Just The Facts Please! A Discussion Of Limitation Periods For Environmental Claims

• Law Firm: McMillan LLP
• Subject Matter: Environment, Litigation, Mediation & Arbitration, Environmental Law, Personal Injury
• Author: Ms Talia Gordner, Ralph Cuervo-Lorens and Andrea Arbuthnot
• Published date: 06 February 2023

From having their own special limitation period exception to the distinct risks associated with continuing environmental torts, environmental claims are in a class of their own. The uniqueness of environmental claims arises in part from the fact that the subject matter of the loss or damage is often literally hidden beneath the surface of the land and requires expert investigation to not only discover the contaminants but to delineate them, determine their source and assess the extent of their impacts. This means that environmental contamination and consequential impacts may be discovered years, if not decades, after the initial contaminating incident. This circumstance is further complicated by the fact that often the responsible parties are long gone by the time a party realizes they have suffered damage.

While all claims are subject to limitation periods of some kind providing a deadline by which a party must commence a legal proceeding, the uniqueness of environmental claims requires special consideration and discussion. This Bulletin considers how limitation periods apply to environmental claims in Ontario and how to reduce the risk of missing one.

Limitation Periods in Ontario

The Ontario Limitations Act, 2002 (the "Limitations Act") provides a basic two year limitation period to commence a legal proceeding after a claim is "discovered" (see more on this key term below) and a fifteen year ultimate limitation period from the day on which the act or omission on which the claim is based took place.¹ However, there are several exceptions to the ultimate limitation period.

One of these exceptions is found in section 17 of the Limitations Act, which provides that "there is no limitation period in respect of an environmental claim that has not been discovered".² Why does this exception exist? It is very common for contamination to remain hidden below the surface before it is discovered years (even decades) later. The legislature determined that it would be unfair for parties impacted by such hidden contamination to be unable to recover their losses from the party who caused them harm because they did not know about or could not find the contamination (or its source) for over 15 years. As a result, recently discovered "legacy" contamination from decades prior is often the subject of environmental proceedings.

While environmental claims will not be automatically statute-barred if the contaminating incident or events occurred over 15 years earlier, thanks to section 17 the two year basic limitation period will start to run when a claim is discovered.

Discoverability

Section 5 of the Limitations Act sets out the test for determining when a claim is discovered. Specifically, a claim is discovered on the earlier of:

1. the day on which the person with the claim first knew: (i) that the injury, loss or damage occurred; (ii) that the injury loss or damage was caused or contributed by or contributed to by an act or omission; (iii) that the act or omission was that of the person against whom the claim is made; and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; OR
2. the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).³

Accordingly, the determination as to the discoverability of a claim is not just based on when the injured party first knew of the claim but when they reasonably ought to have known of the claim. There is no bright-line test that establishes when a party had actual knowledge of a claim. Instead, the determination is case-specific and requires consideration of the totality of the relevant factual circumstances.⁴

Note that, in contrast, discovery of a new cause of action or of...