Court Of Appeal Expands Recovery Of Legal Costs In Contaminated Sites Litigation

• Published date: 15 July 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Clark Wilson LLP
• Author: Mr Brent Meckling and Kim Brown

The recent decision of the British Columbia Court of Appeal ("BCCA") in Victory Motors (Abbotsford) Ltd. v. Actton Super-Save Gas Stations Ltd.,¹ provides important clarification of the law pertaining to the recovery of legal costs reasonably incurred during the remediation of contaminated sites under the Environmental Management Act² ("EMA") and the Contaminated Sites Regulation.³ Prior to this decision, plaintiffs were generally thought to be limited to the recovery of legal costs that were incurred during the litigation process itself as assessed under the Supreme Court Civil Rules.⁴ The BCCA has now confirmed that remediating parties may claim both litigation legal costs and legal costs incurred throughout the actual remediation of the contaminated site.

The Facts

Jansen Industries 2010 Ltd. ("Jansen Ltd.") owned two commercial properties adjacent to a site owned by Victory Motors (Abbotsford Ltd.) ("Victory Motors"). Numerous gas stations historically occupied Victory Motors' premises, including Accton Super-Save Gas Stations Ltd. and Phil Van Enterprises Ltd., a company controlled by Super-Save Gas (Collectively, "Super-Save"), Shell Canada Ltd. ("Shell"), and Chevron Canada Ltd. ("Chevron"). For over forty years, contaminants migrated from the Victory Motors site to the Jansen Ltd. sites. The contamination was exacerbated by Victory Motors' failure to remove buried gasoline storage tanks since 1994.

On August 7, 2011, Jansen Ltd. commenced an action against Victory Motors after discovering the contamination. Jansen Ltd. then purchased all shares of Victory Motors on advantageous terms, and had direct control over both sites and the corresponding litigation. After undergoing remediation, Jansen Ltd. and Victory Motors were each issued Certificates of Compliance under the EMA. On October 31, 2012, Victory Motors and Jansen Ltd. commenced an action against Super-Save, Shell, and Chevron for recovery of the remediation costs and legal fees of approximately $400,000 and $150,000, respectively. Victory Motors further claimed the costs of removing the gasoline storage tanks, loss of rental income during the remediation period, and potential costs incurred as a result of future litigation.

The plaintiffs settled their claims with Chevron and Shell and went to trial against Super-Save. No evidence was led to particularize the legal expenses. Rather, the plaintiffs sought reference to the Registrar for an assessment of costs, relying on section 47(3)(c) of...