Canadian Underwriter
News

How this buried oil tank came back to haunt former homeowners


January 17, 2020   by Greg Meckbach


Print this page Share

If your clients are selling their home, should you ask whether prospective buyers want written assurance that any oil tanks are removed and the soil cleaned up?

Scott Warren and Antonia Camille Fantillo sold their home in early 2016. They have been successfully sued, for nearly $45,000, by buyers who later discovered an oil tank was buried in the yard. Walton v. Warren was released Jan. 9 by the Supreme Court of British Columbia.

Most of the damage award covered the cost to the plaintiffs (William Walton and Nikolas Hill), as the new homeowners, to remediate contaminated soil about three years after they bought the property. The home is in the town of Esquimalt, which borders Victoria to the west.

The buyers – at the behest of their realtor – inserted an addendum to the contract to buy the home. The addendum required the sellers, in part, to “ensure that any underground storage tank located on the property shall be removed by a qualified tank removal contractor and the surrounding soil remediated.”

In October, 2018, the new owners experienced basement flooding. The following month, while replacing the perimeter drain system, contractors discovered an oil tank was buried.

The sellers told the court they were surprised to learn of the tank’s existence, having sold the home to Walton and Hill without knowing the tank was there. The buyer’s realtor had warned Walton and Hill that many older homes in Victoria have underground oil storage tanks.

An environmental remediation contractor tested the soil and found that concentration of hydrocarbons exceeded provincial standards for low-density residential land. In early 2019, the contractor removed contaminated soil and the total bill was $42,720.28.

The sellers told the court that when they bought the property, they were told in writing by the vendors there were no underground storage tanks on the property. They also had a contractor scan the property for evidence of such tanks and were told there was no evidence.

In the fall of 2012 (three years before Warren and Fantillo sold the home to Warren and Hill), their basement  flooded. Warren had contractors replace drainage tiles. But they did not discover the oil tank because the 2012 flooding occurred on the west side of the home. The 2018 flooding occurred on the east side of the home.

After Walton and Hill filed their lawsuit, Warren argued that he met his obligation as a seller because the buyers completed their purchase after being satisfied with the condition of the property.

Justice Heather MacNaughton disagreed, because the tank remove addendum required the sellers to remove “any” oil tank on the property, and to remediate the soil, prior to the date of completion of sale.

“As an oil tank was discovered some years after the Completion Date, the defendants had not complied with the terms of the [agreement] on the Completion Date,” she wrote. So the defendants were in breach of contract.

There was no language in the agreement which could be interpreted as limiting the defendants’ obligations only to underground storage tanks that were discovered prior to the completing the sale or to storage tanks of which the sellers were aware, Justice MacNaughton found.

“For example, it does not say that the defendants are to remove and remediate ‘any oil tank that is discovered prior to the Completion Date’ or ‘any oil tank that they are aware of prior to the Completion Date.’”

The defendants relied on the legal principle of contra proferentem, meaning that where wording in a contract is ambiguous, a judge should interpret the contract against the party who drafted it.

But Justice MacNaughton ruled the contract is not ambiguous.

The oil tank addendum read as follows:

It is a fundamental term of this contract that the Seller shall ensure that any underground storage tank located on the property shall be removed by a qualified tank removal contractor and the surrounding soil remediated in accordance with any provincial or local government laws, including the British Columbia Fire Code 2006, where applicable.

The Seller shall remove the tank before the Completion Date.

The Seller shall be responsible for all costs associated with compliance, including any additional costs for environmental clean up and restoration of the property to its original condition.

The Seller shall provide to the Buyer on or before the Completion Date, written confirmation from the tank removal contractor and relevant Provincial or local government authority that the completed remediation complies with the Provincial or local government law as the case may be.