No limit to liability for environmental cleanup costs in Ontario: Lawyer

Property owners may be asking their insurers to increase the limits on insurance policies covering environmental cleanup costs in the wake of some recent rulings in Ontario, one lawyer says. 

Rosalind Cooper, a partner with Fasken Martineau, delivered a presentation Nov. 7 on liability for environmental cleanup and focused on some recent cases heard by Ontario’s Environmental Review Tribunal, which hears appeals of orders issued by the province’s Ministry of Environment.

In the past, Cooper said, when clients approached her expressing concern they could be held liable for hazardous waste spills that they did not cause, she would tell them the Ontario Ministry of Environment was only concerned about whether a person or corporation who had been slapped with an order was somehow connected to the property.

”Then I would say, ‘But the environmental review tribunal, which hears appeals to cleanup orders by the ministry, has been quite interested in hearing arguments from appellants as to why liability should not be imposed on them.’”

This all changed in late 2009, Cooper said, when the City of Kawartha Lakes appealed an order from the MOE to remediate and clean up after the discharge of furnace oil, originating from a private house, into a lake through a storm sewer system.

Initially, Cooper said, the environment ministry ordered the home owner to clean up the contamination.

“The home owner called the insurer and the insurer responded and they started conducting some remediation, but of course, eventually, because remediation is so expensive, the limits for the policy of the home owner ran out and there was no more money left for the insurer to use to continue the cleanup,” Cooper said.

So then provincial officials slapped the city with an order.

“The ministry walked into the mayor’s office, served the mayor with this order and said, ‘You have to clean up this problem,’” she said, adding the city appealed to the tribunal, with the intent of arguing on the principle of fairness and to introduce evidence showing who was really responsible.

But in this case, Cooper said, the tribunal “really didn’t care” who was responsible, and said their job was to look at the wording of the Environmental Protection Act.

The law says if you have ownership of a property, or occupy it, or have “charge, management or control of a property” you can be given cleanup order, Cooper said.

She noted that unlike charges under provincial laws, with cleanup orders, there is no cap on the exposure to liability.

“That’s what the scary part is … there’s no limit,” she said. “If you have to clean something up you have to clean it up and you have to spend the money.”

Cooper made her presentation at the Sites and Spills conference, produced by Business Information Group, publisher of this website, and held near Toronto. 

She said it “does not take very much” for the costs of a cleanup to exceed a limit on insurance.

“What is going to happen is a lot more attention and focus from insurers,” she said, adding many property owners may want their insurers to increase limits for insurance covering environmental cleanup costs.

“I’m not sure the insurers will be as interested in doing that.”