Polluter Pays (And Maybe Pays Your Lawyer): BC Court Of Appeal Clarifies The Law On Recovery Of Costs In Contaminated Sites Claims

• Published date: 15 July 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Lawson Lundell LLP
• Author: Mr Kinji Bourchier, Thomas D. Boyd and Jillian Epp

The British Columbia Court of Appeal has overturned previous decisions on the recoverability of legal costs associated with remediation under the Environmental Management Act ("EMA"). The decision is likely to have important ramifications on contaminated sites actions and on the role of lawyers in remediation in the future.

The EMA governs remediation (clean up) of polluted sites in B.C. and provides a mechanism for any person who remediates a contaminated site to recover their "reasonably incurred" costs of doing so from defined categories of 'responsible persons' (such as former owners or operators of the site).

In Victory Motors v Super Save¹, the Chief Justice of the Court of Appeal reversed previous case law on the legal fees of remediation. Previously, courts had found that legal costs were not recoverable as remediation costs (that is, recoverable in full). The previous analysis turned on distinctions between 'innocent' and 'responsible' parties in the EMA.²

The recent decision changes that analysis, determining recoverability by the type of cost, rather than the status of the party seeking them. The court determined that there are two categories of legal costs:

Litigation legal costs: (being the normal costs of litigation) are not remediation costs and will be dealt with under the rules of court (meaning pragmatically that only a proportion of them will be recoverable at the end of a trial because they will be subject to a tariff under court rules).

Remediation legal costs: are a new category of costs which (subject to reasonableness) ought to be fully recoverable under the EMA. The court set out specific (non-exclusive) examples of remediation legal costs:

• advising the client;
• negotiating with the government;
• creating a remediation plan;
• obtaining regulatory approvals;
• executing the remediation plan;
• investigating other responsible persons; and
• negotiating and drafting remediation agreements.

The immediate effect of this is to increase the amount that can be recovered by successful plaintiffs.

However, the new framework also creates numerous potential issues for remediating parties, suggesting that the future of recovering costs in cost-recovery actions may not be as clear-cut. Some potential issues include:

1. Excessive claims for remediation legal costs the new framework incentivizes plaintiffs to potentially 'front-load' legal work, so that activity which would usually be done as part of litigation in the normal course of a lawsuit, is done...