Ontario Court Affirms Clean-Up Order Against Innocent Municipality

As appeared in Municipal Information Network.

The City of Kawartha Lakes (the "City") must clean up contamination that seeped into its municipal storm sewer system from a neighbouring basement, even though it was not responsible for causing the contamination. On May 28, 2012, the Ontario Divisional Court found that the Environmental Review Tribunal (the "Tribunal") was correct in upholding the clean-up order issued by the Director of the Ministry of the Environment.1

Facts

In late 2008, several hundred litres of furnace oil leaked from a basement of a property located in the City. The property owner's insurance company retained a consultant to begin remediation, during which it was discovered that furnace oil had entered into the City's municipal storm sewer system and culverts, and was being discharged into Sturgeon Lake. The consultant notified the Ministry of the Environment, and the Ministry, in turn, ordered the property owner to eliminate adverse effects caused by the spill and to restore the natural environment.

Section 157.1 of the Environmental Protection Act (the "Act") gives the provincial officer the power to order "any person who owns or has management or control of an undertaking or property" to take steps to "prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property" or to "prevent, decrease or eliminate an adverse effect that may result from" the discharge or presence of such a contaminant.2

By March 2009, the property owner's insurance coverage became insufficient to cover any clean-up efforts beyond the property boundary. By then, the property itself had sufficiently been remediated but contamination on the City's property still had the potential to impact Sturgeon Lake. Accordingly, in late March 2009, the Ministry issued an order against the City to take all reasonable steps to prevent discharge of the contaminant from its property. The City requested a review of this order by the Director who then confirmed the order on April 9, 2009.

The Tribunal Decisions

At the Tribunal level, the City unsuccessfully tried to argue that the clean-up order should not have been issued against an innocent party because it was unfair and contrary to the "polluter pays" principle.

In November 2009, the Tribunal granted the property owner's motion which prevented the City from leading evidence relating to the parties' fault and the reasonableness of any costs incurred in...