In her chapter in Key Developments in Environmental Law 2017, Natalie Mullins reviews the evolution and current state of the law on damages in contaminated sites cases. Her comprehensive assessment of the law on damages is a backdrop to a critique of the Ontario Court of Appeal's statement in Midwest Properties Ltd. v. Thordarson ("Midwest") that a trend has developed toward awarding damages based on restoration costs rather than diminution in value.

Natalie explores some critical questions that have arisen post-Midwest, such as:

  • Whether diminution in value is still relevant to the measure of damages;
  • What it means to "restore" a real property;
  • How the court can take a proactive role to ensure that awards made to benefit the environment actually meet that objective;
  • How defence counsel might prevent similar awards in the future, and how plaintiff's counsel might use the case to obtain significant damages for their clients.

Here is an excerpt from the introduction to her chapter:

The Ontario Court of Appeal decision in Midwest Properties Ltd. v. Thordarson has introduced uncertainty to the law of damages in contaminated sites cases. Despite being explicit about awarding compensatory damages only under section 99 of the Environmental Protection Act ("EPA") and not at common law, the Court of Appeal may have implied that restoration costs are the default measure of damages in contaminated sites cases.

What is perhaps most unsettling about Midwest is that the case potentially paves the way for plaintiffs to recover very significant damage awards under section 99(2) of the EPA that grossly exceed their actual loss and, in certain circumstances, may be completely unwarranted.

The decision has also created the potential for litigants to profit off of purchasing contaminated sites and for defendants to face double jeopardy following judgment at trial. Although the impetus for the Court of Appeal's award of damages was protection of the environment, the Court did nothing to ensure that the plaintiff's property, and hence the environment, would actually realize any benefit from the judgment.

About the author

Natalie Mullins is a litigation partner in the Advocacy and Environmental groups in the Toronto office of Gowling WLG. Her practice focuses predominantly on environmental litigation and, in particular, complex, multi-party contaminated sites-related disputes.

Natalie appears frequently in court, at arbitration and before administrative tribunals. She represented the successful plaintiff in one of the Province of Ontario's leading environmental decisions, Canadian Tire Real Estate Ltd. v. Huron Concrete Supply Ltd., and has been recognized in The Best Lawyers in Canada for her work in environmental law.