



COURT OF APPEAL FOR ONTARIO

CITATION: Huang v. Fraser Hillary's Limited, 2018 ONCA 527

DATE: 20180608

DOCKET: C63576 and C63592

Hourigan, Benotto and Fairburn JJ.A.

BETWEEN

Eddy Huang

Plaintiff

(Appellant/Respondent)

and

Fraser Hillarys Limited
and David Hillary

Defendants

(Respondents/
Appellant
)

Michael S. Hebert and Cheryl Gerhardt McLuckie, for the
    appellant/respondent, Eddy Huang

Jonathan OHara and Michael Rankin, for the appellant/respondent,
    Fraser Hillarys Limited

Christopher Reil and Jeremy Rubenstein, for the
    respondent, David Hillary

Heard: May 2, 2018

On appeal from the judgment of Justice Pierre E. Roger of
    the Superior Court of Justice, dated March 6, 2017, with reasons reported at
    2017 ONSC 1500.

Hourigan J.A.:

Introduction

[1]

There are two appeals from the judgment of the trial judge following an eight-day
    trial. The primary issue for determination at trial was liability for the
    remediation of the environmental contamination of real property owned by Eddie
    Huang.

[2]

The trial judge held Fraser Hillarys Limited (Fraser) liable in
    nuisance and pursuant to s. 99 of the
Environmental Protection Act
,
    R.S.O. 1990, c. E.19 (the 
EPA
). He awarded over $1.8 million in
    damages for the remediation of Mr. Huangs properties. The action against David
    Hillary was dismissed.

[3]

On appeal, Fraser submits that the trial judge erred in finding it liable,
    both in nuisance and under the
EPA
,
for the remediation costs.
    Mr. Huang also appeals. His primary submissions are that the trial judge erred
    in failing to find Fraser negligent, in failing to find Mr. Hillary liable in
    nuisance or in negligence, and in his assessment of damages.

[4]

For the reasons that follow, I would dismiss both appeals.

Facts

[5]

Fraser owns 1235 Bank Street in Ottawa. It is a commercial property and
    Fraser has operated a dry cleaning business there since 1960. Mr. Hillary is
    the president and sole director of Fraser. He is also the owner of 36 Cameron
    Avenue, a residential property that abuts 1235 Bank Street.

[6]

Mr. Huang is the owner of 1255 and 1263 Bank Street. 1235, 1255, and
    1263 Bank Street are adjacent to one another, in that order. 36 Cameron Avenue
    does not abut any of Mr. Huangs lands.

[7]

Fraser does not dispute that during the period 1960 to 1974, solvents
    used in its dry cleaning operations spilled onto the ground. Tetrachloroethylene
    (PCE) and trichloroethylene (TCE) were ingredients in the dry cleaning
    solution that Fraser used during this time. The environmental danger caused by
    these chemicals was unknown at that time. In 1974, Fraser purchased new dry
    cleaning equipment, which along with new practices significantly reduced the
    amount of PCE and TCE used. It also virtually eliminated the potential for
    spills.

[8]

Mr. Hillary purchased 36 Cameron Avenue in 1986. He was unaware of any
    contamination at that property or at 1235 Bank Street at the time.

[9]

In 2002, Mr. Huang entered into a 20-year lease with Tim Hortons for
    1263 Bank Street. There is also a long-term lease in place on 1255 Bank Street
    that expires in 2024. Despite the existence of these long-term leases, Mr.
    Huang wanted to develop his properties. In 2002, he approached his bank about
    arranging financing for the project. As part of the financing process, a Phase
    I environmental report was obtained. That report concluded that the properties
    were likely contaminated.

[10]

A
    Phase II environmental report of Mr. Huangs properties confirmed that the soil
    and groundwater have a concentration of TCE that exceeds the Ministry of the Environment
    and Climate Change (MOE) standards. Frasers dry cleaning operations at 1235
    Bank Street are the source of the contamination. The report recommended that
    the contaminated soil be removed, with remediation to be done at Frasers
    property. Failing remediation of Frasers property, the report called for a
    barrier system to be installed along the common property boundary. The report
    also recommended remediation of the groundwater.

[11]

It
    is common ground that the dry cleaning solvents have created a source zone that
    contains free phase (undissolved) PCE. The source zone is located on parts of
    1235 Bank Street, 36 Cameron Avenue, and 1255 Bank Street. When groundwater
    flows through the source zone it spreads the contaminant particles. The general
    direction of the groundwater is southeast from 1235 Bank Street and 36 Cameron
    Avenue toward Mr. Huangs properties and onward to the Rideau River.

[12]

In
    January 2003, Mr. Huang put Fraser on notice about the contamination of his
    properties. Fraser retained an engineering firm that prepared a remedial action
    plan in February 2004, but it was not immediately implemented.

[13]

The
    MOE began communicating with Fraser in 2006. There followed various
    interactions between the MOE and Fraser over the next seven years. By 2013, the
    MOE concluded that it was not receiving significant communications from Fraser
    and that its remedial efforts to date did not appear to have had a significant
    impact on the contamination. Consequently, the MOE issued a Provincial
    Officers Order on April 15, 2013, which required Fraser to retain a qualified
    person and submit a detailed work plan to remediate the contamination.

[14]

A
    further Provincial Officers Order was issued on July 23, 2014. That order
    provided that by August 31, 2015, Fraser was to produce a report addressing the
    interpretation of soil vapour monitoring results, interpretation of groundwater
    and soil monitoring results, and identification of the proposed measures for
    ongoing assessment and remediation. Fraser did not comply with that order and the
    MOE initiated enforcement proceedings against Fraser under the
EPA
.

Issues

[15]

These
    appeals raise the following issues:

1.

Did the trial judge err in finding Fraser liable in nuisance?

2.

Did the trial judge err in not finding Mr. Hillary liable in nuisance?

3.

Did the trial judge err in finding Fraser liable under s. 99 of the
EPA
?

4.

Did the trial judge err in not finding Fraser and/or Mr. Hillary
    negligent?

5.

Did the trial judge err in not finding Fraser liable in trespass?

6.

Did the trial judge err in his assessment of damages?

Analysis

(1)

Nuisance - Fraser

[16]

Fraser
    makes a very narrow point on this ground of appeal. Its argument is that the
    trial judge erred in law by failing to consider whether the environmental
    damage was reasonably foreseeable as part of his nuisance analysis. The trial
    judge found Fraser liable in nuisance, having rejected Frasers arguments that
    (1) Mr. Huang had not established either physical damage to his property or
    interference with the enjoyment of his land, and (2) any interference with the
    use of Mr. Huangs land was not unreasonable in the circumstances: see paras.
    118-43.

[17]

According
    to Fraser, foreseeability of harm is a constituent element of the tort of
    nuisance. Counsel for Fraser concedes two things in oral argument: (a) he did
    not ask the trial judge to find that reasonable foreseeability is an element of
    nuisance; and (b) there is no authority binding on this court that supports
    that proposition. He relies instead on statements made in Canadian tort texts
    that foreseeability is required. Specifically, he cites Allen M. Linden and
    Bruce Feldthusen,
Canadian Tort Law
, 10th ed. (Markham: LexisNexis
    Canada, 2015)  at p. 638; Lewis N. Klar and Cameron S.G. Jefferies,
Tort
    Law
, 6th ed. (Toronto: Thomson Reuters, 2017) at pp. 755, 876; and Philip H.
    Osborne,
The Law of Torts
, 5th ed. (Toronto: Irwin Law, 2015) at p.
    416.

[18]

I
    note that where the texts rely on judicial authorities, they cite cases from
    England and New Zealand in support of their contention regarding foreseeability. 
    Reasonable foreseeability of harm has been accepted as part of British law in
    respect of nuisance and in the
Rylands v. Fletcher
context:
Cambridge
    Water Company v. Eastern Counties Leather plc
, [1994] 2 A.C. 264 (H.L.);
Transco
    plc v. Stockport Metropolitan Borough Council
, [2003] UKHL 61, [2004] 1
    All E.R. 589; and
Northumbrian Water Ltd. v. Sir Robert McAlpine Ltd.
,
    [2014] EWCA Civ 685.  The
Northumbrian Water
decision may go so far as
    to require foreseeability of the escape itself:  Maria Hook, Reasonable
    Foreseeability of Harm as an Element of Nuisance (2016), 47 VUWLR 267 at p.
    269.

[19]

There
    has been mixed acceptance of the reasonable foreseeability requirement in this
    country.
[1]
In
Smith v. Inco
, 2011 ONCA 628, 107 O.R. (3d) 321 this court declined
    to decide whether foreseeability is a requirement under
Rylands v. Fletcher
.
    The court did observe, at paras. 109 and 110, that while to require
    foreseeability of the escape itself would be to merge the rule in
Rylands
    v. Fletcher
with liability in negligence, compelling reasons exist to
    require foreseeability of damage as a necessary element.

[20]

In
Windsor v. Canadian Pacific Railway Ltd.
, 2014 ABCA 108, 371 D.L.R. (4
th
)
    339, the Alberta Court of Appeal followed the
Inco
decision in upholding
    the decision of the case management judge to dismiss a class proceeding claim under
    the doctrine in
Rylands v. Fletcher
because the element of
    foreseeability could not be established. Like the present appeal, TCE had been
    used in accordance with best practices at the time. The court noted, at para.
    21, that the appellants evidence that it was not foreseeable that the migration
    of TCE would cause harm to neighboring lands was uncontradicted on the record.
    Yet, without discussing whether foreseeability was a necessary element of the
    nuisance claim, the court permitted certain of the class claimants to pursue
    their nuisance claims.

[21]

The
    Supreme Court of Canada recently considered the
elements of private nuisance i
n
Antrim Truck
    Centre Ltd. v. Ontario (Transportation)
, 2013 SCC 13, [2013] 1 S.C.R. 594.
    Justice Cromwell, writing for the unanimous court, answered that question as
    follows, at para. 18: 
[A] nuisance
    consists of an interference with the claimants use or enjoyment of land that
    is both substantial and unreasonable. The court characterized this as a
    two-part test. Nowhere in its analysis did the court indicate that
    foreseeability is part of the tort.

[22]

While
    I acknowledge the divergence in British law and the fact that the law may be
    evolving in this country, in the absence of any binding Canadian authority I conclude
    that foreseeability is not a necessary part of the tort of nuisance in Canada.

[23]

I
    also fail to see the policy imperative for importing this additional
    requirement into our test for nuisance. The tort is a useful tool in the prosecution
    of environmental claims and is consistent with the Supreme Court of Canadas espousal
    of the principle that the polluter must pay: see
St. Lawrence Cement Inc.
    v. Barrette
, 2008 SCC 64, [2008] 3 S.C.R. 392, at para. 80. The addition
    of a foreseeability requirement blurs the distinction between negligence and
    nuisance. If we were to accept Frasers submission, the utility of the tort
    would be compromised. I would therefore reject this ground of appeal.

(2)

Nuisance - David Hillary

[24]

At
    the outset of the analysis of the potential personal liability of Mr. Hillary,
    it is important to recognize that he was sued only in his capacity as the owner
    of 36 Cameron Avenue and not as an officer or director of Fraser. The fact that
    he holds those positions is of no relevance to this case as pleaded. It is also
    important to note that 36 Cameron Avenue is enveloped by 1235 Bank Street and
    does not abut Mr. Huangs properties.

[25]

The
    theory of Mr. Huangs case against Mr. Hillary is that Mr. Hillary is liable in
    nuisance for the contamination emanating from 36 Cameron Avenue, even though
    that contamination does not travel directly from 36 Cameron Avenue to Mr.
    Huangs properties. In other words, Mr. Huangs position is that Mr. Hillary
    should be liable in nuisance by reason of the fact that he is an up-gradient polluter.

[26]

The
    trial judge noted that the claim against Mr. Hillary was based on his inaction
    since becoming aware that 36 Cameron Avenue was within the source zone. He
    found that Mr. Hillary became aware of this fact in 2007. The trial judge
    concluded that there was no evidence that the need for remediation at Mr.
    Huangs properties had become any worse since 2007. In addition, the trial
    judge found that there was nothing Mr. Hillary could have done at 36 Cameron
    Avenue that would change the fact that Mr. Huangs properties continue to be
    contaminated by PCE and TCE originating from Frasers property. In these
    circumstances, he dismissed the nuisance claim against Mr. Hillary on the
    ground that Mr. Huang had not established that any inaction on Mr. Hillarys
    part caused any substantial interference with Mr. Huangs properties: see
    paras. 144-55.

[27]

Mr.
    Huang submits that the trial judge erred in his analysis. He argues that he has
    met the test for nuisance, as he has suffered
an interference with his use and enjoyment of his land that
    is both substantial and unreasonable. In his submission, the tort is one of
    strict liability and Mr. Hillary as a polluter of his land must be held liable.

[28]

I would not give effect to this ground of
    appeal. The trial judges finding that
36 Cameron Avenue is not the source
    of the contaminant is entitled to deference. In my view, there was no error in
    the trial judges conclusion that causation had not been established and that
    Mr. Hillary did not subject
Mr.
    Huang to an unreasonable interference with his use and enjoyment of his
    properties. Accordingly, I would deny this ground of appeal.

(3)

Section 99 of the
EPA

[29]

Frasers
    submission is that the trial judge erred because he retrospectively applied
    Part X of the
EPA
. That part of the legislation deals with liability
    and other obligations as a consequence of spills. Fraser notes that Part X was
    not proclaimed into force until 1985. Because the spills on its property ceased
    in 1974, Fraser submits that the
EPA
can have no application. I would
    not give effect to this ground of appeal.

[30]

The
    relevant sections of the
EPA
to consider in analyzing this submission
    are as follows:

93(1) The owner of a pollutant and the person having
    control of a pollutant that is spilled and that causes or is likely to cause an
    adverse effect shall forthwith do everything practicable to prevent, eliminate
    and ameliorate the adverse effect and to restore the natural environment.

* * *

99(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.

[31]

In
    my view, the trial judge did not retrospectively apply the
EPA
. Time
    does not freeze in 1974 for the purposes of liability under s. 99(2). Accepting
    for the purposes of this argument that the spills ceased in that year, there
    was an ongoing obligation under s. 93 of the
EPA
to remediate the
    damage. That remediation has not been done. Therefore, there is liability under
    s. 99(2)(a)(i) and (ii) because Fraser has not fulfilled a duty imposed on it
    under Part X of the
EPA
. In short, while the spills may have occurred
    before Part X of the
EPA
was enacted, Frasers obligations under that
    part of the legislation are ongoing.

[32]

Fraser
    relies upon this courts decision in
McCann v. Environmental Compensation
    Corp.
, 1990 CarswellOnt 213 (C.A.) in support of its submission that spills
    that occurred prior to 1985 cannot be the subject of a claim under Part X of
    the
EPA
. In my view, the circumstances of
McCann
are
    distinguishable from the case at bar. In
McCann
, the issue for the
    court was whether fresh evidence should be admitted in order to assert a claim
    against a compensation fund for allergic reactions resulting from a spill. In
    the courts short endorsement, there is no reference to an ongoing obligation
    to remedy a spill by the polluter as is present in the current case. That
    ongoing obligation renders this case distinguishable from
McCann
.

(4)

Negligence

[33]

With
    respect to negligence, the trial judge found that Fraser and Mr. Hillary did
    not breach the standard of care until 2013: see paras. 165 and 168. This was a
    finding of mixed fact and law available to him on the evidence. I cannot
    identify any palpable and overriding error in the trial judges analysis and
    thus it is owed deference by this court.

[34]

The
    trial judge then reviewed the evidence regarding the contamination of Mr.
    Huangs properties. He concluded that there had been no appreciable increase in
    contamination since 2013: see paras. 168-69. This was also a factual finding
    open to him on the evidence and there is no basis for appellate interference.

[35]

The
    trial judge concluded that causation had not been established given that there
    had been no increase in contamination during the relevant time that would have
    any impact on the requirement for remediation or its associated costs. This
    conclusion flowed logically from his findings regarding the date of the breach
    and the absence of increased damage. I would not disturb his conclusion.

(5)

Trespass

[36]

In
    his factum, Mr. Huang submits that the trial judge erred in not finding Fraser
    liable in trespass. Mr. Huangs counsel did not vigorously press this argument
    in his oral submissions. In any event, I would not give effect to this ground
    of appeal.

[37]

The
    trial judge correctly identified that a direct physical intrusion onto Mr.
    Huangs properties was required in order to establish a trespass. He found that
    the intrusion was not direct because the contaminant entered into the ground at
    1235 Bank Street, filtered down and was then carried to Mr. Huangs properties
    in the groundwater: see paras. 49-56. This was a finding of mixed fact and law
    open to the trial judge.

(6)

Damages Assessment

[38]

Mr.
    Huangs experts, David Reynolds and Brian Byerley, provided the court with
    eight different remediation strategies for the purposes of assessing damages.
    Neither Fraser nor Mr. Hillary filed any expert evidence on damages.

[39]

Generally,
    the scenarios presented by Mr. Byerley were far more costly than the estimates
    provided by Dr. Reynolds. The trial judge preferred the scenarios of Dr.
    Reynolds. He noted that Dr. Reynolds had superior qualifications and testified
    in a fair and impartial manner that should be a model for all expert witnesses:
    see paras. 194-95.

[40]

The
    trial judge considered all of the remediation strategies and rejected those
    that called for the remediation of all of the surrounding properties. He found that
    those strategies were impractical because they would rely on Fraser to
    remediate its property and would also require remediation of properties belonging
    to non-parties to the litigation: see paras. 177-79.

[41]

The
    trial judge also rejected Mr. Huangs preferred strategies that called for
    excavation of contaminated soil during the redevelopment process. He was not
    satisfied that the redevelopment could begin before the expiry of the last
    lease in 2024. In his view, these strategies would overcompensate Mr. Huang, as
    they were not discounted for time. The trial judge also expressed concerns
    regarding whether the proposed underground parking structure would occupy the
    entire site: see para. 191.

[42]

The
    remediation strategies that most appealed to the trial judge were the ones that
    involved isolating Mr. Huangs properties. He found that these were the most
    likely to place Mr. Huang in the position he would have been in had the
    contamination not occurred. The trial judge selected remediation strategy GS-2
    proposed by Dr. Reynolds. Its cost was $1.21 million and it called for the
    installation of a ZVI barrier, ZVI injections, bioremediation of the down
    gradient plume on Mr. Huangs lands, and on-going monitoring. It required eight
    to ten years to fully implement, which was consistent with Dr. Reynolds'
    evidence that a longer remediation timeframe is appropriate where there is no
    immediate health and safety threat. The trial judge found that there was no
    evidence that this strategy would interfere with the redevelopment of the properties:
    see paras. 180, 187-92.

[43]

In
    costing the GS-2 strategy, Dr. Reynolds assumed that Mr. Huangs properties
    would retain their commercial zoning. He therefore used a commercial standard
    of remediation, which is less expensive than a residential standard. The trial
    judge concluded that there should be an adjustment because the evidence was
    that the properties highest and best use would be a commercial and residential
    mix. He increased the cost of the GS-2 strategy by $222,500 to reflect a
    residential standard. In addition, he added a $200,000 contingency for the
    repair or replacement of the barrier, and $201,726.71 for the costs already
    expended on experts and engineers. The final amount awarded was $1,834,226.71:
    see paras. 196-209.

[44]

Mr.
    Huang submits that the trial judge erred in his damages assessment because he chose
    a remediation strategy and then adjusted it without an evidentiary basis.
    According to Mr. Huang, this resulted in the trial judge accepting a
    remediation strategy that was not advanced at trial.

[45]

Trial
    judges are owed considerable deference in their assessment of damages. Appellate
    interference with a damages award is limited to situations where the trial
    judge made an error in principle, misapprehended the evidence, failed to
    consider relevant factors, considered irrelevant factors, made an award without
    any evidentiary foundation, or otherwise made a wholly erroneous assessment of
    damages:
TMS Lighting Ltd. v. KJS Transport Inc.
, 2014 ONCA 1, 314
    O.A.C. 133, at para. 60.

[46]

In
    the case at bar, the trial judge carefully considered the evidence and
    determined what he felt was the appropriate figure for damages. He was entitled
    to reject the damages scenarios that he felt were unsuitable in the
    circumstances.

[47]

This
    was not a case where the trial judge assessed damages without regard to the
    evidence at trial or based on a misapprehension of the evidence. His assessment
    was grounded in Dr. Reynolds testimony and the trial judge did not err in
    accepting the GS-2 scenario. The experts were examined and cross-examined
    regarding the cost adjustments that would have to be made in order to target
    different standards of remediation in their various scenarios. It was open to
    the trial judge to simply adopt the GS-2 cost of $1.21 million and make no
    adjustment for the increased costs to remediate to a residential standard. He
    chose, instead, to increase the cost based on evidence about upward adjustments
    for other similar remediation alternatives in order to compensate Mr. Huang for
    the increased costs of remediating to a residential standard. I see no palpable
    and overriding error in that analysis.

[48]

In
    summary, I am not satisfied that there is any basis for appellate interference
    with the trial judges assessment of damages.

Disposition

[49]

I
    would dismiss both appeals. Given the divided success between Fraser and Mr.
    Huang, I would not award costs to either party. Mr. Hillary has been entirely
    successful on the appeals and is entitled to his costs of the appeals payable
    by Mr. Huang. I would fix those costs in the all-inclusive sum of $10,000.

Released: CWH JUN 8 2018

C.W. Hourigan J.A.

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

I agree. Fairburn J.A.





[1]

There is some Superior Court jurisprudence in this province
    that has held or suggested that foreseeability is an element of the tort of
    nuisance: see for example,
Durling v. Sunrise Propane Energy Group Inc.
,
    2013 ONSC 5830, 315 O.A.C. 246;
Sorbam Investments Ltd.
    v Litwack
, 2017 ONSC 706, 276 A.C.W.S. (3d) 852
    (appeal dismissed on unrelated grounds:
2017 ONCA 850, 288 A.C.W.S. (3d)
    677)
. The reach of these cases is arguably limited to their specific
    circumstances, and in any event they are not binding on this court.


