The recent decision of the British Columbia Supreme Court (Court) in Dolinsky v. Wingfield may allow those who have to clean up contamination on their lands to obtain those costs from the responsible parties before actually doing the work. This approach under the Environment Management Act (EMA) is different from previous decisions and practice, where money had to be spent first and then recovered from those responsible. Given the significant costs often associated with remediation, this could provide a better option for those facing cleanup and its costs, but could also place an earlier potential burden on those facing these lawsuits.
Gina Dolinsky found oil contamination at her house and after protracted investigations, environmental consultants identified the source as an old, underground oil tank located on her neighbour’s property. Some of the contamination was remediated, but more was required, which the consultant prepared a plan for, together with the estimated costs and a 50-per cent contingency. Ms. Dolinsky did not complete the remaining work, but rather commenced a legal action against those responsible to recover the money already spent, along with the estimated costs to complete the remediation.
COURT AWARDS FUTURE COSTS
The EMA casts a broad net on those considered responsible to remediate contamination and includes those who have an interest in, or control over, the lands. In this case, it also included a person who was not the registered owner, but who was shown to have controlled contractors on the property. The EMA allows a person who has incurred remediation costs to recover those “reasonably incurred costs” from responsible persons. In the past, courts have interpreted the cost recovery provisions as requiring that the remediation costs be incurred first, before a court can make an order. In this case though, the Court said that the EMA only requires “some costs of remediation” to be incurred before an award can be made for future costs. Given that the consultant had set out the scope of the remaining remediation with a cost estimate, the Court ordered those responsible to pay to Ms. Dolinsky the estimated future remediation costs, including the contingency.
The Court based its decision on the wording in the EMA that those responsible are to indemnify for remediation costs. The Court ordered the estimated costs to be paid in advance and held in trust by Ms. Dolinsky’s lawyer on her undertaking not to release the funds except upon proof that the costs were actually incurred and subject to an analysis that they were reasonable. Any money not spent was to be returned to the responsible persons. The Court said that this approach was preferable to awarding a specific amount at the time of trial, which could result in a windfall for either of the parties, depending on what the actual cost was.
REASONABLENESS OF FUTURE COSTS
The Court said that if the property was remediated by an appropriately qualified environmental remediation specialist in accordance with the usual standards, the remediation costs would generally be assumed to be reasonable.
This Court’s approach will likely encourage those who have incurred some remediation costs, which includes any investigation and consultant costs, to seek an order from the courts for the full cost of remediation, without first incurring all of those costs. For those who are the victims of contamination, this may alleviate some of the significant financial burden in carrying out remediation. But for those who are responsible persons under the EMA, it means that there may be a more aggressive pursuit of legal actions to fund the remediation.
As a practical matter, this means that those who seek such court orders will require an appropriately qualified specialist to investigate and delineate the contamination and to prepare a remediation plan with a defensible cost estimate. Those receiving such an order will want to have their own specialists review and critique any remediation plan and estimate and monitor the remediation and review the costs incurred to ensure that they are all reasonable and recoverable.