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Environmental

Kawartha Oil Spill Cost Recovery Litigation Drags On

City of Kawartha Lakes taxpayers continue to pay heavily for the Ministry of the Environment’s 2009 order, which required the City to cleanup an oil spill that it did not cause. While everyone agreed that the City was an innocent victim of the spill, the Ministry saddled the City with $471,691 in cleanup costs, arguing that the City could seek reimbursement through the courts or a cost recovery order. The Environmental Review Tribunal and the Court of Appeal upheld the Ministry’s order against the City.

The City has been trying to recover its cleanup costs, and its growing legal bills, ever since. It sued numerous parties in the civil courts, and issued a spill cost recovery order under s. 100.1 of the Environmental Protection Act to the Gendrons (the homeowners whose oil was spilled), Thompson Fuels Ltd. (their fuel supplier) and the Technical Standards and Safety Authority.

All three appealed to the Environmental Review Tribunal in 2010, but the appeal has never been heard. Over the City’s strenuous objections, the Tribunal has adjourned the appeal four times (most recently in January 2015), because the City is also pursuing civil litigation to recover the same costs. According to the Tribunal, a global resolution of the total dispute is more likely to be achieved in the civil courts and it would be wasteful to also hold a Tribunal hearing on the s.100.1 Order.

Unfortunately for the City, now that its spill cost recovery actions have been consolidated with Mr. Gendron’s civil action against Thompson Fuels, the Tribunal cannot foresee a scenario (absent the Superior Court adjourning the civil actions) where it would be more efficient for the Parties to proceed before the Tribunal first.

According to the Tribunal, if the complex civil proceedings are dragging on longer than expected, the City has no one but itself to blame. Even now that the City has settled with Thompson Fuels and the TSSA, the Tribunal still refuses to hear the appeal of the cost recovery order. In TSSA v Kawartha Lakes, ERT cases 10-055, 10-058, 10-059, 10-060, January 2005, they ruled:

[37] The Tribunal points out that the presence of a related civil action is not, on its own, determinative of an adjournment motion such as this. The parties are owed a legal determination of the question of whether the City will be reimbursed for clean-up expenses. However, in cases such as this where the City itself is a plaintiff in an ongoing parallel civil action, the potential for duplication is real. …. In a circumstance like this, where the City chose to initiate and actively prosecute a civil action over the same clean-up costs, it is clear that the City itself created the situation that led the Tribunal to adjourn its proceedings to avoid duplication.

The Tribunal’s advice for other municipalities concerned about such delays when seeking compensation for spills you are forced to cleanup? Issue your s. 100.1 order quickly, and try to push to complete the appeal of that order within two years, i.e. before the limitations period expires for launching a civil action for the same costs.

The City has settled its 100.1 case with the TSSA and Thompson Fuels for an undisclosed amount. While the original MOE order was clearly unfair, prolonged litigation costs so much that it is not obvious whether all this litigation has left Kawartha Lakes taxpayers better off.

    By Dianne Saxe, Ontario Environmental Lawyer

Reprinted with permission from the Environmental Law and Litigation Blog.

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