Wind farm developers in Ontario are being threatened with litigation from neighbouring residents who claim property values are suffering because of the perceived health concerns associated with wind turbines.  These claims were recently the subject of an investigation undertaken by the CBC that reported homes near wind farms were selling for less and taking longer to sell than other homes.  The issue has also been raised before the province's Assessment Review Board by property owners seeking to lower their property tax assessments.  

A recent ruling from the Ontario Court of Appeal in Ellen Smith v. Inco Limited will provide the province's wind developers with  stronger hand in fighting back against such claims.  The claimants in the Inco case alleged that their property values were reduced by nickel contamination that originated from Inco’s refinery in Port Colborne.  They succeeded at trial and Inco was held liable for the tort of nuisance and under strict liability imposed by the rule in Rylands v. Fletcher.   The ruling was notable as the refinery had adhered to the applicable environmental regulations during its operation and the level of nickel contamination did not present a threat to human health or otherwise impact the complainants' ability to use and enjoy their property.  Nonetheless, the trial judge held Inco liable for the loss of property value because the contamination led to a negative public perception about the contaminated land.

The Court of Appeal overturned the trial decision on October 7, 2011. On the issue of nuisance, the appeal judges ruled that an allegation of reduced property values cannot succeed in the absence of "actionable, substantial, physical damage" to the property or substantial interference with a claimant's use or enjoyment of his or her land. Neither of those were present in the Inco case. The court specifically noted that public concerns about potential health effects are insufficient to establish liability unless the alleged contamination "caused actual harm to the health of the claimants or at least posed some realistic risk of actual harm to their health and wellbeing." The court was critical of the trial judge's approach to nuisance because it would have allowed claims to succeed based on "unfounded public concerns" and "junk science" even where a defendant proved the contamination did not pose a risk to human health. The trial judge's finding of liability under the rule in Rylands v. Fletcher was also set aside because Inco had operated the facility in a manner that did not create "extraordinary or unusual" risks beyond those incidental to virtually any industrial operation.

The Court of Appeal's decision is good news for wind developers confronted with loss of property value claims from nearby residents. As a result of Inco, a claimant cannot rely upon vague allegations of reduced property values; rather they will be required to demonstrate the reduction arises either from actual physical damage to the property or a substantial interference with their ability to use and enjoy the property.

The Court of Appeal's decision may not be the final word on the matter as the plaintiff in Inco has the right to seek leave to appeal the decision to the Supreme Court of Canada.