Indexed as:
Smith Bros. Excavating Windsor Ltd. v. Camion Equipment
& Leasing Inc. (Trustee of)
Between
Smith Bros. Excavating Windsor Limited, Plaintiff, and
Price Waterhouse Limited, Trustee of the Estate of Camion
Equipment & Leasing Inc., a Bankrupt, Novalta Resources Ltd.,
and Novacor Chemicals Ltd., Defendants
And Between
Smith Bros. Excavating Inc., a Creditor of the Estate of
Smith Bros. Excavating (Windsor) Limited, a Bankrupt,
Plaintiff, and
Price Waterhouse Limited, Trustee of the Estate of Camion
Equipment & Leasing Inc., a Bankrupt, Novalta Resources Ltd.,
and Novacor Chemicals Ltd., Defendants
[1994] O.J. No. 1380
21 C.C.L.T. (2d) 113
48 A.C.W.S. (3d) 1060
Action No. 90-GD-12470
Ontario Court of Justice - General Division
Windsor, Ontario
Cusinato J.
June 15, 1994.
(78 pp.)
Torts -- Nuisance -- General principles and definitions -- Nuisance v. negligence -- Injury to property, neighbouring owners -- Escape of dangerous chemicals -- Strict liability -- General -- Application of rule in Rylands v. Fletcher -- Dangerous things or activities -- Defences -- Industry practice -- Damages -- Torts affecting land and buildings -- Evidence and proof.
Action for damages. The parties were owners of adjoining properties. The defendants were at all material times using their property as a tank farm and in the tanks stored therein was contained associated petroleum products, including methanol. Due to the activities of vandals, a spill of methanol from one of the tanks caused contamination to the underground water system flowing below the lands of the plaintiff. The plaintiff did not acquire its own property until April 1989. Its intention from the outset was to use the plan of subdivision filed by the previous owners to pursue developing a residential subdivision. However, it was not aware of the contaminated state of the lands at the time of the purchase. The plaintiff now claimed damages for loss of opportunity and loss of profits which would have flowed from its proposed development of the lands. There was evidence that prior to the time it learned of the contamination, the plaintiff had decided to abandon its development plans for the lands in question partly because its was in a shaking financial position and partly because it had not been able to develop access roads to the lands as required by the municipal authorities. The defendants had taken prompt steps to clean up the contamination immediately and the steps taken, respecting the plaintiff's lands, were completed by November 29, 1990.
HELD: Action dismissed. The defendants were liable to the plaintiff for the interference to the plaintiff's lands pursuant to the extension of the law of nuisance embodied in the rule in Rylands v. Fletcher. However, damages only become payable where there was proof of loss emanating from the defendants' conduct. That principle required the plaintiff to establish that they were in a position to proceed both financially and with the requisite municipal and provincial approvals. The court was not satisfied that the plaintiff was in such a position.
Case Authorities and Texts:
[* Please see list appended to this judgment *]
CASE AUTHORITIES AND TEXTS
CASES APPLIED:
Rylands v. Fletcher (1868) L.R. 3 H.L. 330.
Ratko et al. v. Public Utility Commission of the City of Woodstock et al. 17 O.R. (36) 427.
Royal Bank of Canada v. King et al. (1991), 82 D.L.R. (4th) 226 (Ont. Ct. (Gen. Div.).
Raj Bakshi v. Dimitrios Kouretsos, et al. (1933) O.J. No. 1795.
CASES CONSIDERED:
LIABILITY:
Royal Anne Hotel Co. Ltd. v. Corporation of the Village of Ashcroft; Saito et al. v. Corporation of the Village of Ashcroft 1 C.C.L.T., 299.
Royal Anne Hotel Co. Ltd. v. Village of Ashcroft; Saito et al. v. Village of Ashcroft 95 D.L.R. (36) 756 (B.C.C.A.).
Pugliese et al. v. National Capital Commission et al.; Beaver Underground Structures Ltd. et al., Third Parties; Dunn et al. v. Regional Municipality of Ottawa-Carleton et al. (1977), 17 O.R. (26) 129 (C.A.).
Chu et al. v. Dawson et al. 31 C.C.L.T. 146 (B.C.C.A.).
Canada (Attorney General) v. Ottawa-Carleton (Regional Municipality), (1991) O.J. No. 1428.
London Guarantee and Accident Company Limited, et al. v. Northwestern Utilities Limited (1935) 3 W.W.R., 446.
R. in Right of Canada v. Saskatchewan Wheat Pool (1983) 3 W.W.R. 97 (S.C.C.).
Darbey v. Winnipeg Electric Co., (1933) 4 D.L.R. 252 (Man C.A.).
Tidy v. Cunningham (1915), 22 D.L.R. 151 (B.C.S.C.).
Sedleigh-Denfield v. O'Callaghan et al. (1940) A.C. 880 (H.L.).
Barker v. Herbert (1911) 2 K.B. 633 (C.A.).
DAMAGES:
Chaplin. v. Hicks (1911) 2 K.B. 786 (C.A.).
Webb & Knapp (Canada) Limited and Western Pacific Projects Ltd. and the City of Edmonton (1970) S.C.R. 588.
Multi-Malls Inc. v. Tex-Mall Properties Ltd.; Tex-Mall Properties Ltd., v. Multi-Malls Inc. et al. 108 D.L.R. (3d) 399 (Ont. C.A.).
Bruce v. Region of Waterloo Swim Club 73 O.R. (2d), 709 (Ont. H.C.).
Prozak v. Bell Telephone Co. of Canada (1984), 46 O.R. (26) 385, (C.A.).
Berliz v. Charter Oil Co. Ltd. (1975), 6 M.R. 68 (S.C.C.).
Kinkel et al. v. Hyman (1939) S.C.R. 364.
MITIGATION OF DAMAGES:
Asamera Oil Corporation v. Sea Oil & General Corporation et al. (1979) 1 S.C.R. 633.
British Westinghouse Electric and Manufacturing Company Limited v. Underground Electric Railways Company of London, Limited, (1912) A.C. 673.
OTHER CASES REVIEWED:
W.B. Wood et al. v. The Grand Valley Railway Company and A.J. Pattison (1915) 51 S.C.R. 283.
Bem Enterprises Ltd., R.W. Garside Construction Ltd., Martin & Sons Trucking Ltd., and M.P. Tellier Construction Ltd. v. Campeau Corporation 32 B.C.L.R. 116 (B.C.C.A.).
Norsk Pacific Steamship Company Limited, Norsk Pacific Marine services Ltd., The Tug Jervis Crown and France MacDonnell v. Canadian National Railway Company (1992) S.C.R. 1021 (Headnote Only).
Beutler et al. v. Beutler et al. (1983), C.C.L.T. 229 (Ont. High Ct.).
TEXTS:
MacGregor on Damages 15th ED. 358.
Damages for Breach of Contract 2nd Ed.
Pitch and Snyder, 1989 Carswell.
Loss of Opportunity; Remoteness, Nominal Damages, Mitigation.
Studies in Canadian Tort Law, Linden 1968 Butterworths; Nuisance in Canada, John P.S. McLaren, 320.
STATUTES, REGULATIONS AND RULES CITED:
Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 38.
Ray Colautti and David Kunsch, for the Plaintiff.
Fred D. Cass and John J. Longo, for the Defendants (except Camion).
Joseph Dillon, Q.C., for the Defendant (Camion).
CUSINATO J.:--
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INTRODUCTION:
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THE PLAINTIFFS' CLAIM:
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1 The plaintiffs's action is framed in nuisance. It claims strict liability against the defendant for interference to the plaintiffs' plans for development of its property.
2 The plaintiff pleads that the defendants were carrying on a special use of their property, the storage of various associated petroleum products including methanol, a substance classified both as hazardous and dangerous.
3 In April 1987 a spill, escape, and seepage of such product caused contamination to the underground water system flowing below the lands of the plaintiff. Because of this contamination which continued into the year 1990, the plaintiff submits its plans for a residential sub-division were not only delayed, but permanently lost.
4 That because of this event the plaintiffs' chance to profit, and its opportunity both then and into the future were lost.
5 That the plaintiffs' inability subsequently for reasons of the economy, and a change in the plaintiffs' financial situation, both relate back to the defendant's nuisance, causing its loss of opportunity. It is for this loss of value, the chance to profit at the opportune time for which the plaintiff claims damages.
FACTS:
6 Smith Bros., Excavating Windsor Limited (Windsor Limited) on April 5, 1989, became the owners of the lands which are now the subject of this action.
7 They are described as the River Road project located off Highway 18 at the Town of LaSalle, formerly the Township of Sandwich West, Exhibit 6.
8 Of importance as it relates to the parties in this action, is the now operative plaintiff.
9 Smith Bros., Excavating Inc., (Smith Bros.) is a principal creditor under a general security agreement within the bankruptcy of Windsor Limited.
10 By order of Zalev J., September 27, 1993, through s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3, Smith Bros., was authorized to continue the proceedings commenced by Windsor Limited.
11 As the principal creditor of the bankrupt Windsor Limited, Smith Bros., continues this action under its derivative rights.
12 While I do not now deal with the importance of this procedural change, I shall consider it when I review, ENTITLEMENT TO PRE-JUDGMENT INTEREST.
13 To facilitate the reading of this judgment, unless specifically identified otherwise, and to avoid confusion when I use the term plaintiff, I shall be referring to both the creditor company exercising its derivative rights and the original plaintiff.
14 I do so even though Windsor Limited is not now a named party other than by reference within the terms of the bankruptcy.
15 I wish now to review the defendants named and their relationship to each other. Alberta Gas Chemicals Limited [Alberta Gas] appears as the named lessee of a lease entered into between itself and Camion Equipment and Leasing [Camion] Exhibit 1, Tab 11.
16 The lease refers to a large bulk tank located on the Camion properties within a berm area. Within this area, the lease permitted the storage of methanol in bulk. Methanol has been described as a hazardous product, highly flammable and miscible with water. Under the terms of the lease, the control, handling, and transporting of this product was with the lessee.
17 On January 1, 1990, Alberta Gas amalgamated with Novalta Resources Limited [Novalta].
18 By name change on June 15, 1990, this amalgamation created 413909 Alberta Limited.
19 These procedural changes by concurrence of counsel for the defence do not affect the status of this action, or any judgment that might be given against the named defendants.
20 The defendant Novacor Chemicals Limited, [Novacor], while they are named as a party defendant, I conclude are neither necessary to the action or an appropriate party.
21 In delivering these reasons, I shall identify the associated defendants collectively as Novalta.
22 Unless stated to be otherwise, this name Novalta alone shall refer to all defendants other than Camion and Novacor. If the term defendants alone is used, it shall include both Novalta and Camion, but not Novacor.
23 I now wish to address some specific facts which shall be considered in the disposition of the issues raised.
24 The plaintiffs' land purchase was identified to be completed on the 5th of April, 1989. It was subsequent to this date, on April 23, 1990 that the plaintiff were advised that the River Road project (River Road) which they intended to improve into a residential sub-division, was affected on an earlier date by a spill of methanol. This spill occurred on the 28th of April, 1987.
25 The plaintiffs' position is that prior to their purchase, they were unaware of the disaster that had befallen this property.
26 At the time of the plaintiffs' purchase, the property in question was registered under a plan of sub-division with lot sizes shown on the original plan of approximately 30 feet in width. This old plan of sub-division has subsisted for many years without any improvement to the land. In fact, the area was zoned, "holding residential" and it was the plaintiffs' hope to obtain approval to develop and service the land.
27 This development of course was subject to satisfying the requisite requirements of not only the Township, but the various Ontario Ministries to enable the plaintiff to proceed with the rezoning of the land.
28 On the plaintiffs' evidence, it intended to utilize the then existing plan of sub-division. This would permit the plan to go forward with minimal changes.
29 To create a building site, the plaintiff intended to combine two 30 foot lots.
30 By proceeding with the original plan of subdivision as registered, the plaintiff believed it could move forward quickly.
31 In following such procedure, the plaintiff hoped to complete the service to these lands, and to commence the sale of these properties by the 1st of April 1990.
32 The plaintiffs, for their market, targeted purchasers who were interested in the development of low cost housing. It was the plaintiffs' hope to either sell the lots as serviced, or in the alternative to construct prefabricated modular homes located thereon.
33 It was the plaintiffs' belief that in proceeding with their first approach, the sale of the lots alone, they could net approximately $15,000.00 profit before tax on the sale of each lot.
34 Proceeding with the second plan as an alternative, the plaintiffs believed that they could net a profit of approximately $30,000 with the construction and sale of a modular home.
35 To arrive at these net profits, it was the plaintiffs' belief that they could service the land including the costs of the lot at a price of approximately $15,000 with a sale price of $30,000.
36 As to locating a modular home on the said lot, they had prices of approximately $50,000 to $55,000 which resulted in a cost package of approximately $65,000 to $70,000 for the construction of a home on the lot.
37 It was while the plaintiff was proceeding with its intended plans that it received information that brought the entire project to a stop.
38 A communication received from the Township, resulted in one of the plaintiffs' representatives attending the property. At the site, Bruce Smith representing the plaintiff, met with Mr. Al Stephens, P. Eng., employed as a senior Environmental officer to the Environmental Commission, and with Robert Hayes, the Township Engineer. It was at this time the plaintiff was informed that the lands which they owned were previously affected by a spill of methanol.
39 It was suggested to the plaintiff that before proceeding further, they should investigate the consequences of the spill and any possible effects the contamination caused to their property.
40 Upon this information being delivered to the plaintiff, it immediately stopped processing its plans. The plaintiffs' course of action was to communicate with the defendants to ascertain the status of their property, and the extent of the contamination. The plaintiffs contend that their course of action and the steps that they took under the circumstances were appropriate and prudent.
41 The defendants take issue with the plaintiffs' conduct, particularly the stoppage of their intended plans, and submit that the plaintiff should have continued with its intended plans, if that was truly its intent.
42 The defendants take this position because at the time the plaintiff received its information, the defendants were in the process of remediating the lands and the affected contaminant to the plaintiffs' property was close to being completely eradicated.
43 The defendants submit that if the plaintiff had continued its plans, they would not have in all likelihood experienced any delay or interruption to their intended use.
44 It is upon this basis nonetheless, that the plaintiff now claims damages for loss of opportunity, and loss of profits, which would have flowed it submits, from the lands development and the plaintiffs' intended use.
THE SPILL - CAUSATION:
45 Although, I shall deal with the issues of liability shortly, and the defence of vandalism, it is appropriate here to deal with the factual background causing the spill.
46 In the early hours of April 28, 1987, two storage tanks on the Camion property were vandalized by strangers.
47 The vandals forced the locks and chains securing the hand levers to the tanks, and then intentionally opened the valves to release the tanks' contents.
48 While there are suspicions that the acts were those of disgruntled and discharged employees, there is no evidence of this before the court, nor were the police able to file any criminal charges.
49 As disclosed in my earlier comments, these tanks were located and surrounded by a berm within the Camion property.
50 Properly constructed, the berms are elevated mounds of earth made of impervious material, to retain any spill that might occur.
51 Unfortunately, in this instance, a buried conduit unknown to Camion, allowed for the escape of methanol. This conduit was used at an earlier date to release the contained water from the berm area which was flooded for testing purposes. Over the years the caps sealing the conduit became corroded, resulting in the spill flowing through the conduit permitting its spread to the adjoining property.
52 Prior to the spill two tanks were located in the berm area, the largest having a holding capacity of 40,000 barrels and the smaller tank 9,000 barrels. (Exhibit 51)
53 The valves on each tank were intentionally opened to permit the escape of the fluids. The larger storage tank contained estimated quantities of methanol in excess of 1,300,000 litres, and it is believed that this total amount was released.
54 A good quantity of the released methanol escaped the berm area, crossing the Camion property at the southerly property line, and thereafter flowed in a southwest direction into the area of the plaintiffs' property.
55 This caused not only surface damage, but more importantly, the contaminants seeped into the underground water system identified by Exhibit 56.
56 The smaller tank which contained crude oil, although also vandalized, is not an issue. This oil contaminant flowed by means of a line hose connected by the vandals into a roadside ditch at the front of Camion's lands.
57 On agreement of counsel, the escape of this fluid did not affect the plaintiffs' lands and thus, forms no consideration in the claim before me.
58 It is with this factual background, that we now proceed to the various questions raised by the parties to the court.
LEGAL ISSUES:
LIABILITY:
(1) Are the defendants liable in nuisance where the plaintiff is able to establish an interference to the underground water system flowing to its lands caused by contamination resulting from the defendant's use of its lands?
(2) Where a special or abnormal use is brought upon the defendant's lands, is the defendant strictly liable for policy reasons under the rule of Rylands v. Fletcher, (1868) L.R. 3 E.L. 330, when a hazardous substance escapes and causes interference and harm to its neighbour, without consideration of the standard of care taken?
ISSUES OF NEGLIGENCE AND NUISANCE:
(3)(a) Are the defendants able to rely on a defence of vandalism, in an action for negligence where harm results to the plaintiff from the intentional acts of strangers?
(b) Does the defence of vandalism by strangers exist within the law of nuisance, where the defendant meets the minimum standard of care of its industry, or within the application of the rule of Rylands v. Fletcher?
(c) Are the principles of negligence appropriate to the law of nuisance, or the rule of Rylands v. Fletcher, where nuisance is not a branch of negligence?
(d)(i) Is the duty of care taken by the defendants securing its premises to the acceptable standards of the industry, where such standard is a minimum standard sufficient as a defence to nuisance or under the rule of Rylands v. Fletcher,?
(ii) Can the defendants escape liability in nuisance, or under the rule of Rylands v. Fletcher, by demonstrating if damage or interference results to its neighbours from a special use brought upon their property, that they have exercised the highest standard of care, and that they have taken all viable and reasonable steps that appear necessary to safeguard its neighbours?
DAMAGES:
(4) Are the damages sustained by the plaintiff a result of contamination to its lands caused by the acts of strangers, or the failure of the defendants within a reasonable time to clean up the methanol spill?
(5)(a) Did the methanol contamination to the underground water system cause a delay or stoppage to the proposed development of the plaintiffs'?
(b) If the contamination did cause a delay or stoppage to the development, what is the measure of damages suffered by the plaintiff?
(c) Are the plaintiffs able to establish a loss of value, the loss of a chance or opportunity to develop its lands?
MITIGATION:
(6) Has the plaintiff done all it could to mitigate its loss?
CONDUCT OF PURCHASE TO DEVELOPMENT:
59 Intent is a subject of the mind, but it may often be established other than by oral communication, through the conduct of the individual, or its corporate representatives.
60 The claims of the plaintiff, are of course, the subject of an intended development.
61 Shortly after the plaintiffs' purchase of River Road in April 1989, because of what appears to be financial considerations, and pressure from its bank, the plaintiff accepted an offer to sell its lands, the transfer to be completed by August 1989. [Exhibit 18]
62 Having regard to the plaintiffs' purchase price in April of 1989, for the sum of $88,000, it hoped to gain in a span of a few months a tidy profit, the sale to Mr. Singh being for the sum of $150,000.
63 For reasons not relevant to the issues before the court, the sale was not consummated.
64 Subsequent to this event, and for reasons given by the plaintiff, that its construction company was occupied with its own business for the balance of the 1989 year, it confirms that Smith Bros., had no plans for the properties' development until the next year 1990.
65 Early in 1990, the plaintiff communicated with James Breschuk, a civil Engineer with M.M. Dillon and Associates, specializing in property development. As a result of this contact, an investigation with the Township was commenced as to its requirements for the development of the plaintiffs' lands into a residential sub-division.
66 Mr. Breschuk determined through his inquiries that the land was zoned holding residential, under the official plan, but there were several obstacles before the proposed application to re-zone, could go forward.
67 The first, which was not a major obstacle, the plaintiffs' would be required to negotiate the purchase of some of the unimproved lots owned by the Township to complete their parcel.
68 Secondly, and more important to the lands development, was that for development beyond 750 feet on River Road, the Township required the establishment of an alternate access route for emergency vehicles. This would require either the purchase of additional lands, or the obtaining of a permanent easement over its neighbours property.
69 Before development could go forward, the access route would have to be settled since this was a Township pre-requisite.
70 It was at about this same time as the access route was being discussed, or shortly thereafter, that the engineer became aware that based on the existing plan as registered, the official plan, and the density under the existing zoning by-law, a maximum of only 48 residential building sites would be available.
71 The plaintiff acknowledges these facts in his evidence, but states it was his initial hope to take necessary steps with the Municipality to develop the property for 60 building sites, combining two 30 foot lots for each site.
72 During the trial, upon presentation of various documentation filed into evidence, the plaintiff admitted that its number was reduced to 52 sites. This number is ultimately used by the accountant to determine the plaintiffs' loss of profit which forms the basis of the plaintiffs' claim.
73 In spite of this position taken by the accountant to demonstrate loss of profit based on 52 building lots, Edward Gorski of E.S. Gorski Realty Ltd., a realtor/appraiser, projected his value and calculations of the plaintiffs' loss upon an approved residential sub-division of 55 building sites.
74 While nothing turns on the numbers of building sites other than its effect as it relates to the calculation or measurement of damages, it is one additional consideration as to what might have created a possible delay to the plaintiffs' original plans.
75 To bring this project on stream in the manner outlined by the plaintiff and its experts, it may well have required an amendment to the official plan and/or the zoning by-law proposed to increase the density. The plaintiffs' requested changes may also have required a new draft plan approval for the sub-division and if required this would with certainty have caused some delay to the plaintiffs' projected time table.
ACTIONS OF THE PLAINTIFF - TO COMPLETE ITS INTENT FOR DEVELOPMENT OF A SUB-DIVISION:
76 To deal with the most pressing problem confronting the plaintiff aside from securing the financial confirmation to proceed from a lending institution, was the problem of resolving an alternate access road for emergency vehicles.
77 To this end, the plaintiff testified to five possible solutions to accommodate its purpose. The most feasible of which, was to obtain an access route over its neighbour's property, either to the north, or south of its boundary limits from River Road.
78 It is not necessary that I review the plaintiff's actions to secure this possible route, other than to say that prior to April 23, 1990, no such route was in place. There is also no confirmation in the evidence that the plaintiff had committed itself either to a purchase of lands for such purpose, or an option.
79 On the totality of the evidence, I am not satisfied that any such access was available. Nor am I satisfied that an agreement could be achieved, or put in place for the year 1990 to complete its sub-division requirements before approval. Even if the plaintiffs' access purchase had been successful as of April 1990, which it was not, there was much yet to do including the sub-division agreement with the municipality before work on the project could commence.
80 Added to its property problems, the plaintiff required the affirmation and acceptability of the proposed project, not only from the Township, but various other Provincial ministries. Not least of the plaintiffs' problems, was the confirmation of a sub-division agreement with the municipality before work on the project could commence, and all of this to be settled, and completed, within the year 1990, if the plaintiffs' claim is to succeed.
81 On the evidence, while in early April 1990, the plaintiff reviewed the possibility of an access to the south of its lands with James Breschuk, its engineer, the lands being owned by Raymond Pajot, the plaintiff never followed up with the engineer's requirements to provide to him surveys of the Pajot lands.
82 This would have enabled the engineer to provide a proposal to the Township as to the feasibility of these lands as an access route, and to inquire of them its acceptance, or rejection for such proposal. This was not accomplished for the reasons given by James Breschuk, in that he was not supplied with the information requested. I conclude more importantly on a review of the evidence, that as of early April 1990, whether it was financial pressure from its bank, or the difficulty it was having with the access route, the plaintiff had a change of heart, and was not then vigorously pursuing the residential sub-division. This change of attitude was prior to its first knowledge of a contaminant upon its lands, of which specifics I shall address later in this judgment.
83 As to the year 1990, and the period between April 23rd and November 29, this period in our consideration is extremely relevant. Its relevance is based on my acceptance, that as of November 29, 1990, the contamination of the plaintiffs' lands was, for all intents, effectively removed, and was no more, the lands being remediated. [Exhibit 56]
84 I conclude, that after this date, the plaintiff could not use the spill, or the contamination, to be a cause of delay, or that its intended use was then thwarted by the contaminant. This of course, does not alter the court's required consideration of the plaintiffs' inability to proceed after this date for other reasons, whether financial, or a change in the market, and thus its claim for damages.
85 Without else, the question then is whether between the dates of April 23, 1990, and November 29, 1990, the plaintiffs could have completed their essential requirement to put their residential plans of a sub-division into a reality.
86 Aside from the necessity of the access route itself, even if it was proven to be available, a further major obstacle arises which depends on the location of the access.
87 The properties on the plaintiffs' borders to the south, were in a flood plain control zone, and close to wetlands. Many objections become apparent, from the evidence, the least of which was Camion, located to the north. Camion at the same time as the plaintiffs' development was being conceived, also intended to proceed with a tire re-cycling plant on its lands. Camion as we are aware from the evidence, for the reason that it required all of its lands had earlier rejected the plaintiffs' proposal for an access upon its lands.
88 On the evidence of Denis Smith, although we know he adopted a position of optimism to service without difficulty the River Road project because of the lands proximity to connect into the main sanitary and water services, this optimism to develop quickly was far from a reality. In spite of this advantage to its lands, Bruce Crozier, an engineer called by the plaintiff, specializing in sub-divisions, acknowledged in his cross examination that the plaintiff could face delays if there was a revision to the existing registered plan. Added to this, construction of the access route, if required in the flood plain control area, in proximity to the Turkey Creek, could cause further major obstacles to arise which depend on the location of the access.
89 Of additional importance, would be the cost of such a route, if it was close to the banks of the Creek, making its feasibility inappropriate, and this would depend on the requirements of the Township, and Ministry, even if its construction was acceptable. I accept that an access route to the north over the Camion lands at the relevant time, would have alleviated these concerns, but at the relevant time this was not to be.
90 To add to this possible delay would be the negotiation of park land dedication, or cash in lieu thereof. Most important to all of these considerations we must also add the question of the Financial Institutions acceptance of the project, and the reasonable probability of the plaintiffs' proposal coming into existence quickly if additional costs were to be incurred. This relates to the plaintiffs' ability to support such additional costs, or increase its financing, having regard to the financial constraints that it was operating under in the year 1990.
91 Any significant increase in development costs would I conclude, on the evidence, have delayed this project. While I find the outlined problems, real possibilities on the evidence as the facts then existed in the year 1990, it will never be known with certainty, how quickly this development could have come on stream because the plaintiff did not proceed forward with the development.
92 As we are now aware after the fact, the relocation of certain underground services became a condition to development imposed by the Township in its Sub-division Agreement.
93 On this point, although a concluded agreement was necessary for the advancement of the sub-division, we are aware that as late as April 23, 1990, negotiations were not even commenced with the plaintiff, and this was prior to its being advised of the spill.
94 In our review of the report of the plaintiffs' accountant, Exhibit 79, he pre-supposed the developments readiness for servicing by April 1, 1990, and provided a completion date by August 31, 1990.
95 We know from the evidence, this was not the case, and in fact the plaintiffs' own predictions given to its accountant were far too optimistic. This is nevertheless, the time table upon which its expert, James Balfe, C.A., of Collins Barrow, has calculated, and based the plaintiffs' loss of profit. This report, I shall speak to when I review the claim for damages.
96 In conclusion, I determine that while many of the obstacles reviewed may not have foreclosed the ultimate development of this project, it would have delayed the plaintiff beyond the date of remediation of its lands accepted by this court to be November 29, 1990.
KNOWLEDGE OF PURCHASER PRIOR TO NOTICE:
97 A good deal of the cross-examination of the plaintiffs' representatives related to the plaintiffs' knowledge of the bulk spill, prior to their purchase of the River Road project.
98 Its purpose was to suggest the plaintiffs' awareness of the spill before purchase, and thus its disentitlement to damages.
99 To support their position, the defence raised the question with the plaintiff of the purchase price being $88,000 in January 1989. The plaintiffs' representative, Denis Smith, accepted that the price was reasonable considering what he believed to be the property's potential, supported by the after acquired property's appraisal, but this raised at time of purchase no suspicions, or inquiries, on their part.
100 Added to this area of questioning, and to raise the possible suspicion of the plaintiffs' awareness before its purchase, a number of articles published in the local newspaper, Exhibit 14 & 15 were produced. These publications illustrate the notoriety at the local level, the methanol spill had achieved at the time of its occurrence.
101 In spite of these productions to the plaintiff, which illustrate extensive media coverage, and would have been of general concern to property owners nearby, of which the plaintiff was one, because of the potential environmental consequences, the plaintiff maintained' that this disaster was unknown to them prior to purchase.
102 This was the plaintiffs' position, even though it acknowledged that their contracting office, and yard operations, were close to the affected lands. In fact, it was confirmed by the plaintiffs' representatives, they would pass the affected lands on a daily basis, because it was a necessary route in proceeding to their offices.
103 The plaintiffs only admission through Denis Smith as to any knowledge as to environmental clean-up in the general area of River Road, also near Turkey Creek, occurred while he was attending a baseball game for his son located near the spill area in the year 1987.
104 On that occasion, he admits to observing clean-up of what he thought to be an oil contaminant in the Turkey Creek shoreline being cleaned up by Honey Bee Sanitation, an environmental disposal company.
105 These actions at the time were of no consequence to him, and gave him no reminder of caution or concern in his later pursuits to purchase the lands, which are now the subject of this courts consideration.
106 Added to these specifics of the plaintiffs' possible awareness before its purchase, is that the plaintiffs' own company had occasion to be retained to perform services at the site of the spill. They admit their company may have assisted in doing some work relating to a contamination problem, but because of the then size of their company, they were unaware of their forces being present at the property site for such purpose.
107 To add to these considerations, many monitoring wells protruding above ground elevation on the plaintiffs' lands were incorporated. These were incorporated after the spill, to record the migration of the contaminant, and continued to exist both before, and after the plaintiffs' purchase. These monitors would have identified with any visual inspection of the site, the environmental problem.
108 While visual site inspection of the property would have without doubt identified this existing situation, there is nothing in evidence to demonstrate an obligation upon the plaintiff in law to make such inspection or to take soil tests.
109 The plaintiff throughout the trial, has maintained it was unaware of any contaminant affecting the property's use prior to purchase, and on the totality of the evidence, I cannot conclude with reasonable probability otherwise. For these reasons, I proceed to dispose of the issues before me on this basis.
FINANCIAL CONDITIONS OF PLAINTIFF IN THE YEAR 1990:
110 As stated earlier in these reasons, confirmed on the evidence of Denis Smith, principal of Windsor Limited, the River Road registered plan of sub-division provides for a maximum of 48 building sites, but it was their intent at the outset to apply to exceed this number, and avail itself of the properties maximum potential. The projected potential started with 60 building sites, and was later reduced to 55, and then 52.
111 These larger numbers of course, could not be achieved without amendment to the existing plan, and withdrawal of the holding residential designation. From a financial consideration of importance to the developer, was that although the River Road lands were unimproved, the main services were nearby to facilitate reduced costs and easy hook-up.
112 To meet the required funding to service this project, we have before the court a commitment letter in early 1990, supplied by the Federal Business Development Bank. It authorizes a loan in the sum of $500,000 to service the sub-division to the extent of 38 building sites. At the time of the commitment, the sub-division was not yet ready to proceed. In fact, there were yet many problems to overcome.
113 In spite of the commitment letter, upon my examination of the report of the plaintiffs' expert, James Balfe, C.A., he shows a considerable shortfall of capital to complete the servicing. The projection of the accountant, while his numbers are based on servicing 52 lots, there would nonetheless be a shortfall in the capital financing to the plaintiff. This is true, even with an increment in the commitment to 52 lots, if such additional allowance for each building site was equal to the capital allowance for each of the original sites.
114 His report identifies the additional capital required above the letter of commitment of approximately $700,000 to complete albeit 52 sites. This would require the plaintiffs to fund a sum in excess of $500,000 for the initial sub-division improvements.
115 As shown in Exhibit 79, the plaintiffs' expenditures at its highest point of development if proceeded with in August of 1990 would approximate $1,232,600 approximating a service cost of $23,700 a site. The outlay of $500,000 for sub-division improvements by the Federal Business Development Bank (F.B.D.B.) for 38 sites, provides servicing costs of only $13,157.90 per site.
116 These costs do not reflect the additional outlay for the modular homes to be located thereon.
117 On this point as to whether the proposed improved subdivision would be sold as individual serviced lots, or with a building to be constructed or located thereon, the evidence of James Balfe, C.A., Collins Barrow, removes this confusion.
118 His evidence and calculations as it related to the plaintiffs' damages were based on the sale of 52 completed modular homes placed and located on the plaintiffs' lot sites.
119 To add confusion to the conflicts in the plaintiffs' evidence, this expert's report shows the completed development and sale of the plaintiffs' intended sub-division within a span of one year. This was not however, the intent or was it the evidence of Denis Smith. He testified that he proposed the development to proceed in two stages, 33 lots in the first stage, and the balance to be completed in stage two. This is the plaintiffs' evidence, even though the draft plan shows only 32 sites in the first stage of the development.
120 To compare the plaintiffs' intent with the letter of commitment from the Federal Business Development Bank, the number of improved lot sites for the first year falls short of the commitment letter which authorizes and requires the improvement to 38 sites for its commitment to $500,000.
121 On my consideration of the plaintiffs' financial stability, these were lofty aspirations. To comply with the accountant's report, a further and substantial infusion of capital on their part to complete was necessary. I conclude that the plaintiffs' ability to provide the additional capital required was remote under the financial constraints the plaintiff was operating in at the time. In fact C.I.B.C., its bank was looking to the plaintiff company to bring their capital loans into order by reducing them.
122 It is with these facts that we shall deal with the various questions raised as to the plaintiffs' financial stability.
123 I accept that from the outset, upon the evidence called, the plaintiff was never in good standing with its bank at the relevant times it intended to proceed with this sub-division. In fact the plaintiffs' use of its operating line of credit to purchase the River Road land found disfavour with its bank.
124 Although many of the plaintiffs' bank problems related to its margin, and that this resulted from the bank changing its rules and/or policy concerning receivables, it is nevertheless still a fact that the bank during the relevant times were unhappy with the financial stability of the plaintiff.
125 Ultimately, as indicated by the testimony of Denis Smith, the C.I.B.C. bank withdrew their support and the plaintiff rescinded their relationship with this bank.
126 For the reasons reviewed I do not accept that the plaintiff would have been in a financial position to either proceed successfully or complete the servicing identified by James Balfe, C.A., in the year 1990. This would be true in spite of the loan commitment by the Federal Business Development Bank (F.B.D.B.) and is a consideration outside of the then existing problems of sub-division approval earlier reviewed.
127 The plaintiff at the outset on the materials filed, and reviewed by me was clearly underfinanced for any kind of development, particularly where additional large capital investment was required above its F.B.D.B. commitment.
128 This would have become clearly evident if the project had proceeded. The cost estimates from the report of James Balfe, C.A., as to the capital outlays verify what would be required for this development over and above the financing provided by the (F.B.D.B.) and at the relevant time I conclude no such ability existed with the plaintiff.
129 When the accountant was questioned concerning this shortfall for capital improvements above the commitment, Mr. Balfe suggested that perhaps payments to sub-trades could be deferred to await a cash flow.
130 I do not accept this as a practical solution to this shortfall without evidence of agreement with the sub-trades and there is none. There is a certitude that without agreement, there would be legal consequences to such a plan. The real truth of the matter is that upon a review of the evidence, it demonstrates a clear intent and that is that the plaintiff as early as April 1989 was availing itself of every opportunity to dispose of these lands with their sale in their then existing state and this is true although the plaintiffs' claim is based on its intent to improve these lands as a sub-division.
131 The plaintiffs' actions to sell its River Road lands throughout, were self-evident to alleviate the bank pressures, which receivable from such a sale could help by applying it to their capital loans thereby reducing such loan into an acceptable position.
132 I also find, although there is conflict in the evidence on this point, that the plaintiffs' timing to develop its sub-division and the commencement of the recessionary trends, may well have been a factor in the banks attitude. This development and the proposed improvements were coming together at approximately the same time as a depressed economy loomed on the horizon.
133 While I have reviewed the evidence of Edward Gorski, appraiser as to the value of the plaintiffs' lands unimproved, and in an improved state together with his opinion on the feasibility as to the sale of the lots in the year 1990, in my final assessment, his analysis, and views as to the rapidity of sales was I conclude, speculative and overzealous. No comparative analysis for the sale of modular homes was produced. There is in my view insufficient or appropriate data to give credence to any of Mr. Gorski's findings as to the rapidity of their sale or the acceptability of the product in spite of the proposed price.
134 There is also no certitude that the proposed listing price could be maintained without at least the plaintiff cutting into its proposed profit. This expert's conclusions and findings are not in keeping with the guidelines set out as being acceptable by the appraisal institute of Canada upon which reliability may be placed on the expert's opinion.
135 His shortcomings in completing an analysis which failed to follow the guidelines outlined by the Appraisal Institute created more than just nonconformity to its principles, but it became apparently clear during his cross examination that his conclusions did not survive careful scrutiny.
136 When we examine both the appraiser's and the accountant's report each pre-suppose a timetable for the sale of the modular homes with the use of realtor agents. Built into their commissions, would be the costs of advertising the project. This nonetheless appears to have been without consultation or instructions from the plaintiffs' representatives. Dennis Smith indicated the plaintiff intended to sell the completed modular buildings without realtor assistance.
137 Accepting this to be a truism, the plaintiff's personal projected analysis of profit made no provision for marketing, or advertising costs. While these costs would have reduced somewhat the profitability of the project, it would certainly enhance the prospects of sale, but more importantly within the time frame provided.
138 In final analysis when I consider the report of the accountant, his assumptions are based on the purchase price of modular homes landed in Canada, C.S.A. approved, but without such information affirmed by a manufacturer in a signed contract with the plaintiff.
139 There is no evidence that the values used, a supply of 52 modular homes to be purchased with timely delivery would be guaranteed.
140 Payment and delivery requirements may be a major consideration and are not addressed in the evidence other than through Mr. Balfe, who pre-supposes that these modular units would be available as required and for the price estimated in his analysis.
141 As to price itself, there are many factors which may create a variance between the sale of one unit and many. Where the manufacturer and/or distributor are small, this could seriously affect the price, particularly if quick delivery is required.
142 Here we have no specific evidence from such manufacturer that the quantity of units required and that the prices as shown on each individual unit are acceptable to the manufacturer and/or distributor for delivery.
143 For all of these reasons I do not conclude when I consider the plaintiffs' financial status at the relevant time that, but for the lands contamination, the plaintiff would have been able to pursue this development at the relevant time, for which it now seeks damages.
MIGRATION OF THE CONTAMINANT-ACTIONS OF THE DEFENDANTS: SPILL HISTORY:
144 To review the actions of the defendants as to remediation relative to the large quantities of methanol that escaped from its bulk storage tank, we commence with the date of the spill April 28, 1987.
145 The local fire department upon being advised of the spill immediately attended the site and commenced to dilute the toxic methanol with large volumes of water.
146 Although there may be varying opinions as to whether it would have been preferable to commence immediate retrieval of the raw methanol and return it to the tank, none of the evidence confirms that the fire department's actions were inappropriate.
147 Pumping did take place immediately thereafter, but approximately 0.86 million litres of the total spill was not recovered. It is surmised that in varying portions it was lost to evaporation into the air, infiltration to the ground or surface run-off.
148 The migration of the contaminant and the steps to remediate within the guidelines as proposed by the Ministry of the Environment are set out within Exhibit 56.
149 The totality of the defendant's actions through its agents do not required repeating, but some of those steps that are identified from the report filed are appropriate to review. Before doing so, I accept that even before M.M. Dillon, experts in Environmental and Scientific Monitoring and Remediation were retained in the summer of 1987, the services of Clayton Environmental Consultants shortly after the spill in May of 1987 were monitoring and carrying on a hydro geological investigation.
150 Part of their examination concerned the potential pathways of the methanol. Shortly after the spill, the guidelines by the Ministry of the Environment were set, providing the acceptable standard of methanol concentration within the ground water.
151 The defendants I accept on the evidence, implemented steps for the properties clean-up as soon as reasonably feasible and when a program was approved.
152 The standards to meet was to reduce the concentrations of methanol below the level of 1,000 parts to 1,000,000 parts of water.
153 To achieve this result, remedial actions in the form of containment of, "pump and treat", were implemented.
154 On site hydraulic containment of the contaminated water was selected. As the monitoring continued to determine the direction and migration of the contaminant, additional actions approved by the Ministry were implemented to accelerate the clean-up.
155 To identify the migration of the contaminant in the ground water, and over what area, the appendixes in APPENDIX "A" as to ground water concentrations of the methanol visually shown in schematic drawings illustrated as plume areas are identified within Exhibit 56.
156 These illustrations are shown as Figure A-1 commencing December 12, 1989 to Figure A-10, March 21, 1991. The details of the remediation efforts taken by the defendants are reviewed within this comprehensive report filed into evidence.
157 With time, the program implemented received success and a closure plan was developed and accepted by the Ministry of the Environment.
158 The effective date of the clean-up as to the plaintiffs' property is identified by Diagram A-7, Exhibit 56.
159 The plume line as identified by this figure establishes minimal extension to the plaintiffs' land. The importance of this assessment as to the below surface problems of methanol gas and the comments of Mark Trudell, the Environmental expert called for the plaintiff has not escaped my consideration. I accept that pockets of methanol gas are a serious problem where a contaminant is found in large concentrations to exist below ground level. Where excavation of the lands is necessary and where with sufficient quantities there could be a serious danger of ignition and explosion because of its flammability it may cause delay to construction.
160 There is however, no evidence before me that after November 29, 1990, that problems existed on the plaintiffs' land, or that it was a dangerous area to work in.
161 While caution should always be a real concern, for the continued development of the property, it does not mean that this alone would cause delay to its development.
162 I conclude; that it was the continuing monitoring of the defendant's experts and the implementation of various programs upon which success was ultimately achieved. We are aware from their investigation, that the dominant movement in the ground water was to the west, southwest. This is the very area of where the breach within the dike was located. As to the ground water velocity, it was estimated to be 10 metres/year to the south, southwest.
163 On the totality of the evidence, I accept that the actions taken by the defendant for the remediation of the land under the circumstances presented were swift, reasonable, and taken without delay.
164 To commence remediation I accept it was first necessary to determine the extent of the problem and then implement a program for its correction acceptable to the Ministry of the Environment which was done.
165 On the evidence of the Ministry's representative, Al Stephens, P. Eng., the defendants were co-operative throughout, and I find that it was this conduct which I conclude to be entirely reasonable under the circumstances which achieved ultimate success.
ABANDONMENT:
166 At the time the plaintiff was considering development of the River Road lands, it was also in the process of developing several other properties. Reaume Road which is identified in the commitment letter of the (F.B.D.B.) was being delayed because of land title problems.
167 At about the same time and prior to April 23, 1990, which is the relevant date of disclosure of the contaminant, the plaintiffs' representatives I conclude, were at a loss concerning a possible access road.
168 Denis Smith had failed in his attempt to obtain approval to cross the Essex Terminal Railway Line and connect with the Ojibway sub-division.
169 The plaintiff also thought that Raymond Pajot wanted too much for his property at a cost of $39,000.00 even if this site could possibly be approved by the Township for the alternate access route required.
170 What appeared to be the best and least expensive route over the Camion's property was not available. The other alternatives addressed by the defendant, I find on the evidence presented, were remote. Faced with these insurmountable problems, I accept that the plaintiff changed its mind about proceeding with its sub-division for the year 1990, and this was prior to its knowledge of the contaminant.
171 I conclude on the evidence, Exhibit 31 & 104 that there was a communication to Nick Popovitch on March 23, 1990, the latter employed in the offices of the Township of Sandwich West. This communication, I conclude, was from Denis Smith to stop any further work on the River Road project because he was unable to secure a second access.
172 This was clear evidence of the plaintiffs' intent to abandon this project at least temporarily if not permanently.
173 Support for this proposition is also shown by the defendant's accelerated interest as identified by the evidence of his various attempts to sell the property commencing almost immediately after its purchase.
174 I further accept the evidence of Robert Braidford, Senior Analyst at Windsor, employed by (F.B.D.B.), that the bank received a communication from Denis Smith prior to April 23, 1990 to alter its commitment of financing from River Road to the plaintiffs' Howard Ave., development.
175 This communication to change its commitment was submitted to the local office and resubmitted to the head office before the 6th of April, 1990. [See Exhibit 29]
176 Exhibit 25 along with other corporate memorandum from the C.I.B.C. filed, illustrates that the River Road project was on hold as of April 6, 1990, and that the plaintiff was looking to redirect its financing from River Road to another site. While these exhibits are not acknowledged for the most part by the plaintiff, and are therefore heresay as to their contents, they may be reviewed not to establish the truth of their contents therein, but to consider the plaintiff's conduct, and actions on the totality of the evidence as reviewed at the relevant time.
177 At the time, of the plaintiff's initial request to shift its financing from River Road to Howard Ave., received prior to April 6, 1990, and confirmed on the evidence of Robert Braidford, I accept that this change initially was rejected for lack of particularity. The importance of these Exhibits 27, 25, 29, & 30 illustrate that the plaintiff was not necessarily committed to the development of this property, or at minimal, with the obstacles presented, there was a change of intent if not permanently, then temporarily. More importantly this confirmed change took place before any knowledge of a possible contaminant on its lands.
178 I have earlier concluded under financial considerations which may additionally have influenced the plaintiffs' conduct to abandon its plans for development of this land at least temporarily, that the plaintiff was not in a position to proceed.
179 On these additional materials I am not satisfied on the evidence heard that even if the plaintiff had the financial ability to proceed with its initial intent if that were the evidence which I do not accept it to be, that the meeting of April 23, 1990, was the cause for the plaintiffs' stopping its development.
180 The suggestion to the plaintiffs' representative Bruce Smith, by Al Stephens, from the Environment Commission was not that development could not proceed. It was at best to raise the environmental and safety concerns of the lands for public use because of the earlier spill and that these be considered and examined.
181 Robert Hayes, the Township Engineer, adds nothing in his evidence to suggest approvals could not be obtained if a report from an expert indicated completed remediation was close at hand together with final approval.
182 Nothing was done by the plaintiff to test the impact of this disaster as it related to the development of the lands after April of 1990. I find no conflict even on the evidence of Mark Trudell, the plaintiffs' environmental expert that would prohibit the preliminary investigation to determine the requirements to pursue sub-division approval. At minimum, if any impediment existed, the real delay if any caused by the contaminant could have been identified.
183 In point of fact, the defendants did at a later date in 1991, when access to the Camion lands became available, proceed for approval of the proposed access route for the River Road lands. This was started before the River Road properties received certification that the lands were no longer affected. If this is evidence of the plaintiff being able to proceed to seek approval for the River Road subdivision before the final closure report confirming the lands completed remediation, then it may be concluded, that these steps, and course of conduct toward development, could also have continued in April of 1990.
SECURITY - DUTY OF CARE
184 Earlier in this judgment we confirmed that the tank farm from which the methanol escaped was under lease. Within the terms of this lease, there are no specific provisions incorporated requiring the lessor to provide specific security or is there evidence of any oral undertaking between the parties.
185 As to the products stored, specifically the product methanol, considerable examination of Harve Plante, President of Camion, related to the question of whether prior to the lease, Camion was licensed under the Fuel Licensing Act to permit such storage.
186 I accept and find on all the evidence that such a licence was not required. I conclude that Camion through Harve Plante whose evidence I accept spoke with Jeff Brown a fuel safety inspector and that this product required no license. This position was confirmed by Fire Chief Tessier.
187 The plaintiff has nevertheless raised security as a major issue for the consideration of this court. In this regard the plaintiff suggests the defendants fell far short of the standard of care required to protect such product from interference and escape.
188 The plaintiffs' counsel suggests that it is due to this failure of the defendants to provide appropriate security whether the escape here is from negligent, or intentional acts of the defendants, or strangers, its ultimate result is the harm visited upon the plaintiff.
189 It is for this failure and resulting harm for which this action is brought and for which the plaintiff suggests the defendants are liable. On this issue of security, Harve Plante testified that at all times there was at least one member of his staff located at the property. In the evenings and after midnight, a dispatcher was present for Camion's trucking business and while not in attendance specifically to guard the tank, there was a people presence. To add to this presence, Camion after 5:00 P.M. each day or when the business was closed from pedestrian traffic, located 3 German Shepherd dogs in the vicinity of the tanks. These dogs were located in different areas of the yard and were controlled by a 25 foot leash and a 200 foot slide cable. A security company was also retained for weekends and holidays to carry out periodic inspections when the business was closed.
190 The defendant pleads that even with these precautions to secure the property which it pleads accords with the minimum standard of care required within the industry, vandalism occurred.
191 The escape of the fluid and the tampering of the tanks as confirmed by Chief Tessier, results from intentional acts by parties unknown. There is also no argument that it was by individuals with special knowledge of their operation and not children.
192 Although the examination of Harve Plante confirms it could have retained the services of a fulltime security officer, he acknowledges this was not done because of the expense, or was it a requirement within the industry.
193 To this end as to licensing requirements or minimum security compliance from Government or regulatory bodies, there is no evidence.
194 It is with this background that the court is to consider the issue of liability and whether the defendants have met the standard of care required in its storage of methanol and its protection from interference by strangers.
195 In applying the principles of negligence to the fact situation before the court, we are left with the duty of the defendants to its neighbours and the standard of care required.
196 Although, hindsight is a useful tool as to what could have been done at least in the area of its obligations, the real question is whether what was done fell below the accepted standard of care imposed within the industry, and constitutes negligence.
197 If liability were to be determined alone based on the principals of negligence, I do not find from the evidence that the plaintiff has established a breach of the duty of care or that this defendant Camion has fallen below the standard of care acceptable within the industry. In the evidence of Fire Chief Tessier, he confirms that he is not aware of any special security that is required or provided for tank farms.
198 I accept from the evidence that additional security measures could have been implemented and put in place not only for accidental causes but intentional.
199 That is, not however, the test for liability in negligence since we first commence with a duty and a breach of this duty to establish liability.
200 These additional measures of security which could have been implemented are not lost in the area of nuisance or the rule of Rylands v. Fletcher where negligence is not required to impose liability, but rather only the establishment of the interference of a neighbour's rights.
201 In such instance liability may well turn upon policy considerations if foreseeability of damage for nuisance is present in the event of escape of the dangerous product. [Cambridge Water Company v. Eastern Counties Leather, P.L.C., [1993] H.L.J. Mo. 41]
202 Where negligence forms no consideration upon proof of escape and harm to its neighbours, should the loss fall upon those who control the hazardous substance? The question of this analysis will be addressed when I deal with liability.
NEGLIGENCE:
203 On the issues of liability, the plaintiff pleaded several grounds. Their pleading is in the alternative, negligence, nuisance, and strict liability. I commence with the principles of negligence as they apply to the facts.
204 As I have earlier stated, the defendant while they owe a duty of care to their neighbour, the breach of which constitutes negligence, such a breach of duty is not established on the facts before me.
205 Upon the evidence, the defendants met the standard of care within the industry which as it relates to security for tank farms is minimal. Although greater security could have been provided, if the obligation does not exist and the standard of care as required is met, the failure to provide additional security does not alone constitute negligence.
206 Aside from the question of security, one additional issue as to negligence has been raised. That issue relates to the actions of the defendants after the spill.
207 The plaintiffs allege there was delay on the part of the defendants in the clean-up and immediate remediation of the land. That as a result of this delay, the plaintiff has suffered damages in that his plans for a proposed subdivision could not proceed forward. That this was a direct cause as pleaded by the plaintiff which created a loss to their moment of opportunity, and thus their ability to realize upon the profitable potential of its lands.
208 On this issue, as I have confirmed earlier in this ruling, wherein I reviewed the actions of the defendants as to their clean-up program, it is my conclusion that the defendants immediately after the spill acted without delay. They retained as was prudent for them to do so, M.M. Dillon and Associates, a firm of scientific environmental engineers to assess the environmental problems. Upon completion of this firms assessment, they developed an immediate course of action and proceeded in consultation with the Ministry of the Environment. Upon my examination of the defendant's conduct and the steps implemented for remediation, it was not only appropriate, but carried out within reasonable time limits. For these reasons, the plaintiff fails on this ground of negligence. (Not causing but - permitting nuisance to continue, resulting in negligent conduct) [Sedleigh-Denfield v. O'Callaghan et al., (1940) A.C. 880 at 904; comments of Lord Wright; Barker v. Herbert (1911) 2 K.B. 633 at 636-637]
NUISANCE AND STRICT LIABILITY:
209 There is no argument that nuisance is not a branch of negligence. Where nuisance is pleaded, the plaintiff need only establish an interference of its interest to person or property. The standard of care as applies in a suit in negligence is not equal to the obligations imposed upon a person or entity to avoid a nuisance.
210 Historically, if harm resulted from the use of one neighbour's property causing interference and loss of enjoyment to an adjoining property owner, the fact that care may have been taken did not exempt the property owner who caused the nuisance from being liable in damages.
211 As to the term "strict liability" arising from nuisance, it emanates from the decision of Lord Blackburn in Rylands v. Fletcher, (1868) L.R. 3 H.L. 330. Lord Blackburn in the facts there was concerned with the situation where the defendant collects things on his lands which are likely to do mischief if they escape, in which event, the defendant will be strictly liable for damages resulting from such escape.
212 This is identified in the words of Lord Blackburn at page 279-280 of Rylands v. Fletcher where he states the following:
"We think that the true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief, if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence off its escape."
213 The rule in Rylands v. Fletcher and the principals applied therein, are then but an extension to the law of nuisance. Nuisance, has been described as interference with the plaintiffs' use and enjoyment of his land. In the rule of Rylands v. Fletcher where dangerous substances are collected on property and they escape, then to the extent they cause harm to a property owner, the imposition of the principles of liability should be strict as stated by Lord Blackburn.
214 Lord Goff in Cambridge Water Company v. Eastern Counties Leather, supra, has limited to some extent the application of the rule in Rylands v. Fletcher. At pg. 11 of this judgment, he concludes that a defendant can only be liable for damages which he can reasonably foresee from the operations of its lands. Where any special use is brought thereon from which damage may result from the operation if it escapes; and such damage is foreseeable, then recovery nuisance is established should follow.
215 While this principle of foreseeability of damages as a pre-requisite may have limited application in most instances, it will be important in the proper fact situation, but I do not find it to be so on the facts here.
216 I therefore conclude that Lord Blackburn in Rylands v. Fletcher was identifying the concept that an unnatural use of land could bring about liability for damages where a neighbour's property was interfered with because of this use.
217 He identified this concept in embodying it within the following principal:
"That where this is an unnatural use to property, the defendant will be liable for harm caused to the plaintiff by the escape of such an unnatural use, notwithstanding that he has exercised all reasonable care and skill to prevent the escape from occurring."
218 In considering natural use, it applied to the ordinary use of land. The Rule of Rylands v. Fletcher did not apply to things that were naturally upon the land, but rather to a special use of things brought thereon. It is under this concept, that this is an extension of the principal of nuisance, relating to interference of a person's use because of the escape of a special thing brought upon the property.
219 The creation of nuisance, does not then necessarily equate to misconduct, although misconduct can in itself create a nuisance. Nuisance, alone can simply relate to the interference of a plaintiff's interest from something within your control that had caused such interference.
220 Under such circumstances, conduct may play a part in that the defendant is obliged to discontinue such conduct if there is an interference to a property owner, and to show that he has done all that was reasonable to prevent such interference to its neighbour's property.
221 Justice Jenkins in Ratko et al. v. Public Utility Commission of the City of Woodstock, et al., 17 O.R. (3d) 427 found liability against a municipality for a ruptured watermain which caused damage to the plaintiffs' premises. While such a watermain may fall under the category of a special use, it was his Honour's conclusion that the resulting damage from the ruptured main, may have been avoided by additional inspections. This could have disclosed the requirement for repairs and secured the property owner from damage.
222 Under the circumstances as he found them, His Honour concluded that as between the innocent party and the defendant, the latter should not escape responsibility, and applied the law of nuisance. We may extract from this authority an application to the principle of nuisance, that the court must be satisfied that the defendant has done all it reasonably could, and all that was practicable to avoid the nuisance being complained of, and/or its continuation, and the ensuing damage which followed. [London Guarantee & Accident Company Limited, et al. v. Northwestern Utilities Limited [1935] 3 W.W.R. 446 at pg. 458 & 459]
223 When we extend this principal to a special use brought upon the land as stated by Lord Goff in Cambridge Water Co. v. Eastern Counties Leather, supra where damage is foreseeable in the event of escape then following the principals enunciated in Rylands v. Fletcher, supra, followed in Ratko v. Public Utility Commission of the City of Woodstock, supra, the party controlling the property from which the nuisance emanates should be responsible. This is true even where a special use benefits the community as a whole where a plaintiff suffers an interference to its property. For policy reasons, if for none other, the creation of such nuisance to a person's property should impose the highest degree of care and liability should follow unless there is a specific statutory exemption.
224 With the intensity of industrial development, where harm befalls an innocent property owner, nuisance becomes an important legal tool. It permits pursuit for recovery of the physical damage caused to property, or loss of enjoyment, including loss of ability to pursue a course of action for the property if established.
225 John P.S. McLaren in an excellent review of the Law of Nuisance in Canada in Justice Linden's case book studies in Canadian Tort Law, 1968, pg. 320 at pg. 375 reviews the traditional concept of tortious liability resulting from negligence, and the interference of a private right created by nuisance, and had this to say.
"In these situations, the traditional fault doctrine gives way to an interpretation of legal responsibility which involves an external, societal view of both the defendant's operations and the injurious consequences that have flown from it. In affect, the defendant becomes the insurer of the safety of his activity or use."
226 To this end, it may allow relief and the imposition of damages where appropriate, and where negligence may fail as a cause of action. Upon the facts found before this court, if for no other reason, the creation of the nuisance affecting the plaintiffs' property is a direct result of the special use of the defendant's lands.
227 For this reason the court should impose the highest standard of care. On the facts before me, it is clear that the defendants did not use every effort to avoid the escape of the unnatural use or substance placed upon their property.
228 It is also no defence that the escape resulted from the acts of strangers. Further, the foreseeability of damage in the event of escape of such a hazardous product should be without argument. Because the principles of negligence have no application in the law of nuisance, and since the defendants have failed to show that they have secured the premises by imposing all known and available security, the establishment of a nuisance, the interference of the plaintiffs' property is sufficient to establish liability.
229 On the facts before this court, there can be no dispute that there were many more procedures for security that could be carried out, but for money considerations were no entertained. For this reason I find the defendants, including Camion, jointly and severally responsible for the interference to the plaintiffs' lands. Based on the lease arrangement, and the responsibility of Novalta to secure their own products, I conclude that Camion is indemnified to the extent of its obligations for any payment from this co-defendant, and its associates as earlier described.
230 This does not however, end our review, but only leads this court to the question of damages. Loss to the plaintiff must be established before any damages flow from this act of nuisance.
231 It goes then without saying, that even with the establishment of a nuisance without proof of damage, the loss may translate into a zero recovery, or at best nominal damages, if the event calls for the same.
ANSWER TO QUESTIONS ON LIABILITY:
232 In answer to the legal issues raised as to Question 1 and 2, are the defendants liable in nuisance for the escape of methanol and the contamination of the underground water system, and secondly are they strictly liable under the rule of Rylands v. Fletcher; the answer upon the facts before this court is in the affirmative to both questions.
233 On Question 3(a) raised earlier in these reasons may the defendants in an action on negligence use the defence of vandalism, where they meet the standard of care within the industry, the answer is yes.
234 As to Question 3(b), does the defence of vandalism by strangers apply within the law of nuisance, or within the rule of Rylands v. Fletcher supra, the answer here is that within the law of nuisance if the defendant shows that the nuisance resulted from a natural use and operation of the land and it has done nothing knowingly to create the nuisance, and that he has pursued his activity with the exercise of reasonable care, it is unlikely that liability will be imposed. (Negligence or nuisance created by a third party) [Darbey v. Winnipeg Electric Co. [1933] 4 D.L.R. 252; Tidy v. Cunningham, (1915), 22 D.L.R. 151 (B.C.S.C.)]. That is of course, not the situation here, and under the rule of Rylands v. Fletcher, supra with the abnormal use of land, where interference of a neighbour's property results from the abnormal use and this creates a nuisance, the defendant pursues his activities at his peril. This is true as here, even without establishing negligence, the defendant is liable.
235 On Question 3(c), the principles of negligence are not appropriate to the law of nuisance, save that the court in situations of normal use of property where nuisance results from the use or operation upon the land reviews the question of reasonable care.
236 The answer to Question 3(d)(i)(ii) have been answered within the earlier questions responded to. In a claim for nuisance where reasonable care is shown, and there is no abnormal use, the operation being devoid of risk, the courts will be careful before imposing liability, but that is not the case here. [Sedleigh-Denfield v. O'Callaghan et al. (1940) A.C. 880 (H.L.)]
237 It is suffice to say where a special use is exercised for policy reasons unless there is legislative immunity or the establishment of a prescriptive right, where damage is established to an innocent victim, and where as here the defendants have not provided all available security for prevention, liability will be found.
DAMAGES:
238 Although there has been a good deal of evidence as to the plaintiff's loss and the damages which are appropriate under the circumstances, I cannot agree with the plaintiff's position.
239 It is an unchallenged principle that although damages are payable whether this emanates from the establishment of negligence or nuisance, it requires proof of loss from the harm created for which damages become payable.
240 Liability alone does not impose payment of A damage where no loss is identified or proven. On the facts before this court, the key to open the door to damages is the establishment that the plaintiff has suffered a loss. The plaintiffs have approached their claim on the proposition that prior to their being aware of the nuisance created by the defendants, they intended to develop a residential sub-division. It is important also to their position in the manner they have presented their claim, that because the subdivision could not proceed within the time frame, that they proposed, they suffered the loss of opportunity for a financial gain.
241 To establish such loss, they must show on reasonable probability, that they were in a position to proceed both financially, together with the requisite municipal, and provincial approvals. To this end, the plaintiffs through their evidence suggests that they would have been ready financially together with all necessary approvals to proceed, but for the nuisance.
242 The plaintiff on this assumption that the sub-division was ready and the finances in place, during the relevant period, to establish their loss called Edward Gorski, a realtor appraiser to show what price the lots within the improved sub-division could have sold at. To add to this evidence, and to identify more clearly their loss by subtracting proposed sales from expenses, the plaintiffs called upon James M. Balfe, C.A., an accountant with Colins Barrow to establish this loss.
243 While Mr. Balfe has prepared several reports, Exhibit 79, 81 and 82, as to the loss of profit, the plaintiffs rely on Exhibit 79, his final report of February 28, 1994 to demonstrate the plaintiff's possible loss.
244 In the exhibits filed, he translates the expenses which would have been incurred in the improvement of the sub-division within the period proposed by the plaintiff subtracted from the proposed profits thereafter minus expenses for the sale of the lots.
245 The plaintiff submits this loss of potential profit as a measuring rod for which it asks this court to apply the principles of loss of opportunity to their development plans to determine probable loss. The determination of the probable loss of course is because the sub-division did not proceed and as we are aware, there are many contingencies which may interrupt such a plan for profit, even when all things are in place. Examples of these are that improvements to the sub-division could not be achieved within the schedule proposed, overrun on estimated costs, lack of additional funds, a downturn in the market re sales and so on.
246 The plaintiff nevertheless suggests these contingencies may be subtracted, and the court as difficult as it may be to assess damages, is obliged to crystallize as best it can the plaintiff's loss of opportunity and thus its loss of potential profit. [Chaplin v. Hicks, (1911) 2 K.B., 786 C.A.; Multi-Malls Inc. v. Tex-Mall Properties Ltd. 108 D.L.R. (3d) 399 at 407, 408]
247 I accept the proposition developed in the courts since first enunciated in Chaplin v. Hicks that if this court determines there is a loss of value that it is obliged to calculate as best it can, the probable loss sustained even if as suggested on some case authority, it is tantamount to a guess. [W.B. Wood et al. v. Grand Valley Railway Company and A.J. Pattison (1915) 51 S.C.R. 283 at pg. 289).
248 The use of the term guess relates only to quantum or the measurement of damages not as to the probability of a claim. In this regard, purely speculative claims are to be rejected outright. A plaintiff's loss may only be assessed as to its possibilities of success if the plaintiff demonstrates a reasonable probability, or possibility for such success [Messer v. J. Clark & Sons Ltd. (1961) 27 D.L.R. (2d) 766; Kranz v. McCutcheon (1920), 18 O.W.N. 395; Webb E. Knapp (Canada) Limited and Western Pacific Projects Ltd. and the City of Edmonton (1970) S.C.R. 588 at pg. 589.
249 When we apply these principles to the plaintiff's claim, I am unable to determine that the plaintiff has established any loss. Without reviewing all of my earlier reasons, I conclude that prior to the plaintiff becoming aware of the contamination to its lands, it abandoned its plans, at least temporarily for the sub-division, and I do not conclude that in the time period which is relevant to its claim, it altered its intention. The plaintiffs resolve not to proceed in the year 1990 with the sub-division, has been established both in the communication to the Township to put its plans for River Road on hold, and to the F.B.D.B. to switch the financing from this project to Howard Ave.
250 I am also satisfied on the evidence, that the plaintiff's financial position was unstable at the time. The F.B.D.B. commitment, was only a portion of the funding necessary to complete the improvement and without some additional contribution from the plaintiff or additional financing from another lender, its proposed plans for improvement I conclude, could not go forward. Based on the plaintiff's financial instability with its own bank, C.I.B.C., I do not find that this would have been a reality. This I find is true, even though at one point of time in early 1989, the C.I.B.C., would have committed themselves to limited financing of at least one of the plaintiffs' projects to the extent of $700,000. In my attempt to review this area of the evidence, it is not clear from Exhibits 20, 21 and 38, that this would have been committed to the River Road Project, and appears to be more of a commitment extended to Reaume Road.
251 I come to this conclusion because the bank was not prepared to defer their security, and accept a secondary position on their existing security as it related to any of the plaintiffs' lands. On the totality of the evidence, I conclude, particularly as to Reaume Road, the bank was not prepared to allow F.B.D.B. first position on title which was a prerequisite for F.B.D.B. unless there was an acceptable reduction of their secured loans or they were paid out. Further, the bank believed from the material filed, that the Reaume Road sub-division was a good risk at the time.
252 Finally, I do not accept that the plaintiff during the period under consideration April of 1990 to November of 1990 would have been able on the evidence before me to resolve his access difficulties. The proposed access across the Essex Terminal Railway, and the Crown Lands was rejected. The access across the Pajot lands was not being pursued for the reasons earlier given. Aside from the necessity of an emergency access road, there were many other contingencies to resolve with the Township, and this did not include the earlier referred to Provincial requirements before this sub-division became a reality.
253 On all of the evidence, I do not conclude, even the possibility of its accomplishment within the time frame referred to in Mr. Balfe's report, which is used to establish the plaintiffs' basis for loss. [Prozak v. Bell Telephone Co. of Canada (1984) 46 O.R. (2d) 385 at 403, 404 and 407]. More importantly, I repeat the plaintiff abandoned its intent for proceeding with the sub-division in the year 1990. It is for this reason, that the court, while it is cognizant as to the application of loss of opportunity described in Chaplin v. Hicks, supra, these provisions are only appropriate where the court concludes there is a loss of some value. Upon such a conclusion, the remoteness of such loss, even based on innumerable contingencies which are to be overcome, is nevertheless something that may be valued. As has been found by many of the authorities, the mathematical uncertainty to such a loss where there is a loss of value, and its difficulty in assessment, does not reduce it to grounds for awarding only nominal damages.
254 On the conclusions arrived at before this court, where the evidence confirms that the project was abandoned prior to ascertaining the nuisance, or at minimum placed on hold, the existence of the nuisance has no affect on the lands unless it was required for some use other than the sub-division for which there is no such evidence before me. Under these circumstances, the plaintiff has not demonstrated any loss of value even nominal. [Raj Bakshi v. Dimitrious Kouretsos, et al. (1933) O.J. No. 1795, Aug. 10, 1993, pg. 2; Kinkel et al. v. Hyman (1939) S.C.R. 364 at pg. 383]
255 If there was some evidence that the plaintiffs were restrained in the use of the lands, then the court may have directed its mind to the loss of use of its surface rights, or at the very minimum a award for nominal damages for loss of use of the property even if this use were to be sporadic. There is, here, no such evidence that the plaintiffs were restricted in such use, or is there evidence that the use of the surface rights in the year 1990 were impaired or further is there any evidence that surface damage continued after the plaintiffs purchase. There is also no evidence of continued soil damage which affected their use of the property, their main complaint being the contamination of the underground water system.
256 For all of these reasons, while I am satisfied that the defendants created a nuisance several years prior to the plaintiffs' purchase of the lands, and which nuisance continued thereafter, it was remediated before the plaintiffs' proposed development was hampered in any way by the existence of this earlier nuisance. For all of these reasons, I do not determine that the plaintiffs have established any loss and their claim for damages is dismissed.
STANDBY FEE:
257 The plaintiffs in their early stage of development of Reaume Road and River Road negotiated with the F.B.D.B., and as is their requirement they deposited a fee of $10,000. known as a Standby Fee which would be returned upon the plaintiffs' drawing down the funding for their project. The loss of the F.B.D.B. Standby Fee of $10,000 in my examination of the evidence, does not result from the nuisance complained of, but rather an inability of the plaintiffs to draw the money down in the time frame provided in its commitment, and this was true both for Reaume Road and River Road. Mr. Braidford also suggested, that if the monies for Reaume Road had been drawn down, that would in all likelihood have sufficed as a credit of $10,000 to that project without a loss of this fee.
258 In the case of Reaume Road, the plaintiff's land were required to be placed into land titles, and this has nothing to do with the issues before the court as it relates to nuisance. As to River Road, there were as reviewed innumerable requirements to be completed which are outside of the consideration of nuisance, and this was before construction could commence and the monies drawn down.
259 For these reasons, the loss of deposit I do not conclude in any way related to the nuisance, and for this reason I find that no reimbursement is warranted under the circumstances.
QUESTIONS RAISED ON DAMAGES:
260 On Question 4, 5(a)(b)(c) set out earlier as it relates to damages, the answer to all of these questions is no.
MITIGATION OF DAMAGES:
261 As I have concluded earlier, while the nuisance resulting from the special use caused contamination, its affect upon the plaintiffs' lands were remediated before any requirement for the lands use was established. To add to this conclusion, the plaintiffs' have failed to show that their plans for a sub-division as to processing the necessary requirements were interfered with which would also be a consideration on the issue of mitigation if damages were appropriate for a delay, or a loss of opportunity for the period under consideration.
SALE OF PLAINTIFFS' LANDS:
262 Although the purchase price of the plaintiffs' lands for $88,000 and its sale price have no real bearing on the issue of damages, it is a consideration where an award for damages is made as mitigation of the plaintiffs' loss.
263 In this instance, it is noted that while the lands were purchased in April 1989 for the above reflected price, those same lands were sold in 1991 for $240,000.
264 Although access rights upon the Camion lands may have been provided as a contingency of sale, it appears nevertheless that based on the purchase and sale price, the plaintiff profited which would be a consideration in the reduction of any claim for damages, if there had been an award for loss of profit.
PRE-JUDGMENT INTEREST:
265 In my earlier comments within these reasons, I proposed to address the issue of pre-judgment interest. Although under the circumstances, I have dismissed the plaintiffs' claim for damages, it may be appropriate to address this issue if the matter proceeds further. The party now having the carriage of this action is Smith Brothers, a principal creditor of the bankrupt Windsor Ltd. By order of Justice Zalev on September 27, 1993, Smith Bros., as a principal creditor through the provisions of s. 38 of the Bankruptcy and Insolvency Act provides in essence that any benefit derived from such proceeding where a creditor is appointed thereunder to process the claim, to the extent of the creditors claim and costs, these belong to the creditor instituting the proceeding, and as here where the creditor has continued the proceeding. As to the surplus if any recovered, it belongs to the estate.
266 In dealing with the plaintiffs' entitlement as it relates to the creditor proceeding with the action, it is to the extent of the amount of its claim proved in bankruptcy and no more. If additional sums are recovered above this claim, and the costs which apply, then these additional sums are governed by the Bankruptcy and Insolvency Act, and are available for distribution rateably among all creditors whose claims are not satisfied.
267 While the bankrupt Windsor Ltd., may have claimed pre-judgment interest, which would relate to its established damages, that is because it sits in the same shoes as the principal to whom the damages are payable. Smith Brothers on the other hand sues only upon his claim and costs as proven in the bankruptcy for which the act makes no provision for entitlement of interest.
268 Justice Henry has analyzed the limitations of s. 38 of the Bankruptcy and Insolvency Act, and the entitlement to interest in the decision Royal Bank v. King; 13 C.B.R. (3d) 292, at pg. 310 ff. I adopt those reasons as to why pre-judgment interest is not here payable to the creditor pursuing the action.
COSTS:
269 On this matter, there have been no submissions to the court on costs. I reserve the issue on costs to be disposed of by written submission of counsel within the next 30 days, or in the alternative, by argument before this court.
270 I further direct, that if there are any errors as it relates to agreements, or omissions, made by the parties to this court, they may be rectified upon speaking to me, but prior to the entering of the judgment.
CUSINATO J.
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