2005 BCSC 631 Workshop Holdings Limited v. CAE Machinery Ltd.

Before: The Honourable Madam Justice Wedge

Reasons for Judgment

Counsel for the Plaintiff	D. F. McCrimmon
Counsel for the Defendant	R. S. Anderson
Date and Place of Trial/Hearing:	March 16 and 17, 2005
	Vancouver, B.C.

I. INTRODUCTION

[1] The plaintiff Workshop Holdings Limited (“Workshop”) applies under Rule 18A of the Rules of Court for determination of an action it commenced against CAE Machinery Ltd. (“CAE”) for the recovery of costs Workshop incurred in the remediation of a contaminated property it developed on Pender Street in Vancouver.

[2] When Workshop began developing the Pender Street property in 1997, it discovered the soil was contaminated by copper and zinc, which are the components of brass. CAE operated a brass foundry on the property many years ago. Workshop brought its action in 1999 under s. 27(4) of the Waste Management Act, R.S.B.C. 1996, c. 482, as rep. by S.B.C. 2003, c. 53, s. 174 alleging that CAE caused the contamination.

[3] Section 27(4) provides as follows:

…any person, including, but not limited to, a responsible person and a manager, who incurs costs in carrying out remediation at a contaminated site may pursue in an action or proceeding the reasonably incurred costs of remediation from one or more responsible persons in accordance with the principles of liability set out in this Part.

[4] CAE denied liability, arguing the following:

(a) Workshop has not established that the site was a “contaminated site” within the meaning of the legislation;

(b) Workshop has not established that CAE was responsible, in whole or in part, for the contamination;

(d) In the alternative, Workshop’s damage claim is excessive.

[5] The four defences argued by CAE are the issues in this summary trial.

II. THE LEGISLATION

[6] Workshop’s action was commenced in 1999 when the Waste Management Act (the “Act”) was in force. Since that time, the legislation has changed in some respects. First, amendments were made with the passage of the Waste Management Amendment Act, S.B.C. 2002, c. 34. The following year, the Act was repealed and replaced by the Environmental Management Act, S.B.C. 2003, c. 53.

[7] The history of the legislation is relevant, among other reasons, because CAE argued that Workshop was required to amend its pleadings once the Act was replaced by the new legislation in 2003. According to CAE, as Workshop has failed to amend its pleadings, it cannot succeed in its action.

[8] Section 35(1) of the Interpretation Act, R.S.B.C. 1996, c. 238 states, in part, as follows:

If all or part of an enactment is repealed, the repeal does not

…

(b) affect the previous operation of the enactment so repealed or anything done or suffered under it,

[9] Section 36(1) states, in part, as follows:

If an enactment (the “former enactment”) is repealed and another enactment (the “new enactment”) is substituted for it,

…

(b) every proceeding commenced under the former enactment must be continued under and in conformity with the new enactment so far as it may be done consistently with the new enactment.

[10] I do not read sections 35 and 36 of the Interpretation Act as requiring amendments to the pleadings in this case. In my view, Workshop is entitled to proceed with its action, which was properly commenced under the Act, in the manner originally pleaded. The basis for this conclusion is contained later in these reasons.

[11] In any event, although the Act has now been replaced by the Environmental Management Act, any changes to the statutory provisions relevant to this action do not affect the substance of Workshop’s claim. CAE argued that the definition of “contaminated site” is now more restrictive than it was under the Act. However, CAE did not suggest that the type of contaminants (copper and zinc) found in the soil of the subject property, or their levels, did not meet the new definition. I am satisfied that none of the provisions of the Environmental Management Act, if applied in this case, would limit or restrict Workshop’s right of recovery accruing under the Act before its repeal.

[12] I turn then to the relevant sections of the Waste Management Act dealing with the remediation of a contaminated site, all of which are contained in Part 4. Section 26 defines, among other things, “contamination”, “contaminated site” and “responsible person”, and deals with the identification of contaminated sites. Section 27 describes the principles of liability for remediation. A number of the provisions in both sections are central to the arguments in this case, and accordingly I will reproduce them:

s. 26(1) Definitions and Interpretation

“contaminated site” means an area of land in which the soil or any groundwater lying beneath it, or the water or the underlying sediment, contains

(a) a special waste, or

(b) another prescribed substance in quantities or concentrations exceeding prescribed criteria, standards or conditions;

“contamination” means the presence, in soil, sediment or groundwater, of special waste or another substance in quantities or concentrations exceeding prescribed criteria, standards or conditions;

“responsible person” means a person described in section 26.5;

26.1(1) A person must provide a site profile in accordance with the regulations

(a) to the approving officer when the person applies for or otherwise seeks approval for a subdivision of land that the person knows or reasonably should know is or was used for industrial or commercial activity, and

(b) to the applicable municipality when the person applies for or otherwise seeks approval for

(i) zoning of land that the person knows or reasonably should know is or was used for industrial or commercial activity,

(ii) a development permit or a development variance permit for land that the person knows or reasonably should know is or was used for industrial or commercial activity,

(iii) removal of soil from property that the person knows or reasonably should know is or was used for industrial or commercial activity,

(iv) a demolition permit respecting a structure that the person knows or reasonably should know is or was used for industrial or commercial activity, or

(v) a prescribed activity.

26.5(1) Subject to section 26.6, the following persons are responsible for remediation at a contaminated site:

(a) a current owner or operator of the site;

(b) a previous owner or operator of the site;

(i) produced a substance, and

(ii) by contract, agreement or otherwise caused the substance to be disposed of, handled or treated in a manner that, in whole or in part, caused the site to become a contaminated site;

(d) a person who

(i) transported or arranged for transport of a substance, and

(ii) by contract, agreement or otherwise caused the substance to be disposed of, handled or treated in a manner that, in whole or in part, caused the site to become a contaminated site;

(e) a person who is in a class designated in the regulations as responsible for remediation.

26.6(1) The following persons are not responsible for remediation at a contaminated site:

…

(d) an owner or operator who establishes that

(i) at the time the person became an owner or operator of the site,

(A) the site was a contaminated site,

(B) the person had no knowledge or reason to know or suspect that the site was a contaminated site, and

(C) the person undertook all appropriate inquiries into the previous ownership and uses of the site and undertook other investigations, consistent with good commercial or customary practice at that time, in an effort to minimize potential liability,

(ii) while the person was an owner of the site, the person did not transfer any interest in the site without first disclosing any known contamination to the transferee, and

(iii) the owner or operator did not, by any act or omission, cause or contribute to the contamination of the site;

…

26.6(3) A person seeking to establish that he or she is not a responsible person under subsection (1) has the burden to prove all elements of the exemption on a balance of probabilities.

27(1) A person who is responsible for remediation at a contaminated site is absolutely, retroactively and jointly and severally liable to any person or government body for reasonably incurred costs of remediation of the contaminated site, whether incurred on or off the contaminated site.

(2) For the purpose of this section, “costs of remediation” means all costs of remediation and includes, without limitation,

(a) costs of preparing a site profile,

(b) costs of carrying out a site investigation and preparing a report, whether or not there has been a determination under section 26.4 as to whether or not the site is a contaminated site,

(d) fees imposed by a manager, a municipality, an approving officer, a division head or a district inspector under this Part.

(3) Liability under this Part applies

(a) even though the introduction of a substance into the environment is or was not prohibited by any legislation if the introduction contributed in whole or in part to the site becoming a contaminated site, and

(b) despite the terms of any cancelled, expired, abandoned or current permit or approval or waste management plan and its associated operational certificate that authorizes the discharge of waste into the environment.

(4) Subject to section 27.3(3), any person, including, but not limited to, a responsible person and a manager, who incurs costs in carrying out remediation at a contaminated site may pursue in an action or proceeding the reasonably incurred costs of remediation from one or more responsible persons in accordance with the principles of liability set out in this Part.

III. HISTORY OF THE ACTION

[13] This is the second summary trial concerning Workshop’s action. In 2001, while the Act was still in force, Workshop applied for summary judgment to recover its costs of remediation. CAE, in response, applied to have the claim struck out on the basis that the Court lacked jurisdiction. CAE’s position was that Workshop could look only to the common law for damages against an earlier polluter, rather than s. 27(4), because it chose independent remediation under s. 28 of the Act rather than following the administrative process under s. 27.

[14] Under the administrative process, remediation cannot take place until a regional waste manager (a “manager”) appointed pursuant to the legislation first makes a determination that a site is a “contaminated site” and issues a remediation order to any “responsible person”. Anyone against whom a remediation order is issued may access the appeal process provided in the legislation.

[15] Section 28 deals with independent remediation. A party who chooses independent remediation under s. 28, as did Workshop, may carry out remediation whether or not the manager has made a determination that the site is contaminated. Section 28(1) provides the following:

A responsible person may carry out independent remediation

(a) whether or not a determination has been made as to whether the site is a contaminated site,

(b) whether or not a remediation order has been issued with respect to the site, or

[16] Workshop’s position was that the legislation intended s. 27(4) to provide a private remedy, capable of being pursued by way of a court action, independent of the administrative process giving the manager power to issue a remediation order after making determinations as to contamination and responsible persons.

[17] The summary trial judge dismissed Workshop’s claim to recover costs it incurred remediating the site, holding that it could only bring an action under s. 27(4) in the event that the manager made the requisite administrative determinations under the Act.

[18] Workshop appealed the dismissal of its action. In Workshop Holdings Ltd. v. CAE Machinery Ltd. 2003 BCCA 56, [Workshop v. CAE] the Court of Appeal set aside the judgment, holding that on a reading of the Act as a whole, s. 27(4) contemplated cost recovery actions such as the one brought by Workshop without a final determination of contamination by the manager. Huddart J.A., writing for the Court, said as follows at paras. 56-58:

The first consideration must be the words of the Act, in this case of Part 4 because that Part encapsulates the entire scheme for the identification and remediation of contaminated sites.

An owner of land who learns that his land may be contaminated in the course of an investigation for the purpose of sale or development will look to Part 4 to determine how he might remediate the land. If he is concerned about business efficacy, on the plain words of Part 4, he is likely to choose the independent remediation route to an approval in principle and certificate of compliance. By taking responsibility for the remediation, an owner can carry out a speedy clean-up without the delay inherent in the administrative processes set down in ss. 26.4(2), 27.1 and 27.4.

The owner’s cost recovery could be limited by a manager’s determination under s. 27.3(1) that a responsible person is a minor contributor to the contamination and, thus, entitled to the benefit of a limitation of liability under s. 27.3(3). Aside from that statutory limitation, the owner would be taking the risk that he might not later be able to establish in an action under s. 27(4) that the site was contaminated, that his costs of remediation were reasonably incurred, or that another person should bear some or all the responsibility for the contamination.

[19] The Court observed that such a reading of the Act advanced one of its purposes, the speedy cleanup of contaminated sites. Were a final determination of contamination by the manager a prerequisite to a statutory cost recovery action by a person who remediates independently, the advantage of that process to a non-polluting owner would be lost. The Court went on to say the following at para. 61:

Section 27(4) does not contain any words that suggest a court cannot determine by application of the statutory definitions whether a site is a “contaminated site,” any more than it contains words precluding a court from determining whether a defendant is a “responsible person.” On a plain reading, it creates a statutory cause of action for any person who has remediated a contaminated site, -- defined in s. 26(1) to mean an area of land in which the soil or any groundwater lying beneath it, or the water or the underlying sediment, contains a special waste or other prescribed substance – to recover its “reasonably incurred” clean-up costs from other “responsible persons”.

[20] The Court concluded at para. 70 that s. 27 creates “a new civil cause of action, entire unto itself, as a means of requiring the polluter to pay and encouraging the owner to remediate.” It set aside the dismissal of the action, and ordered a new trial.

IV. FACTS

History of the Property

[21] In support of its application for summary judgment, Workshop filed the affidavit of its president, Eric Klokstad, who deposed to the history of the property. His affidavit established the following facts.

[22] Corporate documents produced by CAE in the course of the litigation disclose that in September 1919, a company known as Canadian Sumner Iron Works Ltd. (“Canadian Sumner”) was incorporated. In 1964, Canadian Sumner changed its name to CAE Sumner Ltd. In 1965, it changed its name to CAE Machinery Ltd.

[23] An historical search of the property, which is located at 1216-1224 West Pender Street, Vancouver, disclosed that in 1924, the property consisted of four lots. That year, Canadian Sumner bought two of the lots and leased the remaining two.

[24] Canadian Sumner used the lots to operate an iron works and brass foundry. Workshop located a former employee of Canadian Sumner, Robert Lornie, who was hired by the company in 1940. Mr. Lornie deposed that the company’s foundry produced brass trolley wheels, the components of which were copper and zinc. Mr. Lornie said the foundry was built on a dirt floor. In 1941, the company relocated to a property on West Broadway.

[25] By 1949, Canadian Sumner had cancelled its leases to the two lots and sold the other two. Although it appears the foundry buildings remained on the lot for some years after the company relocated, it is not known whether the foundry’s operations continued once the relocation to West Broadway occurred. A 1960 municipal plan referred to the property as Canadian Sumner Iron Works, and showed the position of the machine shop, pattern shop, brass foundry, moulding shop, sheds and storage areas located on the property. The foundry buildings occupied about 60% of the property.

[26] A review of old business directories indicates that a company called Ace Welders occupied the property in about 1945. In the 1950s, a trucking company operated on the property.

[27] In 1960, Eric Klokstad’s father, Annar Klokstad, bought the property. In 1964, he demolished all of the buildings on the property and built a warehouse, which occupied most of the site. The warehouse was an industrial commercial building available for rent. Between 1964 and 1996, Annar Klokstad leased the property to a variety of tenants, including an auto paint and repair operation and a scrap metal dealer.

[28] In 1996, Annar Klokstad died, and the property passed to his wife, Jeannie Marie Klokstad. In April 1997, Workshop was incorporated by Eric Klokstad for the purpose of developing the property. In June 1997, Jeannie Klokstad and Workshop entered into a bare trust agreement by which the property was transferred to Workshop but Jeannie Klokstad remained on title as bare trustee. She is also a Workshop shareholder. Workshop obtained the right to develop and operate the property. The objective was to develop the property into strata titles and market them.

[29] In the summer of 1997, Workshop retained an experienced environmental consulting firm, Pottinger Gaherty Environmental Consultants Ltd. (“PG”), to assist with the development of the property. PG was to provide assistance with respect to environmental hazards and, if necessary, remediation of the property so the development could proceed in accordance with the requirements of the Act. Section 26.1(1) specifically requires that a developer provide a site profile to the municipality when applying for a development permit for land that has previously been used for industrial or commercial activity.

[30] In August 1997, PG completed a preliminary site investigation of the property. It identified a number of potential risks of contamination from the foundry operation and iron works shop of Canadian Sumner, and recommended remediation of the foundry wastes during the site development. PG assessed as minimal the likelihood of contamination from the other onsite uses of the property, specifically the trucking firm of the 1950s, and the scrap metal dealer and auto paint and repair shop of the 1960s. It estimated the costs of remediation at between $60,000 and $115,000.

[31] Workshop decided to proceed with the development of the site in accordance with PG’s preliminary findings. It authorized PG to conduct a detailed site investigation. The site investigation included the making of a number of bore holes in the warehouse foundations to test the soil beneath the warehouse for contaminants. The results of the tests disclosed the presence of copper and zinc which exceeded the limits stipulated in the regulations under the Act.

[32] In November 1997, PG provided a Detailed Site Investigation Report and a remediation plan, which was submitted to the manager with a request for an Approval in Principle (the “AIP”) to proceed with the development. The AIP was granted in January 1998.

[33] With the AIP in hand, Workshop began development of the site. PG oversaw the remediation plan as the development progressed. The project commenced January 22, 1998. It involved a 43 unit commercial strata building and an underground parking facility. The project required that the site be excavated from property line to property line, to a depth of seven to nine feet. All excavated material had to be dumped offsite.

[34] The project was completed by July 22, 1998. Upon completion, Workshop applied for a certificate of compliance from the manager, which was issued in July 1998.

[35] During its investigation, PG identified the soil contaminants on the site as zinc and copper. It concluded the most likely source of the contamination was the Canadian Sumner foundry operations, as the results of a chemical analysis of the contaminated soil material was consistent with the presence of foundry sand. PG also concluded that the presence of the specific waste contaminants was not only consistent with foundry operations, but inconsistent with other historical site uses.

[36] PG initially anticipated it would find buried ash, slag and other foundry materials buried on the site in the location of the foundry operations. None was found. It concluded that during the development of the site in 1964 for warehousing use, the contaminated soil beneath the foundry was spread when used as fill for the warehouse site.

[37] The excavation of the garage for the Workshop project involved principally the disposal of the contaminated fill. The most highly-contaminated fill, excavated to a depth of less than a metre, had to be disposed of at a landfill equipped to take fill contaminated to such a degree. Approximately 1,000 tonnes of this fill was dumped at the Sumas Landfill at a cost of $51,620.

[38] The remaining fill contained a lower concentration of the contaminants, but did not meet the requirements for residential fill; it therefore required disposal at a specialized landfill. It also contained glass and brick debris, likely from the demolition of the warehouse, which made it unsuitable for ocean dumping. The fill was dumped at the Acme-Delta Landfill at a cost of $8,800.

[39] The remaining costs involved the invoices of PG for the investigation of the site, overseeing the testing of the soil and removal of the contaminants, the drafting of the reports to obtain the AIP to proceed with the development, and disbursements incurred at the various stages. At trial, Workshop did not include in its claim the costs incurred for the removal of an underground storage tank (likely installed by the trucking firm) and a sump pump (likely installed when the warehouse was constructed in the 1960s). In total, Workshop’s claim at trial for recovery against CAE was $116,480.

V. DISCUSSION

1. Has Workshop established that the site was a “contaminated site” under the relevant legislation?

[40] CAE argued that the relevant legislation is the Environmental Management Act, as distinct from the legislation under which the action was commenced (the Waste Management Act). Accordingly, said CAE, Workshop must not only amend its pleadings, but must also establish that the property was a “contaminated site” within the meaning of the Environmental Management Act.

[41] I cannot accept CAE’s argument. I have earlier reproduced the relevant sections of the Interpretation Act, which in my view are a full answer to CAE’s argument. Workshop’s rights accruing under the Waste Management Act are not affected by the new legislation. Workshop proceeded with remediation of the site and obtained a certificate of compliance from the manager in 1998, as it was required to do in order to develop the property, many years before the Act was repealed. It commenced its action for recovery of remediation costs under the Act and proceeded by way of summary trial. Workshop appealed the summary trial judgement to the Court of Appeal, which determined the appeal in accordance with the Act although by then the legislation had been amended. The Court of Appeal set aside the judgement and ordered a new trial. There was no suggestion by the Court, or by CAE, that the amendments to the legislation had any effect on the action, or that the merits of Workshop’s action in the new trial be determined under legislation other than the Act.

[42] CAE also argued that Workshop did not obtain from the manager a finding that the site was contaminated. I must reject that argument as well. Workshop filed a preliminary site investigation, completed by PG, identifying the site as potentially contaminated. A detailed site investigation report was then filed, confirming the contamination. A remedial plan was submitted to the Ministry of Environment, Lands and Parks for which the AIP was issued. Once remediation was completed, Workshop provided the manager with the necessary information concerning remediation, and the manager issued Workshop a certificate of compliance pursuant to s. 28(4). The manager would not have issued the certificate had he been satisfied the site was not a contaminated site.

[43] In any event, it is clear from the PG reports filed in the proceedings that zinc and copper were contaminants within the meaning of the regulations, and that the levels present in the soil exceeded the limits stipulated in the regulations. There is ample evidence on which to make a finding of contamination within the meaning of the Act. This court is empowered by Part 4 of the Act to make its own finding that a site is a contaminated site within the meaning of the legislation, and, in the event it is necessary, I make that finding.

2. Has Workshop established that CAE is a responsible person in connection with the site?

[44] CAE argued that Workshop had not advanced any admissible evidence connecting it with the site, because Eric Klokstad had no personal knowledge of the history of the site. His affidavit appended the corporate documents produced from the possession of CAE concerning the history of the company, as well as documents obtained from the Land Titles Registry establishing ownership of the property since 1924.

[45] According to CAE, the fact that the corporate documents were produced from the possession of CAE does not render them admissible as proof that CAE was previously known as Canadian Sumner, or that CAE was a previous owner of the property and an operator of the brass foundry.

[46] As I understand CAE’s argument, the corporate documents are not admissible for their truth because they were obtained by Workshop’s solicitor in the course of the litigation, and are, as a result, hearsay. Counsel for CAE argued that his client may have had in its possession any number of corporate documents that had nothing to do with its corporate history (although I note that CAE provided no evidence to establish that proposition). CAE conceded that if Workshop had gone to the Registrar of Companies and obtained the documents directly from that source, their contents would not be hearsay.

[47] I cannot accept CAE’s position with respect to the effect of the corporate records produced from its possession. The corporate records are certificates of incorporation issued by the Registrar of Companies under the company act in force at the time. These documents were produced from CAE’s possession as part of the discovery process. They fall within a category of documents described by Sopinka and Lederman in The Law of Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999) at pp. 1027-1028 as “documents admissible by reason of custodial origin.” Such documents constitute an admission to prove the truth of their contents.

[48] Counsel for CAE acknowledged that the corporate records were produced from the possession of CAE. They establish that Canadian Sumner Iron Works Ltd. was incorporated in September 1919, that the company changed its name to CAE Sumner Ltd. in October 1965, and that it changed its name to CAE Machinery Ltd. (the current name of the defendant CAE) in April 1966. They are admissible for the truth of their contents.

[49] The documents obtained by Workshop from the Land Titles Registry establish that Canadian Sumner (now CAE) owned the property in question from 1924 until at least 1941. CAE did not dispute the admissibility of those documents nor, as a matter of law, could their admissibility be disputed.

[50] Finally, Mr. Lornie’s affidavit establishes that the foundry was operated by CAE’s corporate predecessor until at least 1941, and that it produced brass trolley wheels. Mr. Lornie also deposed that the main components used in the production of the brass wheels were copper and zinc. That evidence was not disputed by CAE.

[51] In summary, I conclude that Workshop has proven on a balance of probabilities that CAE’s corporate predecessor operated a brass foundry on the property between 1924 and 1941.

3. Is Workshop’s action barred by the 30-year ultimate limitation period?

[52] CAE argued that the ultimate limitation period of 30 years, stipulated by the Limitation Act, R.S.B.C. 1996, c. 266 is an absolute bar to Workshop’s claim. Section 8(1)(c) of the Limitation Act provides that no action to which the it applies (except actions described in s. (8)(1)(a) and (b), which have no application here) may be brought “after the expiration of 30 years from the date on which the right to do so arose.” CAE argued that as it is alleged to have owned the property from 1924 to 1949, and polluted it during that time, the 30-year ultimate limitation period expired in approximately 1979.

[53] CAE could not, however, articulate the precise cause of action that might have arisen during those 30 years. Any cause of action concerning the copper and zinc contamination of the property did not arise until 1993, when the current legislative scheme first created liability for a “contaminated site” within the meaning of the legislation.

[54] Section 27(1) provides that a person who is responsible for the remediation of a contaminated site is “absolutely, retroactively and jointly and severally liable” for the cost of remediating the contamination. Section 27(4) provides that remediation may be pursued from responsible persons “in accordance with the principles of liability set out in this Part.” As noted by the Court of Appeal in Workshop v. CAE, s. 27 of the Act created a “new civil cause of action, entire unto itself, as a means of requiring the polluter to pay and encouraging an owner to remediate”.

[55] Workshop’s action is such a “new civil cause of action”. It did not exist prior to the inception of the legislative scheme. Without deciding whether the ultimate limitation period may apply in other actions brought pursuant to the Act, I conclude that it does not apply in this case.

4. Is the damage claim against CAE excessive?

(a) Are the Klokstads “responsible persons” such that they ought to bear some of the remediation expense?

[56] CAE argued that if it was found to be a responsible person, it should not be held responsible for the entire cost of remediating the site. First, said CAE, Workshop itself is a responsible person: the Klokstads owned and operated the site for over 40 years, and when Annar Klokstad purchased the site in 1960 he must have known it previously housed a foundry. Second, the foundry buildings occupied about 60% of the property, and the contaminated soil was likely confined to that area. Annar Klokstad must have spread the contaminated fill across the entire property when he demolished the foundry and constructed a warehouse. Thus, argued CAE, the Klokstads must have contributed to the pollution of the property.

[57] Workshop disagreed, arguing that it falls within s. 26.6(1)(d), which provides that a current owner or operator is not responsible for remediation of a contaminated site where:

(i) at the time the person became an owner or operator of the site:

(A) the site was a contaminated site,

(B) the person had no knowledge or reason to know or suspect that the site was a contaminated site, and

(ii) while the person was an owner of the site, the person did not transfer any interest in the site without first disclosing any known contamination to the transferee, and

(iii) the owner or operator did not, by any act or omission, cause or contribute to the contamination of the site.

[58] I will turn first to CAE’s argument that Annar Klokstad must have been aware that the property had been used as a foundry when he purchased it, and, therefore, that the site likely contained foundry wastes. In my view, knowledge of the prior use of the property does not per se establish knowledge that the foundry left wastes that would render the property a “contaminated site” within the meaning of the legislation.

[59] The inquiry under s. 26.6(1) is fact-driven. In this case, there was no evidence to suggest the copper and zinc particles left in the soil by the foundry would have been obvious to the purchaser of the property in 1960. To the contrary, the presence of these contaminants in the soil was not discovered until Workshop retained PG to test the soil under the warehouse by gathering samples from boreholes drilled in the warehouse floor.

[60] CAE’s second argument was that Annar Klokstad “contributed” to the contamination of the site within the meaning of the Act by using the contaminated foundry soil as fill when building the warehouse, thereby spreading the contaminated soil across the entire property.

[61] I have difficulty accepting this argument as well. Section 26.5 of the Act imposes liability on persons who introduce pollutants to a site, either by producing the substance on site and handling it in a manner that caused contamination (s. 26.5(c)), or by transporting the substance to the site and handling it in a manner causing contamination (s. 26.5(d)). In this case, a majority of the site was already contaminated with zinc and copper particles in the soil. Annar Klokstad simply used the already contaminated soil as fill beneath his warehouse. He did not introduce any new contaminants to the property. At most, the contamination already in the soil may have become somewhat more diffuse when it was used as fill for the new structure. In my view, that use of the soil did not “cause or contribute” to the contamination of the property within the meaning of s. 26.6.

(b) Does the evidence disclose other responsible persons?

[62] CAE argued that there may have been other persons occupying the site after Canadian Sumner relocated in 1941 who contributed to the contamination of the site. It pointed to the welding company that apparently had a shop on the site in 1945 and the trucking company that leased the site in the 1950s. Further, an aerial photograph taken of the site in the 1950s established that there were still foundry buildings on the property. On that basis, CAE argued there may have been a foundry operated by another company after Canadian Sumner relocated.

[63] The difficulty with CAE’s position is that it is based entirely on speculation. There was no evidence advanced in the trial to suggest that a foundry was operated on the site by another company either before or after the Canadian Sumner foundry. The fact that the foundry out-buildings were still standing in the 1950s is not probative of a new foundry operation.

[64] The contaminants found in the soil were copper and zinc, the components of brass. The evidence established that Canadian Sumner made brass trolley wheels, the components of which are copper and zinc. There was no evidence to suggest that any other occupant of the property produced goods that would result in copper and zinc contamination.

[65] A person who is responsible for remediation of a contaminated site must do more than speculate as to other possible polluters. There must be evidence upon which to base a finding of additional responsible persons before the allocation of responsibility provisions of the Act can be engaged.

[66] Further, I note that s. 27(1) stipulates joint and several liability with respect to a person who is found to be a responsible person.

[67] Finally, Section 27(4) permits any person incurring remediation costs to bring an action to recover those costs “from one or more responsible persons” in accordance with the principles of liability described in Part 4 of the Act. I have determined that CAE is a responsible person. There was no evidence led at trial establishing any other responsible person or persons.

(c) Were the costs claimed by Workshop reasonably incurred?

[68] CAE argued that it should not be responsible for the costs incurred by Workshop because remediation was only necessary as a result of Workshop’s decision to redevelop the property and, in doing so, to construct an underground garage requiring excavation of the site. As such, the costs were not “reasonably incurred”. In particular, CAE pointed to the PG report, which disclosed that the highly-contaminated fill was localized to a relatively thin layer near the surface, and there was no mechanism for the contamination to leach to the soils below or to the deep groundwater. Thus, had Workshop not developed the property for strata units, remediation would have been unnecessary.

[69] That argument, in my view, misapprehends the thrust of the legislation. The identification of many, if not most, contaminated sites occurs where an owner or operator of property seeks to subdivide, rezone or develop property that was previously used for industrial or commercial activity. That is the purpose of s. 26 of the Act. In the present case, it is axiomatic that Workshop would not have incurred the costs of remediation but for its desire to redevelop the property. Part 4 of the Act is designed to ensure that persons responsible for polluting property in the course of industrial or commercial use must pay the costs of remediation when the property is subsequently redeveloped for other uses.

[70] CAE next argued that the costs incurred by Workshop to proceed by way of obtaining an AIP, as distinct from independent remediation, were not reasonably incurred. According to CAE, had Workshop proceeded by way of independent remediation, without first obtaining an AIP, it could have saved from $10,000 to $20,000 in fees and disbursements.

[71] As noted by the Court of Appeal in Workshop v. CAE, there are several options available under the Act to persons who are required to remediate polluted sites. Workshop chose to proceed by way of obtaining an AIP, in part because financing of the project required it, and in part because PG recommended it as the best means of proceeding. Remediation occurred in 1998, when there was little experience with Part 4 of the Act. Today, different means of proceeding may be more economical.

[72] I am satisfied that Workshop had sound business reasons to proceed in the manner it did. It was entitled to balance the risks and benefits of proceeding in any one of the several ways permitted by the legislation, and did so. Workshop was not obliged to proceed with a particular course of remediation simply because it was the most cost-effective one. On the evidence, I am satisfied there was nothing unreasonable about Workshop’s choice of proceeding by way of an AIP.

(d) Are any of the amounts claimed by Workshop excessive?

[73] The total amount claimed by Workshop for remediation of the site is $116,480.51. Workshop has not included in its claim the cost of removing an underground storage tank that may have been constructed by the trucking firm occupying the property in the 1950s, or the cost of removing a sump pump that was likely installed in the 1960s when the warehouse was built.

[74] I have grouped the various claims under four headings:

(a) the PG invoices for investigation of the site, drafting the site reports, and overseeing the remediation of the site in the amount of $26,459.36, and disbursements incurred in the obtaining of the AIP in the amount of $8,453, for a total of $34,912.36;

(b) invoices rendered by the companies retained to test the soil for contaminants in the amount of $6,295.68;

(c) invoices rendered by the drilling company that made the boreholes for testing of the soil in the amount of $3,025.95;

(d) fees for the dumping (or “tipping”) of the contaminated soil by three companies:

(i) Sumas Environmental for the tipping of 1,000 tonnes of contaminated soil requiring specialized disposal - $51,620.72;

(ii) Fairmile Construction Ltd. for the tipping of contaminated soil requiring specialized disposal at a site in Northern Alberta - $11,798.30. (This invoice was originally $22,296.37, but Workshop has reduced this claim by approximately 50% because some of the work involved the removal of asbestos (attributable to the warehouse) and the underground storage tank, and some of the trucking costs are not attributable to the transporting of the soil contaminated by the metal wastes.)

(iii) Acme Delta Landfill for the tipping of soil not exceeding the commercial contamination limits but exceeding the limits for residential fill - $8,827.50.

[75] I will deal with each of the four categories of expenses in turn:

(1) The PG invoices and disbursements:

I am satisfied that the invoices rendered by PG for the three reports, and the disbursements incurred for the obtaining of the AIP and certificate of compliance, were not unreasonable or excessive. A small percentage of the cost incurred for the overseeing of the remediation work by PG was likely attributable to the removal of the underground storage tank and the sump pump. I have deducted $2,000 from the invoices, as suggested by CAE, to reflect those costs. For the PG invoices and the disbursements as claimed, Workshop is entitled to a total of $32,912.36.

(2) Soil testing expenses:

It is not clear from the invoices that all of the testing was attributable to the metal contaminants in the soil. There are some relatively minor charges that may be attributable to the presence of the sump pump and storage tank. I have deducted the questionable invoices totalling $724, such that Workshop is entitled to $5,571.68

(3) Bore hole drilling expenses:

I am satisfied that all of the drilling expenses were incurred as a result of the metal contaminants. CAE argued that approximately $500 expended for the goring of concrete were not attributable to the metal contaminants. However, as noted by Workshop, the concrete goring was necessary to penetrate the concrete floors of the warehouse. Workshop is entitled to the full amount claimed, $3,025.95

(4) Soil disposal:

CAE argued that the disposal of soil excavated from the property to build the underground garage would have been necessary in any event. For that reason, said CAE, the conventional cost of disposal for non-contaminated soil ought to be deducted from the overall cost of dumping the contaminated soil.

(i) Sumas Environmental: 1,000 tonnes of contaminated soil had to be tipped at Sumas due to the high level of the contaminants in the soil. In my view, all of that soil would have required specialized dumping regardless of the depth of the excavation. Workshop is entitled to recover the full cost of the removal, totalling $51,620.72.

(ii) Acme Delta Landfill: The invoice relates to the tipping of soil with a contamination level that did not exceed commercial use, but did exceed residential use. The soil also contained glass and brick debris (likely from the demolition of the warehouse) that made it unsuitable for ocean dumping. CAE argued that it was not responsible for any of the Acme-Delta invoice because (i) it contained the glass and brick debris; (ii) its contamination level did not exceed commercial use; and (iii) the site required excavation for the construction of the underground garage in any event.

An employee of PG, James Smith, deposed that about 60% of the soil excavated from the site and taken to the Acme-Delta landfill was contaminated with copper and zinc. While the level of contaminants met the commercial standards, they exceeded residential standards. For that reason, it could only be taken to a facility such as Acme-Delta. Mr. Smith also deposed that all of the soil contained glass and brick debris, such that none of it was suitable for ocean dumping, the most cost effective method of dumping.

It is apparent from Mr. Smith’s evidence that 60% of the excavated soil required tipping at the Acme-Delta facility, whether or not it contained debris from the warehouse that prevented more cost-effective dumping. That soil also contained contaminants above the level acceptable for residential fill. However, approximately 40% could have been disposed of more cheaply had it not contained the glass and brick debris. For that reason, I have reduced the Acme-Delta invoice by 40%, or $3,531. Workshop is entitled to recover $5,296.50.

(iii) Fairmile Construction: Workshop has claimed $11,798.30 for work performed by Fairmile. The invoice totals $22,296.37. From a review of the invoice, it is apparent that some of the Fairmile expense deals with the removal of asbestos ($5,900), attributable to the warehouse, and to the removal of the underground fuel storage tank ($3,176). The balance of the costs deals with the loading and trucking of soil to the Acme-Delta Landfill, and associated labour costs. CAE argued that the trucking costs would have been necessary in any event, and that the non-contaminated soil did not require trucking to the Acme-Delta landfill.

I agree that the costs for the asbestos and storage tank removal cannot be claimed, but Workshop has already removed those items from its claim. Workshop has also reduced its claim somewhat for the loading and trucking costs.

Of the $11,798.30 now claimed, the trucking and associated labour costs total approximately $10,500 (including the prorated contract fees). As already noted, 40% of the soil trucked to Acme-Delta was not contaminated, and would have required removal in any event. I have accordingly discounted the Fairmile account by 40%. Workshop is entitled to recover the amount of $7,078.98.

[76] In total, Workshop is entitled to recover $105,506.19 in remediation costs.

VI. SUMMARY OF CONCLUSIONS

[77] In conclusion, Workshop has established the following:

1. The property was a contaminated site;

2. CAE is a responsible person;

3. The 30-year ultimate limitation period does not apply;

4. (a) There are no other responsible persons;

(b) The costs incurred to obtain the AIP were reasonable; and

[78] The parties may now speak to the issues of costs and pre-judgement interest.

“C.A. Wedge, J.”
The Honourable Madam Justice C.A. Wedge

Citation:	*Workshop Holdings Limited v. CAE Machinery Ltd.,*
	2005 BCSC 631