British Columbia Court Of Appeal Adheres To 'Polluter Pay' Principle

On November 20, 2015, the British Columbia Court of Appeal ("BCCA") demonstrated a steadfast adherence to the "polluter pays" principle underlying the Environmental Management Act (the "EMA"), by dismissing the appeal in JI Properties Inc v PPG Architectural Coatings Canada Ltd, 2015 BCCA 472. The BCCA decision concerned the allocation of liability for the cost of the environmental remediation of a small island (the "Island"), located just off the Saanich peninsula that was the site of an explosives manufacturing plant for most of the 20th century. Portions of the Island were contaminated with lead, mercury, trinitrotoluene, dinitrotoluene, and other hazardous substances.

PPG Architectural Coatings, originally known as ICI Canada Inc. ("ICI"), owned the Island and operated the explosives plant from 1954 to 1985. After ICI closed down the plant, it made remediation attempts on the Island. As there were no prescribed standards for remediation at the time, ICI consulted with the Ministry of Environment ("MOE") to determine the allowable levels of pollutants. The MOE issued a "comfort letter" acknowledging that ICI had remediated the polluted portions of the Island to the agreed upon levels, and stated that it did not perceive any further environmental concern. ICI then registered a restrictive covenant on the Island, prohibiting any owner from using the industrial areas for residential purposes.

JI Properties ("JIP") acquired the Island in 1994 with knowledge of the restrictive covenant, the contamination, and the Island's history as an explosives plant. Subsequently, the Waste Management Act (a statutory predecessor to the EMA) and Contaminated Sites Regulation ("CSR") came into force. This regulatory scheme provided specific standards for allowable contamination, and established how liability for contamination is allocated and apportioned. From 2004 to 2006, JIP further remediated the contaminated areas on the Island to meet the newly prescribed standards, and then, in 2009, JIP brought a lawsuit against ICI under the EMA to recover its remediation costs from ICI.

Supreme Court Decision

At the trial of the lawsuit, the British Columbia Supreme Court ("BCSC") ordered ICI to pay JIP $4.75 million as compensation for the costs of remediation. The trial judge ruled both JIP and ICI were "responsible persons" under the EMA, but allocated 100% of the liability to ICI. For a more detailed account of the findings at the BCSC, see our earlier post on...