COURT FILE NO.: CV-16-69664

DATE: 20210707

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GORDON EGAN, KEVIN KUNKA, SCOTT PETRIE and PAUL CROZIER

Plaintiffs

– and –

NATIONAL RESEARCH COUNCIL OF CANADA and CARLETON UNIVERSITY

Defendants

Michael S. Hebert and Cheryl Gerhardt McLuckie, for the Plaintiffs

Travis Henderson, Sarah Jane Howard and Heather Thompson, for the National Research Council of Canada

Jamie MacDonald, for Carleton University

HEARD: May 26th and 27th, 2021 (by videoconference)

REASONS FOR DECISION

R. Smith J.

OVERVIEW

[1] The plaintiffs have brought a motion to certify this action as a class proceeding. The plaintiffs allege that the National Research Council of Canada (“NRC”) has allowed contaminants, perfluoroalkylated substances (“PFAS”), to enter the surface water and groundwater at its National Fire Laboratory facility (“NFL”) site and to migrate onto adjoining properties.

[2] Sixty-nine (69) owners of adjacent properties are proposed as the class. They seek damages for the loss in value of their properties, caused by the contamination of the groundwater of some of the class member’s properties and the stigma attached to all of class member’s properties in the immediate area.

[3] The plaintiffs submit that they meet the five criteria required for certification and that certifying a class proceeding is the preferable procedure which will promote access to justice and make efficient use of judicial resources.

[4] NRC argues that the plaintiffs do not meet any of the five requirements for certification. It submits that a significant proportion of the proposed class members have never detected any PFAS in their drinking water and as a result there is no rational connection between the proposed common issues and the proposed class. NRC submits that the joinder of individual actions is the preferable procedure.

[5] Carleton University (“Carleton”) supports NRC’s submissions and in addition, submits that the plaintiffs have failed to show any “basis in fact” that Carleton’s testing activities of burning various items in the “burn hall” on the NRC site caused any PFAS to migrate into the groundwater of adjacent properties. No evidence was presented that Carleton ever used any firefighting foams containing PFAS during the 10 years it leased part of the site and conducted fire safety testing. In fact, Carleton’s evidence is uncontested that it never used firefighting foams containing PFAS at the NFL site.

Background Facts

[6] The NFL is located at 833 Ramsay Road, Mississippi Mills, Ontario just across the road from a small subdivision of 49 homes whose drinking water is supplied by drilled wells. From 1981 to 2016 NRC used the site to conduct research and development of fire safety related matters, including the testing of firefighting foams containing PFAS.

[7] In 2004, Carleton University leased part of the NFL premises and constructed an extension referred to as the “burn tower”. Carleton used the NFL site from April 1, 2006 to March 31, 2017, for its fire safety engineering program. It burned various building materials at the facility and a subway car.

[8] In 2012, NRC hired Stantec Consulting Ltd. (“Stantec”) to conduct an environmental assessment of its site. On March 28, 2013, Stantec reported that it had identified low levels of PFAS within the soil, groundwater, surface water, and drinking water at the NFL site.

[9] On October 8, 2013, Stantec advised NRC that it had identified concentrations of Perfluorinated Compounds at the NFL site, that were below the Health Canada/Environment Canada interim advice guideline for Perfluoroctane Sulfonate (PFSO). On November 8, 2013, Stantec advised NRC that there were no risks to human health at the NFL site and limited risk to the environment from the PFAS detected on site.

[10] In 2014, NRC hired SENES Consultants (“SENES”) to conduct annual monitoring of drinking water at the NFL site. The drinking water was assessed as compliant with applicable federal guidelines, except for lead and iron at the main entry point.

[11] In February 2014, SENES conducted an assessment of the process water collected after a fire test which detected PFAS. SENES recommended that fire-test water runoff should be collected and disposed in an off-site licensed facility.

[12] In March of 2015, Stantec delivered a report to NRC indicating that PFAS were detected in soil samples at the NFL site that exceeded the Environment Canada draft Guidelines, and which were above the Health Canada drinking water screening values.

[13] In March 2015, SNC-Lavalin reported that PFAS concentrations were detected in concentrations below Health Canada screening values in all the NFL drinking water samples. The second report also confirmed that process water had to be treated or disposed of through a licensed contractor.

[14] In late September 2015, NRC installed groundwater monitoring wells to a depth of 60 meters, just beyond the boundaries of its NFL property.

[15] On November 30, 2015 samples were taken from the drinking water of three residences in the Ramsay Meadows subdivision, immediately across the road from the NFL site. The test results indicated the presence of the PFAS, Perfluoropentanoic acid, above the Health Canada screening values in the drinking water at one of the three residences.

[16] On December 23, 2015 NRC hand-delivered a letter to all 49 residences in the Ramsay Meadows subdivision advising them of the possibility of PFAS contamination of their drinking water. NRC suggested that the residents use bottled water and offered to test their water for the presence of PFAS.

[17] In February 2016, NRC advised the 49 residents that PFAS had been found on its property. NRC offered to provide bottled water, to test their drinking water and to install a water filtration system at each of their homes. In May 2016, NRC extended this offer for residential water testing to 20 additional residences immediately surrounding the subdivision homes.

[18] The residential water testing results indicated that PFAS were detected in the drinking water of several residences above the Health Canada screening values. The plaintiffs’ evidence indicates that five properties have detected PFAS levels in the pre-filtration water samples in amounts above the applicable Health Canada drinking water screening values. NRC’s testing results between 2016 and 2020 also indicated that a few residences have detected PFAS above Health Canada’s drinking water screening values.

[19] Many of the members of the proposed class have never detected any PFAS in their drinking water above the Health Canada screening values and a large proportion have never detected any PFAS in their drinking water.

[20] In the fall of 2016, NRC conducted a soil remediation project at its NFL site to attempt to eliminate residual sources of PFAS continuing to contribute to groundwater contamination.

[21] Conflicting expert evidence was presented about the extent of the impact the possibility of having contaminated drinking water has had on the property values of the proposed class members. The plaintiffs’ expert expressed the opinion that the property values of all of the proposed class members have been negatively affected by the migration of PFAS into the groundwater from the NFL site. NRC’s expert acknowledged there was a negative impact in the range of 0% to 15% on the property values of all of the residences in the Ramsay Meadows subdivision.

Analysis

[22] In Hollick v. Toronto (City), 2001 SCC 68, at para. 15, the Supreme Court stated that the Class Proceeding Act, 1992, S.O. 1992, c. 6 (the “CPA”) was remedial legislation that should be given a large and literal interpretation to achieve its three primary objectives:

(a) The promotion of access to justice;

(b) Judicial economy; and

(c) Modification of the behaviour of actual or potential wrongdoing.

[23] The five criteria, that must be met for certification are set out in section 5(1) of the CPA, are as follows:

5(1) The court shall certify a class proceeding on a motion under section 2, 3, or 4 if,

a. The pleadings disclose a cause of action;

b. There is an identifiable class of two or more persons that would be represented by the representative plaintiff;

c. The claims of the class members raise common issues;

d. A class proceeding would be the preferable procedure for the resolution of the common issues; and

e. There is a representative plaintiff who,

i. Would fairly and adequately represent the interests of the class;

ii. Has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceedings; and

iii. Does not have, on the common issues for the class, and interest in conflict with the interests of other class members.

[24] Section 6 of the CPA states that the court shall not refuse to certify a proceeding as a class proceeding on any of the following grounds:

(1) The relief claimed includes a claim for damages that would require individual assessment after determination of the common issues.

(2) The relief claimed relates to separate contracts involving different class members.

(3) Different remedies are sought for different class members.

(4) The number of class members or the identity of each class member is not known.

(5) The class includes a subclass whose members have claims or defences that raise common issues not shared by all class members.

It is not a bar to certification if the class members’ damages will require individual quantification or if it is necessary to create subclasses.

[25] In Hollick at paras. 20 and 25, the Supreme Court of Canada stated that the representative plaintiff must show some basis in fact for each of the certification requirements, as set out in section 5 of the CPA, as outlined above.

[26] In Pro-Sys Consultants Ltd. v. Microsoft Corp., 2013 SCC 57, [2013] 3 S.C.R. 477, the Supreme Court emphasized that the certification stage does not allow for an extensive assessment of the evidence, nor of the complexities and challenges that a plaintiff may face in establishing their case at trial.

a) Causes of Action

[27] The plaintiffs plead the causes of action of strict liability under Rylands v. Fletcher, nuisance, negligence and liability under the Ontario Environmental Protection Act, R.S.O. 1990, c. E. 19 (“EPA”), the Canadian Environmental Protection Act, 1999, SC 199, c. 33 (“CEPA”) and the Ontario Water Resources Act, R.S.O. 1990, c. O.40 (“OWRA”) and they claim punitive damages.

Not all proposed class members have detected PFAS in their water

[28] The defendants’ real objection to the causes of action pleaded are that a majority of the proposed class members have not detected any contamination of their drinking water with PFAS compounds. As such, the defendants argue that these members do not have any cause of action against them.

[29] The plaintiffs allege that all of the proposed class members’ properties have suffered harm, namely a reduction in value as a result of the stigma they all suffer, whether PFAS are detected in their drinking water or not. The question to be determined is whether the plaintiffs can advance a claim for damages for the reduction of their property values caused by the stigma suffered by all of the properties in close proximity to those properties where their groundwater has been contaminated with PFAS. This issue is novel and should not be dismissed at this stage of the proceedings.

[30] In Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 (C.A.), the Ontario Court of Appeal affirmed that the “plain and obvious” test established in Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, applies to determine if a cause of action has been pleaded. As in a Rule 21 motion, when determining whether the plaintiffs have pleaded a cause of action, all of the facts pleaded are assumed to be proven, claims that are unsettled in the jurisprudence should be allowed to proceed, and the pleadings should be read generously to allow for inadequacies due to drafting frailties and the plaintiff’s lack of discovery information.

[31] In Smith v. Inco Limited, 2011 ONCA 628, at para. 71, the Court of Appeal set out the four prerequisites for the operation of the rule in Rylands v. Fletcher as follows:

(1) the defendant made a “non-natural” or “special” use of his land;

(2) the defendant brought on to his land something that was likely to do mischief if it escaped;

(3) the substance in question in fact escaped; and

(4) damage was caused to the plaintiff’s property as a result of the escape.

[32] At paragraph 82 of Smith v. Inco Limited, the Court of Appeal stated:

Returning to the merits of the strict liability theory adopted by the trial judge, we begin by distinguishing the risk that is targeted by that theory [liability for ultra-hazardous activities] from the risk targeted by the rule in Rylands v. Fletcher. Strict liability under Rylands v. Fletcher aims not at all risks associated with carrying out an activity, but rather with the risk associated with the accidental and unintended consequences of engaging in an activity. The Rylands v. Fletcher cases are about floods, gas leaks, chemical spills, sewage overflows, fires and the like. They hold that where the defendant engages in certain kinds of activities, the defendant will be held strictly liable for damages that flow from mishaps or misadventures that occur in the course of that activity. The escape required in Rylands v. Fletcher connotes something unintended and speaks to the nature of the risk to which the strict liability in Rylands v. Fletcher attaches.

[33] The plaintiffs have pleaded that NRC experimented with different types of fire-retardant foams containing a hazardous chemical PFAS, which it allowed to escape into the surface and groundwater and onto adjacent lands. It is not “plain and obvious” that the plaintiffs would be unsuccessful on their claim based on their pleading of strict liability under Rylands v. Fletcher which discloses a cause of action.

[34] The plaintiffs also plead that the defendants are liable in nuisance by unreasonably and substantially interfering with the use of their land. The release of PFAS, which are hazardous compounds onto the plaintiffs’ lands and into the groundwater could constitute a nuisance. It is not plain and obvious that their claim would be unsuccessful and their pleading in nuisance discloses a cause of action.

[35] The plaintiffs also plead negligence against NRC. The defendants would owe a duty of care not to release a toxic compound into the groundwater and thereby contaminate their neighbour’s drinking water. Did the defendants’ conduct fall below the required standard of care and cause damage to the properties of the members of the proposed class? It is not plain and obvious that the plaintiffs would not be successful on such a claim and their pleading in negligence discloses a cause of action.

EPA and CEPA

[36] Section 99(2) of the Environmental Protection Act, R.S.O. 1990, c. E.19 (“EPA”) states that the owner of a pollutant may be found liable to any person suffering loss or damage as a direct result of the “spill of a pollutant”. NRC argues that the plaintiffs have not specifically pleaded that a “spill” has occurred.

[37] The pleadings are to be read generously to allow for inadequacies. As such, it is not plain and obvious that the plaintiffs’ claim under the EPA would not be successful and it disclosed a cause of action. The plaintiffs are permitted to amend their pleadings to allege a spill and a breach of the provisions of the EPA.

[38] Section 40 of the Canadian Environmental Protection Act, 1999, SC 199, c. 33 (“CEPA”), allows for a civil cause of action for damages for a contravention of the Act. The plaintiffs’ claim for damages for breach of the CEPA by the release of a toxic substance under section 95 and section 40 of the CEPA. Reading the pleadings generously, it is not plain and obvious that their claim under the CEPA would not be successful and it discloses a cause of action.

Punitive Damages

[39] The plaintiffs allege that the basis of their claim for punitive damages is NRC’s failure to notify class members as soon as they became aware of contamination of the groundwater with PFAS. The plaintiffs plead that NRC was aware of the contamination of the NRC lands with PFAS as a result of testing conducted on or before 2013. NRC submits that the evidence is that it was not aware of any contamination of adjacent lands with PFAS until November 15, 2015, when they received Stantec’s report. NRC advised 49 adjacent property owners in December of 2015 of possible contamination of their drinking water with PFAS.

[40] In Whiten v. Pilot Insurance Co., 2002 SCC 18, at para. 36, the Supreme Court stated that punitive damages could be awarded against a defendant in exceptional cases, namely for “malicious, oppressive and high handed” misconduct that “offends the court’s sense of decency”.

[41] The plaintiffs plead that NRC failed to notify the proposed class members of the possible contamination of their drinking water with toxic PFAS compounds, for approximately 2 years. NRC denies that it delayed notification of possible contamination for 2 years and submits that the evidence is uncontradicted that it only became aware of the possible contamination of the drinking water of neighbouring properties, for the first time on November 30, 2015, when it received Stantec’s report. NRC notified 49 adjacent homeowners of possible contamination of their drinking water on December 23, 2015, a delay of less than 1 month.

[42] A delay of less than 30 days in notifying class members of possible contamination of their drinking water does not constitute grounds for an award of punitive damages. In addition, NRC offered to supply bottled water, to install filtration equipment and to conduct quarterly testing was also reasonable and could not support an award of punitive damages.

[43] At this stage, the pleadings are deemed to be proven. If evidence is discovered that NRC knew and failed to advise the proposed class members of possible contamination of their drinking water by toxic PFAS compounds for approximately 2 years, then it is not plain and obvious that they would not be successful on such a claim. The claim is premature at this time and if such evidence is discovered, the pleadings could be amended.

[44] The uncontested evidence related to NRC’s knowledge of the potential risk to human health and therefore punitive damages is as follows:

(a) In November and December of 2012, Stantec conducted groundwater testing on NRC lands which detected PFAS compounds in the soil, groundwater and surface water at the NFL site;

(b) In 2008, the Federal Government restricted the use of perfluorinated foams to fight fires. In 2012, there were no federal or regulatory guidelines or screening values for PFAS compounds. Health Canada has not developed any guidelines for PFAS substances to date, but rather has produced drinking water screening values;

(c) Health Canada has issued screening values for two PFAS compounds (PFOA and PFOS) as of 2015 and for nine PFAS compounds as of April 2018 to provide guidance but they are not formal guidelines The United States established advisory guidelines for some PFAS compounds in 2016;

(d) There are no Ontario provincial standards for PFAS compounds in soils or in groundwater;

(e) A report from Stantec dated October 8, 2013, identified concentrations of Perfluorinated Compounds at the NFL site below Health Canada’s interim advice guideline for Perfluorooctane sulfonate. A further report from Stantec dated November 8, 2013 concluded that there was no risk to human health on-site at the NFL and limited risk to the environment;

(f) In 2014, SENES reported that the drinking water at the NFL site was compliant with the federal guidelines, except for lead and iron at the entry point;

(g) In 2014, SENES also assessed process water collected after a fire-test to determine the appropriate disposal strategy. PFAS compounds were detected in the process water and SENES recommended that fire-test runoff water should be collected and disposed of at an off-site licensed facility. This recommendation was followed by NRC;

(h) In March of 2015, Stantec delivered a progress report indicating that a PFAS was detected in soil samples at NFL above the Environment Canada draft guidelines. PFAS were also detected above Health Canada drinking water screening values, in shallow monitoring wells located close to the NFL site;

(i) In September of 2015, NRC installed monitoring wells to a depth of 60 meters at the boundaries of its NFL property and sampled the groundwater;

(j) In October and November of 2015, a number of nearby residents advised NRC of discolouration in their drinking water, which was assumed to be caused by the digging of the monitoring wells. The residents were advised to drink bottled water, the cost of which NRC offered to reimburse, and it offered to test their drinking water for PFAS;

(k) On November 30, 2015, samples were taken of the drinking water from three residences in the Ramsay Meadows subdivision. The test results indicated the presence of a PFAS in the drinking water above Health Canada screening values at one of the three residences. NRC contacted the residents on December 18, 2015 to advise them of the test results;

(l) On December 23, 2015, NRC hand-delivered a letter to all 49 residences in the Ramsay Meadows subdivision advising them of possible PFAS contamination of their drinking water. NRC suggested the residents use bottled water and it offered to test their drinking water for PFAS compounds;

(m) In February 2016, NRC advised the owners of 49 residences that PFAS had been found on NRC’s property. NRC offered to provide them with bottled water, to install a filtration system and to test their drinking water on a quarterly basis; and

(n) In May of 2016, NRC extended its offer for testing the water for PFAS to 20 additional residences in the immediately adjacent area.

[45] In order to have any possible chance of success on a claim for punitive damages, a plaintiff must establish abusive, oppressive or high-handed conduct that offends the court’s sense of decency. The uncontested evidence summarized in the previous paragraph, supports a finding that the plaintiffs would not have any possible chance of success on a claim for punitive damages based on NRC’s conduct. NRC gave notice to all of the residents in the adjacent subdivision within 23 days of receiving its first report that PFAS had been detected in one of the adjoining residence’s drinking water that was slightly above Health Canada’s screening value. The delay of 23 days does not constitute abusive, oppressive or high-handed conduct that could possibly support a claim for punitive values.

[46] The plaintiffs don’t allege that a delay of 23 days could possibly support a claim for punitive values, rather they allege that NRC knew by 2013, as a result of testing that occurred before 2013, of PFAS contamination on its NFL lands. NRC failed to notify adjoining residents of the possible risk of contamination of their drinking water with PFAS compounds and instead conducted an environmental investigation of its own lands.

[47] The plaintiffs allege in their pleading that NRC conducted testing and became aware that its lands were contaminated with PFAS at levels above Health Canada standards, however the uncontested evidence is that NRC did not know the results of any testing that disclosed a risk to the health of class members until 2015. The test results and reports have been produced by NRC and are attached to the affidavit of Mr. Fudge. As a result, the test results and testing conducted by NRC related to contamination by PFAS of its NFL site are known and before the court.

[48] The testing by NRC for levels of PFAS contamination from 2012 onwards, indicates that NRC was concerned about the possibility of a health risk to their employees and potentially to nearby residents. However, the test results received in the reports dated October and November of 2013, indicated that PFAS compounds were detected on its lands at levels below the Health Canada interim advice guideline and concluded that there was no risk to human health. Based on this information, NRC’s actions of not advising adjoining residents of these findings and proceeding to conduct further testing was reasonable in the circumstances. There is no possible chance of success that its decisions to conduct further testing before advising adjacent residents could support an award of punitive damages. NRC did not have knowledge of test results showing contamination with PFAS that could possibly pose a risk to human health until November 30, 2015.

[49] For the reasons given above, at this time based on the uncontested evidence, the pleadings do not disclose any basis in fact to support a cause of action for punitive damages that has any possible chance at success.

Disposition of Causes of Action Disclosed by Pleadings

[50] For the above reasons, I find that the plaintiffs’ pleadings disclose the causes of action of strict liability under the doctrine of Rylands v. Fletcher, nuisance, negligence, and a claim for damage for breaching section 95 of the EPA and section 40 of the CEPA.

b) Is there an identifiable class of two or more persons?

[51] The plaintiffs propose that the members of the class be defined as all persons owning property on January 1, 2013, bounded by the black line on the map attached as schedule “C” to the motion record. The boundary of the class was originally defined as the sixty-nine (69) property owners that NRC gave notice to of possible contamination of their drinking water and to whom they offered bottled water, a filtration system and quarterly testing. There were 49 property owners in the Ramsay Meadows subdivision and an additional 20 adjacent property owners.

[52] The plaintiffs have added a few extra property owners who are in close proximity (identified by a black as opposed to the black and orange line on the map shown on schedule “C”). The plaintiffs have not identified the exact number of additional class members nor have they indicated a reason for their addition.

[53] In Bywater v. Toronto Transit Commission, 1998 Carswell Ont. 4645 (ONSC), at para. 10, the court held that the purpose of the class definition was: (a) to identify persons with a potential claim; (b) to define who will be bound by the result; and (c) describe who is entitled to notice.

[54] At paras. 10-11 of Bywater, the court stated that there must be a rational relationship between the class and the causes of action. Class members are not required to have identical claims and it need not be shown that each member would be successful in establishing a claim for one or more remedies.

[55] In Hollick at para. 17, the Supreme Court stated that the class must be defined by reference to objective criteria and the class must be “bounded” in the sense that it is not unlimited.

[56] NRC submits that there is no rational connection between the common issues and the proposed class definition because PFAS compounds have not been detected in many of the proposed class members’ drinking water. As a result, it submits that these individuals have not suffered any compensable injury because there has not been any contamination of their properties or drinking water.

[57] The plaintiffs argue that all of the proposed class members’ properties are affected by a stigma, caused by NRC allowing PFAS to contaminate the surface and groundwater of adjacent properties. They allege that NRC’s contamination of the groundwater with a chemical toxic to human health has caused all of the class members’ properties to suffer harm, namely a diminution of their property values, even though the toxic chemical has not been detected on many proposed class members’ properties.

[58] The proposed class members include 3 groups of homeowners:

(1) The owners of adjacent properties where testing has shown PFAS contaminants above Health Canada drinking water screening values;

(2) The owners of adjacent properties where testing has detected PFAS contaminants below the Health Canada drinking water screen values; and

(3) The owners of adjacent properties where testing has never detected any contamination by any PFAS compounds in their drinking water.

[59] In Smith v. Inco Limited, the soil of all of the class members’ properties contained nickel particles as a result of emissions generated by Inco’s nickel refinery, which had ceased operations for several years. The trial judge found that widespread public concerns about the levels of nickel in the soil adversely affected the appreciation in the value of the properties after September of 2000, when concerns about nickel contamination became public. The trial judge awarded damages of $36 million dollars for the diminution of value of the claimants’ properties. The Court of Appeal overturned the decision and held that the claimants had failed to establish Inco’s liability under either nuisance or the rule in Rylands v. Fletcher and also held that they had failed to establish any damages. However, the Court of Appeal did not disagree with the awarding of damages for diminution of property values if the evidence had established a proper causal connection to the diminution.

[60] The extent of the contamination of the groundwater of adjacent properties has not been established at this time. PFAS compounds have not been detected in the drinking water of many proposed class members, levels of PFAS below Health Canada screening values have been detected on some properties and levels of PFAS contamination above the Health Canada screening values were detected on 10-15 properties.

[61] NRC gave notice of possible contamination of drinking water with PFAS compounds to the owners of 69 adjoining properties. NRC has also offered to provide bottled water, to install a filtration system and to conduct quarterly testing on the drinking water of these properties.

[62] The plaintiffs propose to add a few extra residents to the class but have not provided an exact number of additional class members or any basis in fact for their inclusion, other than they are immediately adjacent to the boundary that had been chosen by NRC. Significantly, no test results or expert opinion evidence has been provided to provide basis of fact or a reason for expanding the area of the class.

Disposition of Class Definition

[63] The proposed class is readily identifiable by objective criteria, is bounded and is defined as follows:

All persons owning real property at or after December 23, 2015 in the area within the Township of Mississippi Mills, Ontario more particularly described as the 69 lands and premises within the boundary demarcated by the black and orange line in Schedule “C” to the Amended Notice of Motion, excluding the NRC and the Crown.

There shall also be a subclass:

(1) Subclass A shall be members of the above defined class where PFAS compounds have never been detected in their drinking water, or only detected at levels below Health Canada’s screening values.

c) Common Issues

[64] Section 1(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”) requires that the claims of class members raise common issues and defines “common issues” as follows:

(a) Common but not necessarily identical issues of fact; or

(b) Common but not necessarily identical issues of law that arise from common but not necessarily identical facts.

[65] At paragraph 18 of Hollick, the Supreme Court held that for an issue to be common, it must be a substantial ingredient of each class member’s claim. The plaintiff must adduce evidence to show some “basis in fact” that the issues are common.

[66] In Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, at para. 39, the Supreme Court stated that the underlying question is whether the resolution of its proposed common issues will avoid duplication of fact finding or legal analysis.

[67] The Supreme Court in Western Canadian Shopping Centres Inc., at paras. 39 and 40, set out the following factors to be considered:

(1) The commonality question should be approached purposedly;

(2) An issue will be “common” only where the resolution is necessary to the resolution of each class member’s claim;

(3) It is not necessary that class members be identically situated vis-à-vis the opposing party;

(4) It is not necessary that common issues predominate over non-common issues. However, the class member’s claims must share a substantial common ingredient to justify a class action. The court will examine the significance of the common issues in relation to the individual issues; and

(5) Success for one class member must mean success for all. All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent.

[68] The plaintiffs have proposed a number of common issues that are related to the causes of action they have pleaded for all class members. These can be combined into the following common issues:

Are the Defendants liable to the proposed class members?

(a) Under the doctrine of Ryland v. Fletcher as a result of their handling, application, storage and disposal of products containing PFAS compounds and the escape of those products onto the adjacent lands;

(b) For nuisance as a result of the migration of PFAS compounds from NRC lands to the class members’ lands;

(c) Under section 99 of the EPA;

(d) Under section 40 of the CEPA;

(e) For negligence;

(i) By NRC, in its use, handling, application, storage and disposal of PFAS compounds, such that these compounds were allowed to contaminate class members’ lands;

(ii) By Carleton, in burning substances containing PFAS compounds, such that these compounds were allowed to contaminate class members’ lands;

(f) For damages for diminution of the value of their properties due to the negative stigma that affects them as a result of the contamination and the possibility of contamination of their drinking water by PFAS compounds;

(i) For class members where PFAS compounds have been detected in their drinking water above the Health Canada screening values; and

(ii) For members of Subclass A where PFAS compounds have been detected in their drinking water below the Health Canada screening values or have not been detected to date.

[69] The causes of action pleaded under the doctrine of Rylands v. Fletcher, in nuisance, in negligence, under s. 99 of the EPA and s. 40 of the CEPA all raise common issues. The constituent elements of each cause of action will be common issues to be determined and success for one class member will be success for all members of each subclass. Likewise, a failure to prove liability under a constituent element will be failure for all members of the class and members of Subclass A.

Carleton

[70] The plaintiffs have pleaded that Carleton occupied part of the NFL site and burned various materials in its burn tower containing toxic substances and tested various chemicals, including firefighting foam containing PFASs to douse the fires. The pleadings are deemed to be proven but the evidence from the log records indicate that Carleton never tested or used any firefighting foams containing PFASs at the NFL site. The plaintiffs have not presented any evidence to contradict this evidence.

[71] The fire test log indicated that various items were burned as part of the experiments conducted by Carleton, including a light wood frame room, shoe store, columns and struts, various construction materials and a subway car. The smoke from these burns was exhausted through two smokestacks on the roof of the facility.

[72] In Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2013 SCC 58, at paras. 51, 61 and 68, the Supreme Court held that the plaintiffs must demonstrate “some basis of fact” on admissible evidence for each of the criteria from s. 5(1)(b) to (e) of the CPA.

[73] In Kuiper v. Cook (Canada) Inc., 2018 ONSC 6487, at para. 97, rev’d in part 2020 ONSC 128, 320 ACWS (3d) 382 (Ont. Div. Ct.) the Divisional Court affirmed the two part test for a common issue, namely the plaintiffs must show that the common issue actually exists and that the proposed common issue can be answered in common across the class. The plaintiffs must show “some basis in fact” that they have a “colourable claim” and a rational connection between the class members and the proposed common issues.

[74] The plaintiffs have not presented any evidence to show “some basis in fact” that Carleton used firefighting foams containing PFAS. The plaintiffs submit that some of the items burned by Carleton may have contained PFAS and the smoke from their burning was exhausted through an unfiltered smokestack and may have contributed to the contamination of their drinking water with PFAS.

[75] The statement of claim alleges a contamination of groundwater with PFAS from the discharge of water from the NFL site. The plaintiffs have provided extensive expert evidence about groundwater contamination with PFAS arising from NRC’s site but have not produced any evidence connecting the burning of a subway car and other building materials with the release of PFAS compounds into the air. The plaintiffs have also failed to present any evidence of what concentrations of PFAS would have been present in the exhausted smoke, or whether the PFAS compounds from the smoke could have contaminated the groundwater of the class members’ properties. This theory of possible contamination through exhausted smoke was not pleaded, as the pleading alleges contamination by Carleton from the discharge of water and not from smoke.

[76] The plaintiffs produced an article from an American coalition stating that PFAS compounds can be found in automotive components and many building and construction materials. However, no evidence was presented stating that the items actually burned by Carleton contained any PFAS.

[77] Dr. Reynolds gave expert evidence for the plaintiffs as a geotechnical engineer. He agreed in cross-examination that he did not worry about the sky and that evidence of atmospheric contamination required specific expertise that he did not possess. Dr. Reynolds did state that many materials contain PFAS and that it was “ubiquitous”, however, he did not offer any opinion on whether the items burned by Carleton actually contained PFAS or if they did, whether the contamination of some class members’ drinking water was or could be caused by smoke exhausted from the items burned by Carleton.

[78] In Pro-Sys at para. 103, the Supreme Court stated:

It is worth reaffirming the importance of certification as a meaningful screening device. The standard for assessing evidence at certification does not give rise to “a determination of the merits of the proceeding” (CPA, s. 5(7)); nor does it involve such a superficial level of analysis into the sufficiency of the evidence that it would amount to nothing more than symbolic scrutiny.

[79] As Perell J. stated at para. 134 of Kuiper: “The some-basis-in-fact standard is low, but it is not subterranean.” Some evidence of a design defect in the IVC filters was required to certify negligence as a common issue. Here, no evidence was provided of a causal link between the items burned by Carleton and the contamination of the class members’ drinking water.

[80] The plaintiffs initially pleaded that Carleton used fire retardant foams containing PFAS at the NFL site. The pleading turns out to be inaccurate as only NRC used fire retardant foams containing PFAS and Carleton did not. The plaintiffs did not plead that smoke from the items burned by Carleton caused PFAS compounds in the smoke exhausted through the roof to contaminate class members’ drinking water, nor did they provide any expert evidence to support this proposed common issue involving Carleton.

[81] A determination of the above common issues will decide in a positive or negative manner for each class and subclass member, whether they have a claim under each of the causes of action pleaded and whether or not the class members and subclass members have a claim for damages for a diminution of value of properties, in circumstances where PFAS compounds, hazardous to human life, have been detected in the groundwater in the area defined by the class, but where PFAS compounds have never been detected or been detected at levels below Health Canada screening values, in many of the class members’ drinking water.

[82] In Midwest Properties Ltd. v. Thorardson, 2015 ONCA 819, at paras. 55 and 62, the Court of Appeal held that damages could be awarded for diminution of property value from the continued presence of contamination. The Court of Appeal expressed a preference to award restoration costs rather than damages. In this case, remediation is not possible as the groundwater has been contaminated in the area of class members’ properties and detected in the drinking water of some class members’ properties.

[83] In the Smith v. Inco decision, the Court of Appeal dismissed the plaintiff’s claim due to the absence of evidence of contamination of the soil with a substance that was hazardous to human health. Here there is evidence that contamination of drinking water with PFAS compounds is hazardous to human health, but contamination has not been detected in all of the class members’ drinking water.

[84] There is some basis in fact from the evidence of the plaintiffs’ expert, that all of the class members owning properties in Ramsay Meadows (49 residences) have suffered a diminution of value, including those properties where PFAS compounds have not been detected or detected below Health Canada’s screening values due to the stigma of contamination of the groundwater in this area by toxic PFAS compounds. This evidence is not disputed as NRC’s expert appraiser stated that all of the properties in the Ramsay Meadows subdivision have suffered a diminution of value from 0-15 percent.

[85] Whether Subclass A members, where PFAS has never been detected or never detected above Health Canada’s screening values, can be successful in a claim for damages for diminution of the value of their properties is a common issue to be decided. The issue is novel, and the merits are not to be decided at a certification motion. Given the novelty of this issue and the unusual circumstances, I find that this is a common issue for all Subclass A members.

Disposition of Common Issues

[86] For the above reasons, the following are found to be common issues:

Is NRC liable to the class members or Subclass A members?

(a) Under the doctrine of Ryland v. Fletcher as a result of its handling, application, storage and disposal of products containing PFAS compounds and the escape of those products onto the adjacent lands;

(b) For nuisance as a result of the migration of PFAS compounds from NRC lands to the class members’ lands;

(c) Under section 99 of the EPA;

(d) Under section 40 of the CEPA;

(e) For negligence;

(i) By NRC, in its use, handling, application, storage and disposal of PFAS compounds, such that these compounds were allowed to contaminate class members’ lands;

(f) For damages for diminution of the value of class members’ and Subclass A members’ properties due to the negative stigma that affects them as a result of the contamination and possibility of contamination of their drinking water by PFAS compounds;

(i) For class members where PFAS compounds have been detected in their drinking water above the Health Canada screening values; and

(ii) For members of Subclass A, where PFAS compounds have been detected in their drinking water below the Health Canada screening values or have never been detected to date.

[87] The claim against Carleton does not raise a common issue or plead a cause of action that has any possible chance of success for the reasons given above.

[88] The claim against NRC for punitive damages does not have any possible chance of success and is dismissed based on the evidence before the court at this time. Evidence of some basis in fact connecting Carleton’s burning of materials to the contamination of class members’ drinking water with PFAS was not provided.

d) Preferable Procedure

[89] Section 5(1)(d) of the CPA requires that a class action be the preferable procedure for the resolution of the common issues.

[90] In Pro-Sys, at para. 38, the Supreme Court held that two concepts underly the preferability analysis, namely whether the class action would be a fair, efficient and manageable method of advancing the claim and second, whether a class action would be preferable to other reasonably available means of resolving the claims.

[91] In Cloud, at para. 41 and 73, the Supreme Court held that the preferability analysis is conducted through the lense of three goals: access to justice, judicial economy and behaviour modification and by taking into account the importance of the common issues to the claims as a whole including the individual issues.

[92] The plaintiffs submit that a class action is the preferable procedure to meet the above objectives. The defendants submit that a joinder of the individual claims, limited to those property owners where PFAS compounds have been detected in their drinking water above Health Canada’s screening values, would be the preferable procedure.

[93] The cost of extensive expert reports is a factor to be considered as evidenced by the 16 volumes of reports filed by NRC on this certification motion. In these circumstances, certifying this claim as a class action will promote the objective of access to justice as the costs of the proceeding can be shared amongst a number of individuals, or with class counsel.

[94] If the plaintiffs’ claim is not certified as a class proceeding, the plaintiffs are unlikely to be able to afford to proceed. NRC’s real argument is that the claims of the Subclass A members for diminution of value of their properties where PFAS chemicals have not been detected should be dismissed. However, whether Subclass A members have a valid claim is a common issue which can be decided in the class action as a single issue. Access to justice for all class members but specifically Subclass A members would be enhanced if certification is granted.

[95] The objective of judicial economy is also promoted by having one judicial proceeding to decide the common issues which make up the bulk of the claim.

[96] The objective of behaviour modification is not a factor in these circumstances. NRC was conducting research in the public interest to assist in fighting fires. At the time that most of the experiments were conducted, there was no evidence of risk to human health and there were no health guidelines in place. In addition, I find that NRC’s actions of giving notice promptly, providing bottle water, installing filtration and testing was reasonable conduct.

[97] A class action would be manageable and would fairly and efficiently address the common issue of the claims for the following reasons:

(a) There is a relatively small group of clearly defined individual properties (69);

(b) The common issues are clearly defined, and NRC has admitted that its NFL facility is the source of the toxic PFAS compounds that have migrated into the groundwater of adjacent lands;

(c) The issues of liability under the common issues pleaded, largely deal with the defendant’s conduct and will be based on common expert evidence about how PFAS compounds move through the groundwater onto adjacent properties;

(d) Whether the Subclass A members can claim for damages where PFAS compounds have not been detected or detected below Health Canada’s screening values is a discrete and manageable legal issue to be decided. Expert evidence on the likelihood of future contamination exceeding screening values and the extent of property damage will be required; and

(e) Individual actions would take more judicial resources and would likely make it impossible for many class members to advance their claim, denying them access to justice.

Disposition of Preferable Procedure Issue

[98] I am satisfied that certifying this claim as a class proceeding is the preferable procedure because it promotes the objectives of access to justice and judicial economy and can be managed in a fair and efficient manner.

e) Representative Plaintiff and Workable Litigation Plan

[99] NRC submits that the three property owners that have been proposed as the representative plaintiffs are not suitable or unable to be named as representative plaintiffs. NRC also submits that counsel chosen to represent the plaintiffs is not suitable and that the litigation plan proposed is not suitable or workable.

[100] In Western Canada Shopping Centres, at para. 41 and 79, the Supreme Court held that the standard for appointment as a representative plaintiff was not perfection but the court must be satisfied that the proposed representative “will vigorously and capably prosecute the interests of the class”. Here, the plaintiffs have retained experienced counsel who has previously successfully handled a class action involving several hundred individuals whose personal information had been stolen by a Bank of Nova Scotia employee. The representative plaintiffs have engaged experts including a geotechnical engineer with experience in soil water movement and an expert appraiser and they have successfully brought this certification motion.

[101] I am satisfied that the three proposed representative plaintiffs would fairly and adequately represent the interest of the class and subclass. Two of the proposed representative plaintiffs, Mr. Gordon Egan and Mr. Kevin Kunka are appointed as representative plaintiffs for the members of Subclass A and Paul Crozier is appointed as the representation plaintiff of the class members, as PFAS has been detected in his drinking water above Health Canada’s screening values. In this situation, there will be no conflict of interest.

[102] I am satisfied that there is no conflict of interest between the class members and the Subclass A members. The case management will largely be handled by class counsel at case management conferences.

[103] I also find that the plaintiffs have hired suitable counsel with previous experience successfully handling a class proceeding against the Bank of Nova Scotia on behalf of several hundred affected individuals. In addition, Mr. Hebert has over 30 years of litigation experience and successfully handled an environmental claim involving contaminated soil some years ago.

Disposition of Representative Plaintiff Issue

[104] I find that the proposed representative plaintiffs will fairly and adequately represent the interests of the class; Paul Crozier as the representative plaintiff for members of the class and Gordon Egan and Kevin Kunka as representative plaintiffs for Subclass A members.

Litigation Plan

[105] The proposed litigation plan will require amendment based on this decision but provides a workable outline for managing this proceeding.

[106] The plaintiffs shall prepare an amended litigation plan within 30 days and the parties to discuss terms and attempt to reach agreement. A case conference may be arranged to address any points of disagreement in the amended litigation plan.

Costs

[107] The plaintiffs shall have 15 days to make submissions on costs, the defendants shall have 15 days to respond and the plaintiffs shall have 10 days to reply.

Released: July 07, 2021

COURT FILE NO.: CV-16-69664

DATE: 20210707

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

GORDON EGAN, KEVIN KUNKA, SCOTT PETRIE and PAUL CROZIER

Plaintiffs

– and –

NATIONAL RESEARCH COUNCIL OF CANADA and CARLETON UNIVERSITY

Defendants

REASONS FOR DECISION

R. Smith J.

Released: July 07, 2021