Suppose your company spills chemicals, pollutes the air or engages in some other environmental offence that allegedly harms a lot of people. They may try to band together and sue it in what’s called a “class action,” which is a kind of lawsuit designed to resolve common complaints by a group of victims in a single proceeding. Class actions are a mixed blessing. They enable your company to avoid having to defend itself against the same claims over and over in multiple court cases, but also enable victims who don’t have the resources to sue on their own to file claims against the company as part of a group. Class actions are allowed only under certain conditions and are rare in Canada. But an Ontario court recently issued a decision in one of the first class actions to go to trial. Here’s a look at the case and its possible significance.
THE CASE
What Happened: For 66 years, a refinery in the Port Colborne area of Ontario emitted tonnes of nickel into the air until it closed in 1984. In Sept. 2000, the MOE publicly disclosed that it had found higher than expected nickel levels in a soil sample from a neighbouring property, generating negative publicity about the area. So a group of approximately 7,000 property owners in the area around the refinery brought a class action lawsuit against it, claiming that the public disclosure of nickel contamination and resulting negative publicity had adversely affected their property values.
What the Court Decided: The Ontario Superior Court of Justice ruled for the class, ordering the refinery to pay the class members $36 million.
The Court’s Reasoning: The court addressed each of the three theories on which the class claimed that the refinery was liable:
Trespass. The class argued that the refinery had trespassed by allowing nickel particles to migrate onto their properties. But the court found that the intrusion onto those properties was unintentional and indirect and thus rejected this claim.
Strict liability tort. The class also argued that the refinery was liable for a “strict liability tort” established under a case called Rylands v. Fletcher. The idea is that a landowner who brings an unnatural substance onto his land that creates a potential danger to his neighbours will be strictly liable if that substance escapes from his property and causes damage. The court explained that there are two elements to a Rylands claim:
1) The non-natural use of the land by the defendant; and
2) An escape from the land of something likely to do mischief.
As to the first element, the refinery brought nickel onto its property to refine it. During that process, nickel particles were released into the air. Nickel wasn’t naturally found on that property or in the air over it. Thus, the court concluded that the refinery’s use of the land wasn’t natural. And as to the second element, the court noted that although nickel and nickel particles aren’t dangerous per se, they can cause damage to neighbouring properties. It rejected the refinery’s argument that Rylands claims only apply to single escapes of a substance, finding that the concept applies whether there’s an isolated escape or long-term, multiple escapes of a hazardous substance. Thus, the refinery was liable under this theory.
Nuisance. The class’ final claim was that the refinery’s conduct was a private nuisance that unreasonably interfered with the class members’ use and enjoyment of their property. The court concluded that the deposit of nickel particles on the class properties constituted physical damage to them. That damage was “material”—that is, significant—in that it negatively impacted the value of those properties. Therefore, the refinery was liable for nuisance [Smith v. Inco Ltd., [2010] ONSC 3790 (CanLII), July 6, 2010].
ANALYSIS
The Smith decision is significant simply because it’s one of the first decisions in a class action that went all the way to trial. It’s also important because the court had to address unique issues, such as how to apply a statute of limitations to an entire class and how to calculate damages on a class-wide basis. But for EHS coordinators, the most important lesson from Smith is that it demonstrates that environmental class actions are viable. Thus, the decision may encourage other groups who believe they’ve suffered environmental harm by a company to bring an environmental class action.
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