Lawsuits challenge railroad's authority to OK oil pipeline

Here is an interesting article from AP business writer, Josh Funk, about growing conflicts between railways and neighbouring landowners in the US over pipelines and pipelines royalties: Click here to read the article at PennEnergy.com.  Not all railways hold full ownership over the land beneath their tracks; so who has the authority to grant permission for a pipeline, and to whom is compensation payable?

Ontario Court of Appeal overturns $36 million Inco class action damages award

In July, 2010, I posted about a $36 million award of damages made in favour of residential property owners in the City of Port Colborne.  The owners had sued Inco in a class action over property value losses related to soil contamination.  Now, on appeal from the decision of the trial judge, the Ontario Court of Appeal has overturned the award.  The Court allowed the appeal, ordered that Inco be paid $100,000 for the costs of the appeal, and has asked for submissions on the costs of the trial. 

The issues on appeal were:

 i.                   Did the trial judge err in holding that the discharge of the nickel particles by Inco on to the property of the class members constituted an actionable nuisance?

 ii.                 Did the trial judge err in holding that Inco was liable for the discharge of the nickel particles under the rule established in Rylands v. Fletcher?

iii.            Did the trial judge err in holding that the claimants had established a diminution in value of their properties after September 2000?

iv.            Did the trial judge err in holding that assuming there was a diminution in the value of the properties after September 2000, that diminution was caused by the discharge of nickel particles on to the land?

v.            Did the trial judge err in failing to hold that the claim was time barred under s. 45(1)(g) of the Limitations Act?

The Court allowed the appeal on the basis that the property owners failed to establish Inco's liability under either private nuisance or the rule in Rylands v. Fletcher (which is basically that a landowner cannot allow a harmful substance to flow from his or her property onto a neighbouring property).  Alternatively, if liability had been found, the Court of Appeal would still have found that the property owners failed to prove that they suffered any damages. 

Here is some of what the Court said about the tort of nuisance:

People do not live in splendid isolation from one another.  One person’s lawful and reasonable use of his or her property may indirectly harm the property of another or interfere with that person’s ability to fully use and enjoy his or her property.  The common law of nuisance developed as a means by which those competing interests could be addressed, and one given legal priority over the other.  Under the common law of nuisance, sometimes the person whose property suffered the adverse effects is expected to tolerate those effects as the price of membership in the larger community.  Sometimes, however, the party causing the adverse effect can be compelled, even if his or her conduct is lawful and reasonable, to desist from engaging in that conduct and to compensate the other party for any harm caused to that person’s property.  In essence, the common law of nuisance decided which party’s interest must give way.  That determination is made by asking whether in all the circumstances the harm caused or the interference done to one person’s property by the other person’s use of his or her property is unreasonable:  Royal Anne Hotel Co. Ltd. v. Village of Ashcroft (1979), 95 D.L.R. (3d) 756 (B.C.C.A.), at pp. 760-61. 

[...]

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

On the rule in Rylands v. Fletcher, the Court wrote:

The rule in Rylands v. Fletcher imposes strict liability for damages caused to a plaintiff’s property (and probably, in Canada, for personal damages) by the escape from the defendant’s property of a substance “likely to cause mischief”.  The exact reach of the rule and the justification for its continued existence as a basis of liability apart from negligence, private nuisance and statutory liability have been matters of controversy in some jurisdictions:   see Transco plc v. Stockport Metropolitan Borough Council, [2004] 2 A.C. 1 (H.L.); Burnie Port Authority v. General Jones Pty. Ltd. (1994), 179 C.L.R. 520 (Aust. H.C.); Murphy, “The Merits of Rylands v. Fletcher”.  In Canada, Rylands v. Fletcher has gone largely unnoticed in appellate courts in recent years.  However, in 1989 in Tock, the Supreme Court of Canada unanimously recognized Rylands v. Fletcher as continuing to provide a basis for liability distinct from liability for private nuisance or negligence.  

[...]

There are various formulations of the rule found in the case law and the academic commentary.  The authors of The Law of Nuisance in Canada suggest different potential formulations, including one, at p. 113, that requires four prerequisites to the operation of the rule:

•        the defendant made a “non-natural” or “special” use of his land;

•        the defendant brought on to his land something that was likely to do mischief if it escaped;

•        the substance in question in fact escaped; and

•        damage was caused to the plaintiff’s property as a result of the escape.

The Court of Appeal found that there was no liability under this doctrine because Inco's use of its property was not a "non-natural use".

Finally, although the Court of Appeal did not have to address the limitation period issue in order to make its decision, it did provide a brief commentary on the issue because of its potential effect on future cases.  The Court cautioned that discoverability is often an individual issue requiring individual adjudication after common issues (such as liability and damages, in this case) have been decided.  The trial judge in this proceeding had made a ruling on a limitation period defence on the basis that "most property owners" would not have been aware of the potential effect of nickel contamination as of a certain date.  The Court of Appeal ruled that the limitation issue could not be decided in that way in the trial of common issues:

If, as the trial judge found in this case, the evidence does not establish that all class members were not aware of and ought not to have been aware of the material facts, then the application of the Limitations Act to the claims is an individual and not a common issue. 

Read the full decision at: http://canlii.ca/s/6lhbs.

B.C. Appeal Court rules injurious affection class action can proceed

The B.C. Court of Appeal is allowing a class action to proceed over claims of loss suffered as a result of the construction of the Canada Line rapid transit system which connects Vancouver with Richmond and the Vancouver International Airport.  The lawsuit was certified by the B.C. Supreme Court, a decision that was appealed by the Defendant, Canada Line.  In another similar case, the Court of Appeal found that a nuisance claim raised by businesses along the Canada Line related to construction was defeated by the defence of statutory authority (i.e. the authority building the line could not be liable for causing nuisance on account of its legal authority to carry out the project).  In its most recent decision, the Court of Appeal found that the ruling in the earlier case was not conclusive of the issues raised in the appeal now before it.

The construction of the Canada Line rapid transit system took place between 2005 and 2009. The construction commenced at the south end of Cambie Street and proceeded north in a manner referred to as a “construction train”.   The method of construction was “cut and cover” which involved the excavation of a trench from south to north Cambie, the installation of a tunnel in the trench, the backfilling of the trench, and the restoration of the street surface.  The construction train proceeded through Cambie Village.   The claimants in the class action (respondents on the appeal) have submitted that this disruption gives rise to several claims: nuisance, waiver of tort, and injurious affection.  The class is comprised of approximately 62 individuals or companies who own properties in the Cambie Village and approximately 215 individuals or companies who operate a business from leased premises in the Village.

The Court of Appeal upheld the lower court's decision to certify the class action for a hearing of the following common issues: whether the construction caused an actionable nuisance; whether the nuisance is excused by statutory authority for the work; waiver of tort as a basis for nuisance damages; and, if it is found that a nuisance was caused but is excused by statutory authority, whether there is a claim for injurious affection. 

Read the decision at: Gautam v. Canada Line Rapid Transit Inc.

Ontario Court certifies class action for erosion damage

Property owners around Round Lake in Ontario were successful in their bid to certify a class action lawsuit against Renfrew Power Generation Inc. (RPG) related to soil erosion.  The property owners claim damages for trespass as a result of water encroaching on their properties, which they allege was caused by the operation of the Tramore dam.  Round Lake is part of the Bonneshere watershed, a series of rivers and lakes running eastward out of Algonquin Park and emptying into the Ottawa River. A small dam was constructed at the east end of the lake in 1913 by the former Ontario Hydro, which ultimately raised the water level of the lake in 1917. The dam is now operated by the defendant RPG.

The plaintiff landowners claim that RPG has intentionally and continuously trespassed on their land on many occasions over the years since 1917 by operating the Tramore dam to store water in Round Lake to generate electrical power. They claim that RPG’s actions have caused water to erode and now cover part of the plaintiffs’ lands.

The plaintiffs acknowledge that RPG had legal authority to raise the level of the lake to the 107.5 feet elevation in 1917 and therefore did not commit any trespass by so doing, however, they argue that a trespass has occurred and continues to occur because erosion has occurred over time such that water now covers or has escaped onto their lands, which are beyond the initial boundary between the water and the shoreline that would have existed if the level had been raised to 107.5 feet in 1917.
Read the decision at: Plaunt v. Renfrew Power Generation Inc.

BSE Class Action going national

The Ontario Superior Court of Justice is allowing an amendment to the BSE class action that will expand the plaintiff class to include Quebec farmers.  The change will be conditional on a similar action in Quebec being suspended or "stayed" in favour of the Ontario "national" action.  Also, the Court would not allow this amendment without including an opt-out right for Quebec farmers who would fall within the plaintiff class (those alleged to have suffered damages as a result of the Canadian government's actions in connection with the BSE "outbreak" in 2003). 

For at least the past year, the parties have discussed the desirability of proceeding in a single jurisdiction with a result that would be binding on all cattle farmers across Canada. The subject has been canvassed at various case conferences and court attendances in Ontario and Québec. On May 27, 2010, judges in Ontario and Quebec held a joint case management teleconference involving counsel in this action and the ongoing Quebec action. It was agreed that a motion could be brought in Ontario requesting amendment of the class definition to include the Québec class members, conditional on a suspension or stay of the Quebec action.

The Court also commented that the right to opt out is not a mere technicality. It is the foundation for the court’s jurisdiction over class members because it is the mechanism by which those class members become bound by the court’s decision. This was emphasized by Sharpe J.A. in giving the judgment of the Court of Appeal in Currie v. McDonald’s Restaurants of Canada Ltd. 2005 CanLII 3360 (ON C.A.), (2005), 74 O.R. (3d) 321, [2005] O.J. No. 506 (C.A.) at para. 28:

The right to opt out is an important procedural protection afforded to unnamed class action plaintiffs. Taking appropriate steps to opt out and remove themselves from the action allows unnamed class action plaintiffs to preserve legal rights that would otherwise be determined or compromised in the class proceeding. Although she was not referring to inter-jurisdictional issues, in Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46 (CanLII), [2001] 2 S.C.R. 534 at para. 49, McLachlin C.J.C. identified the importance of notice as it relates to the right to opt out: "A judgment is binding on a class member only if the class member is notified of the suit and given an opportunity to exclude himself or herself from the proceeding." The right afforded to plaintiff class members to opt out has been found to provide some protection to out-of-province claimants who would prefer to litigate their claims elsewhere: Webb v. K-Mart Canada Ltd. 1999 CanLII 15076 (ON S.C.), (1999), 45 O.R. (3d) 389 at 404 (S.C.J.). It is obvious, however, that if the right to opt out is to be meaningful, the unnamed plaintiff must know about it and that, in turn, implicates the adequacy of the notice afforded to the unnamed plaintiff.

In this case, the grant of opt-out rights to the newly-added Québec class members supports comity and displays deference to the court of a sister province by respecting the right of residents of that province to opt out of a proceeding in Ontario if they do not wish to be bound by the outcome.

Read the decision at: Sauer v. Canada (Attorney General).

Canadian Government responds to allegations in BSE class action claim

In the ongoing BSE class action against the Federal Government in Ontario, the Government has recently filed a document saying the following about cattle farmers' "duty to mitigate":

The plaintiff and class members had a duty to take reasonable steps to mitigate their losses as a result of the international embargo on Canadian beef and cattle.  The plaintiff and class members failed to do so by, among other things buying additional cattle or otherwise expanding their operations, not taking advantage of government compensation programs or otherwise not taking steps to minimize their losses in the context of their farming businesses.

Plaintiffs who allege they are suffering, have suffered or will suffer damages are obligated to "mitigate" their damages by taking reasonable steps to avoid the damages.  In practical terms, a plaintiff who is successful in an action will recover whatever damages are awarded by the Court less the amount of damages that should reasonably have been mitigated. 

Read the full document at: Particulars of the Statement of Defence.

Other documents and news about the class action are available at: http://www.bseclassaction.ca/.

Class Action judgment against Inco for environmental damages in the amount of $36 million

An Ontario trial judge has awarded a plaintiff class $36 million in damages in its action against Inco related to soil contamination.  The class proceeding was brought by residential properties owners in the City of Port Colborne alleging that emissions from the Inco refinery there contaminated the soil on many properties with high levels of nickel.  The action did not involve a claim for personal injury or adverse health effects.  Instead, the common issue that was allowed to proceed in the class proceeding (all class actions must first be "certified" by the Court before they will be allowed to proceed as class actions) related to property devaluation. 

The common issues before the Court in the trial were:

6(c) Did the disclosure from and after September 2000 of information concerning nickel contamination in the Rodney Street area and elsewhere in Port Colborne negatively affect property values in the Port Colborne area?

6(d) Did the discharge of nickel by Inco amount to a public and/or private nuisance?

6(e) Did the discharge of nickel by Inco amount to a trespass?

6(f) Is Inco strictly liable to the class for the discharge of nickel as a result of a failure to prevent the escape of a dangerous substance (Rylands v Fletcher)?

6(g) If Inco’s liability is established, can class members’ claims for property damages be assessed by group or area and, if so, what is the quantum of damages?

6(h) If Inco’s liability is established, did Inco’s conduct justify an award of punitive damages to the class, and if so, what amount of punitive damages is appropriate?

6(i) Are class members’ claims statute-barred by the six year limitation period provided for by s.45(l)(g) of the Ontario Limitations Act, that was in force during the relevant time?

The trial judge found that the representative plaintiff proved on a balance of probabilities that negative publicity and public disclosures by Inco concerning the contamination from and after September 2000 significantly affected property values in certain areas, somewhat affected property values in other areas, and had a slight effect on property values in another set of areas.  On this basis, different damage awards were made with respect to different areas within the plaintiff class of properties.

The Court used property tax assessment data from MPAC in order to determine the quantum of the losses suffered by the members of the plaintiff class.  An expert accepted by the Court analyzed the MPAC assessments for residential properties that were done in the years 1996, 1999, 2001, 2003, 2005 and 2008 in the cities of Port Colborne and Welland. He found that the average assessment for residential properties in the City of Port Colborne rose 59.5% between 1999 and 2008, and that the average assessment for residential properties in the City of Welland rose 65.4% for the same time period. Thus, residential properties in the City of Welland outperformed those in the City of Port Colborne by 5.9% from 1999 to 2008.  The expert concluded that the value of all of the residential property in Port Colborne is approximately $48,000,000 less than it would have been if property values in Port Colborne had kept pace with property values in Welland from 1999 to 2008.

Read the decision at: Smith v. Inco.

Beef producers slam Ottawa over BSE cases

CBC News - Edmonton - Beef producers slam Ottawa over BSE cases

CBC News reported this week on the ongoing BSE class action lawsuit.  Following the outbreak of BSE in the UK, Canada engaged in various regulatory measures to protect the Canadian cattle industry from contamination. In October 1997, Canada prohibited the feeding of protein derived from mammals to ruminants by regulation under the Health of Animals Act, S.C. 1990, c. 21. The most likely source of the disease was feed manufactured by Ridley Inc. Although Mr. Sauer, an Ontario cattle farmer, had not lost any cattle or suffered any property damage from the use of Ridley’s product, he commenced a proposed class action on behalf of commercial cattle farmers in seven provinces, claiming that Ridley had negligently, recklessly or knowingly sold a product to another farmer that had the potential to, and did, cause the harm suffered, and that the government of Canada had negligently regulated the cattle industry resulting in the harm suffered. Ridley and Canada moved to strike the claims. The motions were denied, as were their appeals.  An attempted appeal of the certification of the Ontario action as a class action was also denied.

Ridley has since settled with the plaintiffs for $6 million.  The case against the government is moving toward trial.

For additional information on the lawsuit and its current status, visit: BSE Class Action.

B.C. Court certifies expropriation-related class action

The British Columbia Supreme Court has certified a class action commenced by business and property owners in Vancouver who claim damages resulting from the construction of a rapid transit link. Class action lawsuits in Canada are just regular lawsuits until they are certified as a class proceeding by a court. The Court must be satisfied that a class action is the "preferable" procedure (rather than each individual claimant bringing its own lawsuit).

In this case, the claim was that the choice of constructing a tunnel using the cut and cover method rather than by boring the tunnel led to significant property and business loss (a "nuisance"). The Court agreed to certify the action as a class action, with the common issues to be determined (for all members of the class) to include: were damages caused by the choice of construction method?; was the interference authorized by law?; even if there was authorization, was the damage suffered injurious affection that can be compensated under expropriation legislation? (see my recent post on the Antrim Truck decision of the Ontario Divisional Court)

Now that the action is certified as a class proceeding, it can go forward through the normal lawsuit process to a trial.

Read the decision at:
http://www.canlii.org/en/bc/bcsc/doc/2010/2010bcsc163/2010bcsc163.html

CBC News - Saskatchewan - Sask. farmer sues over payments to railways

CBC News - Saskatchewan - Sask. farmer sues over payments to railways

CBC reports on a proposed class action lawsuit commenced by Saskatchewan farmer, Gordon Wallace, who alleges that Canada's major railways have overcharged farmers for maintenance of railcars since 1983.