



COURT OF APPEAL FOR ONTARIO

CITATION: Midwest Properties Ltd. v. Thordarson, 2015 ONCA
    819

DATE: 20151127

DOCKET: C56758

Feldman, Hourigan and Benotto JJ.A.

BETWEEN

Midwest Properties Ltd.

Plaintiff (Appellant)

and

John Thordarson and Thorco Contracting Limited

Defendants (Respondents)

Evert Van Woudenberg, for the appellant

Frank Zechner and Christopher Du Vernet, for the
    respondents

Sandra Nishikawa and Isabelle
    OConnor, for the intervener Minister of the Environment and Climate Change

Heard: June 1, 2015

On appeal from the judgment of Justice Andra Pollak of
    the Superior Court of Justice, dated February 28, 2013, with reasons reported
    at 2013 ONSC 775, 73 C.E.L.R. (3d) 303.

Hourigan J.A.:

A.

Overview

[1]

The appellant, Midwest Properties Ltd. (Midwest), and the respondent,
    Thorco Contracting Limited (Thorco), own adjoining properties in an
    industrial area of Toronto.

[2]

Thorco has stored large volumes of waste petroleum hydrocarbons (PHC)
    on its property for several decades. As a result of Thorcos storage practices,
    PHC has contaminated the soil and groundwater on its property. From 1988-2011,
    Thorco was in almost constant breach of its license and/or compliance orders
    issued by the Ontario government ministry now known as the Ministry of the
    Environment and Climate Change (the MOE).

[3]

Groundwater flows from Thorcos property into Midwests property, and
    this has contaminated the latter with significant concentrations of PHC.
    Midwest discovered the contamination after it acquired its property in December
    2007. Midwest sued Thorco and its owner, John Thordarson, relying upon three
    causes of action: breach of s. 99(2) of the
Environmental Protection Act
,
    R.S.O. 1990, c. E.19 (the 
EPA
), nuisance, and negligence.

[4]

The trial judge held that the respondents were not liable under any of
    the causes of action. She found that Midwest failed to prove that it had
    suffered damages, in particular because it had not proven that the PHC
    contamination lowered the value of its property. In addition, she ruled that
    because the MOE had already ordered the respondents to remediate Midwests
    property, a remedy under s. 99(2) was not available to Midwest. In that regard,
    the trial judge found that the
EPA
should not be interpreted in an expansive
    manner that might permit double recovery.

[5]

Midwest appeals and seeks judgment for the cost to remediate its
    property, approximately $1.3 million. The MOE intervenes in this appeal to
    contest the trial judges finding that its order to remediate precludes
    recovery under s. 99(2) of the
EPA
.

[6]

In my view, the trial judge erred in her interpretation and application
    of the private right of action contained in s. 99(2) of the
EPA
. This
    private right of action was enacted over 35 years ago and is designed to
    overcome the inherent limitations in the common law in order to provide an
    effective process for restitution to parties whose property has been
    contaminated. The trial judges interpretation of the section is inconsistent
    with the plain language and context of this provision; it undermines the
    legislative objective of establishing a distinct ground of liability for
    polluters. This is remedial legislation that should be construed purposively.
    It is important that courts not thwart the will of the Legislature by imposing
    additional requirements for compensation that are not contained in the statute.

[7]

The trial judge also erred in law in concluding that Midwest could not
    succeed in nuisance or negligence because it was unable to prove damage, and in
    her assessment of punitive damages, as in my view the conduct of the
    respondents in the circumstances clearly merits a punitive award.

[8]

For the reasons that follow, I would allow the appeal and grant judgment
    to Midwest.

B.

Facts

(1)

Background

[9]

Midwest acquired the industrially-zoned property and building located at
    285 Midwest Road in Toronto in 2007. It or a related company uses 285 Midwest
    for the manufacture and distribution of clothing. Prior to its purchase of 285
    Midwest, Midwest obtained a Phase I Environmental Audit on the property from TS
    Environmental Services, primarily consisting of a visual inspection of the
    property to identify any potential contamination. At that time, Midwest did not
    have the soil or groundwater at the property tested for contamination as the
    Phase I report indicated that a Phase II report was not required.

[10]

Mr.
    Thordarson has controlled Thorco since 1969. Thorco acquired 1700 Midland
    Avenue in 1973. On the approximately 1.1 acre property, Thorcos business
    activities related to the servicing of petroleum handling equipment and the
    lining of tanks, and as a corollary to this business, Thorco began storing
    various materials and wastes on the property in 1974.

[11]

After
    purchasing 285 Midwest, Midwest became interested in acquiring all or part of the
    adjoining property at 1700 Midland to expand its operations. Mr. Thordarson
    provided Midwest with two reports on the property by XCG Consultants Ltd.: a
    Phase I Environmental Site Assessment completed in 1999, and an update of that
    report completed in 2001. He also gave Midwest permission to access 1700
    Midland for further environmental study. As it was aware that PHC storage was
    taking place at 1700 Midland, Midwest hired Pinchin Environmental Ltd. to
    conduct both Phase I and Phase II environmental studies on the property. These
    reports disclosed PHC contamination at 1700 Midland.

(2)

PHC Storage and Contamination at 1700 Midland

[12]

Thorco
    had been storing waste PHC, among other things, on 1700 Midland since 1974, but
    only applied for a Certificate of Approval from the MOE to store wastes on the
    property in 1983. In 1988, the MOE issued a Certificate of Approval allowing
    for two storage tanks, 56 drums, and the storage of 22,520 gallons of waste. Mr.
    Thordarsons evidence at trial revealed that, even in 1988, the amount of waste
    PHC stored on the property well exceeded 22,520 gallons.

[13]

By
    1996, according to a Field Observation Report from the MOE, Thorco was
    exceeding its Certificate of Approval by 53,000 gallons and was not storing the
    waste material according to MOE guidelines. At that time, an MOE Field Order
    was issued requiring Thorco to remove the excess waste, store the waste
    material on its property according to MOE guidelines, and immediately cease
    accepting waste at 1700 Midland until the conditions in the 1988 Certificate of
    Approval were satisfied.

[14]

Another
    Field Observation Report noted in 1997 that: This site has been out of
    compliance with Certificate of Approval  dated April 18, 1988 since its
    issuance. To date, there has not been satisfactory progress by Thorco
    Contracting Ltd. to bring this site into compliance. That report further noted
    that, at that time, Thorco had approximately 38 tanks and bins containing
    material, along with an undisclosed number of drums containing heavy sludge
    or oily water, and approximately 85,496 gallons of waste on its property.
    Thorco was again ordered to, among other things, dispose of excess waste, store
    waste properly, and stop accepting more waste. Thorco was also ordered to submit
    financial assurance in the amount of $85,496 to the MOE.

[15]

Thorcos
    first report obtained from XCG Consultants reveals that, by 1999, there were
    approximately 420,000 litres (roughly 111,000 gallons) of waste PHC on 1700
    Midland, stored in 20 above ground storage tanks.

[16]

In
    2000, Thorco and Mr. Thordarson were convicted by the Ontario Court (Provincial
    Division) of
EPA
offences, including counts of failing to dispose of
    all wastes in excess of the maximum permitted quantities specified in the
    Certificate of Approval obtained in 1988, failing to submit financial assurance
    in the amount of $85,496 to the MOE, and failing to ensure the proper storage
    of materials on 1700 Midland. A court order issued, ordering, among other
    things, the removal of significant quantities of oil and water, solid catalyst,
    and oil sludge, and requiring compliance with the 1988 Certificate of Approval.

[17]

Thorcos
    updated report from XCG Consultants shows that as of August 2001, Thorco had
    only reduced its inventory to approximately 172,000 litres (roughly 45,000
    gallons). Mr. Thordarsons evidence at trial was that he began to wind down the
    business operations of Thorco in 2002. A Provincial Officer Report of the MOE
    notes that as of March 2003, wastes were still not being stored in compliance
    with the 1988 Certificate of Approval, and that approximately 15 tonnes of
    hydrocarbon sludge remained on site in violation of the order of the Ontario
    Court (Provincial Division). In 2008, while further MOE inspections revealed
    that Thorco and Mr. Thordarson had significantly reduced the volume of waste on
    site, a report indicated that, Most notable, is the Companys continual
    reluctance to store subject waste properly, so as to prevent spills to the
    natural environment. The companys storage of subject waste and chemical
    storage poses a significant risk of impairing the natural environment.

[18]

A
    new MOE order issued in 2008, and while some improvements had been made by
    2009, approximately 10,000 litres of waste remained in non-approved storage tanks.
    As of January 4, 2011, all liquid waste had been removed from 1700 Midland, but
    during that year concerns still remained about a waste storage pit on the
    property, unsecured against the infiltration of precipitation, that continued
    to generate oily water.

[19]

All
    indications, from the 2000 court order and numerous MOE reports, are that PHC
    was entering the ground at 1700 Midland for many years, if not decades. The
    court order stated that several containers were not secured against the
    infiltration of precipitation, were of questionable integrity, and were even leaking
    oily water. An MOE inspection report in 2008 noted many risks that the
    materials on site would contaminate the environment, or were already doing so.
    Among other things, that report noted the following:

·

At the time of inspection, oily water was spilling from the
    opening of tank #44 to the ground.

·

A second tank  had an access hatch cut into the side of the
    tank. [w]aste oily water was also level with the tank opening. The tank
    contents were also slowly leaking to the ground at the time of inspection.

·

A mini roll-off bin was observed in the south-east portion of
    the yard. The bin contained full pails of paints, solvents, sealants and
    various other waste chemicals. The bin was full of stormwater and was
    overflowing to the ground at the time of inspection.

·

Pooled stormwater saturated the southern portion of the site
    adjacent to the Outdoor Storage Pit. A light sheen was evident on the surface
    of this stormwater. Cross contamination with oil from the outdoor storage pit
    is highly likely.
Risk of off-site movement is probable.
 [Emphasis in
    original.]

[20]

Officer
    Mitchell of the MOE, the author of the reports beginning in 2008, testified at
    trial that during one inspection in 2008 he observed an outdoor waste
    processing pit in which waste furnace oil had breached a containment structure
    and mixed with storm water immediately adjacent to 285 Midwest. That processing
    pit was, in Officer Mitchells words, absolutely kind of the worst way of
    holding back waste, hydrocarbon, fuel, oil and the such. He further testified
    at trial that the storage practices at 1700 Midland were probably some of the
    worst I have seen. His 2011 report notes that, Many years of processing oily
    waste in this unapproved manner has resulting in ongoing petroleum hydrocarbon
    spills to the surrounding soils. Soil samples collected outside the pit
    confirm the presence of petroleum hydrocarbons. Significantly, the summary
    section of that report notes the following:

The outdoor waste processing pit has been the source of a spill
    of petroleum hydrocarbons to the natural environment. This was confirmed on
    September 7, 2011 as grab samples collected in and around the waste processing
    pit confirm the presence of petroleum hydrocarbons. The release of petroleum
    hydrocarbons in this manner may cause an adverse effect.

[21]

The
    Phase II Environmental Site Assessment of 1700 Midland, commissioned by Midwest
    and completed by Pinchin Environmental, confirmed the contamination of the
    property when measurements were taken in 2008. Pinchin Environmental drilled
    several monitoring wells at various locations on both 1700 Midland and 285
    Midwest to conduct its environmental studies. The measurements taken at these
    wells were partly concerned with measuring the concentration of PHC fractions
    in the groundwater and soil.

[22]

The
    2011 MOE standards broke PHC into different fractions: F1 to F4. These
    fractions differ based on the number of carbon atoms in the molecules, and
    indicate the volatility and mobility of the PHC: F1 is volatile and mobile,
    whereas F4 is not. More volatile fractions get into the air and pose a risk to
    human health, and the MOE standards reflect this difference, with less strict
    standards for higher fractions.

[23]

On
    1700 Midland, six monitoring wells showed results that exceeded MOE standards
    for PHC in groundwater. Two monitoring wells showed results that exceeded MOE
    standards for PHC in soil.

(3)

PHC Contamination at 285 Midwest

[24]

Learning
    of the contamination at 1700 Midland from the Pinchin Environmental studies,
    Midwest then obtained a Phase II report on its own property. This report and
    subsequent studies revealed PHC contamination of the soil and groundwater at
    285 Midwest that exceeded MOE guidelines.

[25]

Measured
    from 2008 to 2012, the concentrations of several PHC fractions exceeded MOE
    standards at a number of monitoring wells on 285 Midwest. At two locations, monitoring
    wells 101 and 102, free product, pure hydrocarbon, or free phase
    hydrocarbon was observed in 2011 and 2012. The appearance of free product
    indicates that the PHC concentration at that location was so high that the PHC
    could no longer remain entirely dissolved in groundwater. Monitoring well 106,
    installed inside the building at 285 Midwest, detected an F2 fraction exceeding
    MOE standards. Midwests expert testified at trial that this result indicated a
    risk that volatile PHC could enter the building and pose a health risk to the
    occupants.

[26]

Moreover,
    evidence at trial established that the situation at 285 Midwest was getting
    worse over time. While tests of monitoring well 101 in 2011, and monitoring
    well 102 in 2008, showed that the PHC was still dissolved in groundwater, tests
    of these same monitoring wells revealed free product in monitoring well 101 in
    2012, and in monitoring well 102 in 2011. Midwests expert testified that the
    discovery of free product PHC indicated that conditions at 285 Midwest were much
    worse than previously thought.

(4)

Financial Impact of PHC Contamination on Midwest

[27]

Three
    experts on environmental assessment gave expert evidence at trial on the
    financial impact of PHC contamination: Andy Vanin and Robert Tossell, of
    Pinchin Environmental, for Midwest, and Thomas Kolodziej, of XCG Consultants,
    for the respondents.

[28]

Mr.
    Vanin was qualified as an expert on environmental site assessment, but stated
    that he also had expertise in whether a mortgage lender would finance a
    contaminated property. He testified that the owner of a property contaminated
    with PHC has two concerns: (1) potential third-party liability as a result of
    offsite migration through groundwater, and (2) diminution of the value of the
    property and the ability to use the property as collateral. He continued, this
    is not a property that any lender would probably want in their books.

[29]

Mr.
    Tossell was qualified as an expert in environmental assessment and
    rehabilitation, and agreed that he did not profess to be an expert in corporate
    finance matters, mortgaging or corporate lending, [or] banking practices. He
    testified that [a]ny contaminated property comes with stigma that reduces the
    interest of some prospective purchasers, and that if you want to sell your
    property its likely youre going to have to comply with MOE standards. On
    cross-examination, Mr. Tossell stated that a property owner could have trouble
    getting financing for contaminated property.

[30]

Mr.
    Kolodziej acknowledged that the willingness of a prospective purchaser of land
    possibly contaminated with PHC, even after successfully completing a risk
    assessment, depends on the risk tolerance of the potential buyer. According
    to him, some buyers thrive on properties with a risk assessment attached to
    find a better deal.

[31]

Midwests
    expert evidence was that the reasonable costs of remediating 285 Midwest would
    be $1,328,000. Mr. Tossell testified that removing pure phase hydrocarbon is
    a challenge to a remediator. Further migration of free product to 285 Midwest
    would be more expensive to deal with. On behalf of the respondents, Mr. Kolodziej
    opined that Midwests expert estimates were high and that its difficult
    really to judge, because there was not enough data to make such a
    far-reaching or so definite or absolute statements as far as the costs. The
    respondents did not, however, lead positive evidence on the costs of
    remediating 285 Midwest.

(5)

The MOE Order to Remediate 285 Midwest

[32]

On
    January 16, 2012, Officer Mitchell issued a report which noted, in part, the
    following:

An Environmental Subsurface Investigation and Restoration
    Program needs to be conducted to delineate the full vertical and horizontal
    extent of petroleum hydrocarbons spilled near the Waste Processing Pit. The
    Environmental Subsurface Investigation and Restoration Program shall include a
    plan to restore the natural environment in accordance with section 93(1) of the
    EPA.

[33]

This
    report was followed by an order, issued on January 19, 2012, including the
    following directives to Thorco and Mr. Thordarson:

·

the Orderees shall retain the services of one or more Qualified
    Person(s) to prepare and complete an Environmental Subsurface Investigation and
    Restoration Program.

·

provide written confirmation to the undersigned Provincial
    Officer that the Qualified Person(s) have been retained.

·

provide a written copy of the proposed Environmental Subsurface
    Investigation and Restoration Program for the Site to the undersigned
    Provincial Officer for written acceptance.

·

Within 30 days of receiving written acceptance by the
    undersigned Provincial Officer, implement the Environmental Subsurface
    Investigation and Restoration Program at the site.

[34]

At
    trial, Officer Mitchell was asked whether that order applied only to 1700
    Midland. He replied: No. That was intended to basically go wherever they
    believe or demonstrated the contamination to go to. He further testified that
    he believed that, based on his previous experience at the site, the
    contamination had likely moved south towards 285 Midwest. Finally, he testified
    that, while Thorco and Mr. Thordarson had done some things required by the
    order at the time of trial, the work was not being done within the specified
    timeframes and that, as a result, Thorco and Mr. Thordarson were in breach of
    the order.

[35]

The
    trial judge found, at para. 20 of her reasons, that the respondents had in fact
    been ordered to remediate 285 Midwest.

[36]

As
    of the date of the appeal, no work had been undertaken by Thorco and Mr. Thordarson
    to remediate 285 Midwest.

C.

Reasons for Decision of the Trial Judge

[37]

The
    trial judge accepted, at para. 8, Midwests expert evidence establishing that
    groundwater would flow from 1700 Midland onto 285 Midwest, and that as a
    result, the known contamination at 1700 Midland would migrate onto, and has
    contaminated, 285 Midwest. She rejected, at para. 9, the respondents
    submission that the contamination at 285 Midwest could have been caused by
    another property. She found, however, that There is  no evidence as to when
    such contamination has occurred.

[38]

The
    trial judge dismissed Midwests claim under s. 99(2) of the
EPA
. She
    referred to the discussion of damages under s. 99(2) in
Mortgage Insurance
    Co. of Canada v. Innisfil Landfill Corp.
(1996), 2 C.P.C. (4th) 143 (Ont.
    Gen. Div.), at para. 11, noting that the court in that case had not referred to
    the type of damages claimed by Midwest (namely, the fact that MOE standards
    were exceeded at certain locations on the property), nor had it addressed
    damages for the cost of remediation. She noted, at para. 20, that the MOE had
    already ordered the respondents to remediate 285 Midwest and that the
EPA
cannot be interpreted  in an expansive manner that allows damages contemplated
    by section 99 to include damages for the cost of remediation in circumstances
    where such remediation has already been ordered under the
EPA
.

[39]

The
    trial judge rejected, at para. 22, Midwests arguments that it should not have
    to wait an excessive amount of time for its property to be remediated under the
    MOE order, and that there was no guarantee that the property would actually be
    remediated by the respondents under the MOE order, on the basis that there was
    no evidence before the court as to how long remediation would take. She further
    held that an award of damages equivalent to the cost of remediation in these
    circumstances would create the opportunity for double recovery if the property
    were subsequently remediated in accordance with the MOE order. Finally, the
    trial judge held, at para. 23, that Midwest had not introduced evidence of loss
    or damage required under s. 99(2)(a)(i), such as actual loss in property value,
    inability to use or operate its business on the property, or business losses.

[40]

The
    trial judge dismissed Midwests nuisance claim on the basis that it had failed
    to prove damages. She noted, at para. 27, that, because there was no evidence
    of the environmental state of 285 Midwest at the time it was acquired in 2007,
    Midwest could not prove that there was any chemical alteration in the soil and
    groundwater on its property. She held that Midwest would have to prove that
    there was an increase in the contamination level of the property. The trial
    judge also dismissed Midwests negligence claim on the basis that Midwest had
    failed to prove damages. Finally, the trial judge dismissed Midwests claim for
    punitive damages.

D.

Issues

[41]

This
    appeal raises the following issues:


(i)

Did the trial judge err in finding that recovery under s. 99(2) of the
EPA
is precluded where the MOE has ordered a defendant to remediate a plaintiffs
    land?


(ii)

Did the trial judge err in finding that no compensable loss or damage
    under s. 99(2) of the
EPA
was established in the circumstances of this
    case?

(iii)

Is Mr. Thordarson personally liable under the
EPA
?

(iv)

Did the trial judge err in dismissing the nuisance and negligence
    claims?


(v)

Did the trial judge err in dismissing the claim for punitive damages?

E.

Analysis

(i)

Interaction Between the MOE Order and the s. 99 Claim

[42]

Midwest
    brought a claim against the respondents under s. 99(2) of the
EPA
,
    which provides:

(2) Her Majesty in right of Ontario or in right of Canada or
    any other person has the right to compensation,

(a) for loss or damage incurred as a
    direct result of,

(i) the spill of a pollutant that
    causes or is likely to cause an adverse effect,

(ii) the exercise of any authority
    under subsection 100 (1) or the carrying out of or attempting to carry out a
    duty imposed or an order or direction made under this Part, or

(iii) neglect or default in carrying
    out a duty imposed or an order or direction made under this Part;

(b) for all reasonable cost and
    expense incurred in respect of carrying out or attempting to carry out an order
    or direction under this Part,

from the owner of the pollutant and the person having control
    of the pollutant.

[43]

In
    my view, the trial judges interpretation of s. 99(2) is inconsistent with the
    wording of the legislation and with binding authority on the proper
    interpretive approach to the
EPA
. Moreover, having regard to the
    history and purpose of the statutory private right of action found in s. 99(2),
    it is clear that her interpretation is also inconsistent with its purpose.

[44]

I
    turn first to the history of this part of the
EPA
. Section 99(2) is
    found in Part X of the
EPA
, which was introduced in 1979 and
    proclaimed into force on November 29, 1985. There is very little case law interpreting
    s. 99(2), and none of the reported cases have addressed the purpose of this
    provision in any depth. However, the legislative context and background provide
    some guidance as to the provisions objective. Part X, which is commonly
    referred to as the Spills Bill, is aimed at two main goals.

[45]

The
    first goal is to minimize the harm caused through the discharge of pollutants
    by requiring prompt reporting and clean-up by the party that owned or
    controlled the pollutant, regardless of fault. The second goal is to ensure
    that parties that suffer damage through the discharge of pollutants are
    compensated by establishing a statutory right to recovery from parties that
    owned and controlled the pollutant: Mario D. Faieta et al.,
Environmental
    Harm: Civil Actions and Compensation
(Markham, ON: Butterworths, 1996), at
    p. 144. These objectives, and others, were stated expressly by the Hon. Dr.
    Harry Parrot, then Minister of the Environment, on the introduction of a
    revised Bill 24,
An Act to amend the Environmental Protection Act, 1971
,
    into the Legislature: Ontario, Legislative Assembly,
Official Report of
    Debates (Hansard)
, 31st Parl., 3rd Sess., No. 8 (27 March 1979), at p.
    255.

[46]

An
    early commentator understood Part X to superimpose liability over the common
    law, where intent, fault, reasonable use, escape, extent of damage, duty of
    care and foreseeability are not an issue. Rather, the ownership and control of
    the spill pollutant is the primary question: J.W. Harbell, Common Law
    Liability for Spills, in Stanley M. Makuch, ed.,
The Spills Bill: Duties,
    Rights and Compensation
(Toronto: Butterworths, 1986), at p. 25. This is
    consistent with the Minister of the Environments comments at the introduction
    of the revised bill, where he noted that one of the intentions of the bill was To
    establish liability for compensation for damage resulting from a spill and for
    the cost of cleanup
which clarifies and extends the right to compensation at
    common law
 (emphasis added).

[47]

The
    Minister of Environment also made the following comments on first reading of
    the bill that eventually became Part X:

I believe those who create the risk should pay for restoration
    as a reasonable condition of doing business; it is not up to an innocent party
    whose land or property has been damaged. At present, persons manufacturing and
    handling contaminants are not legally responsible in the absence of fault or
    other legal ground of liability.
Common law and the existing provisions of
    the Environmental Protection Act are inadequate
in spelling out the
    necessary procedures to control and clean up spills and restore the natural
    environment.

Ontario, Legislative Assembly,
Official Report of
    Debates (Hansard)
, 31st Parl., 2nd Sess., No. 151 (14 December 1978), at
    p. 6178. [Emphasis added.]

[48]

The
    modern principle of statutory interpretation requires that courts read
    legislative provisions in their entire context and in their grammatical and
    ordinary sense harmoniously with the scheme of the Act, the object of the Act,
    and the intention of Parliament:
Bell ExpressVu Ltd. Partnership v. Rex
,
    2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.

[49]

In
    my view, the trial judges interpretation undermines the legislative objective
    of establishing a separate, distinct ground of liability for polluters. It
    permits a polluter to avoid its no-fault obligation to pay damages solely on
    the basis that a remediation order is extant. The purposes of the
EPA
would
    be frustrated if a defendant could use an MOE order as a shield. Such an
    interpretation would also discourage civil proceedings, and may even discourage
    MOE officials from issuing remediation orders for fear of blocking a civil
    suit.

[50]

In
    addition to violating the general rules of statutory interpretation, the trial
    judges interpretation of s. 99(2) is also inconsistent with the specific
    principles applicable to interpretation of the
EPA
. The trial judge
    stated explicitly, at para. 20 of her reasons, that s. 99(2) should
    not be interpreted expansively. This is inconsistent with the interpretive
    approach to the
EPA
mandated by the Supreme Court of Canada.

[51]

In
R. v. Consolidated Maybrun Mines Ltd.
, [1998] 1 S.C.R. 706, at para.
    54, the Supreme Court held that the preventative and remedial purposes of the
EPA
must be borne in mind in interpreting the scheme and procedures established by
    the Act. Similarly, in
R. v. Castonguay Blasting Ltd.
, 2013 SCC 52,
    [2013] 3 S.C.R. 323, at para. 9, the Supreme Court held as follows:

The
EPA
is Ontarios principal environmental
    protection statute. Its status as remedial legislation entitles it to a
    generous interpretation (
Legislation Act
, 2006, S.O. 2006, c. 21, Sch.
    F, s. 64;
R. v. Canadian Pacific Ltd.
, [1995] 2 S.C.R. 1031 (S.C.C.),
    at para. 84). ...
[E]nvironmental legislation embraces an expansive approach
to ensure that it can adequately respond to a wide variety of environmentally
    harmful scenarios, including ones which might not have been foreseen by the
    drafters of the legislation. Because the legislature is pursuing the objective
    of environmental protection, its intended reach is wide and deep. [Emphasis
    added, citations removed.]

[52]

The
    trial judges interpretation of s. 99(2) is also inconsistent with the plain
    language and context of this provision. It ignores the fact that under the
EPA
,
    a person can, as a result of a spill, be subject to various remedial or
    preventative orders. These consequences are complementary, not exclusive of one
    another.

[53]

There
    is no language in s. 99(2) to support the trial judges conclusion that a party
    cannot advance a claim under this section if the owner or party in control of
    the pollutant is already subject to an MOE order. On the contrary, s. 99(2)(a)(iii)
    specifically provides for recovery of loss or damage incurred as a result of a
    defendants neglect or default in carrying out its obligations under the
EPA
.
    These obligations under the
EPA
 must include obligations imposed
    under a remediation order. Consequently, it is clear that an MOE order and
    recovery under s. 99(2) are not mutually exclusive.

[54]

The
    trial judge was concerned that an award of remediation damages under s. 99
    could permit Midwest to achieve double recovery: Midwest cannot be entitled to
    a double recovery arising from the same legislation, which would result if
    their property is remediated pursuant to the MOE order and this Court
    concurrently awards a sum equivalent to Midwests proposed remediation (para. 22).

[55]

Given
    the fact that the respondents have not cleaned up their property, or 285
    Midwest, since being ordered to do so in 2012, I believe the chances of them
    now moving with alacrity to remediate the property before Midwest takes its
    remediation action is remote. In my view, the possibility of double recovery
    should not prevent an order for damages for the remediation of contaminated
    property under s. 99(2) where the MOE has already ordered the remediation of
    the property. In any event, the MOE intervened in this appeal and agreed that it
    would be forced to redirect its remediation order in the event that the respondents
    were ordered to pay remediation damages to Midwest. Therefore, the potential
    for double recovery in this case has been eliminated.

(ii)

Failure to Prove Damages

[56]

The
    trial judge also dismissed, at para. 23, Midwests s. 99(2) claim on the ground
    that it did not introduce evidence of damage or loss pursuant to section 99 of
    the
EPA
, such as actual loss in property value or its inability to use
    its property or operate its business on its property, or business losses. The
    respondents assert three arguments in support of the trial judges conclusion
    on damages.

[57]

First,
    the respondents argue that any damages awarded to Midwest should be measured by
    the diminution in the value of Midwests property rather than by the cost of
    remediation.

[58]

The
    respondents note that, while Mr. Vanin and Mr. Tossell suggested that there
    would be negative financial impacts from the contamination, neither was
    qualified as an expert in mortgages or property valuation. Midwest also did not
    tender any appraisal reports or property valuations. Therefore, the respondents
    submit that there is no basis to conclude that the value of Midwests property has
    been adversely affected, and accordingly, no basis on which to award damages.

[59]

I
    would not give effect to these arguments.

[60]

There
    is a significant debate in the case law about whether diminution in value or
    restoration costs is the appropriate measure of damages in cases of
    environmental harm: see Faieta et al., at p. 293.

[61]

At
    common law, the traditional view was that damages for any type of injury to
    property should be measured by the diminution in value caused by the injury:
    see
Hosking v. Phillips
(1848), 154 E.R. 801, 3 Exch. Rep. 168 (Eng.
    Ex. Ct.). More recently, courts have awarded damages based on restoration
    costs, even if those costs exceed the amount of the decrease in property value:
    see Katherine M. van Rensburg, Deconstructing
Tridan
: A Litigators
    Perspective (2004) 15 J. Envtl. L. & Prac. 85, at p. 89; see e.g.
Jens
    v. Mannix Co.
(1978), 89 D.L.R. (3d) 351 (B.C.S.C.);
Horne v. New
    Glasgow
, [1954] 1 D.L.R. 832 (N.S.S.C.).

[62]

The
    restoration approach is superior, from an environmental perspective, to the
    diminution in value approach. Since the cost of restoration may exceed the
    value of the property, an award based on diminution of value may not adequately
    fund clean-up: Bruce Pardy,
Environmental Law: A Guide to Concepts
(Markham, ON: Butterworths, 1996), at p. 223.

[63]

In
    its
Report on Damages for Environmental Harm
, the Ontario Law Reform
    Commission canvassed a number of methods for calculating damages. Ultimately,
    it recommended the adoption of methodologies, like the restoration approach,
    that best ensure that the environment is returned to its pre-contaminated
    condition: Ontario Law Reform Commission,
Report on Damages for
    Environmental Harm
(Toronto: Ontario Law Reform Commission, 1990), at
    p. 56. The Commission concluded, at p. 55, that the ultimate goal of the
    courts should be to ensure that the environment is put in the same position
    after the mishap as it was before the injury.

[64]

Two
    relatively recent cases reflect the trend toward awarding remediation damages. In
Tridan Developments Ltd. v. Shell Canada Products Ltd.
(2000), 35
    R.P.R. (3d) 141 (S.C.), affd (2002), 57 O.R. (3d) 503 (C.A.), leave to appeal
    refused, 177 O.A.C. 399 (note), a property neighbouring a gas station was
    contaminated with gasoline after a leak in a fuel line. Since the defendant
    polluter admitted liability, the only issue at trial was the assessment of
    damages. The plaintiff sought to recover the cost of returning its property to pristine
    condition. It also claimed stigma damages measured as the diminution in the
    value of its property. The defendant argued that the plaintiff had suffered no
    damages due to the spill, or that alternatively, its damages should be limited
    to the cost of remediating the property to the MOEs minimum standards. The
    trial judge awarded damages as requested by the plaintiff. On appeal, this
    court overturned the stigma damage award but upheld the trial judges decision
    to order damages for the cost of future remediation.

[65]

The
    respondents argue
Tridan
does not apply because the defendant in that
    case admitted it was liable. There is no merit in this argument. The damages
    analysis in
Tridan
is relevant regardless of whether liability was
    admitted or found by the court.

[66]

The
    second case is
Canadian Tire Real Estate Ltd. v. Huron Concrete Supply Ltd.
,
    2014 ONSC 288, 88 C.E.L.R. (3d) 93. It also involved PHC contamination by a
    neighbour. Justice Leitch ordered the defendant to pay $3.6 million, which was
    the estimated cost for future remediation, as damages for nuisance, negligence,
    trespass and strict liability. She found that this award would place the
    plaintiff in the position it was in prior to the tortious conduct.

[67]

Neither
Tridan
nor
Canadian Tire
involved a claim under s. 99(2) of
    the
EPA
. There is no reported case where a court has awarded damages
    for the cost of future remediation under this section. Nonetheless, in my view,
    awarding damages under s. 99(2) based on restoration cost rather than
    diminution in property value is more consistent with the objectives of
    environmental protection and remediation that underlie this provision.

[68]

This
    approach to damages reflects the polluter pays principle, which provides that
    whenever possible, the party that causes pollution should pay for remediation,
    compensation, and prevention: see Pardy, at p. 187. As the Supreme Court has
    noted, the polluter pays principle has become firmly entrenched in
    environmental law in Canada:
Imperial Oil Ltd. v. Quebec (Minister of the
    Environment)
, 2003 SCC 58, [2003] 2 S.C.R. 624, at para. 23. In imposing
    strict liability on polluters by focusing on only the issues of who owns and
    controls the pollutant, Part X of the
EPA
, which includes s. 99(2), is
    effectively a statutory codification of this principle.

[69]

Further,
    a plain reading of s. 99(2) of the
EPA
suggests that parties are
    entitled to recover the full cost of remediation from polluters. Pursuant to s. 99(2)(a),
    a party is entitled to recover all loss or damage resulting from the spill. Section
    99(1) provides that loss or damage includes personal injury, loss of life,
    loss of use or enjoyment of property and pecuniary loss, including loss of
    income. Section 99(2)(b) provides that a party has a right to compensation for
    all reasonable cost and expense incurred in respect of carrying out or
    attempting to carry out an order or direction under this Part, from the owner
    of the pollutant and the person having control of the pollutant. In my view,
    under either part of s. 99(2), polluters must reimburse other parties for
    costs they incur in remediating contamination.

[70]

In
    summary, restricting damages to the diminution in the value of property is
    contrary to the wording of the
EPA
, the trend in the common law to
    award restorative damages, the polluter pays principle, and the whole purpose
    of the enactment of Part X of the
EPA
. It would indeed be a remarkable
    result if legislation enacted to provide a new statutory cause of action to
    innocent parties who have suffered contamination of their property did not
    permit the party to recover the costs of remediating their property, given the
EPA
s
    broad and important goals of protecting and restoring the natural environment.

[71]

The
    second argument advanced by the respondents is that compensation under s. 99(2)
    is dependent upon the establishment of an actionable nuisance, which requires
    proof of physical injury to the land or substantial interference with the use
    or enjoyment of the land in order to claim damages. In support of that position
    they rely upon the decision of this court in
Hollick v. Metropolitan
    Toronto
(1999), 46 O.R. (3d) 257 (C.A.), affd 2001 SCC 68, [2001] 3
    S.C.R. 158.

[72]

According
    to the respondents, there was no such evidence before the court. They say the
    fact that certain contaminants exceed MOE standards is not evidence of physical
    harm to the property. They also argue that there was no evidence tendered of
    health risks, impacts to individuals at Midwests property, or interference
    with potable water.

[73]

I
    am not persuaded that, in order to succeed in its claim under s. 99(2), Midwest
    is required to prove an actionable nuisance. As noted above, the purpose of
    enacting s. 99(2) was to provide a flexible statutory cause of action that
    superimposed liability over the common law. In so doing, the Legislature
    recognized the inherent limitations of the common law torts of nuisance and
    negligence. This new cause of action eliminated in a stroke such issues as
    intent, fault, duty of care, and foreseeability, and granted property owners a
    new and powerful tool to seek compensation.

[74]

The
    interpretation urged upon us by the respondents, that under this new cause of
    action a plaintiff could only recover if it could first prove that the
    defendants conduct constituted a nuisance at common law, is entirely
    incongruous with the purpose of the enactment of s. 99(2). The Legislature is
    presumed to know the law. If the Legislature wanted to define the new cause of
    action in a manner consistent with the existing common law of nuisance it could
    have done so. It did not.

[75]

I
    am also not persuaded that
Hollick
is authority for the proposition
    that proof of common law nuisance is a prerequisite for a claim under s. 99.
    The issue in that case was whether a putative class action should be certified.
    The plaintiff had pleaded nuisance, negligence,
Rylands v. Fletcher
,
    and s. 99 of the
EPA
. While Carthy J.A. indicated that No one of
    these claims can be established unless a nuisance is proved, in my view, this
    comment should be taken as indicating that the claims in the proceeding were
    dependent on the proof of an underlying nuisance in the colloquial sense.

[76]

In
Hollick
the court was not dealing with the merits of a s. 99 claim, but
    instead considering whether there were sufficient common issues to justify class
    certification. Ultimately, the court concluded that there were not because
    there was not sufficient commonality on the issues relating to the source and
    impact of the pollution. In contrast, in this case there is no issue that there
    was a spill of a pollutant as that term is defined in s. 91(1) and that the
    spill caused an adverse effect by, among other things, causing damage to
    property as defined in s. 1(1).

[77]

Third,
    the respondents argue that Midwest has not demonstrated that its property was
    clean when it was purchased in December 2007. They say that the time at which
    the property was contaminated is relevant to the application of the
Limitations
    Act
,
2002
, S.O. 2002, c. 24, Sch. B. The respondents submit that
    Midwest has an obligation to establish that the contamination occurred within
    the two year limitation period and that, in the case of an ongoing
    contamination, they are only responsible for pollution that is proven by
    Midwest to have occurred during that period (i.e. two years).

[78]

I
    would not give effect to this argument. First, the respondents ignore s. 17 of
    the
Limitations Act, 2002
, which provides that There is no limitation
    period in respect of an environmental claim that has not been discovered. Here
    there is no question that Midwest commenced its action within two years of
    buying the property and discovering the contamination.

[79]

Second,
    the respondents are not absolved from liability under s. 99(2) on the basis
    that Midwest cannot state what level of contamination occurred before and after
    they purchased the property. There is no requirement under the
EPA
for
    them to do so. Further, the respondents should not be able to use their lengthy
    history of pollution and non-compliance as a shield to limit the amount of
    damages they now owe.

[80]

For
    the foregoing reasons, I would find that the trial judge erred in law in her
    conclusion that Midwest had not proven recoverable damages under s. 99 of the
EPA
.
    As noted above, there is really no dispute on the evidence regarding the costs
    of the remediation. Midwest led expert evidence that the reasonable costs of
    remediating its property would be $1,328,000 and the respondents, while
    challenging that expert evidence, did not lead positive evidence on the costs
    of remediating Midwests property. In my view, the future remediation costs for
    Midwests property are recoverable and Midwest is entitled to judgment for the
    full amount of its estimated costs, being $1,328,000.

(iii)

Personal Liability Under the
EPA

[81]

The
    trial judge found that the respondents were not liable under the
EPA
.
    Understandably, she did not consider whether Mr. Thordarson had any personal
    liability under the statute. Given my conclusions above regarding the
EPA
,
    the issue of personal liability now arises.

[82]

Section
    99(2) of the
EPA
establishes a right to compensation from the owner
    of the pollutant and the person having control of the pollutant. The term owner
    of the pollutant is defined in s. 91(1) as the owner of the pollutant
    immediately before the first discharge of the pollutant, whether into the
    natural environment or not, in a quantity or with a quality abnormal at the
    location where the discharge occurs. Thorco falls squarely within this
    definition.

[83]

Mr.
    Thordarson relies on the corporate veil principle set out by this court in
ScotiaMcLeod
    Inc. v. Peoples Jewellers Limited
(1995), 26 O.R. (3d) 481 (C.A.), at
    paras. 25-26, to argue that he is not personally liable. I disagree.

[84]

Section
    99(2) provides that an action lies against the owner of the pollutant and the
    person who controls the pollutant. Person having control of a pollutant is
    defined in s. 91(1) as the person and the persons employee or agent, if any,
    having the charge, management or control of a pollutant immediately before the
    first discharge of the pollutant, whether into the natural environment or not,
    in a quantity or with a quality abnormal at the location where the discharge
    occurs. This definition, and the use of the word and in s. 99(2), indicates
    that the party or entity that owns the pollutant and the person or people,
    including employees and agents, who manage or control the pollutant can all be held
    liable under this provision. In other words, parties with control of a pollutant
    cannot rely on separate ownership of the pollutant to shield themselves from
    liability.

[85]

The
    question remains whether Mr. Thordarson had control of the PHC. Mr.
    Thordarson is Thorcos principal, and had sole control of Thorco during the
    relevant time period. As noted above, Thorco owned the PHC.

[86]

There
    are two reported cases involving claims against corporate principals, directors
    or officers under s. 99(2). In
Bisson v. Brunette Holdings Ltd.
(1993), 15 C.E.L.R. (N.S.) 201 (Ont. Gen. Div.), the plaintiffs brought an
    action under s. 99(2) against a neighbouring gas station and the person
    who was its principal shareholder, manager, and president, after gasoline
    leaked onto their property. Although the individual defendant was ultimately
    able to rely on the due diligence defence in s. 99(3), the court found, at
    para. 32, that he had the charge, management, and control of the gasoline, on
    the companys behalf, immediately prior to its escape, and that therefore he
    falls squarely within the definition in s. 91(1) of a person having
    control of a pollutant.

[87]

On
    the other hand, in
United Canadian Malt Ltd. v. Outboard Marine Corp. of
    Canada Ltd.
(2000), 48 O.R. (3d) 352 (S.C.), s. 99(2) claims against
    current and former directors of the corporate defendant and its American parent
    company were struck on the ground that the pleaded facts did not suggest these
    individuals had charge, management or control of the pollutants. The individual
    defendants only became embroiled in the issues after the contamination problem
    was found to exist, and subsequently with respect to the attempts to remedy the
    problem (para. 32).

[88]

These
    cases make clear that a finding that a corporate principal, director, or
    officer is a person having control of a pollutant will be dependent on the
    factual circumstances of the case. In my view, the present case is similar to
Bisson
.
Like the corporate defendant in
Bisson
,
    Thorco is a small business whose day-to-day operations are effectively
    controlled by one personMr. Thordarson. His evidence at trial established
    that it was he who applied for the Certificate of Approval from the MOE and
    that he was responsible for both the material being brought on to 1700 Midland
    and its storage on the property.

[89]

In
    light of the evidence and the similarities to
Bisson
, in this case Mr. Thordarson
    had control of the PHC for the purpose of s. 99(2). As for the allocation of
    damages between Thorco and Mr. Thordarson, s. 99(8) provides that liability
    under s. 99(2) is joint and several.

(iv)

Nuisance and Negligence Claims

[90]

Given
    that the compensatory damages sought under the common law causes of action are
    the same as those sought under the
EPA
, it is unnecessary to decide
    the issue of whether the trial judge erred in dismissing the appellants claims
    in nuisance and negligence in order to determine the entitlement of the
    appellant to compensatory damages. However, the issue becomes relevant to the
    question of the availability of punitive damages because this court has held
    that where a statutory cause of action provides for compensatory damages only,
    a court cannot award punitive damages, which are, by their nature,
    non-compensatory: see
Lord (Litigation Guardian of) v. Downer
(1999),
    125 O.A.C. 168 (C.A.). Thus, in order to determine whether punitive damages are
    available it is necessary to first decide whether the trial judge erred in
    dismissing the nuisance and negligence claims.

[91]

The
    trial judge dismissed Midwests nuisance claim on the basis that it had failed
    to prove damages. She noted that, because there was no evidence of the
    environmental state of 285 Midwest at the time it was acquired in 2007, Midwest
    could not prove that there was any chemical alteration in the soil and
    groundwater on its property. She held that Midwest would have to prove that
    there was an increase in the contamination level of the property. The trial
    judge then cited
Innisfil Landfill
, where the court approved, at para.
    9, of the following statements of law:

Actual damage must be proven to succeed in nuisance. No
    special damages (for alleged devaluation of property) can be advanced on the
    basis of mere speculation that a prospective purchaser might be apprehensive
    about the impact of the alleged nuisance on the property. An interference with
    the health of the plaintiffs thereby interfering with their enjoyment of the
    lands would fall within the essence of nuisance.

[92]

She
    further cited
Smith v. Inco Ltd.
, 2011 ONCA 628, 107 O.R. (3d) 321,
    leave to appeal refused, [2012] 1 S.C.R. xii (note), in part for the
    proposition that:

[A]ctual, substantial, physical damage to the land in the
    context of this case refers to nickel levels that at least posed some risk to
    the health or wellbeing of the residents of those properties. Evidence that the
    existence of the nickel particles in the soil generated concerns about
    potential health risks does not, in our view, amount to evidence that the
    presence of the particles in the soil caused actual, substantial harm or damage
    to the property. The claimants failed to establish actual, substantial,
    physical damage to their properties as a result of the nickel particles
    becoming part of the soil. Without actual, substantial, physical harm, the
    nuisance claim as framed by the claimants could not succeed.

[93]

The
    trial judge then concluded that Midwest had not proven damage in nuisance.

[94]

The
    trial judge also dismissed Midwests negligence claim on the basis that it had
    failed to prove damage. She referred again to
Mortgage Insurance Co. of Canada
,
    at para. 9, for the proposition that, A fundamental requirement of negligence
    is the constituent element of there being shown actual damage suffered by the
    plaintiff as a result of the defendants breach of a duty of care towards the
    plaintiff.

[95]

The
    respondents submit that the trial judge was correct in dismissing both causes
    of action. They argue the fact that certain contaminants in the soil exceed the
    relevant MOE guidelines is not evidence of physical harm or damage to the
    property. The latter cannot be inferred from the former; evidence of actual
    harm or interference with use is required.

[96]

The
    respondents further submit that there is no evidence of any impairment of the
    use that the appellant is making of its property, no harm or material
    discomfort to any person, no adverse impact on the health of any person, no
    evidence that the property is unfit for continued use as a
    commercial/industrial property for the manufacture of clothing, and no evidence
    of interference with the normal conduct of business at the property.

[97]

With
    respect to the financial impact of the contamination, the respondents submit
    that while Mr. Vanin and Mr. Tossell suggested that there would be a negative
    financial impact, neither of those expert witnesses was qualified as an expert
    in mortgages, property valuation or property appraisals.

[98]

In
    my view, the trial judge erred in dismissing these claims on the basis that
    damage had not been established. There was uncontradicted evidence at trial that
    established a diminution in the value of the appellants property and a human
    health risk. Nowhere in her reasons did the trial judge consider the evidence.
    Instead she made findings that damage had not been established without
    reference to the evidence at trial.

[99]

With
    respect to property values, Messrs. Vanin and Tossell testified that PHC
    contamination would lower the value of property and/or make it more difficult
    to obtain financing. Although not professional appraisers, they were experts in
    the environmental assessment of realty. They have expert knowledge of the
    relationship between particular contaminants and their general effect on property
    values. While the experts did not quantify the loss, quantification of damages
    is not required to establish that Midwest has suffered damage compensable under
    the law of nuisance and negligence.

[100]

With respect to health
    risks, Mr. Tossell testified that the F1 and F2 fractions for PHC are volatile
    and constitute a risk to human health and the environment. Soil and groundwater
    sampling at 285 Midwest showed results which exceeded the permitted
    concentrations at several locations on the property. Monitoring well 106,
    installed underneath the building at 285 Midwest to assess the condition for
    the occupants of the building, showed an F2 reading over the MOE limit. Mr.
    Tossell testified that there is a risk that the volatile PHC will get into the
    building and that this is a potential health risk to the occupants.

[101]

The fact that
    the contamination of the property with PHC presented a health risk to the
    employees of Midwest is evidence of physical and material harm or injury to the
    property. Again we are not concerned with the quantification of the loss,
    because any damages would be subsumed in the compensatory damages awarded under
    the
EPA
. The point is that there was uncontradicted evidence that the
    appellant had suffered damage in terms of physical and material harm or injury
    to the property and diminution in the value of its property.

[102]

This situation
    is distinguishable from the facts in
Inco
where there was nickel
    contamination but no evidence that the change in the chemical composition of
    the soil posed any health risk to the occupants or diminished the value of the
    plaintiffs property at the time of the contamination.

[103]

The respondents
    also submit that the trial judge was correct in finding that damage had not
    been established because Midwest could not prove that there had been any
    contamination after it acquired its property. This conclusion is unsupportable
    because it is contrary to the evidence regarding the worsening condition of 285
    Midwest.

[104]

There was
    uncontradicted evidence that after December 2007 there was a qualitative
    difference in the PHC contamination. In monitoring well 102, free product was
    not detected in 2008, but was detected in 2011; in monitoring well 101, free
    product was not detected in 2011 but was detected in 2012. The evidence of Mr.
    Tossell was that it was more expensive and challenging for a remediator to
    remove free product. Thus the evidence established that the PHC contamination
    grew worse and more expensive to fix after the appellant acquired 285 Midwest
    in 2007.

[105]

In my view, the
    trial judge erred in dismissing the claims in nuisance and negligence on the
    basis that the appellant had not established any damage. There was
    uncontradicted evidence that supported a finding that damage had been suffered.
    The trial judge committed a palpable and overriding error in not considering
    that evidence and in reaching the unsupported finding that damage had not been
    proven.

[106]

It is also clear
    that the other elements of the torts of nuisance and negligence are made out on
    the facts of this case. Nuisance is a substantial and unreasonable interference
    with the plaintiffs use or enjoyment of land:
Antrim Truck Centre Ltd. v.
    Ontario (Transportation)
, 2013 SCC 13, [2013] 1 S.C.R. 594, at para. 18.
    While the jurisprudence prior to
Antrim
established that physical or
    material harm to land was presumptively unreasonable, in
Antrim
the
    Supreme Court held, at para. 51, that the reasonableness of the interference
    must be assessed in all cases. The court, however, also held that where actual
    physical damage is at issue, the reasonableness analysis will likely be brief:
Antrim
,
    at para. 50.

[107]

Such is the case
    here. The invasion of PHC onto Midwests property, to the point that the
    product is of such a concentration that it can no longer dissolve in
    groundwater and is found to pose a risk to human health, cannot be classified
    as trivial, insubstantial, or reasonable. The interference becomes all the more
    unreasonable when the significant cost to Midwest to remediate the
    contamination and undo the damage to the soil and groundwater on its property
    is considered. This is not the kind of interference with the use or enjoyment
    of property that society, through the law of nuisance, expects a property owner
    such as Midwest to bear in the name of being a good neighbour.

[108]

Midwests claim
    in negligence is also made out. Beyond proof of damage, to succeed in a
    negligence action, the plaintiff must demonstrate that the defendant owed it a
    duty of care, that the defendant breached the standard of care, and that the
    damage was caused, legally and factually, by that breach:
Mustapha v.
    Culligan of Canada Ltd.
, 2008 SCC 27, [2008] 2 S.C.R. 114, at para. 3.

[109]

A landowner owes
    a duty to adjoining landowners to avoid acts or omissions that may cause harm
    to those adjoining landowners:
Canadian Tire
, at para. 299. There can
    be no serious suggestion on the facts of this case that Thorco actually
    complied with the standard of care expected of a reasonable landowner. The
    evidence established that the respondents were never in compliance with the
    Certificate of Approval issued by the MOE in 1988 with respect to the limits on
    waste material or required storage practices. On the contrary, excessive
    amounts of waste materials were stored on 1700 Midland in conditions that easily
    allowed the contents to be infiltrated by rainwater and escape to the natural environment.

[110]

The trial judge
    found, at paras. 8-9 of her reasons, that the expert evidence established that
    the contamination at 285 Midwest was caused by the migration of the known
    contamination at 1700 Midland, through the flow of groundwater, onto 285 Midwest.

[111]

While the
    respondents were only convicted of failing to comply with an MOE order once,
    the series of reports from Officer Mitchell, beginning in 2008, disclose a
    repeated pattern of what can only be described as utter disregard for the
    effect that the deficient storage practices of chemicals stored on the property
    could have on the surrounding environment, including 285 Midwest.

[112]

In conclusion,
    the appellant established an entitlement to damages under both nuisance and
    negligence. The trial judge erred in dismissing these claims.

[113]

Mr. Thordarson
    cannot rely on the corporate veil principle in
ScotiaMcLeod
to avoid
    personal liability for the commission of these torts. It is well-established in
    the law of Ontario that employees, officers and directors will be held
    personally liable for tortious conduct causing physical injury, property
    damage, or a nuisance even when their actions are pursuant to their duties to
    the corporation:
ADGA Systems International Ltd. v. Valcom Ltd.
(1999), 43 O.R. (3d) 101 (C.A.), at para. 26.

[114]

As noted above,
    Thorco is a small business whose day-to-day operations are effectively
    controlled by Mr. Thordarson, and there is no question that he was intimately
    and equally involved in the conduct which was both a nuisance and negligent.

[115]

The following passage
    from
Desrosiers v. Sullivan
(1986), 76 N.B.R. (2d) 271 (C.A.), leave
    to appeal refused, 79 N.B.R. (2d) 90 (note), has often been quoted and is
    equally applicable in the circumstances of this case:

The question here is whether Mr. Sullivan, who was the manager
    and principal employee of the company that committed the nuisance, may be
    responsible along with the company.  I see no reason why, because of his
    involvement in creating and maintaining the nuisance, Mr. Sullivan should not
    also be responsible.  Here, as the trial Judge found, Mr. Sullivan was the
    principal employee of the company and the person responsible for its day-to-day
    operations and on that basis he was responsible for both creating and
    maintaining the nuisance.



The question here, as I have pointed out, is not whether Mr.
    Sullivan was acting on behalf of or even if he was the company, but whether a
    legal barrier, here a company, can be erected between a person found to be a
    wrongdoer and an injured party thereby relieving the wrongdoer of his
    liability.  In my opinion, once it is determined that a person breaches a duty
    owed to neighbouring landowners not to interfere with their reasonable
    enjoyment of their property, liability may be imposed on him and he may not
    escape by saying that as well as being a wrongdoer he is also a company manager
    or employee.

[116]

As a result, I
    would hold Thorco and Mr. Thordarson jointly and severally liable to Midwest.

(v)

Punitive Damages

[117]

The trial judge
    held, at para. 36 of her reasons, that an award of punitive damages would be
    made only in exceptional cases for malicious, oppressive and high-handed
    misconduct that offends the courts sense of decency. She further noted that
    findings that the respondents conduct was wrong in law, caused or permitted
    the deposit of contaminants onto 285 Midwest, or caused damage, would be
    insufficient to warrant an award of punitive damages.

[118]

The trial judge
    distinguished one case cited by Midwest,
Deumo v. Fitzpatrick
(2008),
    39 C.E.L.R. (3d) 299 (Ont. S.C.), where the conduct of the defendant was reckless,
    destructive, persistent, pervasive and heedless of their neighbours physical
    integrity and property rights, concluding that the evidence in the present
    case did not support such a finding.

[119]

Midwest submits
    that punitive damages should be awarded where conduct is high-handed,
    malicious, arbitrary or highly reprehensible, and in cases where a defendant
    consciously, deliberately, and callously disregards a neighbours rights. They
    argue that the respondents conduct was severe, lasted decades, had a profit
    motive, and was undeterred by MOE orders.

[120]

The respondents
    submit that punitive damages are exceptional and Midwest has not demonstrated
    that the respondents behaviour was malicious or otherwise deserving of
    punishment, particularly during the relevant period of time contemplated by the
Limitations Act, 2002
. Their position is that mere contamination of
    Midwests property is not a sufficient basis to ground a punitive damages
    claim.

[121]

In my view, the
    trial judge erred in law in concluding that an award of punitive damages was
    not appropriate in this case. The general objectives of punitive damages are to
    punish, to deter, and to denounce a defendants conduct:
Whiten v. Pilot
    Insurance Co.
, 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 68. An award of
    punitive damages should be rationally connected to one of these objectives:
Whiten
,
    at para. 71. Factors relevant to determining the rational limits of a punitive
    damage award include whether the defendant persisted in the conduct over a
    lengthy period of time, whether the defendant was aware that what he or she was
    doing was wrong, and whether the defendant profited from the conduct:
Whiten
,
    at para. 113.

[122]

On the facts of
    this case a punitive damages award was clearly warranted. Thorcos history of
    non-compliance with its Certificate of Approval and MOE orders, and its utter
    indifference to the environmental condition of its property and surrounding
    areas, including Lake Ontario, demonstrates a wanton disregard for its
    environmental obligations. This conduct has continued for decades and is
    clearly driven by profit. Mr. Thordarson testified at trial that one of the
    reasons he did not comply with the 22,520 gallon limit on waste in the Certificate
    of Approval, when that certificate was issued in 1988, was that he was not
    aware of an economical way of doing so.

[123]

The 1999 report
    from XCG Consultants informed the respondents that it would cost approximately
    $43,000 to dispose of the inventory of PHC and catalyst at the property, and
    recommended that soil and groundwater should be investigated to assess
    potential soil impacts and rule out groundwater impacts on-site. Thorco and
    Mr. Thordarson made a business decision not to invest this modest sum, or
    conduct further investigations. Instead they permitted the level of
    contamination and the costs of remediation to increase exponentially.

[124]

This is the type
    of conduct by a defendant that warrants punitive sanction by the court. I would
    award Midwest punitive damages in the amounts of $50,000 against Thorco and
    $50,000 against Mr. Thordarson.

F.

Disposition

[125]

I would allow
    the appeal, set aside the judgment of the trial judge and substitute judgment
    against both respondents jointly and severally for $1,328,000 in damages under
    s. 99 of the
EPA
. Given that the respondents are liable in nuisance
    and negligence, I would also award Midwest $50,000 in punitive damages against each
    of the respondents.

[126]

With respect to
    costs of the appeal, Midwest sought costs on a partial indemnity scale of
    $74,894 and the respondents sought costs on that scale of $56,250. Midwest as
    the successful party is entitled to its costs, which I would fix at $70,000,
    inclusive of all fees, disbursements and applicable taxes. With respect to the
    trial costs, at the conclusion of the appeal the parties were unable to agree
    on the quantum of costs awarded at trial or what the appropriate quantum of
    Midwests costs of the trial would be if it were successful on this appeal. In my
    view, given the result of the appeal, Midwest is also entitled to its costs of
    the trial. If the parties are unable to agree on these costs, they may file
    brief written submissions on costs within 10 days of the release of these
    reasons.

Released: November 27, 2015 KF              C. W. Hourigan
    J.A.

I
    agree K. Feldman J.A.

I
    agree M.L. Benotto J.A.


