Top 5 Civil Appeals From The Court Of Appeal Last Month (November 2011)

Contents

Smith v. Inco Limited (Doherty, McFarland JJ.A., and Hoy J. ad hoc) October 7, 2011 McQueen v. Echelon General Insurance Company , 2011 ONCA 649 (Gillese, Armstrong and Karakatsanis JJ.A.) October 18, 2011 Dean v. Mister Transmission (International) Ltd ., 2011 ONCA 670 (Sharpe, Armstrong and Karakatsanis JJ.A.) October 27, 2011 United Mexican States v. Cargill Incorporated (Rosenberg, Moldaver and Feldman, JJ.A.) October 4, 2011 Attis v. Ontario, 2011 ONCA 675 (Sharpe, Epstein JJ.A. and Cunningham A.C.J. ad hoc) October 31, 2011 1. Smith v. Inco Limited, 2011 ONCA 628 (Doherty, MacFarland JJ.A., and Hoy J. ad hoc), October 7, 2011

This appeal considered a July 2010 class action trial judgment, in which the trial judge held that the soil on the properties in Port Colborne contained nickel particles deposited by emissions from Inco's nearby nickel refinery. The trial judge further held that concerns about the levels of nickel in the soil caused wide-spread public concern, affecting property values after September 2000. Inco was found liable on the basis of both private nuisance and under strict liability pursuant to Rylands v. Fletcher. Damages were awarded in the amount of $36 million to the class.

Inco had operated the nickel refinery in Port Colborne from 1918 until its closure in 1984, during which time it emitted nickel oxide into the air via a 500-foot smoke stack located on its property. Nickel oxide had been found in widely varying amounts in the soil on many of the properties that are located within a several mile radius of the refinery. There was no dispute that the refinery was the source of most of the nickel in the soil, even though Inco did not operate its refinery unlawfully or negligently at any time. Indeed, the trial evidence demonstrated that Inco had complied with the various environmental and governmental regulatory schemes applicable to its refinery operation.

The class was comprised of all individuals who have, since September 2000, owned residential property within an area that takes up the majority of Port Colborne, consisting of approximately 7,000 properties. The only claim at trial related to a diminution in property values. Allegations that nickel deposits caused adverse health effects had been abandoned prior to trial.

In granting the appeal, the Court of Appeal analyzed the common law of nuisance, which is the means by which to balance the competing interests between one person's lawful and reasonable use of his property that may indirectly harm or interfere and another person's ability to use and enjoy his own property. "Nuisance", unlike "negligence", does not focus on the defendant's conduct which may be quite reasonable but still cause an unreasonable interference with a neighbouring property.

The plaintiffs did not assert that the nickel particles caused any interference with their use or enjoyment of the property; rather, the sole claim was that the nickel particulars caused physical injury to the property and a subsequent adverse effect on the value of the land.

The Court of Appeal held that a mere chemical alteration in the content of the soil, without more, does not amount to physical harm or damage to the property. The trial judge erred in finding that the nickel particles caused actual substantial physical damage to the claimants' lands. Had the claimants shown that the nickel levels in the properties posed a risk to health, they would have established that those particles caused actual substantial physical damage. In rejecting the claims, the Court of Appeal also noted that "the claims as advanced and as accepted by the trial judge were not predicated on any actual risk to health".

Rylands v. Fletcher, a case learned in law school and infrequently revisited thereafter, is given thorough treatment by the Court of Appeal. As expressed by the Court of Appeal itself, "Rylands v. Fletcher has gone largely unnoticed in appellate courts in recent years".

As a result of its analysis, the Court of Appeal pronounced that strict liability, further to a Rylands v. Fletcher analysis based exclusively on the "extra-hazardous" nature of a defendant's conduct, should not be part of the common law in Ontario. In so finding, the Court of Appeal expressly rejected contentions put forward by Allen M. Linden and Bruce Feldthusen in their text Canadian Tort Law, 8th Edition, which had been adopted at trial. Perhaps with an eye to a possible application for leave to appeal to the Supreme Court of Canada, however, the Court of Appeal noted that, even if strict liability for extra-hazardous activities were part of the law in Ontario, the class of claimants failed to prove...