Canadian National Railway v. ABC Recycling

Case comment: recovering legal costs associated with site cleanup
August 7, 2007

The Environmental Management Act ("EMA") creates a cause of action where a person who cleans up contamination may sue persons "responsible" for the contamination, as long as the clean up costs were reasonably incurred. The EMA also provides that costs of remediation include "legal and consulting costs associated with seeking contributions from other responsible persons."

The lower court in this case concluded that "legal costs," as employed in that section, entitles a property owner to "special costs" after successfully suing "a person who is responsible for remediation." Special costs are much higher than standard court costs. The court considered this interpretation to be consistent with the underlying principles of the legislation:

(a) insuring that the polluter pays;
(b) preventing pollution and deterring polluting activities; and
(c) providing for the speedy remediation of contaminated sites.

This aspect of the decision, however, was reversed on appeal. The British Columbia Court of Appeal (BCCA) took issue with the trial judge’s interpretation of "legal costs." BCCA’s reasoning was simple; the plaintiff had not incurred any legal or consulting costs associated with seeking contribution from "other" responsible persons. In this case there were no other responsible persons; there was only a single defendant. As such, it can be inferred that, had the plaintiff incurred legal and consulting expenses associated with seeking contribution from multiple responsible persons, the defendant would have an obligation to contribute to those costs. The plaintiff was only entitled to party and party costs.

The Court of Appeal’s plain-meaning approach is, in and of itself, hard to fault. Surely though, cost recovery was intended by the legislature even where there is only one "responsible person."

Would the prospect of facing special costs not encourage "responsible persons" to contribute to remediation costs without resort to the courts, except where absolutely necessary? This decision may encourage litigation and frustrate the purposes of the EMA. The solution may be a legislative amendment, but a contrasting decision of the BC Supreme Court or Court of Appeal, which distinguishes the ABC decision, would be of great help.

For assistance in assessing the impact of this decision of your business, please contact the Co-Chairs of the Environmental Practice Group at Harper Grey LLP, Richard Bereti and Richard Attisha.

This article was prepared with the assistance of Harper Grey LLP articled student, Una Radoja.