On November 21, 2012, the Ontario Court of Appeal (OCA) reaffirmed that for a plaintiff to receive damages from a negligence claim, the defendant’s negligence must have actually caused the plaintiff’s loss. In the case of Biskey v. Chatham-Kent (Municipality) (CK), the Biskeys had purchased contaminated property that, unknown to them at that time, had previously been used as a landfill. In the course of seeking a building permit, the Biskeys learned of the property’s previous use and sued CK, a prior owner of the property. The Biskeys argued that CK owed them, as subsequent purchasers of the property, a duty of care to properly notify them of its true condition; in not doing so, they argued, CK was negligent and breached its duty. The Superior Court of Justice agreed and awarded the Biskeys damages of $386,142, which included the additional construction costs they incurred as a result of the landfill on the property. (For further information on the Superior Court judgment, please see Torys’ March 2011 EH&S Bulletin.)

In reversing the Superior Court’s ruling, the OCA found it unnecessary to deal with the issues of whether CK owed the Biskeys a duty of care and whether CK breached that duty. Instead, the OCA ruled that the trial judge erred in finding that the losses claimed by the Biskeys were attributable to or caused by the negligence of CK. According to the OCA, the trial record showed that before the Biskeys commenced construction, they knew that the property had formerly been used as a landfill and that, consequently, they were bound to incur significant additional construction costs. Prior information regarding the property had been disclosed to the Biskeys in several site assessment reports, as well as from the preliminary work done by their contractor. Before the Biskeys commenced construction, the owners of the property immediately prior to the Biskeys offered to take it back and refund the entire purchase price. The OCA indicated that this provided the Biskeys with an opportunity to substantially satisfy their claim. In addition, the OCA noted that the Biskeys’ damages would have been about $25,000 had they accepted the prior owners’ offer, and that the Biskeys ultimately recovered $100,000 from other defendants (so the Biskeys could have avoided all their losses). The OCA concluded that when the Biskeys decided to reject the prior property owners’ offer and proceed with the construction, knowing that they were building on a landfill and that they would incur added costs, any causal link with CK’s alleged negligence was broken. The OCA therefore allowed CK’s appeal, set aside the trial judgment and dismissed the action.

To read the full OCA decision, please see Biskey v. Chatham-Kent (Municipality).  

Jeff Gracer (Partner at Sive, Paget & Riesel)