On April 26, 2012 the Supreme Court of Canada refused leave to appeal from the dismissal of Ellen Smith’s environmental class action concerning Inco’s refinery formerly located in Port Colborne. The refusal marks the end of a long and complex legal battle that has served as a test case for environmental class actions in Ontario.
In brief, the class action sought to recover property devaluation damages arising from nickel contamination, caused by Inco, on residential properties surrounding the refinery. At trial, Justice Henderson of the Ontario Superior Court found Inco liable in nuisance and strict liability for $36 million.
On appeal, the residential property owners’ claims were unanimously dismissed. The Ontario Court of Appeal, in reversing the large award, found that the plaintiffs had failed to prove that their properties were in fact devalued as a result of the nickel contamination. Additionally and more importantly, the court concluded that the tort of private nuisance and the doctrine of strict liability did not apply in the circumstances. The key points of the Court of Appeal decision in this regard are as follows:
- In order for liability in nuisance to arise as a result of environmental contamination, something more than a “mere chemical alteration in the content of soil” is necessary. To constitute physical harm, a change in chemical composition must have a detrimental effect on the land itself or the rights associated with the use of land. In the residential context, such detrimental effects include negative health effects, but property devaluation due to a perceived risk of negative health effects is not sufficient to establish liability in nuisance.
- The strict liability doctrine founded in the English case of Rylands v. Fletcher is not limited to single isolated escapes of substances. However, the doctrine does not apply to emissions into the natural environmental that are the intended consequence of an activity that is approved and carried out in accordance with all rules and regulations. Strict liability, in the environmental context, is limited to “mishaps” that occur in the course of the conduct of an unnatural or unusual activity.
- Strict liability does not apply unless the defendant has made an unnatural use of its land. The act of bringing a foreign substance onto the land does not alone constitute an unnatural use. In order to establish strict liability, the plaintiff must show that the defendant’s use of the land was “not an ordinary or usual use” in light of “the degree of dangerousness posed by the activity and the circumstances surrounding the activity”. While compliance with environmental and zoning laws is not determinative, it is “an important consideration” which in this case weighed favourably for Inco.
- In Canadian law, there is no tort of strict liability for extra-hazardous activities. Imposing strict liability for certain inherently dangerous activities is a task that should be left to the legislature. The harm caused by dangerous activities is currently addressed through the tort of negligence and its ever flexible standard of care.
The Court of Appeal decision, as whole, represents the increasing importance of regulatory standards and approvals in the private law of liability for environmental contamination. In placing limits on the breadth of the individual elements of nuisance and strict liability, the scope of these recovery mechanisms has been significantly narrowed. How these torts will be treated in future cases, particularly those involving regulated activities and lacking significant human health risks, remains to be seen. However, for the time being, the Court of Appeal decision has provided defendants with ample arguments, in many common circumstances, against claims grounded in nuisance and strict liability.