



COURT OF APPEAL FOR ONTARIO

CITATION: Donleavy v. Ultramar Ltd., 2019 ONCA 687

DATE: 20190904

DOCKET: C64817 & C64813

Rouleau, van Rensburg and Benotto JJ.A.

DOCKET: C64817

BETWEEN

Sheila Donleavy and Kenneth Edwards

Plaintiffs

(Respondents/

Appellants by way of Cross-Appeal)

and

Ultramar Ltd.

Defendant

(Appellant/

Respondent by way of Cross-Appeal)

and

Kilpatrick Fuels
    Limited and Joe Burns

Defendants

(Respondents by way of Cross-Appeal)

DOCKET: C64813

AND BETWEEN

Sheila Donleavy and Kenneth Edwards

Plaintiffs

(Respondents)

and

Ultramar
    Ltd.

Defendant

and

Kilpatrick Fuels Limited and Joe Burns

Defendants

(Appellants)

David Zuber and James Tausendfreund, for the appellants/respondents
    by way of cross-appeal, Kilpatrick Fuels Limited and Joe Burns

Todd J. Burke and Benoit M. Duchesne for the appellant/respondent
    by way of cross-appeal, Ultramar Ltd.

S. Daniel Baldwin and R. Steven Baldwin, for the respondents/
    appellants by way of cross-appeal, Sheila Donleavy and Kenneth Edwards

Heard: January 23, 2019

On appeal from the judgment
    of Justice Sylvia Corthorn of the Superior Court of Justice, dated December 14,
    2017, with reasons reported at 2017 ONSC 7438.

van Rensburg J.A.:

OVERVIEW

[1]

Sheila Donleavy and Kenneth Edwards (together the respondents),
    commenced an action against Kilpatrick Fuels Ltd. and its employee, Joe Burns,
    (together Kilpatrick) and Ultramar Ltd. (Ultramar), as a result of a fuel
    oil spill at their home in June 2008. Ultramar supplied oil to the respondents
    fuel oil tank on at least 23 occasions. Kilpatrick inspected the tank three times,
    including prior to the first delivery of oil in 2002.

[2]

The tank was approved for indoor use and marked as such. Its
    installation and use outdoors contravened regulatory requirements. The tank
    failed due to corrosion from the inside out.

[3]

The principal issues at trial were whether Kilpatrick and
    Ultramar were negligent; whether such negligence caused, at law, the fuel oil
    spill; and the degree of respective fault of the parties, including whether
    there was contributory negligence. Although the bulk of the damages were agreed
    ($750,000 for the subrogated interest of the homeowners insurer), there was
    also a dispute about the respondents claim for additional damages, including a
    claim for lost rental income.

[4]

The trial judge found Kilpatrick and Ultramar liable for the discharge,
    but she also found contributory negligence on the part of the respondents. Both
    appellants admitted various breaches of the applicable regulations. Ultramars
    witness testified that Ultramar would not have supplied oil to the
    non-compliant tank, had it been aware that this was an indoor tank installed
    outdoors. Mr. Burns, the Kilpatrick employee who conducted the initial
    inspection, acknowledged that the tank should have been tagged and identified
    for removal. The trial judge found, among other things, that the appellants
    failed to discharge their obligations to the respondents to inspect the tank
    and to identify this deficiency before the oil supply commenced. She also found
    that the respondents failed to discharge their obligations as owners to
    maintain the tank. The trial judge apportioned 40% liability to the
    respondents, and 60% liability to Ultramar, one half of which it was entitled
    to recover from Kilpatrick on its crossclaim. She awarded a total of $30,000
    for the respondents general non-pecuniary damages and dismissed their claim
    for lost rental income.

[5]

Kilpatrick and Ultramar (together the appellants) appealed. Although
    each appellant raises a number of other issues, the thrust of their appeals is that
    the trial judge erred in applying the material contribution test for
    causation. They say that, even if they were in breach of various regulatory
    obligations, they did not meet the but for test in relation to the damages
    caused by the fuel oil spill. Ultramar also attacks certain aspects of the
    trial judges liability findings, and both appellants take issue with her
    allocation of liability. In the cross-appeal, the respondents challenge, among
    other things, the finding of contributory negligence and the treatment of their
    claims for damages.

[6]

For the reasons that follow, I would dismiss the appeals and the
    cross-appeal.

FACTS

The Events at the Donleavy Home

[7]

In 2002, Sheila Donleavy purchased a house in Rideau Ferry, near Perth,
    Ontario. Her partner, Kenneth Edwards, moved into the home in 2006. In January
    2008, they rented the house to another couple and moved into an addition to the
    house. The renters were living in the main house when the oil spill occurred in
    June 2008.

[8]

A 900-litre fuel oil tank of an unknown age was located outdoors when
    Ms. Donleavy purchased the house in 2002. The tank bore an Underwriters
    Laboratories of Canada (ULC) label reading INSIDE TANK FOR OIL BURNER FUEL.
    This meant that the tank was manufactured for indoor use only. There was no
    legible date of manufacture on the ULC label, simply 19_9. The evidence at
    trial was that the tank was most likely manufactured in 1979 or 1989.

[9]

Ultramar supplied oil throughout the relevant period, first under
    a fuel oil delivery contract with Ms. Donleavy, and then, starting in January
    2008, under contract to the tenant, Edward Noftall.  There were at least 23
    deliveries of fuel oil by an Ultramar subcontractor, Glenn Nesbitt, with the
    last delivery on May 1, 2008, about one month before the fuel oil spill.

[10]

A comprehensive inspection of the tank by the fuel oil supplier
    (Ultramar) was required before supply could commence. The objective of the
    inspection was to determine whether the tank complied with the regulatory
    regime then in force so as to permit fuel oil to be delivered to the tank. The
    inspection was performed by Ultramars subcontractor, Kilpatrick, under a
    burner service contract. The burner service contract was in place between 2002
    and 2004, and provided for Kilpatrick to carry out any service required on an
    Ultramar customers fuel oil-burning heating equipment during the contract
    period, including inspections of oil tanks for Ultramars new customers.

[11]

On October 1, 2002, Joe Burns, a Kilpatrick employee, and
    licensed oil burner technician (OBT), visited the Donleavy property to
    conduct the pre-delivery inspection of the tank. The tank inspection report was
    on a form for an indoor tank and Mr. Burns stated that the tank was from the
    1990s. However, in the inspection reports submitted to Ultramar, Mr. Burns
    failed to indicate the year of manufacture of the tank (or that he was unable
    to determine this information) or that the tank was labelled for indoor use and
    installed outdoors. Although there were a number of deficiencies, the tank
    inspection report identified only two elements of non-compliance with the
    regime: that the tank rested on wood and that a new oil gauge was needed.

[12]

Mr. Burns issued a no charge Ultramar invoice to Ms. Donleavy (this
    time indicating that the tank was outside and showing 1996 as its age), which
    indicated that the tank was on wood and that a new oil gauge was needed and
    then stated Everything else up to Code!, even though Mr. Burns had checked
    the box indicating that the tank was installed outdoors. As noted, the
    applicable regulations prohibited the outdoor installation of a fuel oil tank
    manufactured for indoor use.

[13]

On October 8, 2002, another Kilpatrick employee, also an OBT, David
    Hitchcock, conducted a follow up visit. The invoice prepared that day recorded
    the age of the tank as more than 20 years, that the technician had lifted
    oil tank and removed old wood underneath and replaced with patio stones, ran
    new line; and stated: Tank now up to Code  B139, section 14. (As noted
    below, B-139 is a reference to the Installation Code for Oil-Burning
    Equipment.)

[14]

Ultramar received the reports and invoices from Kilpatrick, did
    not identify any problems, and proceeded with the fuel oil supply. Ultramars
    subcontractor, Glenn Nesbitt, made at least 23 deliveries of fuel oil between
    October 2002 and June 2008, when the oil spill was discovered. Although on every
    delivery a visual inspection of the tank was required, at no time did Mr. Nesbitt
    notify Ultramar that the tank, though installed outdoors, was labelled for
    indoor use. Nor did he communicate any other concerns in relation to the tank.

[15]

On March 9, 2007, following a no-heat call made by Mr. Edwards
    directly to Kilpatrick, a Kilpatrick employee attended at the residence. The
    employee replaced the blower motor and capacitor but did not inspect the fuel oil
    tank.

[16]

On June 6, 2008, Mr. Edwards met with a sales associate from
    Stinson Propane, Thomas Carmichael, to discuss the possibility of converting to
    propane heat. On that occasion, Mr. Edwards noticed that the tank was approximately
    half-full.

[17]

On June 12, 2008, Mr. Edwards received a call from Mr. Noftall,
    the tenant of the house, saying there was no oil in the tank. Mr. Edwards
    walked around the tank and noticed the oil spill, including discolouration of
    the soil, dead flowers near the tank, and a drip of oil from the bottom of the
    tank.

[18]

There was no issue at trial (or on appeal) about the physical
    cause of the tank failure and oil discharge. Stein Pedersen, a professional
    engineer and metallurgist who testified for the respondents as an expert
    witness, tested the tank after it failed, and determined that the tank corroded
    from the inside out because of water that accumulated in the bottom of the
    tank. The corrosion caused a hole in the bottom of the tank from which the oil
    leaked.

[19]

The homeowners insurer was immediately contacted once the oil
    spill was discovered. Ms. Donleavy and Mr. Edwards were required to move out of
    the addition to their home and the tenants moved from the main home. The
    respondents did not return to the Rideau Ferry home and relocated to Perth.

The Regulatory Regime

[20]

The regulatory regime was and remains essential to the parties arguments
    and was the foundation of the trial judges analysis of the duty and standard
    of care. Although disputed at trial, there is no real question on appeal that
    the standard of care required, at a minimum, compliance with the regulatory
    requirements. And, although the regulatory regime changed over time, ultimately
    there is no dispute on appeal about what regulatory provisions were applicable in
    respect of the Donleavy oil tank. As I note later, the parties take issue with
    the trial judges interpretation of some of the regulatory provisions (in
    respect of the inspection duties of the subcontractor, Nesbitt, and of the
    respondents as owners of the tank) in their arguments about allocation of
    liability. I set out here the main regulatory provisions relied on by the
    parties, and referred to by the trial judge.

[21]

The general scheme is set out in the
Technical Standards and Safety Act, 2000
, S.O. 2000, c. 16
    (the 
Act
). O. Reg. 213/01 (the
    Fuel Oil Regulation) was made pursuant to the
Act
.   Fuel oil codes as
    they may be varied from time to time are adopted by reference: O. Reg. 223/01.
    CAN/CSA-B139-00
Installation Code for
    Oil-Burning Equipment
(the 2000 Code) was in force from October
    1, 2001 to March 1, 2007, when the updated 2006 Code came into effect.

[22]

Oil-burning equipment installed prior to the implementation of the
    Fuel Oil Regulation was required to have complied with the predecessor
    regulation - the Fuel Oil Code Regulation, R.R.O. 1990, Reg. 329 - at the time
    of installation. Under that regulation, the predecessor fuel oil codes, CSA
    Standard B139-1976 (the 1976 Code) and CAN/CSA-B139-M91 (the 1991 Code) were
    applicable and had the force of law.

[23]

The Fuel Oil Regulation applies to the installation, testing,
    maintenance, repair, removal, replacement, inspection and use of appliances,
    equipment, components and accessories where fuel oil is to be used as a fuel:
    s. 2(1). Every person engaged in an activity or the use of fuel oil equipment
    governed by the
Act
or the Fuel
    Oil Regulation is required to comply with the regulation: s. 3(1).

[24]

The Fuel Oil Regulation prohibits the supply of fuel oil by a
    distributor (in this case Ultramar) unless the distributor is satisfied that
    the installation and use of the appliance or work complies with the regulation,
    and unless the distributor has inspected the appliance or work at least once
    within the previous ten years or has inspected the appliance or work in
    accordance with a quality assurance inspection program: s. 7(1). The
    pre-delivery inspection conducted by Kilpatrick was an inspection intended to
    comply with s. 7(1). Section 19 of the Fuel Oil Regulation provides that no
    person shall operate or permit to be operated an appliance or tank system
    unless it is maintained in a safe operating condition and it complies with
    [the] Regulation.

[25]

According to the Fuel Oil Regulation, certain procedures are
    required to be followed by any distributor who is informed or finds during
    delivery or an inspection that an appliance or tank system is in an
    unacceptable condition.  Unacceptable condition includes where the appliance,
    container or work is being used for a purpose other than that for which it was
    approved or where the condition of the state of repair, the mode of operation
    or the operating environment of the equipment is likely to impair its safe
    operation or does not meet the requirements of [the] Regulation: s. 22(1).

[26]

An appliance or tank system that is in an unacceptable condition
    must be tagged as an immediate or non-immediate hazard. If tagged as an
    immediate hazard, supply of fuel oil is prohibited until the distributor
    obtains written evidence of the correction of the hazardous condition. If there
    is a non-immediate hazard, the owner will be given a specified period of time
    of no more than 90 days to replace the tank or to make it compliant with the
    regime. After that time period, any delivery of oil to the non-compliant tank
    is prohibited: ss. 22-24.

[27]

Similar duties apply to certificate holders (OBTs) and
    contractors who find an appliance or tank system to be in an unacceptable
    condition: ss. 25-26.

[28]

Under each applicable Code, to be approved for installation and
    use, a fuel oil tank must be designed and constructed to the appropriate ULC
    Standard. Fuel oil tanks manufactured to the M77 Standard
[1]
and M81 Standard
[2]
were required to bear a label reading INSIDE TANK FOR OIL BURNER FUEL, or a
    similar notation, and could only be installed for use indoors. By contrast,
    fuel oil tanks certified to the M92 Standard
[3]
(which applied only in and after 1992), could be installed and used both inside
    and outside, and would bear a different label.

[29]

In March 2006, a Directors Order, made pursuant to s. 36(3) of
    the
Act
, allowed indoor tanks
    that were installed outdoors to continue to be used, but only if the following
    two conditions were met:

1. Every calendar year, the external condition of the tank and
    the installation is visually inspected and accepted by the fuel oil distributor.

2. Following the tank and installation
    inspection, a written record of the inspection shall be provided to the tank
    owner/operator.

[30]

Article 14 of the 2000 Code required maintenance, at least
    annually, of oil-burning appliances, including the requirement to inspect a
    fuel oil tank and lines for leaks, and to effect any required repairs. Under Article
    13 of the 2006 Code, adopted March 1, 2007, the annual maintenance obligation
    was specified to be that of the owner, and required a dip test (to check for
    water in the tank) on metallic end-outlet tanks (such as the respondents
    tank), with the removal of any water found in the tank. In October 2007, the dip
    test requirement was limited to end-outlet tanks located outdoors. The document
    setting out this amendment was posted to the website of the Technical Standards
    and Safety Authority (the TSSA), the agency that has administered and
    enforced the regulatory regime since 1997.

[31]

None of the appellants ever tagged the respondents oil tank as
    non-compliant with the regime because it was an indoor tank installed outdoors,
    or for other any reason.  While owned by the respondents, the tank was never
    subject to inspection or maintenance, apart from the visits in October 2002 and
    March 2007.

The Trial

[32]

At trial, the respondents argued that Ultramar and Kilpatrick were
    liable under both tort and contract law. They submitted that the appellants
    could have prevented the oil spill had they met their minimum obligations under
    the regulatory regime. They also asserted that the appellants had breached their
    contractual obligations: Ultramar under the oil supply contract with Ms.
    Donleavy, and Kilpatrick in March 2007 under its service contract with Mr.
    Edwards.

[33]

The respondents claimed $750,000 for the homeowners insurers
    subrogated interest (this amount was agreed between the parties), $100,000 in
    general non-pecuniary damages for Ms. Donleavy, $75,000 in general
    non-pecuniary damages for Mr. Edwards, and $28,800 in loss of rental income.

[34]

The appellants also crossclaimed against each other for
    contribution and indemnity. Ultramar relied on its burner service contract with
    Kilpatrick in place from 2002 to 2004, while Kilpatrick argued that Ultramar
    failed to satisfy its statutory and other requirements as the distributor
    under the regime.

[35]

At the ten-day trial, Ms. Donleavy and Mr. Edwards testified. The
    following witnesses also testified on their behalf: Wayne Pilon (the TSSA Fuel Safety
    Inspector who attended at the property the day after the spill was discovered);
    Ralph Sumabat (an Engineer Specialist, Fuels Program with the TSSA); and Frank
    Amo (a former employee of the TSSA) and Stein Pedersen (a professional engineer
    and metallurgist), who testified as expert witnesses.

[36]

Kilpatricks witnesses were its principal, Carl Kilpatrick, as
    well as technicians Joe Burns and David Hitchcock, Mr. Carmichael from Stinson
    Propane, and expert witness James Roberts, a former employee of a predecessor
    to the TSSA.

[37]

Ultramar called its employee Larry Sauve, who, at the time was a
    service inspector with responsibility for the relevant region.

THE TRIAL DECISION

[38]

The trial judge began her reasons by emphasizing the central role
    of the regulatory regime. She stated, at paras. 2 and 3:

The supply and use of fuel oil are governed by a series of
    provincial statutes, regulations, and other documents (the regime). At the
    heart of the regime is the protection of the public and of the environment. The
    regime reflects the complexity of regulating the use of and supply of oil to a
    fuel oil-burning heating system. Of necessity, the requirements of those
    involved in the fuel oil industry and of people who rely on fuel oil-burning
    heating systems change over time  so as to address advancements in the
    industry and an increased understanding of the hazards arising from reliance on
    fuel oil.

The outcome in this case turns on
    an assessment, in the context of the regime as it changed from 2002 to 2008, of
    the obligations of the homeowners, the fuel oil supplier, and a sub-contractor
    to the fuel oil supplier.

[39]

The trial judge noted, at para. 21, the appellants admission
    that there was a regulatory or statutory breach in respect of the work
    completed at the Donleavy property on October 1 and 8, 2002. Their position was
    that proof of such breach was insufficient, and that the respondents had failed
    to establish a causal link between the breach and the oil leak. They also
    argued that the respondents had failed in their obligations, as owners, to
    maintain the tank, and, from 2007, to conduct an annual inspection that
    included a dip test.

[40]

The evidence of the factual cause of the oil spill was
    uncontradicted. The tank corroded from the inside out due to water that had accumulated
    in the bottom of the tank. The corrosion created a hole in the bottom of the
    tank from which the oil leaked in June 2008: at para. 44.

[41]

The trial judge concluded that the appellants all owed a duty of
    care to the respondents (this is not at issue in the appeal): at para. 53.

[42]

The trial judge concluded that the standard of care was informed
    by the regulatory regime requirements, which changed over the years in
    question. She noted that,
given the regime requirements over
    time, the label on the tank, in combination with the appearance of the tank and
    the outdoor location of the tank, was sufficient to trigger obligations on the
    part of each of the parties to this action: at para. 52.

[43]

The trial judge held that the Kilpatrick employees were negligent
    in failing to address the lack of compliance with the regime and the potential
    for the tank needing replacement when they attended at Ms. Donleavys home on
    October 1 and 8, 2002: at paras. 77, 87. The non-compliant tank ought to have
    been tagged, which then would have required the homeowner to be advised and
    remedial steps to be taken: at paras. 75, 76. There was also negligence when
    the Kilpatrick employee who attended in March 2007 following a no-heat call failed
    to inspect the entire fuel oil-burning heating system, to identify the
    deficiencies and to tag the system: at paras. 101, 102.

[44]

The trial judge found that, based on photographs of the heating
    system taken in the days following discovery of the oil leak, the heating
    system had a number of deficiencies apart from the location of the indoor fuel oil
    tank outdoors, including its location under a drip edge on the roof with no
    protection from snow and ice. She concluded that the failure of the Kilpatrick
    employees to identify any one or more of the other deficiencies was part of an
    overall pattern of work that fell below the standard required, contributed to
    the tank not being tagged and removed or subject to annual inspection, and was
    unreasonable in the circumstances: at paras. 104, 105, 107.

[45]

Kilpatrick was found vicariously liable for the negligence of its
    employees during the three visits to the property, in failing to properly
    inspect and to tag the tank: at paras. 77, 87, 102, 147-149.

[46]

The trial judge concluded that Ultramar was negligent in 2002
    because it: (1) failed to review the Kilpatrick documents and from them
    identify and then address discrepancies as to the location of the tank; (2) failed
    to obtain a report of a comprehensive inspection following the October 1 and 8
    attendances; and (3) failed to postpone oil delivery until there was
    confirmation that the tank was installed properly. Ultramar was also negligent
    in not having conducted annual inspections of the tank, which were required as
    a condition of the continued installation of an indoor tank outdoors after the
    2006 Directors Order. Finally, Ultramar was vicariously liable for the
    negligence of its subcontractor Mr. Nesbitt, who failed to conduct a basic
    visual inspection of the tank during all of his deliveries of fuel oil to the Donleavy
    home: at paras. 115, 129, 143, 150-152.

[47]

The trial judge then turned to causation. She stated that, in
    determining causation, she was relying on the material contribution test: at
    para. 155. She concluded that the negligence of Kilpatrick and Mr. Burns in
    October 2002 in failing to tag the tank as non-compliant materially contributed
    to the respondents injuries and losses, as Ms. Donleavy would have replaced
    the tank had she been told she was required to do so: at paras. 157, 158. The
    trial judge also concluded that Ultramars failure to fulfill its obligations
    under the regime prior to the first delivery of fuel oil, and over time, along with
    the repeated failure of its subcontractor to inspect the tank, materially
    contributed to the respondents injuries and losses: at paras. 160, 166.

[48]

Because of the absence of evidence of the timing of the corrosive
    process, and the presence of water in the tank at particular times, the trial
    judge did not find that the negligence of the Kilpatrick employee in March 2007
    or of Ultramar in failing to inspect the tank in 2006 or 2007 (as required by
    the Directors Order), materially contributed to the respondents losses: at
    paras. 159, 162.

[49]

The trial judge found contributory negligence on the part of the
    respondents in their failure to maintain their heating system: at para. 173.
    The trial judge apportioned 60% liability for the respondents damages to
    Ultramar and 40% to the respondents: at para. 178. She then held that Ultramar
    was entitled to recover from Kilpatrick half of the amounts for which it was
    liable to the respondents and she dismissed Kilpatricks crossclaim against
    Ultramar: at paras. 182, 183.

[50]

The trial judge refused to make findings on the terms of the
    contracts between Ms. Donleavy and Ultramar, and between the respondents and
    Kilpatrick, as the contracts were not in evidence: at paras. 186, 188.

[51]

The trial judge assessed the damages as follows: $750,000, as the
    agreed amount for the homeowners insurers subrogated interest, $20,000 in
    general non-pecuniary damages for Ms. Donleavy, and $10,000 in general
    non-pecuniary damages for Mr. Edwards. She dismissed the respondents claims
    for loss of rental income: at paras. 190, 203, 208.

ISSUES ON APPEAL

[52]

A number of issues are raised by the parties in the appeals and
    cross-appeal, the most significant being causation. In particular, the
    appellants say that the trial judge erred in applying the material
    contribution test. The appellants contend that the trial judge resorted to material
    contribution because she could not apply the but for test, that but for
    causation is precluded by certain specific findings of the trial judge, and
    that in any event there was a missing link in the trial judges causation
    analysis  that she did not, and could not find that, if the respondents tank
    had been replaced, the replacement tank would not have failed.  While the
    respondents agree that the trial judge ought not to have said she was applying
    the material contribution test, they argue that in fact the trial judge applied
    the but for test, or alternatively that but for causation is readily found
    based on the trial judges findings of fact, or on an assessment of the
    evidence at trial. Further they say that the fact that a replacement tank would
    not have failed was, if not an explicit finding, implicit in the trial judges reasoning,
    and a common sense inference supported by the evidence.

[53]

Ultramar also challenges the trial judges findings that it had
    duties to inspect the oil tank during fuel oil delivery, and duties to inspect under
    the Directors Order, and that it was in breach of such duties. Instead,
    Ultramar contends that the duty of inspection was entirely that of the
    respondents, as part of the required annual maintenance that they as owners
    of the tank were required to perform, and under a proper interpretation of the
    Directors Order.

[54]

The parties also dispute the trial judges allocation of fault 
    both as between the appellants, and with respect to contributory negligence. The
    appellants argue that the respondents, as owners of the system, ought to have
    been found to be entirely or largely at fault. The respondents say that the
    trial judge erred in finding contributory negligence and that she ought to have
    found Ultramar and Kilpatrick jointly and severally liable. The apportionment
    of fault as between the appellants is also at issue.

[55]

The respondents assert that the appellants ought to have been
    found liable for breach of contract, since breach of the regulatory regime
    would constitute a breach of an implied contractual term.

[56]

Finally, Kilpatrick contends that the trial judge ought not to
    have awarded general damages for loss of property, while the respondents argue
    that she erred in refusing to award damages for their claim for loss of rental
    income.

[57]

The balance of these reasons will address each issue in turn.

ANALYSIS

Issue 1: Causation

[58]

A finding of causation is typically reviewable for palpable and
    overriding error:
Ediger v. Johnston
,
    2013 SCC 18, [2013] 2 S.C.R. 98, at para. 29. That said, the argument here is
    that the trial judge made a legal error in applying the wrong legal test for
    causation. That error would be reviewable on a standard of correctness:
Housen,
    v. Nikolaisen
, [2002] 2 S.C.R. 235, at para. 8.

[59]

The parties agree that the trial judge articulated the wrong test
    for causation. They disagree about what happened next. The respondents argue
    that, after referring to the wrong test, the trial judge in fact went on to
    apply the but for test, and that in any event the evidence supports the application
    of that test for causation in this case.

[60]

The appellants contend that the trial judges resort to the
    material contribution test occurred after she concluded that the but for
    test for causation could not be made out against them. Further, the appellants
    assert that the trial judge specifically stated that she could not make the
    necessary findings for but for causation  and that, if she had used the but
    for test, the respondents action against them necessarily would have failed.

[61]

As I will explain, the trial judge appears to have misinterpreted
    the leading case,
Clements v. Clements
,
    2012 SCC 32, [2012] 2 S.C.R. 181, and what is meant by the but for and
    material contribution tests for causation. It appears that she decided that
    she had to apply the material contribution test because there were multiple actors
    (including the respondents), whose conduct was at issue, and she may well have
    assumed that the but for test required the identification of a single
    negligent act that was the sole cause of the respondents loss or injury. When
    the trial judge spoke of each appellants material contribution to the
    [respondents] loss and injury, she was in fact applying the but for test.
    The trial judge made certain findings of fact that are consistent with but
    for causation in this case, and her reasons, when read fairly and in their
    entirety, do not preclude, but rather support, a finding against all of the
    appellants of but for causation.

(i)

But for is the correct test for causation in this case

[62]

The but for test is generally applied in establishing causation
    in the tort of negligence. It requires a plaintiff to prove, on a balance of
    probabilities, that without the negligence of one or more of the defendants, the
    injury would not have occurred. A defendants negligence is thus a necessary
    factor to bring about the injury:
Clements
, at para. 8.

[63]

The but for test applies even where a defendants negligence is
    not the sole cause of the plaintiffs injury. A defendant will be liable for
    all injuries caused or contributed to by his or her negligence, even if other
    non-tortious causes are present:
Athey v. Leonati
, [1996] 3 S.C.R.
    458, at paras. 12, 17. Indeed, there are usually a number of background factors
    that cause an injury and not only a single cause. A defendant only needs to be
    a cause of some harm to be found liable in tort: Erik S. Knutsen,
    Clarifying Causation in Tort (2010) 33:1 Dal. L.J. 153 at p. 159.

[64]

The alternative, and exceptional, basis on which legal causation can
    be established is where the defendants act or omission materially contributed
    to the plaintiffs risk of injury. As McLachlin C.J.C. pointed out in
Clements
,

at para. 46, material contribution eliminates
    the need to prove factual causation, and it is the appropriate test only in
    exceptional cases:

Exceptionally, a plaintiff may
    succeed by showing that the defendants conduct materially contributed to risk
    of the plaintiff's injury, where (a) the plaintiff has established that her
    loss would not have occurred but for the negligence of two or more tortfeasors,
    each possibly in fact responsible for the loss; and (b) the plaintiff, through
    no fault of her own, is unable to show that any one of the possible tortfeasors
    in fact was the necessary or but for cause of her injury, because each can
    point to one another as the possible but for cause of the injury, defeating a
    finding of causation on a balance of probabilities against anyone.

[65]

I emphasize here that the alternative basis for legal causation
    is the defendants material contribution to
risk of injury
(and not, as
    I point out below, material contribution to the plaintiffs
loss or damage
).
    Material contribution is not a test of causation but a policy-oriented rule
    that imposes liability on the basis of tortious risk creation. The departure
    from the general but for rule is justified in these specific cases, because
    it satisfies the underlying goals of negligence law:
Clements
, at para. 41; Lewis N. Klar &
    Cameron S.G. Jefferies,
Tort Law
,
    6th ed. (Toronto: Thomson Reuters, 2017), at p. 545.

[66]

In this case the trial judge began her discussion of causation at
    paras. 153 and 154, where she correctly observed that, in the usual case,
    causation is determined on a but for standard, and that in exceptional cases,
    a defendant might be held liable on the basis of material contribution to the
    risk of injury or loss. The trial judge stated:

To succeed in an action in negligence, a plaintiff must
    demonstrate on a balance of probabilities that the defendants breach of the
    standard of care is causally connected to the injuries or losses alleged. In
    all but exceptional cases, the test for causation is the but for test: a
    plaintiff has the onus of establishing that their injuries or losses would not
    have occurred without the defendants negligence (see
Clements v. Clements
,
    2012 SCC 32, at para. 8).

Exceptional cases include where
    there are negligent acts by multiple actors and it is established that one or
    more of them in fact caused the injuries or losses, but the plaintiff is unable
    to determine which of a number of negligent acts caused the injuries or losses.
    In such cases, a defendant may be held liable on the basis that his or her acts
    and omissions materially contributed to the risk of injury or loss (
Clements
,
    at para. 13).

[67]

The trial judge then went on to conclude that this case fell
    within the meaning of exceptional cases and she stated that, in determining
    causation, she would rely on the material contribution test. Her explanation
    for resorting to the material contribution test was that there were three
    named defendants, and more than three actors whose conduct was considered,
    including the plaintiffs: at para. 155.

[68]

The fact that there are multiple defendants, or more than one
    potential cause of an injury, is not a reason to depart from the but for test
    for causation:
Resurfice Corp. v. Hanke
, 2007 SCC 7, [2007] 1 S.C.R.
    333, at para. 19. McLachlin C.J.C. emphasized in
Clements

that but for causation continues to apply
    as the default test in cases where there are multiple tortfeasors, and that
    something more is required before the material contribution to risk approach is
    warranted. She stated, at para. 43:

It is important to reaffirm that
    in the usual case of multiple agents or actors, the traditional but for test
    still applies. The question is whether the plaintiff has shown that the
    negligence of one or more of the defendants was a necessary cause of the
    injury. Degrees of fault are reflected in calculations made under contributory
    negligence legislation. By contrast, the material contribution to risk approach
    applies where but for causation cannot be proven against any of multiple
    defendants, all negligent in a manner that might have in fact caused the
    plaintiffs injury, because each can use a point the finger strategy to preclude
    a finding of causation on a balance of probabilities.

[69]

The critical threshold, then, for the application of the material
    contribution to risk approach is the impossibility of proving which of two or
    more possible tortious causes is in fact a cause of the injury. Before resorting
    to material contribution, it is necessary to establish that fault or negligence
    caused the event and that there is more than one negligent actor, but that it
    is impossible for the plaintiff to tease out whose negligence was a but for
    cause.

[70]

Professor Knutsen, in Coping with Complex Causation Information
    in Personal Injury Cases (2013), 41: 2 and 3 Adv. Q. 149, notes that the fact
    that there are multiple tortfeasors and an indivisible injury does not mandate the
    use of the material contribution test. Rather, he states, at pp. 153-154:

Nothing in the
Clements
cases approach to the material contribution test alters traditional damages
    and contribution doctrinal analyses whereby multiple tortfeasor defendants may
    be partially responsible for some of a plaintiffs injury, but not all of it (
i.e.
,
    divisible and indivisible injuries) after they have been proven to be a cause
    of some of the plaintiffs harm. The
Clements
analysis concentrates
    entirely on the causation threshold question  did the defendants cause the
    plaintiffs injury, yes or no. It does not target the how much question. That
    is a damages question, not causation, and left for later on in the negligence
    analysis (along with joint and several liability issues about responsibility to
    pay for the harm).



In nearly all instances [of an
    indivisible injury involving multiple tortfeasors], it will be possible for the
    plaintiff to apply the but for test in proving that the target tortfeasors
    negligent conduct was a cause of some of the global total harm. If the question
    is about how much of that harm each target tortfeasor is responsible for,
    that is not a causation question but one of extent and damages, dealt with
    later in the negligence analysis. The fact that the injury is indivisible does
    not affect the workability of the causation test.

[71]

Indeed, this point was made by McLachlin C.J.C. in
Blackwater v. Plint
, 2005 SCC 58, [2005] 3
    S.C.R. 3, a case involving civil liability for sexual assault. The Chief
    Justice stated, at para. 78:

It is important to
    distinguish between causation as the source of the loss and the rules of damage
    assessment in tort. The rules of causation consider generally whether but for
    the defendants acts, the plaintiffs damages would have been incurred on a
    balance of probabilities.
Even though there may be several tortious and
    non-tortious causes of injury, so long as the defendants act is a cause of the
    plaintiffs damage, the defendant is fully liable for that damage.
The
    rules of damages then consider what the original position of the plaintiff
    would have been. [Emphasis added.]

[72]

Even in the but for context, there are situations involving
    multiple defendants where courts have used contribution language to recognize
    that a defendants negligence is a cause of the plaintiffs injury. This is a
    potential source of confusion.
The phrase 
caused
    or contributed
 is used in the
Negligence
    Act
, R.S.O. 1990, c. N.1, s. 1. A
s Lauwers J.A.
    observed in
Sacks v. Ross
, 2017 ONCA 773, 417 D.L.R. (4th) 387,
    leave to appeal refused [2017] S.C.C.A. No. 491, at para. 117,
this
    is the way the causation test has been described in several cases in the
    Supreme Court (including as I noted earlier in
Athey
), and in this court;
    see also
White v. St. Josephs Hospital (Hamilton)
, 2019 ONCA
    312, at para. 25. Causation is made out under the but for test if the
    negligence of a defendant caused the whole of the plaintiffs injury, or contributed,
    in some not insubstantial or immaterial way, to the injury that the plaintiff
    sustained. Causation requires a substantial connection between the injury and
    the defendants conduct:
Resurfice
, at para. 23,
Clements
, at
    paras. 20-21, 28. As Paciocco J.A. noted in
Smith v. Safranyos
, 2018
    ONCA 760, at para. 128, McLachlin C.J.C.s reference to a robust and common
    sense application of the but for test of causation is a manifestation of
    this limit. Used in this way, the conclusion that one or more defendants
    materially contributed to a plaintiffs injury or loss simply recognizes that
    the defendants negligence was not the only cause.

[73]

Accordingly, even in a case where there are multiple tortfeasors,
    the but for test presumptively will apply. In the case of a negligent
    omission, as in the present case, the application of the but for test
    requires the trier of fact to attend to the fact situation as it existed in
    reality the moment before the defendants breach of the standard of care, and
    then to imagine that the defendant took the action the standard of care obliged
    [it] to take, in order to determine whether [its] doing so would have prevented
    or reduced the injury:
Sacks
, at para. 46. The but for causation
    question in respect of each appellant, is whether, if that party had discharged
    its duty to the respondents, and had not been negligent, the oil spill would have
    been prevented.

(ii)

The Trial Judge in Fact Applied But For Causation in This Case

[74]

As I will now explain, the trial judge, after incorrectly
    identifying the test that she was to apply, effectively went on to apply the
    but for test, rather than the material contribution test. She found but
    for causation in respect of the negligence of each of the appellants, when she
    explained that the oil discharge would not have happened if they had done what
    they were supposed to have done, and then concluded that their negligence
    materially contributed to the respondents
loss and damage
.

[75]

If the trial judge had truly applied a material contribution
    test, she first would have had to conclude that it was impossible to determine
    the factual cause of the fuel oil discharge (through no fault of the
    respondents), and then to have determined legal cause by considering whether
    the conduct of an appellant that could not be causally linked to the
    respondents injury materially contributed to the
risk of injury
. She
    would have had to conclude that each appellant was negligent, but that it was
    impossible to say whose negligence caused the injury.

[76]

The trial judge did not proceed in this way. She did not conclude
    that it was impossible to say whose negligence caused the respondents injuries
    and losses resulting from the oil spill. Instead, the trial judge concluded
    that, if Kilpatrick had conducted a proper comprehensive inspection, the fuel oil
    tank would have been tagged, removed and replaced: at para. 156. In Ultramars
    case, the trial judge, after referring to its failure to receive a report of a
    comprehensive inspection that met the requirements of the regime, and the
    failings of its subcontractor when delivering fuel oil, stated that the spill
    was precisely the end result that would have been avoided if Ultramar had
    fulfilled its obligations pursuant to the regime from the outset and over
    time: at para. 166.

[77]

These are findings of but for causation, although the trial
    judge stated her conclusions in material contribution to injuries and losses
    language (not material contribution to
risk
). She stated that the
    negligence of Kilpatricks employees in failing to conduct a proper inspection
    in October 2002, that would have resulted in the tagging of the fuel oil tank
    and the delivery of oil only if it was replaced by a new tank, materially
    contributed to the
injuries and losses
ultimately suffered by the
    respondents: at para. 158. Similarly, the trial judge described Ultramars
    negligence in failing to ensure it received a proper comprehensive inspection
    report, and in the repeated failure of its subcontractor to inspect the tank on
    each delivery, before concluding that Ultramars negligence also materially
    contributed to the respondents
injuries and losses
: at paras. 156-158,
    160, 166.

[78]

The appellants argue that the trial judge resorted to the
    material contribution test for causation, as she purported to do, because she
    recognized that she was unable to make the necessary factual findings for but
    for causation. They point to the absence of evidence about the specific
    condition of the tank in 2006 and 2007 and the timing of when water began to accumulate
    in the tank and the progress of the corrosive process. They refer to
Gendron
    v. Thompson Fuels
, 2017 ONSC 4009, affd 2019 ONCA 293, in which there was
    evidence with respect to the rate of corrosion leading to a discharge from a
    fuel oil tank, and they say that the absence of this type of evidence in this
    case was fatal to any finding of but for causation.

[79]


I do not accept this argument, which is not supported by
    the trial judges reasons. The absence of evidence of the timing of the
    corrosive process meant that the trial judge could not find a causal link
    between the discharge and Ultramars failure in 2006 and 2007 to inspect the
    tank (as required by the Directors Order), and Kilpatricks failure to inspect
    the tank in 2007, when it would have remained compliant as an indoor tank
    installed outdoors: at paras. 159, 162, 163. Because the timing of the
    corrosive process could not be established, it was impossible to know whether
    an inspection would have revealed water in the tank to the extent that it would
    have needed to be replaced. For this reason, the trial judge concluded that
    there was insufficient evidence to find that these negligent acts in
    isolation caused the respondents losses (or as she stated, that they
    materially contributed to such losses).

[80]

The timing of the corrosive process however was not essential to
    the conclusion that the appellants other negligent omissions were a cause of
    the discharge (or using the trial judges wording, materially contributed to the
    respondents losses). If an appellant had identified that the tank was an
    indoor tank installed outdoors, Ultramar would not have supplied fuel oil
    unless that tank had been replaced, irrespective of whether it showed signs of
    corrosion or was still sound. This is why the trial judge observed, at para. 49,
    that the specific timing of the corrosive process was not relevant to the
    outcome of the case.

[81]

As for the appellants reliance on
Gendron

(another
    case involving a fuel oil discharge from a tank that corroded from the inside),
    evidence about the rate of corrosion was part of the causation analysis in that
    case, because the tank was an indoor tank, installed indoors, and only eight
    years old. There was no regulatory requirement for removal or replacement of
    the tank, nor was it suggested that the age and location of the tank
    contributed to its failure. Rather, the question was whether the oil supplier
    ought to have detected the accumulation of water in the tank, and so prevented
    the discharge. The finding that water had accumulated over a lengthy period and
    would have been detected if the supplier had tested for water in 2006 or 2007
    was part of the causal analysis: see
Gendron

(appeal), at para.
    54.

[82]

I therefore reject the appellants argument that the trial judge in
    fact applied the material contribution test after she had determined that it
    was impossible to find but for causation. Rather, she appears to have
    proceeded on a misunderstanding of the material contribution test, and
    concluded that it was required simply because there were multiple parties whose
    conduct was at issue. Her causation findings, although expressed in terms of
    material contribution to the respondents loss or damage, are but for
    findings: she concluded that the discharge would have been avoided if Ultramar
    or Kilpatrick had tagged the tank, thus preventing the delivery of fuel oil
    unless it was replaced. In these circumstances, where the trial judge made
    findings that demonstrate that the but for test was satisfied, her error in
    the identification of the applicable test is not a reversible error: see
McKenzie
    v. Lloyd
, 2018 BCCA 289, [2019] 3 W.W.R. 352, at paras. 50-52.

(iii)

There is no missing link - but for causation was made out in this case

[83]

Next, I turn to the submission of Kilpatrick in oral argument of
    the appeal that there was a fatal missing link in the trial judges causation
    analysis. Kilpatrick argues that, if the negligence of the appellants was in their
    failure to identify that the indoor tank required replacement, and in
    continuing to supply fuel oil to a non-compliant tank, causation could only be
    made out if any replacement tank for outdoor use that had been installed in
    2002 would have been less susceptible to corrosion. Kilpatrick asserts that the
    trial judge made no such finding, and that such a finding is not supported by
    the evidence. It is unclear whether any such argument was made before the trial
    judge. In her detailed and comprehensive reasons, she did not specifically
    address any such argument.

[84]

In my view, although she may not have expressly articulated the
    connection, when the trial judge concluded that the appellants failure to properly
    inspect and tag the tank materially contributed to the loss (in effect, that
    this conduct was a cause of the loss), it was implicit that, if the tank had
    been replaced by a new outdoor tank, it likely would not have corroded and
    leaked. This was a common sense inference available to the trial judge on the
    evidence and consistent with her findings.

[85]

There was no direct evidence at trial, whether through an expert
    or otherwise, that a new tank installed in 2002 would have been just as likely
    to have failed as the respondents tank. Rather, all of the relevant witnesses agreed
    that the age, location and condition of a fuel oil tank correlate with its
    propensity for failure:

·

Stein
Pedersen, an expert witness for the
    respondents, confirmed that the longer a tank is exposed to an environment that
    includes corrosive elements, the more likely it is to develop internal
    corrosion, and that this tank was so old, a pit developed into a hole and oil
    leaked out. He testified that outdoor tanks that are subject to stress, such as
    changes of temperature, will develop problems earlier than tanks that are
    indoors, and that an
indoor tank will take on less water so it
    will last longer. In his opinion a 25-year- old tank is more apt to fail than a
    six-year-old tank because it is subject to a lot more stress.

·

Joe
Burns, the Kilpatrick employee who
    conducted the initial and deficient inspection of the tank in October 2002,
    agreed with statements in a TSSA Oil Burner Technician Update Workshop Handbook
    (the Handbook) that most [above ground steel oil tanks] corrode and
    ultimately fail from corrosion and the age at which tanks fail varies
    considerably and to protect against property and environmental damage caused
    by tanks leaking oil, tank owners should considerreplacing their tank before
    it starts leaking. As an OBT, and b
ased on his training, Mr.
    Burns agreed that the condition, location and age of a tank are important
    considerations to avoid environmental problems later on. He agreed that temperature
    changes contribute to condensation, that an outside tank has more opportunity
    to collect water from condensation, and that water coming off the eaves of a
    roof (as here) can introduce water into the tank.
Mr. Burns agreed that
    the age of the tank is relevant to the presence of water, sludge and impurities
    in the bottom, and that a more recently installed tank would be less
    susceptible to water collection leading to corrosion.

·

Larry
Sauve, Ultramars representative, also
    agreed with the statements in the Handbook, and that tanks accumulate water
    through various means, including condensation, and that tanks located outside
    are more prone to collect water than inside tanks. He also confirmed that the
    longer an end outlet tank is outside the longer it will be holding water in the
    bottom of the tank and it could very well have an increased likelihood of rust
    or corrosion.

·

Ultramars service invoice at the time of the
    pre-delivery service visits in October 2002 recognized that the age and ULC
    approval of a tank were important. It stated: Ultramar recommends replacing
    any oil tank 20+ years old and/or not UL/ULC approved and all underground
    lines.

·

Kilpatricks expert witness, Mr.
Roberts,
    confirmed that an outside tank is more prone to corrosion through the
    collection of water by condensation and otherwise. He also confirmed that a
    tank with a side outlet is even more prone to the collection of water, and that
    the condition and the environment are very relevant as well as the time period
    the tank is exposed to a particular set of circumstances. He agreed with the
    statement in the Handbook, that oil tanks corrode and ultimately fail from
    internal corrosion at the bottom of the tank.  Importantly, Mr. Roberts endorsed
    the view that, because no one can predict exactly when a tank will fail, the
    regulatory measures are in place to prevent a leak before it happens. Although
    he has investigated tanks that have failed in as short as six months and others
    that have lasted as long as 30 years, he agreed that it is recommended practice
    to replace a tank after 20 years of use.

[86]

Although the appellants attempted to sow doubt on the issue, they
    did not advance any evidence to contradict the common sense inference that a
    new replacement tank installed in 2002, would not likely have failed. The fact
    that some of the witnesses had seen newer tanks fail of course did not mean
    that the risk of failure for old and new tanks was the same. Nor would the absence
    of a maximum lifespan for fuel oil tanks under the regulatory regime (which was
    emphasized by Mr. Roberts) mean that the risk of failure was the same for newer
    and older tanks.

[87]

The appellants assert that
there was no difference
    between indoor and outdoor fuel oil tanks that would make an indoor tank any
    more vulnerable to the elements, and in turn could lead to corrosion. They did
    not, however, lead any expert evidence to the effect that all indoor tanks
    manufactured to the M81 (or earlier) standard were identical in construction to
    all outdoor tanks manufactured to the applicable standard for outdoor tanks.
    They led no evidence, for example, as to the thickness of the rolled steel used
    in the construction of the tanks. At its highest, the evidence was that none of
    the witnesses who were questioned on this point knew of any material
    differences between indoor and outdoor fuel oil tanks, other than that outdoor
    tanks had an extra layer of paint. When Mr.
Sumabat of the TSSA was asked
    about the possible differences between tanks certified for indoor and outdoor
    use, he
acknowledged that he never became aware of any
    material differences in construction between such tanks, however he indicated
    that the concern was that the standards were minimum requirements only and that
    manufacturers might have built a tank more robustly for outdoor use. He stated:
    old manufacturers, we cant specifically say what their intent was when they
    had their equipment certified for inside use.

[88]

The appellants also argued that there was no evidence that a new
    tank would be less prone to failure, because the corrosive process could start
    at any time. This argument is undercut by the evidence referred to above  that
    the corrosive process takes place over time as a result of the introduction of
    water into the tank. Again, the appellants did not offer any expert or other
    evidence to support the assertion that the age of the respondents tank did not
    correlate with its failure.  Indeed, the full extent of their evidence on this
    point was that of Mr. Amo, the former TSSA employee, that, while most tanks
    fail after 30 years, he had been involved in cases where tanks failed below ten
    years, and of Jim Roberts (Kilpatricks expert) that it is impossible to
    determine at what date a tank will leak, and that tanks fail anywhere from six
    months to 30 years.
Kilpatricks counsel noted at trial that
    it was never his position that the age of the tank was not relevant. The only
    defence witness to express any opinion on the issue, Mr. Sauve, said I cant
    tell you that a new tank installed in 2002 would not have leaked in 2008. And,
    while Mr. Sumabat admitted that he had known of a handful of tanks [failing]
    within five or ten years, he stated that most reported tank failures in
    Ontario occurred after the tank was older than 30 years.

[89]

Finally, the appellants argument that a new outdoor tank would
    be as likely to fail as an indoor tank used outside is inconsistent with the
    regulatory regime and its underlying environmental safety objectives. The
    regulatory regime prohibited the supply of fuel oil to a tank manufactured and
    labelled for indoor use that was installed outdoors. It required non-compliant
    tanks to be tagged, and prohibited the supply of fuel oil to such tanks. The
    Directors Order permitted the continued use of such tanks only if there was an
    annual inspection, which as of 2007 required a dip test and removal of any
    water found in the tank. As the trial judge noted at para. 122, the purpose of
    this condition, according to Mr. Sumabat, who was employed by the TSSA
    throughout the relevant period, was to address the potential for internal
    corrosion of the tank, and ultimately, the failure of the tank. Again, Kilpatricks
    own expert witness, Mr. Roberts, confirmed that the regulatory measures are in
    place to prevent a leak before it happens because
no one can
    predict exactly when a tank will fail.

[90]

In my view, therefore, it was implicit in the trial judges
    conclusion that the negligence of the appellants in supplying fuel oil to a
    non-compliant tank (Ultramar) and in failing to properly conduct a pre-delivery
    inspection (Kilpatrick) were causes of the discharge (or, using her words, that
    the negligence was a material contribution to the respondents loss and
    injury), that a replacement tank would not have corroded or leaked
. If
    either Ultramar or Kilpatrick had identified the tank as non-compliant, there
    would have been no delivery of fuel oil, unless the tank had been replaced. The
    trial judges conclusion, at para. 166, that the loss would not then have
    occurred means that she must have accepted on a balance of probabilities that a
    new replacement tank likely would not have corroded and failed.

[91]

In the alternative, if I am wrong in my conclusion that the trial
    judge implicitly found that a new replacement tank would not have corroded and
    failed in 2008, which was an inference available to her, then in my view this
    is a case where the record  the evidence I have just reviewed - is sufficient
    for this court to draw such inferences and therefore to determine causation:
    see
Martin-Vandenhende v. Myslik
,
    2015 ONCA 806, 343 O.A.C. 110, at paras. 57-58.

Issue 2: Ultramars Negligence
    Based on the Conduct of Its Delivery Person

[92]

Ultramar says that the trial judge made a
    palpable and overriding error in concluding, at para. 143, that its subcontractor,
    Mr. Nesbitt, was negligent in carrying out the delivery of fuel oil.

[93]

The trial judges finding was that Mr. Nesbitt
    had an ongoing obligation to inspect the tank and to communicate to Ultramar
    any concern he had with respect to the potential lack of compliance with the
    regime. Ultramar points to evidence that Mr. Nesbitt was not an OBT and, as
    such, any inspection of the oil burning system would be beyond his competence
    and the requirements of the regulatory regime. They say that it was the
    respondents as owners of the tank, and not Mr. Nesbitt, who were responsible
    for conducting a dip test as of 2006 or 2007. They also say that, even if Mr.
    Nesbitt had conducted a visual inspection, the tank was not in a condition that
    would have indicated the potential for internal corrosion.

[94]

I would not give effect to this ground of
    appeal.

[95]

The trial judge was entitled to conclude that, despite
    the fact that Mr. Nesbitt was not an OBT, he had certain obligations under the
    regulatory regime to ensure the safety of the fuel oil delivery. At para. 133,
    the trial judge referred to Mr. Sauves evidence that the basic visual
    inspection required on every visit would include looking at the tank label and
    for obvious signs of corrosion on the exterior of the tank. However,
    referring to s. 22 of the Fuel Oil Regulation, she concluded that the
    obligations went further. In particular, the trial judge carefully considered
    the distributors obligation to take certain steps on discovery of an unacceptable
    condition before she concluded that Mr. Nesbitt, as Ultramars subcontractor,
    had an ongoing obligation to inspect the tank and to communicate to Ultramar
    any concerns he had with respect to potential lack of compliance with the
    regime. This included the tanks location under a drip edge on the roof with no
    protection from the ice and snow: at paras. 134-140.

[96]

There was no evidence at trial about what Mr.
    Nesbitt might have observed, and why he did not identify or communicate to
    Ultramar any of the patent deficiencies with the respondents tank. Notwithstanding
    Ultramars indication at the outset of trial that he would testify, Mr. Nesbitt
    was not called as a witness. In all the circumstances the conclusion that Mr.
    Nesbitt was negligent in failing to identify obvious non-compliance with the
    regime, when he was delivering oil, and that Ultramar was liable for the
    negligence of its subcontractor, were open to the trial judge.

[97]

As for the condition of the tank, although some of the witnesses agreed
    that the tank was not heavily rusted,
there was evidence,
    accepted by the trial judge, that the tank showed signs of age, which likely
    indicated corrosion: at paras. 51-52. In my view, little
turns on this
    however in relation to Mr. Nesbitts negligence. What Mr. Nesbitt was negligent
    in failing to identify (in addition to the location of the tank under a drip
    edge) was that the tank was labelled for indoor use.
And it
    was Ultramars evidence that, even after the Directors Order, if it had known
    that this was an indoor tank for outdoor use, it would not have delivered oil
    to the respondents unless the tank had been replaced.

[98]

Similarly, Ultramar argues that the annual inspection obligation that
    would have permitted continued fuel delivery to an indoor tank installed
    outdoors under the 2006 Directors Order, was that of the owner of the tank,
    rather than of Ultramar. The
trial judge, at paras. 122 to 124
    of her reasons, carefully explained why she
rejected the very argument
    that is made here. I accept her analysis and conclusions.

[99]

As already mentioned, the regulatory regime has required annual
    maintenance by an owner, including a dip test, at least since March 2007. The
assertion that the owner had the obligation to inspect
under the
    Directors Order
however is inconsistent with the plain language of the
    Order, which required the external condition of the tank and installation to be
    visually inspected and accepted by the fuel oil distributor and a written
    record of the inspection to be provided to the tank owner or operator. Plainly,
    the distributor had the obligation to both inspect and to accept the exterior
    condition and the installation of the tank, underscored by the obligation to
    provide a written record of such inspection to the tank owner or operator.
The
    trial judge noted the evidence that as a practical matter, the TSSA saw the
    inspection obligation under the Directors Order as that of the distributor: at
    para. 122.
Even Ultramars own witness, Mr. Sauve, acknowledged
    that the distributor had the obligation to inspect under the Directors Order.

[100]

In
    any event, nothing turns on this point for the disposition of the appeal. As I
    have already noted, the trial judge did not find a causal link between Ultramars
    failure to inspect the tank in 2006 and 2007, and the respondents losses.
    Rather, the negligence was in failing to tag as non-compliant and in continuing
    to supply fuel oil to the indoor tank that was being used outdoors. Ultramar
    was negligent in failing to ensure a proper comprehensive inspection (a finding
    that was not attacked on appeal), and, on each occasion of delivery, in failing
    to identify that the indoor tank was being used outdoors. It was not Mr.
    Nesbitts failure to perform a dip test, or even to identify signs of corrosion
    on the tank, that was found to have caused the discharge  it was his failure,
    during the deliveries to identify and to communicate to Ultramar the potential
    lack of compliance with the regime, and in particular that this was an indoor
    tank being used outdoors, and that it was installed under a drip ledge: at paras.
    134-137.

[101]

Accordingly,
    I would not give effect to this ground of appeal.

Issue 3: Contributory Negligence and Apportionment of
    Liability

[102]

The
    trial judge apportioned liability 60% to Ultramar. She then concluded that
    Kilpatrick was liable to Ultramar on its crossclaim for one half the amounts
    for which Ultramar was found liable to the respondents, and dismissed
    Kilpatricks crossclaim against Ultramar. The trial judge found contributory
    negligence of 40% on the part of the respondents.

[103]

All
    parties take issue with the apportionment of liability in this case. Ultramar
    questions the conclusion that it was 60% responsible because, according to the
    trial judge, it was at the top of the pyramid under the regulatory regime.
    Ultramar argues that the respondents, as owners of the tank were at the top of
    the pyramid, and that it ought to have been able to rely on Kilpatrick under
    the burner service contract to conduct a proper comprehensive inspection.
    Kilpatrick asserts that the trial judge erred in dismissing its crossclaim
    against Ultramar, because Ultramar was in breach of its regulatory obligations.
    The respondents argue that the trial judge ought to have found Kilpatrick and
    Ultramar jointly and severally liable, and that she erred in finding
    contributory negligence.

[104]

A
    decision respecting apportionment of liability is entitled to considerable deference.
    Interference on appeal requires a demonstrated error in the trial judges
    appreciation of the facts or applicable legal principles:
Ingles v.
    Tutkaluk Construction Ltd.
, [2000] 1 S.C.R. 298, at para. 57.  As Hourigan
    J.A. noted in this courts decision in
Gendron
, the apportionment of
    liability remains a highly fact-specific exercise that is not an exact science:
    at para. 83.

[105]

I
    agree with the respondents that, having regard to the findings made by the
    trial judge, in particular her specific findings that Kilpatrick owed the
    respondents a duty of care, breached that duty and that this was a cause of the
    respondents losses, it would have been appropriate for the trial judge to have
    allocated responsibility directly to Kilpatrick, rather than holding Ultramar
    60% liable with a right of recovery over against Kilpatrick. It would have been
    more appropriate for the trial judge to have found the appellants jointly and
    severally liable.

[106]

The
    end result however would have been the same, because of the circumstances of
    this case. The negligence of Kilpatrick that was causally related to the
    respondents losses was the failure to conduct a proper comprehensive
    inspection in October 2002. This was a task that was required of the fuel oil
    distributor that was delegated to Kilpatrick under its contract with Ultramar,
    and as such was the subject of the crossclaim. The trial judge approached the
    question by considering the respective degrees of fault, when, at para. 180,
    she indicated that she was balancing the conduct of the Kilpatrick employees in
    October 2002, with the conduct of Ultramar in failing to review the documents
    submitted by those individuals, failing to institute an annual inspection of
    the fuel tank, and failing to identify the visible deficiencies with the tank
    installation during the delivery dates.

[107]

As
    for the question of contributory negligence, the respondents, in their
    cross-appeal, say that the trial judge, in finding 40% contributory negligence,
    based her decision on their obligations as operators of the system. They argue
    that the trial judge erred in concluding that they were required to conduct annual
    maintenance, when this was not brought to their attention by the distributor, and
    that their failure to maintain the tank was causally related to the discharge.

[108]

By
    contrast, the appellants argue that the main cause of the respondents losses
    was their failure, as owners of the tank, to conduct annual maintenance, which
    would have included the inspection of the tank for internal corrosion,
    including conducting a dip test, before the discharge occurred.

[109]

In
    my view, there is no error here. The trial judges decision reflects a fair assessment
    of the duties and responsibilities of the respondents as owners of the tank,
    Ultramar as the fuel oil supplier, and Kilpatrick in its inspection and service
    capacity, under the regulatory regime and within the factual context of this
    case. As I have already indicated, the trial judge carefully analyzed and rejected
    Ultramars argument that the respondents, as owners of the tank, had the
    obligation to inspect the tank in 2006 and 2007, under the terms of the
    Directors Order, in order to permit its continued use as an indoor tank used
    outdoors. Nevertheless, she accepted that the respondents had the obligation
    under the regulatory regime to maintain the tank. The trial judge had to
    balance the respective negligence of the various parties.

[110]

The
    trial judge accepted that the primary responsibility under the regulatory
    regime was that of the individuals and corporations working within the fuel oil
    industry. She also found that, although it was Ultramars stated practice to
    remind its customers of the obligation to conduct annual maintenance, there was
    no evidence that anything had been sent to the respondents. She found however
    that, the respondents were not entitled to sit back and do absolutely nothing
    towards the maintenance of their fuel oil-burning heating system: at para.
    168. As persons who had previously owned homes with fuel oil-burning heating
    systems, they ought reasonably to have developed an appreciation for the
    importance of regular maintenance of the system. This informed her decision to
    allocate fault 40% to the respondents.

[111]

As
    for the respondents argument that there was no causal link between the failure
    to conduct annual maintenance and the discharge, I disagree. As the trial judge
    emphasized repeatedly, each annual inspection would provide an opportunity to
    identify that the respondents fuel oil tank was not compliant with the
    regulatory regime. It would be speculative to conclude, as urged by the
    respondents, that if they had contracted for annual maintenance, the tanks non-compliance
    with the regime would have been missed on each and every attendance, and that
    the discharge would still have taken place.

[112]

I
    therefore see no reason to interfere with the trial judges apportionment of
    liability to the appellants or her decision to allocate 40% contributory
    negligence to the respondents.

Issue 4: Breach of Contract Claims

[113]

The
    respondents argue that the trial judge erred in dismissing their claims that
    there had been a breach of the oil-burner contract they had with Kilpatrick,
    under which its employee made a no-heat call to the home in March 2007, and
    their delivery contract with Ultramar. They asserted at trial (and argue on
    appeal) that the contracts contained an implied term that work would be
    undertaken in a workmanlike manner, which would include compliance with the
    regulatory regime. The trial judges findings that there were regulatory
    breaches ought to have resulted in a finding of breach of contract.

[114]

The
    trial judge rejected the breach of contract claims at paras. 184 to 189 of her
    reasons. The trial judge noted that no copy of any contract relied on by the
    respondents was introduced in evidence. She observed that the terms of the
    contracts may have included obligations on Ms. Donleavys part, or exclusion
    clauses, and that, in the absence of the written contracts, she was not
    prepared to make any findings as to their terms.

[115]

I
    see no reason to interfere with this conclusion. The case before the trial
    judge (apart from the claims as between Ultramar and Kilpatrick, which engaged
    their own contract, which was in evidence) was about negligence: the failure to
    comply with regulatory requirements as evidence of a breach of the standard of
    care, whether the negligence of each party caused the oil spill, and the
    respective allocation of fault as between the appellants and the respondents.
    In the circumstances of this case, the trial judge reasonably refused to
    consider the breach of contract claims in the absence of the written
    contracts.

Issue 5: Damages

[116]

The
    respondents assert that the trial judge erred in refusing their claim for
    $28,800 for loss of rental income, after accepting that they had been receiving
    rent of $800 per month for the main home. They say that she erred in
    characterizing the claim as speculative, and in denying this head of damages
    out of concern that they had already been compensated for the loss under their
    homeowners insurance, when they had refused to produce a copy of the policy.
    The respondents argue that the claim in fact was not speculative, that their
    claim for three years loss rental took into account the various contingencies
    and that, because the appellants had been provided with all of the details of
    the $750,000 subrogated claim, they could have satisfied themselves that there
    would be no double recovery for lost rentals.

[117]

I
    see no reversible error here. The respondents had the onus of satisfying the
    court that they suffered damages in the form of lost rental income. The trial
    judge was not satisfied on the evidence, which was limited to the respondents
    oral evidence and not supported by any documents, that the claim was made out.
    She noted that, as of June 2008, the respondents had been renting the main
    house for only six months, and that a number of factors might in the future
    have contributed to a decision to cease being landlords, or to move into the
    main home and to rent the addition instead. The trial judge also pointed to a
    lack of evidence respecting mitigation - as to the efforts made by the respondents
    to replace their home with a similar home that could provide rental income. The
    trial judge was entitled, as she did, to take into account the respondents
    refusal to produce a copy of their insurance policy, which would have assisted
    in determining whether any part of the indemnity they had received from their
    own insurer was in respect of lost rental income.

[118]

Kilpatrick
    submits that the trial judge erred in awarding general damages of $20,000 to
    Ms. Donleavy and $10,000 to Mr. Edwards because of their forced relocation from
    the home. Kilpatrick argues that it was prevented from testing this claim when
    the respondents refused to produce their home insurance policy, or information
    regarding whether they elected a buy-out as opposed to having been forced from
    their property.

[119]

There
    is no merit to this ground of appeal. The trial judge rejected the basis for
    general damages that Kilpatrick says it was unable to test  that the
    respondents suffered as a result of their forced relocation from the home. She
    noted that in the absence of better evidence as to the reasons why the
    [respondents] chose not to rebuild and of their inability to find a home that
    more closely measures up to the [subject] property, she was not in a position
    to award damages associated with that aspect of the claims: at para. 195. Instead,
    the general damages were in respect of the disruption in the respondents lives
    following the oil spill, something that they testified about at trial, and
    which reasonably warranted the modest amounts awarded by the trial judge.

CONCLUSION AND DISPOSITION

[120]

For
    these reasons, I would dismiss the appeals and the cross-appeal. If the parties
    are unable to agree on costs of the appeals and the cross-appeal, they may make
    written submissions, limited to five pages each, not including any costs
    outlines. The respondents shall deliver their costs submissions within 20 days of
    these reasons and the appellants within 15 days of receipt of the respondents costs
    submissions.

Release: PR September 4, 2019

K.
    van Rensburg J.A.

I
    agree. Paul Rouleau J.A.

I
    agree. M.L. Benotto J.A.





[1]
CAN4-S602-77/ULC-S602076 Standard for Steel Inside Tanks for Oil-Burner Fuel.



[2]
CAN4-S602-M81 Standard for Steel Inside Tanks for Oil-burner Fuel.



[3]
CAN/ULC-S602-M92 Standard for Aboveground Steel Tanks for Fuel Oil and
    Lubricating Oil.


