40 to 60 years may be too old when determining whether to extend a limitation period for a negligence-based environmental contamination claim, the court recently ruled in Brookfield Residential (Alberta) LP (Carma Developers LP) v Imperial Oil Limited, 2017 ABQB 218 [Brookfield]. In Brookfield, the likelihood of prejudice to the defendant in granting an extension was significant since the alleged cause of the environmental damage occurred over 60 years ago, witnesses and documents were no longer available, and expert evidence on the standard of care at the time would be impossible to obtain.
The facts of Brookfield involved a claim brought in negligence against Imperial Oil Ltd. (Imperial) by Brookfield Residential (Alberta) LP (Brookfield) based on environmental contamination from an oil well. Imperial drilled and operated the well between 1949 and 1950, and disposed of it in either 1950 or 1954. A different owner operated the well between 1950 and 1957 and then used it for salt water disposal between 1958 and 1961, at which point the well was decommissioned and abandoned. Contamination requiring remediation was not discovered until 2010 when Brookfield was preparing the site for residential development.
Extending a Limitation Period for an Environmental Claim
Imperial sought to summarily dismiss Brookfield’s claim on the basis that the 10-year ultimate limitation period set out in the Limitations Act, RSA 2000, c L-12 had expired. In response, Brookfield sought an extension of the limitation period under section 218 of the Environmental Protection and Enhancement Act, RSA 2000, c E-12 [EPEA], which states:
218(1) A judge of the Court of Queen’s Bench may, on application, extend a limitation period provided by a law in force in Alberta for the commencement of a civil proceeding where the basis for the proceeding is an alleged adverse effect resulting from the alleged release of a substance into the environment.
(3) In considering an application under subsection (1), the judge shall consider the following factors, where information is available:
(a) when the alleged adverse effect occurred;
(b) whether the alleged adverse effect ought to have been discovered by the claimant had the claimant exercised due diligence in ascertaining the presence of the alleged adverse effect, and whether the claimant exercised such due diligence;
(c) whether extending the limitation period would prejudice the proposed defendant’s ability to maintain a defence to the claim on the merits;
(d) any other criteria the court considers to be relevant.
With respect to the first factor (218(3)(a)), the court decided that it did not have enough evidence to determine when the environmental damage occurred. On the second factor (218(3)(b)), the court found that there was evidence that Brookfield exercised the necessary due diligence. The court further determined under 218(3)(d) that no additional relevant factors were present. The extension of the limitation period, therefore, turned on the possibility of prejudice to Imperial.
The Role of Prejudice
The court held that extending the limitation period would cause prejudice to Imperial, and that such prejudice outweighed the other factors under section 218(3).
First, the relevant events occurred some 60 years before Brookfield commenced its action. As a result of the passage of such an extended period of time, witnesses and documents were lost:
Imperial says it cannot even point to specific missing witnesses or missing documents, and this goes to the heart of the prejudice that it will suffer if this matter proceeds. More than 60 years later, Imperial does not know who could have once spoken to these events or who could have identified the specific relevant records.
Second, as Brookfield’s claim was based in negligence, evidence of the applicable standard of care at the time was necessary. The evolution of the standard of care over time, however, would complicate matters:
Undoubtedly, close analysis might indicate that the prevailing practices were negligent, but that would appear to be the result of hindsight and a fundamentally different approach to environmental protection. … It would, in my view, be unfair to consider the appropriateness of 67-year-old practices without reliable evidence of what the practices were then.
The court held that “calling the expert evidence required to establish the standard of care 60 years later would be, in the words of our Court of Appeal, ‘impossible’”, applying authority that would indicate that 40 years may be too old as well.
In light of the passage of time, the loss of witnesses and documents, the difference in the standard of care, and the impossibility of finding experts to establish the standard of care, the court ruled that Imperial would suffer significant prejudice if the limitation period was extended. Upon balancing this prejudice with the first two factors in section 218(3), the court held that the limitation period should not be extended and granted summary judgment to Imperial.
Brookfield represents the first case concerning section 218 of the EPEA in which the court found that the claim would cause significant prejudice to the defendant. In effect, it judicially creates an ultimate limitation period for negligence-based environmental contamination claims of 40 to 60 years. Whether the same result would follow for a contamination claim not based on negligence remains to be considered–while some of the factors the court points to (loss of witnesses and documents) will be similar in such cases, the applicable standard of care and expert evidence concerning the standard of care will not be. In light of Brookfield, potential claimants should carefully assess whether a claim that arose decades ago is likely to give rise to a presumption of prejudice before advancing an application to extend the limitation period.
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About the Authors
Scott H.D. Bowers is a Corporate, Commercial, Securities and Energy Lawyer at Bennett Jones in Calgary, Alberta. Head of Legal Research for the firm in Alberta, Scott Bower represents clients in corporate, commercial, securities and energy litigation matters. He appears before all levels of court in Canada and before disciplinary bodies and provincial securities commissions, representing corporations, governmental agencies, banks and individuals.
Russell J. Kruger is a Research Lawyer at Bennett Jones Calgary, Alberta. Russell has a research-oriented practice spanning a variety of areas, including energy, construction, franchise, arbitration and other corporate and commercial matters. Russell engages in review of technical and complex questions of law, and assists with preparation of written legal argument. Russell’s research-focused practice is informed by his previous courtroom experience as a litigation associate. Russell is also an Associate American Bar Association member.
Stephanie Clark is a articling student at Bennet Jones. She is a graduate of McGill law school and also has a B.A. from the University of Calgary.
This article was first published on the Bennett Jones website.