Dry cleaner who contaminated neighbour’s property ordered to pay significant damages

A dry cleaning business was ordered to pay over $1.6 million in damages to remediate a neighbour’s property for environmental contamination.

In Huang v. Fraser Hillary’s Limited the plaintiff, a property owner, brought an action against his neighbour, Fraser Hillary’s Limited (“FHL”), a dry cleaning business, and David Hillary (“Hillary”) the owner of a residential property adjacent to FHL. Hillary, who was the president and sole director of FHL, was only sued as the owner of the neighbouring property. The plaintiff alleged that during the 1960s and 1970s, dry cleaning solvents used at the FHL property migrated to the plaintiff’s property and that FHL and Hillary took no steps to address the migration of contaminants to its property. The plaintiff sued FHL and Hillary for trespass, strict liability, liability under s. 99 of Ontario’s Environmental Protection Act (“EPA”), nuisance and negligence.

FHL did not dispute that its dry cleaning products were the source of contamination on the plaintiff’s property. It denied liability because the products were not known to be hazardous at the time they were used, that the products at issue had been disposed of, and that the plaintiff had not proven his damages for interference with his properties. In his personal capacity, Hillary disputed liability on the basis that he, like the plaintiff, was an owner of a property that had been contaminated by the dry cleaning practices of their neighbour FHL.

Everything but the kitchen sink was argued

Trespass

Trespass requires a direct and physical intrusion onto the plaintiff’s land. In this case, Justice Roger of the Ontario Superior Court of Justice, found that the spills of tetrachloroethylene (“PCE”) and trichloroethylene (“TCE”) in 1960 and 1970 on FHL’s property was an indirect intrusion onto the plaintiff’s property and that the claim in trespass had to fail on that basis as against both defendants.

Strict Liability

To establish strict liability under the rule in Rylands v Fletcher, a plaintiff must establish the following four requirements:

1. The defendant made a “non-natural” or “special” use of his/her land;
2. The defendant brought on to his land something that was likely to do mischief if it escaped;
3. The substance in question in fact escaped; and
4. Damage was caused to the plaintiff’s property as a result of the escape.

Justice Roger found that FHL’s use of PCE and TCE in its dry cleaning operations from 1960 to 1974 was not a “non-natural” or “special” use of its land. Because the harmful effects of PCE and TCE were not known prior to 1974, it was not thus, foreseeable that the products were likely to do mischief if they escaped. Justice Roger refused to find liability on this basis.

Section 99 of the EPA

The plaintiff alleged that FHL, as the owner and party in the charge, management, and control of PCE on its property before it was first discharged, was liable to the plaintiff under section 99(2)(a)(iii) of the EPA. The plaintiff alleged that FHL failed in its duty under section 93 of the EPA to mitigate and restore the adverse effect of the spill of PCE. The plaintiff also alleged that Hillary was an owner and person having control of the pollutant because there was evidence that Hillary’s property was a source area and that contaminants had migrated from that source zone onto the plaintiff’s property.

Section 99(2) of the EPA provides the following:

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.

Justice Roger noted that the flow of PCE/TCE under FHL’s property onto neighbouring properties did not meet the definition of a “spill” under the EPA because it was already in the natural environment.

FHL was, however, the owner and person having control of the pollutant immediately before discharge as defined under the EPA and as such the plaintiff was entitled to compensation from FHL under section 99(2) of the EPA.

Section 99(2) of the EPA was not an available remedy against the defendant Hillary personally because there was no evidence that he was an owner or person in control of the pollutant immediately before discharge, as defined in the EPA. Further, Hillary did not purchase his property until years after the pollutants were discharged at FHL’s property.

Nuisance

To establish the tort of nuisance, a plaintiff is required to establish an interference with its use or enjoyment of land that is substantial and unreasonable.

Justice Roger held that FHL’s interference with the plaintiff’s property was substantial and unreasonable given that, among other things, the plaintiff’s property was impacted by PCE/TCE contamination, the source of the contaminants originated at FHL’s property and migrated onto the plaintiff’s land, the plaintiff was unable to redevelop his property unless remediation took place, and the cost of remediation was significant.

The plaintiff could not establish nuisance as against the defendant Hillary. Hillary was not an adjoining landowner and the evidence showed that his property was not the source of the contamination to the plaintiff’s property. By the time Hillary was aware that his property was located within a source zone of contamination, the plaintiff’s lands were already contaminated. Hillary’s failure to act did not change the fact that the plaintiff’s property continued to be contaminated from contaminants originating on FHL’s property.

Negligence

The plaintiff could not prove causation against FHL or Hillary and as such his claim in negligence failed.

Tips for future remediation claims 

Going forward plaintiffs may be able to obtain significant damages for remediation costs by asserting claims under section 99 of the EPA and private nuisance against a neighbour who is the source of contamination to its property. On the flip side, suing a neighbouring property owner that has contaminants flowing through its property, but is not the source of contamination, may not be sufficient to establish liability.