BC Court Of Appeal Allows Recovery Of Legal Fees As Remediation Costs

• Published date: 11 February 2022
• Subject Matter: Environment, Litigation, Mediation & Arbitration, Environmental Law, Trials & Appeals & Compensation
• Law Firm: Miller Thomson LLP
• Author: Christie McLeod, Steven Evans and Michelle Eng

Introduction

Last year, the British Columbia Court of Appeal ("BCCA") rendered its decision in Victory Motors (Abbotsford) Ltd. v. Actton Super-Save Gas Stations Ltd., 2021 BCCA 129, providing that legal costs reasonably incurred in connection with the remediation of a contaminated site could be recoverable as "remediation costs" under section 47 of the Environmental Management Act ("EMA").

Victory Motors (Abbotsford) Ltd. ("Victory Motors") was the owner of a site from which Super-Save, Shell, and Chevron had previously operated a gas station (the "Victory Motors Site"). Over the years, contaminants had migrated from the Victory Motors Site to a commercial site owned by Jansen Industries 2010 Ltd. ("Jansen").

Consequently, Jansen commenced an action against Victory Motors, Super-Save, Shell, and Chevron, while Victory Motors commenced an action against Super-Save, Shell, and Chevron (as the former operators of the Victory Motors Site). Chevron and Shell settled the claims against them before trial, entering into a BC Ferry Agreement through which their liability was limited to a fixed amount, with Victory Motors and Jansen agreeing not to seek recovery of any damages ascribable to Chevron or Shell from any other party¹.

View a flow chart highlighting which entities Jansen and Victory Motors each sued and which claims were settled prior to trial.

At trial, Jansen and Victory Motors together claimed $150,000 in legal costs allegedly incurred in connection with the remediation of the contaminated sites. However, rather than adducing evidence to support their claim, they sought a reference to the registrar for an assessment of the costs, relying on section 47(3)(c) of the EMA.

The trial judge held that referring such a matter to the registrar was not appropriate, and dismissed the claim due to a lack of supporting evidence. Jansen and Victory Motors appealed to the BCCA.

The BCCA was then faced with two questions. Firstly, were the legal fees incurred by Jansen and Victory Motors in connection with the remediation of the contaminated sites recoverable as remediation costs? Secondly, how should responsibility for the contamination be allocated as between Super-Save and Victory Motors?

Are the appellants' legal fees recoverable as remediation costs?

While the BCCA upheld the decision to dismiss the claim due to a lack of evidence, the Court proposed for the first time that legal costs reasonably incurred in connection with the remediation of a contaminated...