On May 3, 2007, the Supreme Court of Canada (SCC) agreed to hear the appeal of a major environmental class action judgment rendered by the Court of Appeal of Québec (CAQ): Ciment St-Laurent inc. v. Barrette (St-Lawrence Cement)1.
The CAQ’s decision – along with its concurrent decision in the matter of Comité d’environnement de Ville Émard (C.E.V.E.) v. Domfer poudres métalliques Ltée (Domfer)2 – was an important ruling in the field of environmental class actions.
Therefore, the SCC decision will have significant ramifications for businesses operating in Québec and throughout Canada. It will be even more significant since this is the first time the SCC will hear an environmental class action originating from Québec. Further, it will serve as a guide to Québec Courts in these fields3.
The case of St-Lawrence Cement related to a class action initiated on behalf of a group of occupants or owners of residences located near a cement factory in the Québec City area. The members alleged that the business was at fault in the operation of its plant and that it failed to act in a good neighbourly fashion. Damages were claimed with regard to the harm suffered due to dust, noise and odours which, according to the members, had reached excessive levels. At trial, the Superior Court granted relief, although it held that the cement factory had not been guilty of any wrongdoing. The Court was of the view that the cement plant, as a result of its operations, had caused abnormal inconvenience exceeding tolerable limits and that it consequently had to be held liable, in the absence of any wrongdoing, pursuant to the applicable rules in matters of private nuisance provided for in Article 976 C.C.Q.
The CAQ reversed the decision of the Superior Court on this point, unanimously holding that the liability scheme for nuisance claims did not create a personal right of action and could not be the basis for a class action. The CAQ also held that there could be no liability without wrongdoing – and, therefore, the mere evidence of abnormal inconvenience (which, essentially, stems from a subjective appreciation of said inconvenience) was insufficient.
The CAQ decided that Article 976 C.C.Q. could not be the basis for a class action since this provision, in its opinion, creates rights in rem, whereas a class action is a procedural vehicle created exclusively to enable the exercise of personal rights. However, after revisiting the evidence, the CAQ reversed the decision of the Superior Court to the effect that the cement plant was not guilty of any wrongdoing. In so doing, the CAQ laid down a principle stating that any business must maintain its anti-pollution equipment in optimal working condition at all times during production. In this respect, the CAQ attached greater significance to the compliance or lack of compliance by the business with the statutory duties provided for in the Environmental Quality Act (EQA)4 and, in particular, Section 12 of the Regulation respecting the application of the Environmental Quality Act (Regulation)5. On this basis, the CAQ held that the action taken by St-Lawrence Cement was insufficient and that it was guilty of wrongdoing.
3. Brief Overview of the Issues Before the Supreme Court
One of the main issues the SCC will deal with is the interpretation of Section 12 of the Regulation. The CAQ’s interpretation of Section 12 resulted in the liability of St-Lawrence Cement for not maintaining its anti-pollution equipment in optimum working order at all times during production hours. The SCC will be called upon to revisit the theory of liability without fault in matters of private nuisance and to determine its application in Québec civil law. In the context of this debate, the parties will most likely seek to establish compliance or non-compliance by St-Lawrence Cement with its duties and obligations, in light of the evidence.
In addition, the debate will focus on the issue of compensation for harm suffered in the context of a class action. In this regard, the decision handed down by the CAQ was significant in that it confirmed the appropriateness of lump sum compensation, which awards average compensation for the nuisance and inconvenience caused by wrongful conduct. However, it held that this compensation method, based on an average was not appropriate to compensate economic damages, i.e. damages that can be assessed objectively, such as the cost of maintenance work. The SCC will be called upon to determine if this method of assessment of the quantum of damages is appropriate in class actions.
Finally, the Court will be required to review the decisions of the lower courts, which held that the commencement of a class action based on day-to-day nuisance caused by an industrial operation could interrupt the prescription or limitation period with respect to future rights.
Whereas the decision of the CAQ represented a major turning point in environmental class actions in Québec, the case now takes on national significance since the SCC has granted the application for leave to appeal.
This matter primarily raises the significant issue of potential liability of a business for having caused environmental nuisance to its neighbours and asks the SCC to make a determination of the extent to which legislative standards in environmental matters are relevant to determine such liability. This matter also raises the issue of the role class actions play in disputes of an environmental nature. Although the fact situation originated in Québec, it goes beyond the borders of this province, raising issues of national importance such as the protection of the environment and an analysis of the liability of businesses.
The decision handed down by the CAQ had the merit of reverting to more reasonable legal foundations in matters of liability for private nuisance, with the use of more objective criteria than the previous approach followed by the courts based on the subjective assessment of the level of the nuisance. The SCC will however have full latitude to establish its own criteria and crystallize the law in this respect. In addition, this analysis will likely occur on a national scale, taking into account rules developed with respect to private nuisance in common law, which are akin to those implemented by the Québec Courts prior to the recent decision of the CAQ. Regardless of the outcome, it is desirable that more specific criteria be developed for the assessment of liability for private nuisance.
The CAQ based its opinion on a very broad interpretation of Section 12 of the Regulation to establish the duty to maintain anti-pollution equipment in an optimum working condition, which none considered to be an absolute duty. However, this is a cause for great concern in the industry. Indeed, the interpretation favoured by the CAQ is difficult to accept from the point of view of the industry in light of the fact that it does not appear to take into account compliance with EQA regulations governing emissions. Therefore, the SCC decision is eagerly awaited.
Ultimately, it is desirable that objective factors be used to determine a business’ liability for the environmental nuisance it causes its neighbours. The resolution of such matters would be made easier, and all stakeholders would be in a better position to appreciate their rights, duties and obligations. Although the SCC may reconcile the state of the law with growing environmental concerns through this decision, one hopes that the law in this field will also be clarified.
This is just as true when one examines this matter from a "class actions" perspective. Class actions are tools that have profoundly changed the nature of legal proceedings, and they are gaining in popularity in Canada. This procedural vehicle does raise some practical difficulties, particularly in the determination of damages. This case will provide the SCC the opportunity to establish rules that will guide the lower courts in the determining the amount of compensation to be awarded in class actions – with a view, one hopes, to promoting a practical and methodical approach.
The decision of the SCC will have a significant impact on two fields of law – environmental and class actions. These fields are significant and should continue to develop since environmental matters are a growing concern for citizens. One hopes that the SCC will propose benchmarks that will help reconcile the various interests at stake.