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Date:: |
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Docket: |
L001638 |
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Registry: Vancouver |
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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BETWEEN: |
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BEAZER EAST, INC. |
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PETITIONER
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AND: |
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ENVIRONMENTAL
APPEAL BOARD AND
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RESPONDENTS |
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- AND -
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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Docket: L001898 |
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Registry: Vancouver |
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BETWEEN: |
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ATLANTIC INDUSTRIES LIMITED |
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PETITIONER
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AND: |
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DOUGLAS POPE, IN HIS
CAPACITY AS ASSISTANT |
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RESPONDENTS |
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REASONS FOR
JUDGMENT |
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Counsel for Beazer East, Inc: |
Leonard T. Doust, Q.C.
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Counsel for Atlantic Industries Limited: |
James M. Sullivan
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Counsel for Douglas T. Pope, in his capacity as Assistant Regional Waste Manager:
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Joyce Thayer |
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Counsel for Canadian National Railway Company:
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Richard E. Bereti |
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Counsel for Environmental Appeal Board: |
T. Murray Rankin, Q.C.
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Dates and place of hearing: |
October 10, 11, 16, 17, 19, 20, 24 – 27, 2000 Vancouver, B.C.
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INTRODUCTION
[1] Beazer East, Inc. (“Beazer”) and Atlantic Industries Limited (“Atlantic”) both challenge, by way of judicial review, the decision of the Environmental Appeal Board (the “Board”) dated March 29, 2000. The Board upheld the decision of the Assistant Regional Waste Manager (the “Manager”) to name Beazer and Atlantic as responsible persons in a remediation order (the “Remediation Order”) issued under s. 27.1 of the Waste Management Act R.S.B.C. 1996, c. 482, as amended (the “Act”). Canadian National Railway Company (“CNR”) was also named as a responsible person in the Remediation Order, but it did not appeal the Manager’s decision and it has supported the Remediation Order, both before the Board and this Court.
[2] Beazer and Atlantic have separately challenged the Remediation Order in two different proceedings. I am issuing one set of Reasons for Judgment for both proceedings because it is the same decision of the Board which is the subject matter of each proceeding and the Petitions in the two proceedings were heard together. Although the basis for attacking the Remediation Order is different in each proceeding, there is considerable overlap between the two matters.
UNDERLYING FACTS
[3] I propose to set out the underlying facts which I do not believe are in dispute. As these are judicial review proceedings, it would be inappropriate for me to make any findings of fact (except, possibly, by way of negating a finding of fact unsupported by the evidence). It would be particularly inappropriate for me to appear to make any findings of fact in the circumstances of this matter because some of the issues dealt with by the Board may also be considered by this Court in pending actions pursuant to s. 27(4) of the Act. Hence, I wish to stress that although I may state certain things as facts, I am not making any findings of fact in this matter.
[4] The property which is the subject matter of the Remediation Order is located at 8335 Meadow Avenue, Burnaby, along the Fraser River (the “Site”). It is contaminated as a result of a wood treatment operation which was carried on from 1931 to 1982. The Site was owned throughout this period by CNR and was leased to the operators of the wood treatment business.
[5] The operator of the business remained the same from 1931 until the last 6 or 7 months of operation in 1982 but it had different names and owners, both during and after this period. It was named Timber Preservers Ltd. at the beginning of the period and changed its name to (i) TPL Industries Ltd. in 1967, (ii) Koppers International (Canada) Ltd. in 1973 and (iii) Atlantic Industries (Canada) Limited in 1989. I will refer to this company as the “Principal Operator”.
[6] In 1948, Swanson Lumber Co. Ltd. (“Swanson”) acquired a controlling interest in the Principal Operator. In 1969, Beazer purchased the shares of Swanson and thereby became the parent corporation of the Principal Operator (although Beazer was then named Koppers Company Inc. and subsequently had another name, I will refer to it throughout as Beazer). This structure continued until 1981 when Beazer decided to sell Swanson, but not the Principal Operator. In order to facilitate the transaction, Beazer caused Swanson to transfer its shares in the Principal Operator to a numbered company owned by Beazer and the shares in Swanson were then transferred to the purchaser.
[7] In April 1980, the Ministry of Environment issued an order under the Pollution Control Act, the predecessor of the Act, requiring the Principal Operator to clean up oily contaminants on the surface of the Fraser River and on the bottom sediments along the river-bank. In June 1980, the Principal Operator was charged with discharging oily wastes into the Fraser River and another order was issued under the Pollution Control Act requiring the Principal Operator to undertake a detailed assessment of the Site and to clean up the residual contaminants. The Principal Operator pleaded guilty to one charge and was fined $7,500.
[8] In November 1981, there was a spill of pentachlorophenol into the Fraser River from the Site and charges were laid under the Fisheries Act (Canada). The Principal Operator pleaded guilty to one charge and was fined $6,000. In June 1982, a pollution abatement order was issued to the Principal Operator under the Pollution Control Act. The order required the submission of plans for the dredging of the foreshore and reclamation of the shore of the Site.
[9] In the spring of 1982, the Principal Operator sold its wood treatment assets to Domtar Inc. (“Domtar”) which carried on the operation for approximately 6 months until it was permanently closed in the fall of 1982. The Principal Operator continued to carry on its other operations, which involved the manufacture of culverts at other locations.
[10] Remedial work was carried out at the Site and, in June 1983, the Ministry of Environment advised the Principal Operator that the Site had been cleaned to its satisfaction. The Site was monitored following the completion of the remedial work and the monitoring continued until 1986, when the Ministry of Environment internally concluded that the requirements of the pollution abatement order had been satisfied.
[11] In 1988, the shares in the Principal Operator were sold by Beazer to Border Enterprises Limited (“Border”). The Principal Operator amalgamated with another Border subsidiary in 1993 under the name of Atlantic (the other Border subsidiary had the same name as the amalgamated company).
[12] CNR sold the Site to another party in 1984 and it has been sold on two subsequent occasions. The current owners are a group of eight companies.
[13] In 1995, potential problems regarding the Site were brought to the attention of the Manager. In the summer of 1997, following the proclamation of the current Part 4 of the Act, the Manager invited submissions as to who should be required to remediate the Site. After receiving submissions, the Manager issued the Remediation Order on December 19, 1997 naming the following parties as persons responsible for remediation at the Site under s. 26.5(1) of the Act:
(a) Beazer, as a previous owner, operator and producer;
(b) Atlantic, as a previous operator; and
(c) CNR, as a previous owner.
Beazer and Atlantic each appealed the Manager’s decision to name them in the Remediation Order.
DECISION OF ENVIRONMENTAL APPEAL BOARD
[14] The appeals of Beazer and Atlantic were pursuant to s. 44 of the Act to the Board, which was established under the Environment Management Act, R.S.B.C. 1996, c. 118. Under s. 47 of the Act, the Board is authorized to confirm, reverse or vary the Manager’s decision or to make any decision that the Manager could have made. The appeal was a hearing de novo and, after hearing evidence called by the parties, the Board made its own decisions with respect to the Remediation Order.
[15] I will discuss the Board’s decision in greater detail as I deal with the various challenges by Beazer and Atlantic. At this stage, I will simply set out a summary of the Board’s conclusions:
(a) Beazer was a responsible person by virtue of being a previous owner and operator under s. 26.5(1)(b) of the Act but the Manager was wrong in concluding that Beazer had been a producer under s. 26.5(1)(c);
(b) Beazer was not entitled to an exemption under s. 26.6(1)(h) as being a person who provided assistance or advice respecting remediation work;
(c) the Manager had not improperly exercised his discretion in naming Beazer as a responsible person in the Remediation Order;
(d) Atlantic was a responsible person by virtue of being a previous owner and operator under s. 26.5(1)(b);
(e) Atlantic was not entitled to an exemption under s. 26.6(1)(d) as being a person who became an owner of a contaminated site without knowledge of the contamination;
(f) the Manager had not improperly exercised his discretion in naming Atlantic as a responsible person in the Remediation Order;
(g) the Remediation Order should not be vacated against Atlantic on the basis of an abuse of process;
(h) the Board had no jurisdiction to stay the Remediation Order as against Atlantic pending the resolution of the outstanding legal action authorized by s. 27(4).
[16] In the result, the Board dismissed the appeals of Beazer and Atlantic and upheld the Remediation Order, with the exception of the reference to Beazer being a producer under s. 26.5(1)(c).
[17] In these proceedings, Beazer challenges each of the Board’s conclusions relating to it and Atlantic challenges the last three of the Board’s conclusions. Atlantic does not challenge the conclusions that it is a responsible person as a previous owner and operator and that it is not entitled to an exemption under s. 26.6(1)(d).
LEGISLATIVE SCHEME
[18] Part 4 of the Act was brought into force on April 1, 1997. At the same time, the Cabinet enacted the Contaminated Sites Regulation.
[19] Section 26.2 of the Act authorizes a manager to order an investigation of a site which he or she suspects is contaminated. Section 26.4 allows a manager to make a determination that a site is contaminated.
[20] Section 26.5 provides that certain listed categories of persons are responsible for remediation of a contaminated site. The categories include current and previous owners and operators of sites. Those terms are defined in s. 26(1) as follows:
“owner” means a person who is in possession of, has the right of control of, occupies or controls the use of real property, including, without limitation, a person who has any estate or interest, legal or equitable, in the real property, but does not include a secured creditor unless the secured creditor is described in section 26.5(3);
“operator” means, subject to subsection (2), a person who is or was in control of or responsible for any operation located at a contaminated site, but does not include a secured creditor unless the secured creditor is described in section 26.5(3);
Subsection (2), which is referred to in the definition of “operator”, has no application to these proceedings.
[21] Section 26.6(1) lists the exemptions for persons who are not responsible for remediating a contaminated site. The one which is relevant to this matter is clause (h), which reads as follows:
(h) a person who provides assistance or advice respecting remediation work at a contaminated site in accordance with this Act, unless the assistance or advice was carried out in a negligent fashion;
[22] Section 27(1) states that a responsible person is “absolutely, retroactively and jointly and severally liable” for reasonably incurred costs of remediation of the contaminated site. Section 27(4) provides that any person who incurs costs in carrying out remediation at a contaminated site may pursue legal action for costs of remediation from one or more responsible persons. This is the legal proceeding which has been called a “cost recovery action” or an “allocation proceeding”. In addition to these terms, I will refer to it as a “cost recovery/allocation proceeding”.
[23] Section 27.1 is very important in these proceedings. Subsection (1) reads as follows:
(1) A manager may issue a remediation order to any responsible person.
Subsection (2) states that a remediation order may require the named persons to undertake remediation, make a financial contribution to another person who had incurred remediation costs or give security. Subsection (3) sets out factors for the manager to consider when deciding whether remediation should begin promptly. Subsection (4) reads as follows:
(4) When considering who will be ordered to undertake or contribute to remediation under subsections (1) and (2), a manager must to the extent feasible without jeopardizing remediation requirements
(a) take into account private agreements respecting liability for remediation between or among responsible persons, if those agreements are known to the manager, and
(b) on the basis of information known to the manager, name one or more persons whose activities, directly or indirectly, contributed most substantially to the site becoming a contaminated site, taking into account factors such as
(i) the degree of involvement by the persons in the generation, transportation, treatment, storage or disposal of any substance that contributed, in whole or in part, to the site becoming a contaminated site, and
(ii) the diligence exercised by persons with respect to the contamination.
[24] Section 27.2 provides that on request of a person, a manager may appoint an allocation panel to provide an opinion on, among other things, the contribution of a responsible person to the contamination. The section sets out the factors for the allocation panel to take into account. The opinion of the allocation panel is not binding on the manager.
[25] Section 27.3 allows a manager to determine a responsible person to be a minor contributor, in which case that person is not liable in a cost recovery/allocation proceeding for more than the amount or portion of the remediation costs specified by the manager. Section 27.4 contains provisions for the manager to enter into voluntary remediation agreements with responsible persons.
[26] Section 28.7 states that a manager may exercise any of the manager’s powers even though they may have been previously exercised if one of 6 conditions exists. Those conditions include additional information becoming available, revised standards and the site posing a threat to human health or the environment.
[27] The final provision of the Act relevant to these proceedings which I will mention at this stage is s. 54(20). It states that a person who fails to comply with a remediation order commits an offence and is liable to a fine up to the sum of $200,000.
[28] The pertinent sections of the Contaminated Sites Regulation are ss. 34 and 35. Section 34 states that nothing in s. 27(1) of the Act shall be construed as prohibiting the apportionment of liability by a manager through the issuance of a remediation order or by the court in a cost recovery/allocation proceeding. Section 35 of the Regulation contains provisions governing certain aspects of cost recovery/allocation proceedings. Subsection (2) sets out the factors to be considered in determining the appropriate allocation between responsible persons. These factors are similar, but not identical, to the factors to be considered by an allocation panel under s. 27.2 of the Act. The wording of subsection (5) is relevant to one of the issues in these proceedings, and it reads as follows:
(5) In an action under section 27(4) of the Act, a corporation is not liable for the costs of remediation arising from the actions of a subsidiary corporation unless the plaintiff can prove that the corporation authorized, permitted or acquiesced in the activity of the subsidiary corporation which gave rise to the costs of remediation.
A similar provision with respect to the liability of directors, officers and employees is contained in the preceding subsection.
LEGISLATIVE HISTORY
[29] In view of the submissions made by the parties, it is also necessary to consider the history of the enactment of Part 4 of the Act and the Contaminated Sites Regulation.
[30] In March 1993, a group called the Canadian Council of Ministers of the Environment (the “CCME”) produced a report on contaminated site liability. The report was prepared by a core group of 10 organizations which included the environment ministries of 4 provinces and the federal government. The B.C. environment ministry was not part of the core group but it was one of the 38 organizations listed as workshop participants.
[31] The CCME report made 13 recommendations with a view of providing a model framework upon which individual governments in Canada could develop legislation. One of the stated objectives was to promote and facilitate a consistent approach to the issue of environmental liability across Canada.
[32] The CCME report recommended that the most effective way to cast a broad net of liability was to list specific classes of persons who may be identified as potential responsible persons and to have a “catch-all clause” to bring in other potentially responsible persons into the net. It suggested that the list could include, among others, parent corporations. The report noted that industry representatives had made the point that parent corporations should remain in the net only if the subsidiary corporation was established primarily to avoid responsibility. After pointing out the position of the industry representatives, the report stated that it was only recommending 2 other statutory exemptions (namely, exemptions in respect of lenders and receivers/trustees).
[33] Part 4 of the Act was added by the Waste Management Amendment Act, 1993. It was passed by the Legislature on June 15, 1993 but it was not proclaimed until April 1, 1997. In the meantime, the Ministry of Environment, Lands and Parks retained a professor at the University of Victoria, Chris Tollefson, to conduct an external review of Part 4 and associated draft regulations. After holding stakeholder consultation meetings and analyzing the remediation scheme, Professor Tollefson issued a report dated July 31, 1996.
[34] Professor Tollefson concluded that Part 4 would operate in a manner that is consistent with the Ministry’s principle of “polluter pay” but that the regime could be overbroad in some limited respects by imposing liabilities on responsible persons that are disproportionate to their relative contribution to site contamination. One of the areas of concern was the imposition of liability on a parent corporation for the actions of its subsidiary.
[35] In his report Professor Tollefson said the following about the definition of “owner” in Part 4:
Interpreted literally, the italicized phrase “has the right to control of” found in the definition of “owner” would appear to expand the potential liability of parent corporations considerably beyond the common law concepts of “sham” and “agency”. Indeed the terminology “right of control” would seem to justify attributing liability directly to a parent where the parent had only an unexercised capacity to control the affairs of the subsidiary.
He went on to express the concern that there was a very real prospect that parent corporations will be named in private cost recovery actions involving their subsidiaries even where there is no evidence to suggest that the parent exercised any control over the activities of the subsidiary. He concluded that cost recovery plaintiffs should be required to prove that the parent corporation “authorized, permitted or acquiesced” in the activity giving rise to the contamination.
[36] I interject to observe that Professor Tollefson did not explain the rational of why parent corporations which do not authorize, permit or acquiesce in the contaminating activity should be given a defence in cost recovery/allocation proceedings but should still be exposed to being named in remediation orders.
[37] The Cabinet apparently accepted Professor Tollefson’s recommendation in this regard because the wording recommended by him is found in s. 35(5) of the Contaminated Sites Regulation which was enacted on April 1, 1997, the same day on which the Waste Management Amendment Act, 1993 was proclaimed.
STANDARD OF REVIEW
[38] The traditional approach in considering whether the court should interfere with the decision of an administrative tribunal was to determine whether the tribunal had made a jurisdictional error. The approach has been changed by a number of decisions of the Supreme Court of Canada in the past dozen years to what is called the “pragmatic and functional approach”. The change began in U.E.S. Local 298 v. Bibeault, [1988] 2 S.C.R. 1048 and has continued with three decisions which all counsel agree are the leading authorities for the purposes of these proceedings, Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557, Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748 and Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982.
[39] In Pezim, the Court stressed that there is a spectrum for the applicable standard of review. It ranges from a standard of correctness to a standard of reasonableness. At the correctness end of the spectrum, the courts give the least amount of deference to the administrative tribunal and will interfere if the decision of the tribunal is incorrect. At the other end of the spectrum, the courts give the highest level of deference to the tribunal and will only interfere if the decision is patently unreasonable.
[40] Although the standard of review can be located at any point along the spectrum, the Court in Southam gave recognition to a particular point on the spectrum between the two extremes. This point is a standard of reasonableness simpliciter. The Court explained this third standard as follows:
I conclude that the third standard should be whether the decision of the Tribunal is unreasonable. This test is to be distinguished from the most deferential standard of review, which requires courts to consider whether a tribunal’s decision is patently unreasonable. An unreasonable decision is one that, in the main, is not supported by any reasons that can stand up to a somewhat probing examination. Accordingly, a court reviewing a conclusion on the reasonableness standard must look to see whether any reasons support it. The defect, if there is one, could presumably be in the evidentiary foundation itself or in the logical process by which conclusions are sought to be drawn from it. An example of the former kind of defect would be an assumption that had no basis in the evidence, or that was contrary to the overwhelming weight of the evidence. An example of the latter kind of defect would be a contradiction in the premises or an invalid inference.
The difference between “unreasonable” and “patently unreasonable” lies in the immediacy or obviousness of the defect. If the defect is apparent on the face of the tribunal’s reasons, then the tribunal’s decision is patently unreasonable. But if it takes some significant searching or testing to find the defect, then the decision is unreasonable but not patently unreasonable. (pp. 776-7)
The Court also stated the standard of reasonableness simpliciter was closely akin to the “clearly wrong” test utilized by appellate courts in reviewing findings of fact by trial judges. The Court concluded in this regard by stating that “the standard of reasonableness simply instructs reviewing courts to accord considerable weight to the views of tribunals about matters with respect to which they have significant expertise”. (at p. 779)
[41] The difference between “unreasonableness” and “patent unreasonableness” is demonstrated in Kovach v. British Columbia (Workers’ Compensation Board), [2000] 1 S.C.R. 55, a decision in which the Supreme Court of Canada allowed the appeal substantially for the dissenting reasons of Donald J.A. in the B.C. Court of Appeal (Re Kovach (1998), 52 B.C.L.R. (3d) 98. In contrast to the standard of reasonableness simpliciter, which involves a “somewhat probing examination”, Donald J.A. stated that the review test for patent unreasonableness is whether the result is patently unreasonable, irrespective of whether there may be defects in the tribunal’s reasoning. (at p. 112)
[42] In Pushpanathan, the Court set out the following four factors to be taken into account when applying the pragmatic and functional approach to determine the standard of review:
(a) privative clauses;
(b) expertise;
(c) purpose of the Act as a whole, and the provision in particular; and
(d) the nature of the problem.
I will now review these factors within the context of this matter.
(a) Privative Clauses
[43] There is neither a private clause nor a statutory right of appeal under the Act. In Pushpanathan, the Court stated that the absence of a privative clause does not imply a high standard of scrutiny where the other factors suggest a low standard and that a statutory right of appeal suggests a more searching standard of review. (at p. 773)
[44] While the absence of a privative clause and a statutory right of appeal suggests that this factor does not point strongly to either extreme of the spectrum, there is another aspect of the legislation which I believe should be taken into account when considering this factor.
[45] While the Act empowers a manager to investigate and determine whether a site is contaminated and to order responsible persons to remediate the site, the Legislature decided that the courts should be authorized to determine the allocation of responsibility for the contamination. Section 27(4) of the Act provides that any person who incurs costs of remediation may commence legal action for contribution from one or more responsible persons and s. 35(5) of the Contaminated Sites Regulation sets out the factors to be considered by the court in such an action. Section 27.2(1) also provides for allocation of responsibility to be considered by an allocation panel but the opinions of allocation panels are not binding and it is more likely that a person who incurs remediation costs will resort to legal action unless there is a reasonable prospect of a voluntary remediation agreement among all responsible persons.
[46] In an action under s. 27(4), it will be necessary for the courts to determine who are responsible persons in order to allocate the responsibility for the contamination. This means that the courts will be considering the definitions of, among others, “owner” and “operator”, the interpretation of which is central to Beazer's challenge of the Board’s decision in this case. In other cases, both the courts and the Board will have to interpret s. 26.5 to determine if persons are responsible persons by virtue of being producers or transporters.
[47] In my view, it would lead to embarrassment and unjust results if the courts and the Board arrived at different interpretations of the definitions of “owner” and “operator” (or any other provision of the Act in common to both the remediation order process and cost recovery/allocation proceedings). This points to a lesser degree of deference to be accorded to the Board in its interpretation of these two definitions.
[48] It is my understanding that counsel for the Manager agrees with my conclusion in this regard but counsel for the Board submits that the existence of a civil cause of action is not relevant to the Court’s determination of the standard of review. Counsel points to the Southam case, which involved the Competition Act, and says that it also contains provisions by which individual plaintiffs can pursue statutory civil actions based on conduct contrary to the offence provisions of that Act. The distinction to be made, in my view, is that the Southam decision involved an issue of mixed law and fact while the interpretation of the definitions in this case is an issue of law. There is much less likelihood of embarrassment and unjust results with respect to contrary conclusions by the courts and the administrative tribunal on issues of mixed law and fact because the facts will be different in each case.
[49] It should not be taken as saying that this factor is determinative of the standard of review. I am simply saying that it is a factor to be taken into account and that it is a factor which weighs in the direction of less deference. It may well be outweighed by other factors.
(b) Expertise
[50] In Southam, the factor of expertise was described as the most important of the factors that a court must consider in settling on the appropriate standard of review.
[51] In Pushpanathan, Bastarache J., on behalf of the majority of the Court, reiterated that expertise is a relative, not an absolute concept. He explained the dimensions of this factor:
Making an evaluation of relative expertise has three dimensions: the court must characterize the expertise of the tribunal in question; it must consider its own expertise relative to that of the tribunal; and it must identify the nature of the specific issue before the administrative decision-maker relative to this expertise. (p. 1007)
He then observed that the criteria of expertise and the nature of the problem are closely interrelated. Bastarache J. also commented that if a broad relative expertise is established, the Court is sometimes prepared to show considerable deference even in cases of highly generalized statutory interpretation where the instrument being interpreted is the tribunal’s constituent legislation. (at p. 1007 of [1997] 1 S.C.R.) In Pushpanathan itself, the Court concluded that the decision of the tribunal should be subjected to a standard of correctness because, for among other reasons, the tribunal did not enjoy relative expertise on the issue of law in question.
[52] In the present case, the Board was established in 1981 under the Environment Management Act. In addition to its functions under the Act, it hears appeals under several other environmental statutes, including the Commercial River Rafting Safety Act, the Health Act, the Pesticide Control Act, the Water Act and the Wildlife Act. Counsel for the Board advised that its members presently include a health professional, several professional engineers, a biologist, a consultant on environmental regulatory issues, a pulp and paper worker with experience as an environmental officer, an agrologist, a retired industrial arts instructor, a former Crown counsel and several lawyers specializing in environmental law. The expertise of the Board in environmental matters has been recognized in numerous previous decisions: see Olson v. British Columbia (Ministry of Environment Wildlife Branch, Director), [1989] B.C.J. No. 1579 (Q.L.) (B.C.S.C.) British Columbia (Minister of Health) v. British Columbia (Environmental Appeal Board) (1996), 26 B.C.L.R. (3d) 367 (B.C.S.C.) Howe Sound Pulp & Paper v. B.C. (Environmental Appeal Bd.) (1999), 29 C.E.L.R. (N.S.) 224 (B.C.S.C.) and Swamy v. Tham Demolition Ltd 2000 BCSC 1253.
[53] As pointed by Bastarache J. in Pushpanathan, it is necessary to consider the aspect of expertise in light of the nature of the issue before the tribunal and the Court must consider its own expertise relative to that of the tribunal. There are numerous issues in question in these proceedings. Some of them are matters of statutory interpretation in respect of which the Court has more expertise than the Board. The Act is not the Board’s constituent legislation and the issues of statutory interpretation do not involve questions which engage the Board’s expertise.
[54] Some of the issues relate to the jurisdiction of the Board. It is agreed by all counsel that true questions of jurisdiction are subject to a standard of correctness, but there are disagreements as to whether particular issues which have classified by Atlantic as questions of jurisdiction properly fall within that category.
[55] There are issues which are not solely restricted to statutory interpretation or the Board’s jurisdiction. The Board’s expertise does come into play with respect to such issues and deference should be given to the Board on those issues. As the level of the Board’s expertise increases, the level of deference given to the Board’s decision will increase correspondingly.
(c) Purposes of the Act
[56] The purposes of the Act are the prevention of pollution and the identification and remediation of contaminated sites: see Howe Sound Pulp & Paper (at p. 231), Swamy (at para. 36) and Re the Queen in Right of British Columbia and Alpha Manufacturing Inc. (1996), 132 D.L.R. (4th) 688 (B.C.C.A.) at p. 693. It is the latter purpose which is the focus of Part 4 of the Act.
[57] In Swamy, Hunter J. concluded that the principles set out in R. v. Consolidated Maybrun Mines Ltd., [1998] 1 S.C.R. 706 by the Supreme Court of Canada applied to our legislation. In that case, the Court held that the purpose of the legislation before it was to prevent and remedy environmental contamination. The Court also said the following about the remediation purpose:
Such a purpose requires rapid and effective means in order to ensure that any necessary action is taken promptly. This purpose is reflected both in the scope of the powers conferred on the Director and in the establishment of an appeal procedure designed to counterbalance the broad powers conferred on the Director by affording affected individuals an opportunity to present their points of view and assert their rights as quickly as possible...
(para. 59)
Similarly, the purpose of remediation under the Act encompasses the need for expeditious action. The Act empowers a manager to issue a remediation order as required and anyone named as a responsible person has a right of appeal to the Board. The ultimate allocation of responsibility is left by the Act to a more time-consuming court process unless there is a voluntary remediation agreement among all responsible persons.
[58] These purposes point to a higher level of deference to the Board, especially in situations where its expertise is engaged or where the matter in question involves an exercise of discretion by a manager or the Board.
(d) Nature of the Problem
[59] There was an instructive discussion in Southam about this topic. The Court summarized the types of potential problems as follows:
Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. A simple example will illustrate these concepts. In the law of tort, the question what “negligence” means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact. I recognize, however, that the distinction between law on the one hand and mixed law and fact on the other is difficult. (pp. 766-7)
The Court gave guidance with respect to distinguishing between questions of law and questions of mixed law and fact in the following passage:
To some extent, then, the question resembled one of mixed law and fact. But the question was one of law, in part because the words in question were present in a statutory provision and questions of statutory interpretation are generally questions of law, but also because the point in controversy was one which might potentially arise in many cases in the future... (p. 767)
In the present context, the interpretation of the definitions of “owner” and “operator” in the Act involves statutory interpretation and is likely to arise in many cases in the future.
[60] The Court also gave an example of the difficulty in distinguishing between questions of law and questions of mixed law and fact:
...if a decision-maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision-maker considers only A, B, and C, then the outcome is as if he or she had applied a law that required consideration of only A, B, and C. If the correct test requires him or her to consider D as well, then the decision-maker has in effect applied the wrong law, and so has made an error of law. (pp. 768-9)
[61] Another type of problem involved in this case is the exercise of discretion by the Manager. In Baker v. Canada (Minister of Citizenship and Immigration), [1992] 2 S.C.R. 817, the Supreme Court of Canada confirmed that the pragmatic and functional approach should be applied in deciding the amount of deference to be given to the exercise of discretion by an administrative decision-maker. Included in the factors to be considered are the amount of choice given by the legislation to the decision-maker and the nature of the decision.
[62] In this case, the issues before the Board included all types of questions, but neither Beazer nor Atlantic is directly challenging findings of fact made by the Board. Rather than discussing and characterizing all of the issues raised by Beazer and Atlantic at this stage, I will consider the nature of the problem when I deal with each of the issues.
(e) Conclusion on Standard of Review
[63] Taking all of these factors into account, it is my conclusion that there should be different standards of review depending on the nature of the issue. It is my view that (i) the questions of law should be subjected to a standard of correctness and (ii) the questions of mixed law and fact should be subjected to a standard of reasonableness simpliciter. I will discuss the standard of review to be applied to the exercise of discretion by the Manager when I deal with the relevant issue because it will be necessary to consider the language of the relevant provision of the Act and the nature of the decision made by the Manager.
[64] The questions of law in this case involve statutory interpretation and do not engage the expertise of the Board. The courts have more relative expertise than the Board in considering matters of statutory interpretation. However, the Board heard the evidence and its expertise does come into play with respect to the questions of mixed law and fact. More deference should be given to the Board on these questions and a standard of reasonableness simpliciter is the appropriate standard in my view.
PRINCIPLES OF STATUTORY INTERPRETATION
[65] Before I address the particular challenges of the Board’s decision, I wish to deal with a disagreement of a general nature between counsel for Beazer and counsel for the Manager with respect to the correct approach to statutory interpretation.
[66] Counsel for the Manager advocates a purposive approach to statutory interpretation which she submits first involves a determination of the purpose of the legislation, which then governs the interpretation of the wording of the statute.
[67] This approach of giving priority to the purpose of the legislation over the literal meaning of the words in the statute finds support in Driedger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994). However, the approach was rejected by the B.C. Court of Appeal in Haida Nation v. British Columbia (Minister of Forests) (1997), B.C.L.R. (3d) 80. Esson J.A., on behalf of the majority, preferred the general statement of statutory interpretation found at p. 87 of the second edition of Driedger on the Construction of Statutes (Toronto: Butterworths, 1983), which reads as follows:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. This principle is expressed repeatedly by modern judges, as, for example, Lord Reid in Westminster Bank v. Zang, and Culliton C.J. in R. v. Mojelski. Earlier expressions, though in different form, are to the same effect; Lord Atkinson in Victoria (City) v. Bishop of Vancouver Island, [1921] A.C. 384, at p. 387, put it this way:
In the construction of statutes their words must be interpreted in their ordinary grammatical sense, unless there be something in the context, or in the object of the statute in which they occur, or in the circumstances with reference to which they are used, to show that they were used in a special sense different from their ordinary grammatical sense.
I need not delve into Esson J.A.’s very thorough reasoning which speaks for itself. However, as counsel for the Manager replies that she is relying on decisions of the Supreme Court of Canada in addition to the third edition of Driedger, I will mention that Esson J.A. addressed the apparent division in that Court and concluded that its majority judgments continue to rely on the second edition of Driedger and ignore the third edition. The most recent example, which post-dates the decision in Haida Nation, is the case of Will-Kare Paving & Contracting Ltd. v. Canada (2000), D.L.R. (4th) 242 (S.C.C.), where the Court quoted the first sentence of the above passage from the second edition of Driedger without mentioning the third edition. (at p. 257)
[68] Of course, the purpose of the legislation is relevant to its interpretation but it does not override the plain meaning of the words used in the legislation unless the purpose of the legislation would be defeated. In this regard, the second edition of Driedger (at p. 88) quotes the following passage from Westminster Bank Ltd. v. Zang, [1966] 1 All E.R. 114 (H.L):
But no principle of interpretation of statutes is more firmly settled than the rule that the court must deduce the intention of Parliament from the words used in the Act. If those words are in any way ambiguous – if they are reasonably capable of more than one meaning – or if the provision in question is contradicted or is incompatible with any other provision in the Act, then the court may depart from the natural meaning of the words in question.
In the Haida Nation decision, Esson J.A. commented on the fact that there are shades of difference between this passage and the passage quoted in the second edition of Driedger from Victoria (City) v. Bishop of Vancouver Island, but those shades of difference do not come into play in the case at bar.
[69] In addition, as pointed out by Esson J.A. in the Haida Nation decision, the Court is bound by s. 8 of the Interpretation Act, R.S.B.C. 1995, C. 238, which reads as follows:
Every enactment must be construed as being remedial, and must be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.
I have already considered the purposes of the Act. Its objects are the prevention of pollution and the identification and remediation of contaminated sites. The Act must be given a fair, large and liberal interpretation to achieve these objects but, with this in mind, it is still necessary to give effect to the wording chosen by the Legislature.
[70] Esson J.A. also made reference to s. 8 of the Interpretation Act in British Columbia (Minister of Environment, Lands and Parks) v. Alpha Manufacturing Inc. (1997), 150 D.L.R. (4th) (B.C.C.A.), a decision which involved the interpretation of the Act. He stated that it is necessary to interpret the Act by reference to the legislative purpose and that it would be contrary to s. 8 to give effect to an interpretation which would negate an essential object of the Act (at p. 203). He rejected the strained and technical interpretation of the language of the Act being put forward by the appellant in that case.
SUMMARY OF BEAZER’S PETITION
[71] Beazer first seeks an order in the nature of certiorari quashing or setting aside the Remediation Order against it. It next seeks an order in the nature of certiorari quashing or setting aside the portions of the Board’s decision (i) finding Beazer to be a “previous operator” of the Site, (ii) finding Beazer to be a “previous owner” of the Site, (iii) finding that Beazer was not exempt for the remediation work it carried out at the Site and (iv) finding that the Manager properly exercised his discretion in naming Beazer in the Remediation Order. Beazer also seeks declarations that (i) it is not a responsible person, (ii) it is exempt for the remediation work it carried out at the Site and (iii) it did not “contribute most substantially” to the contamination at the Site and should not have been named in the Remediation Order. Alternatively, Beazer requests that the matter be remitted to the Board for reconsideration.
[72] I will now deal with each of Beazer’s submissions. I will utilize separate headings in which I will attempt to capture the essence of the issue.
WAS BEAZER A PREVIOUS OWNER?
[73] The Board dealt first with the issue of whether Beazer fell within the definition of “operator”, but the nature of the parties’ submissions make it more convenient to begin by dealing with the issue of ownership.
(a) The Board’s Decision
[74] Although I am first considering the ownership issue, it is necessary to review some of the Board’s conclusions with respect to the issue of whether Beazer was an operator because the conclusions are common to both issues.
[75] The Board declined to follow a decision of the United States Supreme Court in the case of United States v. Bestfoods, 118 S. Ct. 1876 (1998), which involved a consideration of the terms “operator” and “owner” under the U.S. federal environmental legislation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601-9657 (the “U.S. Legislation”).
[76] The Board did not find s. 35(5) of the Contaminated Sites Regulation to be the test for determining whether a parent corporation is an operator. The Board found that the Legislature did not intend to “pierce the corporate veil” in the sense that liability for remediation as an operator does not occur simply because of the legal relationship between a company and its shareholders. Thus, a parent which owns 100% of its subsidiary’s shares does not, on that fact alone, become an operator under the Act. By implication, the Board also made these same findings with respect to the ownership issue.
[77] The Board relied on the broad language used by the Legislature in the definition of “owner” to reject the narrow approach advocated by Beazer to the effect that corporate principles dictate that parent corporations should not be treated as owners of real property belonging to their subsidiaries. The Board concluded that Beazer had the right to “control the use of” the real property as a result of the fact that all leases of the Site had to be approved by Beazer before they could be entered into by the Principal Operator.
(b) Standard of Review
[78] The interpretation by the Board of the definition of “owner”, if it is expressly stated by the Board or can be discerned from the Board’s reasons, is a question of law, and is subject to a standard of correctness. If the definition was correctly interpreted by the Board, the application of the facts to the definition is a question of mixed law and fact, and is subject to a standard of reasonableness simpliciter.
(c) Discussion of Question of Law
[79] I will again set out the relevant portion of the definition of “owner” for ease of reference:
“owner” means a person who is in possession of, has the right of control of, occupies or controls the use of real property...
[80] The first issue to be determined is whether a parent corporation can be an “owner” by virtue of its share ownership in its subsidiary. Although this was not the conclusion of the Board, it is the Manager’s position that the correct interpretation of the definition leads to such a conclusion.
[81] I will first address the effect of the CCME report and s. 35(5) of the Contaminated Sites Regulation. Beazer says that in view of the fact that the CCME report recommended that parent corporations could be listed as responsible persons, the Legislature must have rejected the notion of making parent corporations liable for the actions of their subsidiaries merely because of their status as parent corporation. The Manager responds that the Legislature made the definitions of “owner” and “operator” sufficiently broad to include a person having the status of a parent corporation and that it was not necessary to specifically list parent corporations as responsible persons.
[82] In my view, nothing can be inferred from the fact that the Legislature had the benefit of the CCME report and chose to describe responsible persons in a fashion different than recommended in the CCME report. The Legislature decided not to list classes of persons as responsible persons and to use a “catch-all clause”. Instead, the Legislature used definitions containing language of a general nature. It is necessary to interpret that language in order to determine whether the Legislature intended to include parent corporations generally. It may have been possible to draw an inference if the Legislature did list classes of persons as responsible persons and chose not to include parent corporations in the list (in which case the issue would be whether parent corporations fall within the “catch-all clause”). However, the Legislature did not use this approach and I do not believe that anything can be read into its decision to use a different approach.
[83] The Manager says that the express intent of the Legislature to include parent corporations within the broad definition of “owner” is found in s. 35(5) of the Contaminated Sites Regulation. Section 35(5) specifically makes reference to parent corporations and the Manager submits that the exemption in s. 35(5) was incorporated in explicit recognition that parent corporations would be caught by the definitions of “owner” and “operator”. In this regard, the Manager relies on the following passage from the third edition of Driedger:
Where the provision to be interpreted appears in a regulation, it is read in the context of both the regulation and the enabling Act as a whole. Where the provision to be interpreted appears in the enabling Act, the regulations are often ignored. Because regulations are a subordinate form of legislation, usually made after the enabling Act has been passed, they have limited value in interpreting provisions of the Act. In appropriate circumstances, however, where the Act and the regulations are closely meshed so as to form an integrated scheme, provisions from both are interpreted in the light of that overall scheme. (p. 246)
Finally, the Manager says that if a parent corporation is active in the affairs of its subsidiaries, it will never be able to rely on s. 35(5) and that the threshold test under the Act has to be higher than s. 35(5) (i.e., parent corporations can be responsible persons even if they are not active in the affairs of their contaminating subsidiaries.
[84] While it is true that a statute and its regulations should usually be interpreted together when they form an integrated scheme, it is my opinion that it would not be appropriate in the present circumstances to have regard to s. 35(5) of the Contaminated Sites Regulation when interpreting the definitions of “owner” and “operator” in the Act. Although the Act and Regulation came into force on the same day, the Act was passed by the Legislature almost four years before the Regulation was enacted. Section 35(5) of the Regulation was included on the recommendation of Professor Tollefson three years after the Act was passed by the Legislature on the basis of his view that there was a very real prospect that the definition of “owner” would be interpreted to include parent corporations. To have regard to s. 35(5) of the Regulation in these circumstances would not be proper in my view because it would be tantamount to utilizing the views of an outsider in attempting to ascertain the intention of the Legislature.
[85] I do not agree with the Manager’s submission that s. 35(5) is meaningless unless the definition of “operator” and “owner” are interpreted to include parent corporations on the basis of their shareholdings in subsidiaries. It is possible that a parent corporation can be found to be an owner or an operator as a result of its involvement with the contaminated site but will nevertheless be able to rely on s. 35(5) if such involvement was unrelated to the contamination (and if it did not otherwise authorize, permit or acquiesce in the activity of the subsidiary giving rise to the contamination).
[86] Accordingly, I find neither the CCME report nor s. 35(5) of the Regulation to be of assistance in interpreting the definitions of “owner” and “operator” in the Act. I will now turn my attention to the Bestfoods decision.
[87] On its face, Bestfoods is very similar to the case at bar. It involved the question of whether the terms “owner” and “operator” contained in environmental legislation include parent corporations. As it is a decision of the U.S. Supreme Court, a great deal of respect should be accorded to it even if it is not technically binding on this Court. The U.S. Supreme Court concluded that in certain circumstances a parent corporation could be an operator under the U.S. Legislation.
[88] In Bestfoods, it was not alleged that a parent corporation is liable as an owner or operator under the U.S. Legislation simply as a result of control through ownership of the shares in its subsidiary. The Court also suggested that a parent corporation might never be found to be an owner of a contaminated site, but it did not preclude the possibility of a parent being found to be an operator. In this regard, it decided that the critical question is:
...whether, in degree and detail, actions directed to the facility by an agent of the parent alone are eccentric under accepted norms of parental oversight of a subsidiary’s facility. (p. 1889)
The problem facing the U.S. Supreme Court was that the U.S. Legislation “is not a model of legislative draftsmanship” because the “phrase ‘owner or operator’ is defined only by tautology, however, as ‘any person owning or operating’ a facility” (at p. 1881).
[89] In other words, the U.S. Legislation does not have meaningful definitions of the terms “owner” or “operator”. The U.S. Supreme Court was required to give meaning to those terms without any assistance from the legislative body. In the present case, however, the Legislature has provided guidance by giving substantive definitions to the terms “owner” or “operator”. Thus, while the Bestfoods decision is helpful in giving meaning to the words “owner” and “operator” within the context of the U.S. Legislation, it provides little assistance in giving meaning to the words contained in the definitions of “owner” and “operator” under the Act.
[90] There was considerable discussion before the Board and this Court about “lifting the corporate veil”. In my view, this case is not about lifting the corporate veil in the sense of making the shareholders of a corporation liable for the actions of the corporation. Rather, this case is about the interpretation of the Act. The text, Gower’s Principles of Modern Company Law, 6th ed. (London: Sweet & Maxwell, 1997), stated its conclusion about the topic of lifting the corporate veil in the following terms:
Where then does this leave “lifting of the veil”? Well, considerably more attenuated than some of us would wish. There seem to be three circumstances only in which the courts can do so. These are:
(1) when the court is construing a statute, contract or other document;
(2) when the court is satisfied that a company is a “mere façade” concealing the true facts;
(3) when it can be established that the company is an authorized agent of its controllers or its members, corporate or human.
And (2) only is a true example of lifting the veil; in (1) and (3) the separate personality of the company is not denied but the practical effect on the parties’ rights and liabilities is the same as if it had been. (p. 173)
Here, the effect of interpreting the Act may be the same as lifting the corporate veil but it would be based on the wording of the Act and it would not be ignoring the separate existence of a corporation from its shareholders.
[91] In support of its position that a parent corporation can be an “owner” by virtue of its share ownership in the subsidiary, the Manager relies primarily on the decision of the Supreme Court of Canada in Atco Ltd. v. Calgary Power Ltd., [1982] 2 S.C.R. 559. At issue in that case was whether Atco Ltd. required the consent of the Public Utilities Board of Alberta before it could acquire shares in Calgary Power Ltd. In order to decide whether the consent was required, it was necessary to determine whether Atco Ltd. was an owner of a public utility. The Court concluded that Atco Ltd. was the owner of a public utility because it owned the majority of the shares in a company which, in turn, owned almost all of the shares of three companies which were public utilities.
[92] In the Alberta legislation, the phrase “owner of a public utility” was defined to mean “a person owning, operating, managing or controlling a public utility”. The focus was whether Atco Ltd. controlled a public utility. The genesis of the Court’s reasoning is as follows:
In the discharge of its varied functions it is difficult to appreciate how the Board can maintain a sound and comprehensive regulatory position so as to discharge its duty to the public at large in the regulation of public utilities and their owners, unless a broad interpretation is accorded to the words adopted by the legislature in s. 98. In my view, the words “owner of a public utility” must, by reason of s. 2, supra, include a person without legal ownership in the system but having the power to control. (p. 575)