decision in Brown, the trial judge referred to the plaintiff (who had long ignored an obvious problem) as being in the “driver’s seat” and the defendant fuel oil supplier as “merely the look-out”. That case involved a patently obvious odour of fuel and the visible drippage of fuel from the tank. The facts are distinguishable from the present case. I find the analogy to the driver’s seat and the look-out helpful, but reverse the roles: Ultramar was, from 2002 forward, in the driver’s seat and the plaintiffs were the look-outs.

[177] In Brown, the plaintiff in the driver’s seat was held 90 per cent responsible for the losses. In Appleyard v. Earl, the plaintiff was found to have made a “minor, inadvertent lapse” by putting her foot on an exposed fuel line, of which she had been aware for a number of years, causing it to rupture. Her contributory negligence was assessed at 30 per cent ((2009), 90 C.L.R. (3d) 49 (Ont. S.C.), at para. 40).

[178] The contributory negligence of Mrs. Donleavy and Mr. Edwards falls somewhere between being in the driver’s seat and a minor, inadvertent lapse. I would, however, find it difficult in the circumstances of this case to apportion a greater degree of liability to the plaintiffs than to the fuel oil supplier. I find that an appropriate apportionment of liability is 60 per cent to Ultramar and 40 per cent to the plaintiffs.

b) Crossclaims Between Defendant Corporations

[179] In April 2002, Kilpatrick entered into a burner service contract with Ultramar (the “Contract”). In that document, Kilpatrick is identified as the “Contractor” and Ultramar, the “Company”. Ultramar crossclaims against Kilpatrick on the basis of paragraph 3(o) of the Contract—the “save harmless clause”:

The Contractor hereby agrees with the Company as follows:

Notwithstanding paragraph 5(a) and (b) hereof, to fully indemnify and save harmless the Company from any and all claims made against the Company for or in respect of personal injury, death or property damage or loss howsoever caused, arising out of or in connection with any acts or omissions of the Contractor and/or of his employee(s).

[180] I find that Ultramar is entitled to rely on that clause to the extent that the negligence (already found) of the Kilpatrick employees on October 1 and 8, 2002 contributed to the injuries and losses suffered by the plaintiffs. It is a matter of balancing the conduct of the Kilpatrick employees on those two dates with the conduct of Ultramar in failing to review the documents submitted by those individuals, failing to institute an annual inspection of the fuel tank, and failing to identify, during any one of the 23 delivery dates, the visible deficiencies with the tank installation. Consideration is also required of the importance of the initial inspection.

[181] As I have already indicated, I find that Ultramar was in the driver’s seat because of its stance atop the pyramid of individuals and companies involved in the supply of fuel to the property and because of the importance of the initial inspection. Viewing the October 2002 events collectively as the initial inspection, and taking into consideration the negligence of the Kilpatrick employees, I find that Ultramar is entitled to contribution and indemnity from Kilpatrick for a portion of Ultramar’s liability to the plaintiffs.

[182] I find that Ultramar is entitled to recover from Kilpatrick one-half of the amounts for which Ultramar is liable to the plaintiffs.

[183] I dismiss the crossclaim by Kilpatrick against Ultramar.

Issue No. 4 – Fuel Delivery Contract with Ultramar

[184] It is admitted that Mrs. Donleavy had a contract with Ultramar for the delivery of fuel oil to the property from October 2002 until the end of December 2007. There is no evidence that Mr. Edwards was ever a party to that contract. As of January 1, 2008, Ultramar’s contract for delivery of fuel oil to the property was with Mr. Noftall.

[185] A copy of the contract between Mrs. Donleavy and Ultramar was not presented as evidence at trial. The plaintiffs request that a finding of breach of contract be made on the basis of the failure of Ultramar to deliver fuel oil in accordance with the regime. The plaintiffs submit that a term to that effect was either an express or implied term of the fuel supply contract.

[186] The terms of the contract may have included obligations on Mrs. Donleavy’s part and/or exclusion clauses. In the absence of a copy of the contract, I am not prepared to make any findings as to the terms of the contract.

[187] The plaintiffs’ claim against Ultramar based in breach of contract is dismissed.

Issue No. 5 – Service Contract with Kilpatrick

[188] For the same reasons, the plaintiffs’ claim against Kilpatrick Fuels based in breach of contract is dismissed: a copy of the contract was not introduced as evidence and I am not prepared to make any findings as to the terms of the contract.

Issue No. 6 – Damages Arising from Breach of Contract

[189] Based on my findings with respect to Issue Nos. 4 and 5, this issue does not need to be determined.

Issue No. 7 – Assessment of Damages

[190] The plaintiffs are entitled to damages based on the negligence of the defendants. The damages to which the plaintiffs are entitled include the $750,000 agreed upon with respect to the homeowners’ insurer’s subrogated interest.

[191] The plaintiffs’ claims for general non-pecuniary damages and loss of rental income remain to be determined. The evidence in support of these aspects of the plaintiffs’ claims is limited to their respective viva voce evidence. No documents were filed in support of the claims under either head of damages.

a) General Non-Pecuniary Damages

[192] The plaintiffs’ respective claims for general non-pecuniary damages arise from the upset they experienced immediately following the discovery of the oil spill, the disruption to their lives, and the stress of moving several times until they relocated permanently to Perth.

[193] The plaintiffs did not lead any evidence as to the potential cost of re-building the home and their decision-making process in light of that cost, or with respect to the total insurance and other funds available to apply to the cost of re-building the home. The only evidence as to why the plaintiffs did not rebuild on the Rideau Ferry property is that of Mrs. Donleavy. She testified that there was insufficient insurance to cover the cost of re-building the home.

[194] It was Mrs. Donleavy’s evidence that she is not as content in the couple’s home in Perth as she was in the Rideau Ferry home. There was no evidence led as to the efforts made by the plaintiffs to find a property similar to the Rideau Ferry property, whether in Rideau Ferry or elsewhere.

[195] In the absence of better evidence as to the reasons why the plaintiffs chose not to rebuild and of their inability to find a home that more closely measures up to the Rideau Ferry property, I am not in a position to award damages associated with that aspect of the plaintiffs’ claims.

[196] It is understandable that the oil spill and resultant disruption to the couple’s lives caused upset for them. The evidence given by each of Mrs. Donleavy and Mr. Edwards in that regard was limited. Mrs. Donleavy testified that it was terrible to know that she would never again (a) wake up in her own home, and (b) see her beautiful old house. She expressed that life had never been the same for her since the house was pulled down.

[197] Mr. Edwards’ testimony on the sense of loss was, “I guess it’s just like you’re uprooted … you got to move everything you go. It’s not nice. What else can I say?”

[198] There was no evidence led with respect to any medical or other care sought by Mrs. Donleavy or Mr. Edwards as a result of the oil spill and the disruption it caused to their lives. I appreciate that medical evidence is not required in support of a claim for general non-pecuniary damages.

[199] Mrs. Donleavy was the original homeowner and had been in the home for approximately four more years than had Mr. Edwards. It was Mrs. Donleavy who chose the home. When the couple decided to live together, they decided to live in that home. It is therefore appropriate to award Mrs. Donleavy a higher amount for general non-pecuniary damages than Mr. Edwards.

[200] The plaintiffs cite the decision in Westlake v. Granby Steel Tanks, in which the plaintiffs were each awarded $250,000 for general non-pecuniary damages for the disruption caused in their lives following an oil spill (2006 CarswellOnt 8881 (C.A.)). That case is distinguishable for a number of reasons:

• The award of damages was made by a jury, not a judge sitting alone;

• It was recognized that there was “compelling evidence that the oil spill and its aftermath … struck at the heart of the respondents’ existence in a unique and powerful way” (para. 21). The evidence in the matter before me falls far short of that type of evidence; and

• The Court of Appeal speculated that the jury could have viewed the case as one in which the defendant’s negligence “virtually destroyed the respondents’ enjoyment of their life for many years” (para. 21). Once again, the evidence in the matter before me falls far short of that type of evidence.

[201] In summary, the Court of Appeal accepted that it was reasonably open to the jury to take the view that most favoured the plaintiffs. Even though the award of damages was high, it was not “so high as to shock the conscience of the court.” As a result, the Court of Appeal chose not to interfere in the damages awarded (para. 22).

[202] The evidence before me does not approach the type of evidence described by the Court of Appeal in its decision in Westlake. I agree with the submissions on behalf of the defendants that the damages to which the plaintiffs are entitled do not approach the figures claimed.

[203] I assess the general non-pecuniary damages to which the plaintiffs are entitled as follows:

For Mrs. Donleavy $ 20,000

For Mr. Edwards $ 10,000

b) Rental Income

[204] The plaintiffs claim loss of rental income in the amount of $28,800 based on $800 per month for a period of 36 months. There is no evidence to explain why the claim extends for or, put another way, is limited to 36 months. Although there is no documentary evidence of the tenancy agreement with the Noftalls, I accept that the plaintiffs were receiving $800 per month in rent for the main home.

[205] As of June 2008, the plaintiffs had been renting the main house for six months. A number of factors might, in the future, have contributed to a decision by the plaintiffs to cease being landlords or, in the alternative, to move into the main home and rent the addition instead. Those factors include the respective ages of the plaintiffs, whether they would continue to require money to travel to Texas during the winter months, whether they tired of the responsibilities and headaches associated with being a residential landlord, etc.

[206] The plaintiffs’ evidence is that their present home is not suitable for renting out a portion of the home. Again, there is a lack of evidence as to the efforts made to replace the Rideau Ferry home with a similar home (i.e. one that provides rental income). I am unable to assess the extent, if any, to which the plaintiffs attempted to mitigate the loss of rental income they allege they have suffered.

[207] The defendants also request that I consider the refusal of the plaintiffs to produce a copy of their homeowners’ insurance policy. The defendants submit that as a result of the plaintiffs’ refusal to produce a copy of the policy, the defendants have been denied the opportunity to determine whether the loss of rental income formed part of the plaintiffs’ recovery under the policy of insurance. The defendants ask that I draw an adverse inference in that regard and conclude that the plaintiffs have been compensated for the loss of rental income.

[208] In all of the circumstances, I find that the claim for damages for loss of rental income is speculative and not supported by the evidence. I am also concerned about the potential for double recovery if the $750,000 paid to the plaintiffs includes indemnity for a portion of the rental income allegedly lost. I therefore assess the damages to which the plaintiffs are entitled under this heading at nil.

Disposition

[209] In summary:

a) The plaintiffs’ claims against the corporate defendants based in breach of contract are dismissed;

b) The plaintiffs shall have judgment against Ultramar based on an apportionment of liability as follows: 60 per cent to Ultramar and 40 per cent to the plaintiffs;

c) Ultramar shall have judgment on its crossclaim against Kilpatrick for contribution and indemnity, with Kilpatrick liable to indemnify Ultramar for one-half of the amounts for which Ultramar is found liable to the plaintiffs;

d) The crossclaim by Kilpatrick against Ultramar is dismissed; and

e) The plaintiffs’ damages are assessed as follows:

i) Damages as agreed upon in the amount of $750,000;

ii) General non-pecuniary damages for Mrs. Donleavy in the amount of $20,000; and

iii) General non-pecuniary damages for Mr. Edwards in the amount of $10,000.

Pre-Judgment Interest and Costs

[210] The issues of pre-judgment interest and costs remain to be addressed. If the parties are unable, on or before January 31, 2018, to resolve one or both of those issues, counsel shall:

a) Make arrangements through the Trial Co-ordinator’s Office to appear before me to make submissions with respect to any unresolved issue; and

b) Prior to that appearance, deliver written materials, in accordance with the Rules of Civil Procedure, in advance of such appearance.

Other Matters

[211] I thank counsel in this matter for the detailed written submissions provided. The submissions were thorough, clear, and extremely helpful.

Madam Justice Sylvia Corthorn

Released: December 14, 2017

CITATION: Donleavy v. Ultramar Ltd., 2017 ONSC 7438

COURT FILE NO.: CV-09-0097-00

DATE: 2017/12/14

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Sheila Donleavy and Kenneth Edwards,

Plaintiffs

-and-

Ultramar Ltd., Kilpatrick Fuels Limited and Joe Burns,

Defendants

BEFORE: CORTHORN J.

COUNSEL: R. Steven Baldwin and S. Daniel Baldwin, counsel for the Plaintiffs

Gordon Douglas, counsel for the Defendant, Ultramar Ltd.

Joseph Villeneuve and Melanie Prise, Counsel for the Defendants, Kilpatrick Fuels Limited and Joe Burns

REASONS FOR JUDGMENT

CORTHORN J.

Released: December 14, 2017

[^1]: ULC Standard: CAN4 – 5602 – M81, “Standard for Steel Inside Tanks for Oil Burner Fuel”.

[^2]: ULC Standard: CAN/ULC – 5602 – M92, “Standard for Aboveground Steel Tanks for Fuel Oil and Lubricating Oil”.