2017 Harvest

2017 Harvest

Friday, July 2, 2010

Claim against CN over sale of contaminated property going forward, in part

This is another decision on motions for summary judgment.  The action involves land owned in North Bay by Canadian National Railway Company (CN) that was sold by Canadian National Railway Properties (CNRP), a special purpose subsidiary of CN that was used to sell the lands, to Drosophilinks Consulting Inc. (DCI). It is alleged that there were environmental problems with one of the parcels sold by CN known as the Main Street lands. Damages are claimed by DCI for breach of contract and by the plaintiff Aldo Forgione under the Occupiers Liability Act, at common law and for breach of an alleged duty of good faith owed to him.  Forgione was involved because the property had come to DCI through an agreement between CN and Forgione "in trust" (for DCI).

The plaintiffs claim that in late July 2005, Mr. Forgione discovered a trailer on the Main Street property that contained transformers containing PCBs that exceeded federal and provincial guidelines. It is accepted that these transformers were there when the sale to DCI closed, although CN says that at the time of the sale, it thought that the property had previously been successfully decommissioned of environmental problems. It is claimed that DCI has incurred substantial expenses to comply with an order of the Ministry of the Environment, that Mr. Forgione has suffered personal damages as result of coming into contact with the PCBs and that he has suffered damages by reason of a lessening in value of the other properties that he purchased from CN in North Bay due to the notoriety of the PCB problem at the Main Street property.

The Ontario Superior Court declined to dismiss the DCI claim for breach of the agreement of purchase and sale, finding that there were genuine issues for trial.  The Court did, though, dismiss all of Forgione's personal claims, ruling that: 1) CN could not be liable under the Occupiers Liability Act when it had already sold the property to DCI; 2) Forgione provided no evidence of personal injury or harm; 3) Forgione provided no evidence of damage caused to other neighbouring properties purchased by companies he owned; 4) Forgione has no claim for a breach of the "duty of good faith":
Moreover, Canadian law has not recognized a general duty of good faith independent from or contrary to the terms of contract.
Even if Forgione were a party to the contract, which he wasn't, a breach of the contract by CN could not give rise to a cause of action for Forgione based on a separate breach of the "duty of good faith".

Read the decision at: Drosophilinks Consulting Inc et al v. Canadian National Railway Company.