On April 26, 2012, the Supreme Court of Canada (“SCC”) refused leave to appeal from the reversal of a $36 million environmental class action award against Inco. As usual, the SCC did not give reasons for declining to hear the appeal. The refusal of the leave application means the decision of the Ontario Court of Appeal (“ONCA”) will stand (See November 2011 Focus on Environmental Law). The parties now face a determination of the trial costs awarded to Inco (costs of the appeal have been fixed at $100,000).  

Summary

In a 3‐0 decision, the ONCA reversed a $36 million trial award to members of an environmental class action. Thousands of Port Colborne, Ontario’s residents had sued Inco for property devaluation caused by soil contamination arising from 66 years of nickel refining emissions from Inco’s smelter. Smith v. Inco Ltd. (formerly Pearson v. Inco Ltd.) is notable as one of the first environmental class actions to go to a full trial on the common issues.  

Implications

The ONCA decision makes it much more difficult to pursue claims of trespass, private nuisance and Rylands v. Fletcher strict liability in cases of historic contamination and also clarifies the application of limitation periods for class actions. Since the ONCA could have easily dismissed the claim based on the lack of damages or problems with a common limitation period alone, it is unclear if the ONCA’s sweeping limitation of private nuisance and Rylands v. Fletcher strict liability claims will be followed by future courts.  

Since the Ontario Court of Appeal’s decision is binding only in Ontario, there are arguably different standards set by courts in other jurisdictions in Canada for establishing the torts of private nuisance and Rylands v. Fletcher strict liability in an environmental context. Appellate court decisions are often persuasive in other provinces, with any perceived incongruity ultimately resolved by the Supreme Court of Canada. While the SCC did not choose to hear Smith v. Inco Ltd., we have likely not heard to the last word on this issue.