Court File and Parties

Court File No.: CV-04-262689-0000 Date: 2024-12-06 Ontario Superior Court of Justice

Between: 863880 Ontario Limited, Plaintiff And: Canadian Pacific Railway Company and Oxford Properties Group Inc., Defendants

Counsel: John M. Buhlman, Michael Statham and Lia Boritz, for the Plaintiff Rosalind H. Cooper and Nicholas R. Carmichael, for the Defendant, Canadian Pacific Railway Company

Heard: September 12, 2024

Before: Parghi J.

Reasons for Decision

[1] The Defendant, Canadian Pacific Railway Company (“CPR”), moves for summary judgment to dismiss this action as statute-barred. CPR states that the action was commenced well past the applicable six-year limitation period.

[2] For the reasons below, I grant the motion. I find that the action is statute-barred.

Background

[3] In January 1990, the Plaintiff, 863880 Ontario Inc. (“863”), a property developer, entered into an agreement of purchase and sale with the predecessors of the Defendant companies. The agreement was to purchase a parcel of land called the CPR/Marathon Property in what is now known as Liberty Village in Toronto. The sale closed in November 1990. At the time, 863 and its affiliates were involved in developing Liberty Village. They acquired various adjacent parcels of land over the course of many years as part of this project. The CPR/Marathon Property is one of the most significant parcels within the development.

[4] In January 2004, 863 commenced this action, seeking damages in respect of the presence of certain contaminants on the CPR/Marathon Property. The contaminants include volatile organic compounds, primarily trichloroethylene and its degradation compounds. I will refer to these as “TCE Contaminants” and to the phenomenon as “TCE Contamination”.

[5] 863 states that it learned of the TCE Contaminants on the CPR/Marathon Property in 1998, after it engaged an environmental consultant, Decommissioning Consulting Services Limited (“DCS”), to conduct certain investigations in relation to its proposed purchase of property to the south of the CPR/Marathon Property, called the Inglis Lands. Accordingly, says 863, it commenced this action within six years of learning of the TCE Contamination.

[6] CPR alleges that 863 in fact knew of the TCE Contamination on the CPR/Marathon Property in April 1991, after having received four reports about the TCE Contamination from different environmental consultants. CPR states that, based on these four reports, 863 not only knew that there was TCE Contamination at that time, but also knew that the presence of the TCE Contamination would make it more expensive and more challenging to develop the CPR/Marathon Property. However, 863 made a business decision not to commence its claim at that time.

[7] 863 disputes this claim, stating it knew there was TCE Contamination on the CPR/Marathon Property, but did not know the extent of the TCE Contamination or the mechanism by which the TCE Contaminants had reached the CPR/Marathon Property until it received its report from DCE (the “1998 DCS Report”). It says that discoverability is, in these circumstances, a genuine issue requiring trial.

The Law

[8] CPR seeks summary judgment on the basis that the action was not started within the six-year limitation period in place at the time.

[9] The Supreme Court of Canada has confirmed, in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, that the ultimate question in a motion for summary judgment is whether there is a genuine issue requiring a trial. The Court held that a genuine issue requiring trial does not exist if the motion provides a process that allows a judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.

[10] On a motion for summary judgment, I must first determine, based only on the record before me, whether there is a genuine issue requiring a trial. If there appears to be a genuine issue requiring a trial, I am to determine if the need for a trial could be avoided by using my enhanced powers under either Rule 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), which powers enable me to weigh evidence, evaluate a deponent’s credibility, and draw reasonable inferences from the evidence; or Rule 20.04(2.2), which powers allow me to order that oral evidence be presented by one or more parties. I may use these powers at my discretion, as long as their use is not against the interests of justice – that is, as long as they will lead to a fair and just result and will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole (Hryniak, at para. 66).

[11] I am entitled to presume that the parties have put forth their best evidence on the motion and that if the case were to proceed to trial, no additional evidence would be presented (TD Waterhouse Canada Inc. (TD Waterhouse Private Investment Advice) v. Little, 76 C.C.E.L. (3d) 243, at para. 15).

[12] I am to consider CPR’s motion for summary judgment based on the limitation period in force at the time 863 commenced its action. That limitation period, as established in section 45(1)(g) of the Limitations Act, R.S.O. 1990, c. L.15, is six years “after the cause of action arose”.

[13] In considering discoverability for the purposes of this limitation period, the so-called discoverability factors enumerated in the successor Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. apply. Those factors are set forth in section 5(1), which provides:

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[14] The Court of Appeal for Ontario, in Nasr Hospitality Services Inc. v. Intact Insurance, 2018 ONCA 725, 142 O.R. (3d) 561 (at para. 35), confirmed that in a motion for summary judgment based on a limitation period, I am to determine whether the record before me enables me to make the following findings of fact, with the degree of certainty required by Hryniak:

a. The date on which the plaintiff is presumed to know the matters listed in subsections 5(1)(a)(i)-(iv) − i.e., that the injury, loss or damage had occurred, that it was caused by or contributed to by an action or omission by the person against whom the claim is made, and that a proceeding would be an appropriate means to seek to remedy it;

b. the date on which the plaintiff acquired this actual knowledge under s. (5)(1)(a), in the event the evidence proves the contrary of the presumptive date;

c. the date of objective knowledge under s. 5(1)(b), based on the reasonable person with similar abilities and circumstances analysis; and

d. which of the actual knowledge and objective knowledge dates is earlier, for that will be the day on which the plaintiff discovered the claim for purposes of applying the basic limitation period.

[15] The onus lies on CPR to show there is no issue requiring trial with respect to the expiry of the six-year limitation period (AssessNet Inc. v. Taylor Leibow Inc., 2023 ONCA 577, 168 O.R. (3d) 276, at para. 34; Clearway Construction Inc. v. The City of Toronto, 2018 ONSC 1736, 89 C.L.R. (4th) 222, at para. 55). CPR must show that 863 knew or ought reasonably to have known of the elements of s. 5(1)(a), set forth above, more than six years prior to commencing the proceeding (AssessNet, at para. 35).

[16] The case law is clear that a plaintiff does not have to have perfect or complete knowledge for the limitation period to start running. Rather, it must have “enough facts on which to base its allegations” (The Investment Administration Solution Inc. v. Silver Gold Glatt & Grossman LLP, 2011 ONCA 658, 107 O.R. (3d) 795, at para. 15).

[17] Thus, in Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385, the Court of Appeal for Ontario held that the limitation period started running when the plaintiff knew that the defendant HVAC system installer had installed the system at issue and that the system was not working properly from the start. It was not necessary for the plaintiff to know “how it happened” (at paras. 38-39 and 42-43).

[18] In Peixeiro v. Haberman, [1997] 3 S.C.R. 549, the Supreme Court of Canada discussed the common law principle of discoverability. It held that, for a limitation period to start running, all that is required is for the plaintiff to “kno[w] that some damage has occurred” and to have “identified the tortfeasor”. At that stage, “[t]he cause of action has accrued.” The Court added that "[n]either the extent of damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended time beyond the general limitation period” (at para. 18).

The Reports

[19] The issue in this motion is whether and to what extent various reports from environmental consultants gave 863 knowledge of the TCE Contamination on the CPR/Marathon Property, such that the six-year limitation period started running. I briefly consider below the various reports cited by the parties, up to and including the 1998 DCS Report, which 863 says informed it of the TCE Contamination and triggered the start of the limitation period.

[20] In October 1989, CPR provided 863 with a report authored by a firm called MacLarentech Inc. Hazardous Waste Specialists ("MacLarentech"). The MacLarentech report identified TCE Contamination in one borehole on the CPR/Marathon Property. It found no significant levels of volatile organic compounds (of which TCE is one example) in soil samples.

[21] 863 then engaged a firm called Trow Geotechnical Ltd. (“Trow”) to conduct a geotechnical assessment of the CPR/Marathon Property and review the issues described in the MacLarentech Report. In March 1990, Trow provided its first report. The report identified non-TCE contaminants and estimated the costs of remediating their effects on the soil.

[22] In October 1990, one of 863’s affiliates, 921425 Ontario Limited (“921425”), received a further report from Trow about the Inglis Lands (the “1990 Trow Report”). At the time, 863 was considering purchasing the Inglis Lands. The 1990 Trow Report identified TCE Contamination in one of seven monitoring wells in the groundwater on the Inglis Lands. It indicated that the suspected source of the TCE Contamination was to the north of the Inglis Lands, based on the fact that there was a higher concentration of TCE Contaminants upgradient from the northern property boundary. Although the 1990 Trow Report did not expressly identify the property to the north of the Inglis Lands, it is undisputed that the property to the north of the Inglis Lands is the CPR/Marathon Property. The 1990 Trow Report further stated that whether the land continued to be used for industrial purposes or was decommissioned for any kind of redevelopment (industrial/commercial, or residential/parkland), it would be “necessary to work with the owner of the property to the north to further define the source and extent of the groundwater contamination” and “arrange for appropriate remediation at the source and downgradient as may be required.”

[23] In January 1991, Trow provided 921425 with another report (the “1991 Trow Report”). It discussed sampling that was done on two monitoring wells located on the CPR/Marathon Property. Based on this sampling, the 1991 Trow Report concluded that the concentrations of TCE Contaminant were “significantly higher” upgradient. This, in turn, “suggest[ed] that contamination may be migrating onto” the Inglis Lands “from” the CPR/Marathon Property. The report also indicated that the TCE Contamination “has been observed to be ingressing to the site from the north” (where the CPR/Marathon Property is).

[24] 863 then retained two firms, DCS and Angus Environment Ltd. (“Angus”), to assist in its assessment of the TCE Contamination on the Inglis Lands.

[25] DCS in turn retained Golder Associates Limited (“Golder”) to investigate the groundwater on the Inglis Lands, and in April 1991, Golder issued its report (the “1991 Golder Report”). Golder’s investigation included groundwater sampling from monitoring wells on the CPR/Marathon Property. The 1991 Golder Report indicated that laboratory results from those samples “confirmed the presence of elevated concentrations” of TCE Contaminant. It also found TCE Contamination on the Inglis Lands. It said it was “not clear where the actual source or sources of TCE [were] located.”

[26] In April 1991, Angus issued a letter outlining its analysis (“the “1991 Angus Letter”). It said the following:

While site characterization has been enhanced, there still remain areas of uncertainty. The least understood environmental aspect of the site concerns the TCE located beneath Building 8-29 [located on the CPR/Marathon Property] and along the northern boundary [adjacent to the CPR/Marathon Property]. Our letter of 31 January 1991 recommended that a high priority should be assigned to characterizing this situation fully. The latest boreholes suggest there is more than one source or cause of the TCE contamination but the actual source(s) have not been identified conclusively. Furthermore, TCE is a compound that draws considerable attention from regulatory agencies due to its potential health implications, and it has proven to be very difficult to clean-up sites containing TCE to acceptable levels. Based on the information available, it is still the opinion of AEL [Angus] that this aspect of the site will pose a major challenge to cleaning up the property.

[27] The development of Liberty Village did not move forward, and 863 did not direct any further environmental investigations, until 1998, when 863 and its affiliates engaged DCS to do a re-assessment of the Inglis Lands. The 1998 DCS Report was delivered. It indicated that TCE Contamination was “determined to be present in the groundwater on the CP lands” and that spills of TCE had probably occurred on certain of those lands.

The Parties’ Positions

[28] 863 states that it was only with the benefit of the 1998 DCS Report that it discovered the TCE Contamination on the CPR/Marathon Lands.

[29] 863 submits, first, that it was only through the 1998 DCS Report that it learned that the volume of contaminated soil was significant. The previous four reports on which CPR relies – namely, the 1990 Trow Report, the 1991 Trow Report, the 1991 Golder Report, and the 1991 Angus Letter – did not indicate that there was any significant TCE Contamination on the CPR/Marathon Lands and instead described the Contamination as “localized” and “minimal”.

[30] 863 further states that the previous four reports did not indicate the source of the TCE Contamination, which was a sewer within the CP rail corridor that discharged volatile organic contamination into the Liberty Village Lands. This information was disclosed only in the 1998 DCS Report.

[31] CPR submits that the case law does not support 863’s claim that it needed to know the significance or the source of the TCE Contamination issue for the limitation period to start to run. CPR maintains that by 1991, when the 863 had the four reports cited above, it had knowledge of the TCE Contamination and the limitation period began.

Analysis

[32] I find that 863 had actual knowledge of the presence of TCE Contamination on the CPR/Marathon Property, sufficient in nature to trigger the start of the limitation period, in April 1991. I make this finding based on the record before me and without having to rely on any of the enhanced fact-finding powers set forth in Rules 20.04(2.1) and (2.2).

[33] In my view, by April 1991, 863, having received the 1990 Trow Report, the 1991 Trow Report, the 1991 Golder Report, and the 1991 Angus Letter, had “enough facts on which to base its allegations” against CPR. Based on those reports, 863 knew the following:

a. That one of seven monitoring wells in the groundwater on the Inglis Lands, directly south of the CPR/Marathon Property, had TCE Contamination; that the suspected source of the TCE Contamination was to the north of the Inglis Lands, meaning the CPR/Marathon Property; and that before any redevelopment of the land, the “source and extent of the groundwater contamination” would need to be further defined and “appropriate remediation at the source and downgradient” may be required;

b. That two monitoring wells on the CPR/Marathon Property showed “significantly higher” concentrations of TCE Contamination upgradient, which suggested that the TCE Contamination was coming onto the Inglis Lands from the CPR/Marathon Property;

c. That laboratory results from monitoring wells on the CPR/Marathon Property “confirmed the presence of elevated concentrations” of TCE Contaminant; and

d. That TCE on and adjacent to the CPR/Marathon Property was “[t]he least understood environmental aspect” of the site and that “a high priority should be assigned to characterizing this situation fully,” that TCE draws considerable regulatory attention, and that TCE on the site “will pose a major challenge to cleaning up” the CPR/Marathon Property.

[34] I am unable to accept 863’s submission that these four reports merely pointed to localized and minimal TCE Contamination. The monitoring wells where TCE Contamination was found were specific locations, but that does not mean, and the reports did not suggest, that the TCE Contamination was itself localized. Nor did anything in the reports suggest that the TCE Contamination was minimal.

[35] Nor can I accept 863’s submission that the reports did not contain enough information about the extent or source of the TCE Contamination for the limitation period to start. As discussed above, the jurisprudence is clear that 863 did not need perfect or complete knowledge for the cause of action to accrue. It did not need to know the extent or type of damage involved. It only needed to know the facts on which to base its allegations. I have found that 863 knew those facts: it had actual knowledge, based on the reports, that loss or damage had occurred in the form of TCE Contamination on the CPR/Marathon Property and that the TCE Contamination was caused or contributed to by an action or omission on the part of CPR.

[36] Notably, 863’s representative acknowledged during examinations for discovery that by 1991, 863 had information about TCE Contamination on the CPR/Marathon Property. He was asked if this information gave rise to any concern. His answer was, “Not really.” His evidence was that 863’s concern was with contamination on the Inglis Lands, and the CPR/Marathon Property was something “we would deal with, but the question was whether to buy additional land.” He later explained, “When the time came to develop” the CPR/Marathon Property, “we would have to address the contamination there.”

[37] He further testified that no one at 863 was thinking at this time about giving notice to CPR about the TCE Contamination. He did not know what giving notice would accomplish, because 863 was focused on deciding whether to continue to assemble land for the project based on this information about TCE Contamination. He agreed with the suggestion that this was something 863 would deal with in the future.

[38] This evidence further supports my finding of actual knowledge on the part of 863.

[39] Accordingly, the motion enables me to make the required factual findings and apply the law to the facts. I am also satisfied that the motion is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial. There is therefore no genuine issue requiring trial in respect of the expiry of the limitation period. Summary judgment is appropriate.

Order Granted

[40] CPR’s motion for summary judgment is granted. 863’s action against CPR is dismissed.

Costs

[41] The parties have not provided any submissions on costs. If they are unable to resolve the issue of costs on their own within 30 days, they are to notify me, and I will set a schedule for the provision of brief costs submissions.

Parghi J. Released: December 6, 2024