Buyer Can’t Void Purchase Of Contaminated Land

Crosslink Bridge Corp. (Crosslink) purchased contaminated land from CN Railway (CN) in 2008 to develop a tourism, entertainment, retail and sports venue in the Niagara region. Crosslink received a box of environmental reports, including the Certificate of Requirement (also registered on title) that revealed the existence of a Ministry of the Environment Director's order relating to a risk assessment of the contamination. It was not clear, however, whether Crosslink had actually received the order. Could they void the transaction five years later, in the first case ever decided under s. 197 of the Environmental Protection Act?

Crosslink tried to void the transaction in late 2012, after an attempt to sell the land failed because of the contamination. Crosslink claimed $5.913 million from CN for the costs of purchasing, carrying, maintaining and developing the property, on the basis that it had not been provided with a copy of the Director's Order. The Court rejected Crosslink's application, concluding that Crosslink had received a copy of the Order or, in the alternative, that they were estopped from denying that they had received it.

Under s. 197 of the Environmental Protection Act, if the seller of real property fails to provide a copy of a Director's Order related to the land to the purchaser, the sale of the property is voidable at the instance of the purchaser. The key issue before the Court was whether Crosslink had actually received the Order. The Court reasoned that they must have received it, because they requisitioned the order and later advised that all requisitions had been satisfied. [emphasis added]:

[56] There is no dispute that the Certificate of Requirement was not only registered on title but was also provided to the purchasers by CN prior to closing. The Certificate of Requirement refers to the Director's Order and provided notice to the purchaser Crosslink that there was a Director's Order outstanding. However, the registration of the Certificate of Requirement is not the same as giving to the potential purchaser a copy of the Director's Order. Actual notice of Director's Order was required not only by specific direction to CN contained in the Director's Order but also by the relevant provisions of the EPA. As noted above, the Director's Order mandated disclosure of the Order by CN to any subsequent purchaser as follows: " .. ., I order you ... before dealing with the property in any way, to give a copy of this order...