On July 6, 2010, Mr. Justice Henderson of the Ontario Superior Court of Justice ordered Inco Limited (“Inco”) to pay $36 million to a Plaintiff Class comprised of past and present property owners in Port Colborne, Ontario. The award was to compensate for reduction in property values caused by historic nickel contamination.

Until operations ceased in 1984, Inco operated a nickel refinery in the City of Port Colburne, near Niagara Falls. The evidence showed that the refinery released airborne metals, particularly nickel, which were ultimately deposited into the soil of surrounding properties over the 60 years during which the refinery operated.

Several novel issues arose during this class action. However, the Court’s finding with respect to the timing of the action, given the historical nature of the contamination, has the potential to be the most far-reaching aspect of the decision.

Liability was found against Inco based on the legal doctrine from Rylands v. Fletcher, whereby a land user is strictly liable for any damage caused by failing to prevent the escape of a dangerous substance, regardless of whether precautionary measures were taken.

Inco acknowledged that its refinery had been the source of the majority of nickel contamination found within the class members’ property. All parties also agreed at trial that no “new” nickel deposits had occurred since Inco ceased its operations in Port Colburne in 1984.  

As the Statement of Claim in this action was not issued until March 2001, Inco’s primary argument at trial was that the class was out of time to maintain this action.

Pursuant to the Ontario Limitations Act, claims based on the Rylands v. Fletcher doctrine must be brought within six years. Similar claims in Alberta must be brought within two years of when the plaintiff knew, or ought to have known, that the damage had occurred.

Inco argued that, since the refinery ceased operating in 1984, the limitations period expired in 1990 at the latest.

The Plaintiff Class argued that the limitations period had not expired, as they only discovered that Inco’s conduct had negatively impacted their property values after the Ontario Ministry of Environment publicly released a phytotoxicological study concerning the contamination in January 2000. After this study was released, and a meeting of the local real estate board occurred, real estate agents began to include clauses relating to the nickel contamination in agreements for purchase and sale of property in Port Colburne.

The Trial Judge rejected Inco’s argument and accepted the argument of the Plaintiff Class, finding that prior to the release of the Ministry of Environment’s report, it was very unlikely that most members of the public knew, or had the means of acquiring knowledge, of the negative effect of the nickel contamination on the value of their property.

The Trial Judge also considered in the context of a class action if limitations periods should begin to run, when one member of the class becomes aware of the damage or has the means to acquire this knowledge, or when all class members knew or ought to have known of the material facts.  

The Trial Judge found that the majority of class members were not aware of the negative impact of the contamination and did not have means to acquire such knowledge until after the meeting of the local real estate board, which occurred on February 15, 2000.

Therefore, the Trial Judge found that the limitations period started to run on February 15, 2000, and the action against Inco was therefore not time-barred.

In the final result, 26 years after ceasing its nickel refining operations in Port Colburne, Inco was found liable for the negative impact to property values caused by nickel contamination and ordered to pay $36 million.

This decision, currently under appeal, suggests that actions relating to even the most historic contamination may not be barred by the passage of time. It also highlights the power of class proceedings to elevate the risk for companies facing a large number of claims that might, on their own, either be uneconomic to pursue or pose a lesser threat to an operator’s viability.