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Ontario Superior Court of Justice Decision in Port Colborne Class Action

26-Jul-10

On July 6, 2010, the Ontario Superior Court of Justice ordered Inco Limited (Inco) to pay $36 million to past and present property owners of Port Colborne, Ontario.

This large award was to compensate landowners for the reduction of their property values due to nickel contamination caused by Inco’s nickel refinery, which deposited nickel and other metal particles onto the soil of surrounding properties for 60 years until operations were ceased in 1984. Liability was found against Inco based on the legal doctrine from Rylands v. Fletcher, whereby a land user is strictly liable for any damage caused by failing to prevent the escape of a dangerous substance, regardless of whether precautionary measures were taken.

While several novel issues arose during this environmental class action, the court’s finding with respect to the timing of the action, given the historical nature of the contamination, has the potential to be the most far-reaching aspect of the decision.

Pursuant to the Ontario Limitations Act, claims based on the Rylands v. Fletcher doctrine must be brought within six years. Inco argued since the refinery ceased operating in 1984, the limitations period expired in 1990. However, the trial judge rejected Inco’s argument finding that a limitations period starts only when the injured party becomes aware, or ought to become aware, of the damage.

It was only after the Ministry of the Environment released a phytotoxicological study quantifying the nickel soil contamination that real estate agents operating in Port Colborne started to include clauses regarding nickel soil contamination into the agreements of purchase and sale. Before that property owners could not be deemed to be aware of the impact nickel soil contamination may have on property values. The trial judge, therefore, found that the limitations period started on February 15, 2000, and the action against Inco was not time barred.

This decision, although potentially subject to appeal, means that even actions for long-standing contamination may not be barred by the passage of time.

We will be watching how this matter unfolds and comment on future developments.

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