Individuals and organizations are allowed to sue for money damages for environmental losses they suffer, such as property damage caused by a spill of hazardous substances. But such private lawsuits must be filed within specific time limits, such as two years. The question of when the clock starts running can become an issue when contamination and other kinds of environmental harm go undetected for years. In many cases, courts conclude that the clock starts not when the environmental damage occurred but when it was discovered. But exactly what kind of knowledge of environmental damage is enough to start the clock running? Here are two cases addressing that question.
WHEN BUYER KNEW ABOUT CONTAMINATION
A company bought a building and property in an industrial and commercial zone. In the summer of 1999, the buyer decided to remove a tank that hadn’t been used since the building’s heating system was converted from oil to natural gas. As part of the project, it got an environmental report that said there was hydrocarbon contamination on the property and recommended remediation work. But the buyer didn’t remediate the contamination until August 2002, when it decided to sell the property. In Dec. 2004, having realized the amount of work required to clean up the property, it sued the seller for more than $247,000 in remediation costs.
The Québec Superior Court dismissed the lawsuit, ruling that the clock started running in 1999 when the buyer learned that the property was contaminated.
The buyer argued that the “prescription period” of three years didn’t start to run until it knew the nature and extent of the contamination, which wasn’t until 2002. But the court disagreed. The prescription period starts when the injured party knows that damage exists, even if it doesn’t know the full extent of the damage at that time. Here, the buyer knew when it got the environmental report in 1999 that the property was contaminated and needed remediation. Thus, the clock on the prescription period started running then and had expired by the time the buyer sued the seller in December 2004.
Investissements Intergem Inc. c. Ultramar Canada Inc.,  QCCS 1571 (CanLII), April 5, 2011
WHEN DEVELOPER KNEW OR SHOULD’VE KNOWN ABOUT CONTAMINATION
In June 2000, a property developer bought land on which it planned to build residential housing from a city in a tax sale. In 2006, the developer drilled test holes in the land and discovered evidence that it’d been the site of a landfill, was contaminated and thus wasn’t suitable for residential development. So in February 2009, he sued the city for failing to disclose the land’s past use.
The Ontario Superior Court dismissed the lawsuit, ruling that the clock started running when the developer knew or should’ve known the property was contaminated.
The developer’s claim was subject to a two-year limitation period. So if a reasonable person with the developer’s experience and in his shoes would’ve known the land was contaminated before February 2007, the lawsuit would be “statute-barred,” explained the court. The developer was experienced and had lived in the area for most of his life. There were significant amounts of garbage, including abandoned cars, lumber and other unknown fill, clearly visible on the property. The developer also knew that the land was next to an old waste disposal site. Finally, in 2006, he got several reports on the property’s condition which raised environmental concerns, including possible lead contamination. The court concluded that the developer knew or ought to have known by late 2006 that the land was contaminated. So the two-year period had already expired when he filed the lawsuit.
Tayview Properties Inc. v. The Corporation of the City of Perth,  ONSC 5243 (CanLII), Oct. 13, 2010