Contract of $98 million awarded for Port Hope Area Clean-up

Canadian Nuclear Laboratories Ltd. (“CNL”) recently awarded a $98 million clean-up of radioactive contamination in Port Hope, Ontario.  The contract for the Port Hope Area Initiative (“PHAI”) Long-Term Waste Management Facility (“LTWMF”) was awarded to a joint venture company of  ECC/Quantum Murray LLP.

The contract involves the construction of the remaining storage cells at the LTWMF.  ECC/QM, LP will also operate the facility during the upcoming cleanup of historic low-level radioactive waste in Port Hope.

The Town of Port Hope is located approximately a 1-hour drive east of Toronto.  The Canadian Nuclear Safety Commission (CNSC) is overseeing the clean-up of historic low-level radioactive waste that originated from the Eldorado radium extraction facility that first started operations in the town in 1932.

Eldorado Nuclear Ltd. was a company wholly owned by the Canadian Government.  In 1988, Eldorado Nuclear and the Saskatchewan Mining Company were amalgamated and privatized to form Cameco.

There are 4,800 properties in Port Hope that have been checked for low-level radioactive waste. Based on previous information, it was estimated that about 400 to 450 residential properties require cleanup.  The PHAI is a federal environmental clean-up program. Its mandate is the remediation and local, long-term, safe management of 1.2 million cubic metres low-level radioactive waste in Port Hope and the nearby town of Port Granby.

The clean-up of radioactive material will be one of the largest remediation projects in Ontario, Canada.  The project includes the excavation and placement of Low Level Radioactive Waste (“LLRW”) from the existing Welcome Waste Management Facility, as well as receipt and placement of LLRW from the remediation of various sites throughout the Municipality of Port Hope, and final closure of the facility.

ECC/QM, LP constructed the first cell of the aboveground mound at the Port Hope LTWMF.  The joint venture company has now won three contracts from CNL at Port Hope.

Oil Spill Response Course – May 2017

The United States National Oil Spill Response Research & Renewable Energy Test Facility (Ohmsett) is holding an Oil Spill Response Strategies and Tactics Training session from May 22-25, 2017 at the Ohmsett facility in Leonardo, New Jersey.

Over the past 20 years, in partnership with Texas A&M University, the National Spill Control School (NSCS), Ohmsett has offered a hands-on oil spill response curriculum designed to provide response personnel the skills necessary to make quick and informed decisions during an oil spill incident.

“For the oil spill response technician, this is an important part of their spill response training program and a stepping stone for their career,” stated John Delia, program manager at Ohmsett. “Not only do students receive classroom theory, they participate in tank exercises with real oil.” 

The Oil Spill Response Strategies and Tactics course starts out with classroom instruction providing a detailed review of oil spill fundamentals and actual implementation of proven best practices during spill response efforts.  Topics include a review of the application of all types of skimmers, booming strategies, an overview of Shoreline Cleanup and Assessment Technique (SCAT), National Incident Management System (NIMS), contingency planning, and a review of the behavior of oil on water.

Following classroom instruction, attendees receive hands-on oil spill response training using the latest equipment and techniques in the Ohmsett test tank.  The tank’s wave generator can create different types of waves to simulate a variety of harbor and sea conditions.  There they practice recovering real oil using equipment under conditions that simulate an actual oil spill.

For more information on the course and to register visit the Texas A&M National Spill Control School web site.

Emergency Management and Business Continuity Standard Course

The Ontario Association of Emergency Managers (OAEM) is hosting an Emergency Management and Business Continuity Standard Course based on the Canadian Standard Association (CSA) Standard Z1600.

The event is scheduled for two days, March 9th and 10th from 11 am until 5 pm each day.  The event will take place in Burlington, Ontario, Canada.

Event Fee(s) are as follows:

OAEM Members – $ 475.00

OAEM Student Members – $ 200.00

Non-OAEM Members – $ 575.00

Visit the OAEM web site for more information on the event and to register.


Spill Response Job in Hawaii

Marine Spill Response Corporation (MSRC) is currently looking for a Mate aboard an Oil Spill Response vessel located in Honolulu, HI.   The position offers a schedule of M-F 0700-1530 with the ability to go home nights and weekends.  This is a dynamic opportunity for a motivated individual to become part of an oil spill response company with a competitive compensation package including great Health Care Benefits with an above average 401(k) savings plan.

MSRC is a not-for-profit, U.S. Coast Guard Classified Oil Spill Removal Organization.  MSRC was formed in 1990 to offer oil spill response services and mitigate damage to the environment.

To find out more about the opportunity, visit the job posting.


Global Forecast for the Emergency Spill Response Market

According to a recent market study, the emergency spill response market is estimated to reach $33.68 billion (USD) by 2022, at a compound annual growth rate (CAGR) of 7.0% between 2016 and 2022.  The market is expected to have significant growth in the coming years owing to stringent environmental regulations across world to reduce the environmental pollution from spills.

The government agencies across the world are focused on reducing environmental pollution from the spills, leading to the growth of the emergency spill response market.  For example, in Canada, the federal government recently announced $1.5 billion (Cdn.) ocean protection plan to address concerns about potential fuel spills from oil tankers.  The funding includes increased coast guard capacity and new rescue stations.

According to the market report, radio communication products are expected to have the highest growth in the market during the forecast period.  The growth of this segment can be primarily attributed to the increasing focus on preventing spills as well as reducing environmental pollution by minimizing the spill pollution through early detection.

The market for the ports and harbors vertical is expected to grow at the highest CAGR during the forecast period owing to the increasing international sea trade, which may result in large spills during the various vessel operations including loading/discharging, bunkering, anchoring, underway, and other operations.  These spills can impact the environment of the ports and harbors. Furthermore, the increasing government focus on reducing environmental impact of spills on the environment strengthens its market for Ports & harbors vertical.

The market in North America is expected to grow at the highest rate between 2016 and 2022 because of the government focus on reducing the environmental impact of spills.  In addition, the presence of a large number oil rigs and subsea oil operations provide opportunities for the growth of the market in this region.


Observations from the Brownfield Trenches in the U.S.: The Phase I Report

Lately, it seems that more and more often one runs into a Phase I report for a property that has already been through some assessment and remediation. That is, after all, the status of many a completed brownfield project. It’s been my unfortunate experience that only a few of today’s Phase I drafters know what to do with that situation. Let’s climb into the Wayback Machine and remind ourselves what the heck a Phase I is and why we do it.

Like most things brownfield, the Phase I came to us from CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act), the Superfund Law. Because CERCLA was originally envisioned as the tool by which the nation would take on its worst and most dangerous environmental threats, it came with a regulatory system of just how threats are supposed to be analyzed and remediated. The first level of effort in such an undertaking was to study all the available information one can get. That came to be known as “Phase I”, and in the early days it wasn’t an established form (nor even, necessarily, generally agreed upon contents). The practice of this “initial study” (primarily of documents and library information) changed pretty dramatically as a result of the 2002 Amendments to CERCLA

A multi-stakeholder committee was assembled under the FACA (Federal Advisory Committee), which does sound like a threatening acronym. Their task was to determine how one could qualify for the new break that Congress worked into CERCLA – the “get out of jail” card that said you weren’t on the hook for historical insults to the land. The law had always had a notion of “innocent landowner” – but the Courts had never met one. If you walked into Court with a CERCLA claim on your back (worse than a giant “A” on your chest) you were not walking out without spending money. Sometimes it was shocking amounts.

Now, though – you could be an “innocent”! You just had to prove to the world that you looked carefully. You poked at the pig rather than bought a pig in a poke. If your poking carefully followed the rules that now circumscribed how a Phase I must be done (the so-called “All Appropriate Inquiry” rule) then you were blessed with innocence and not a Responsible Party under CERCLA. Bottom line: don’t buy property unless you know whether it needs fixing up or not. That’s why we do a Phase I – to qualify for this special status.

Now the bad news is that efforts by property owners to claim this protected space have not met with general success. Sometimes it’s been a good thing – but more often there is some little bit or piece of the puzzle that you just sort of missed and WHAM! Color you a Responsible Party. And, by the way, if the strategy does work, it ONLY works for CERCLA as a “get out of jail pass”. It doesn’t work for the Clean Water Act (federal) or Porter-Cologne (state) or claims of nuisance or any one of a dozen creative ways lawyers can tell you, “tag, you’re it.” So the Phase I only goes so far, but you want to use everything you’ve got, right? Use The Credit People if you need to repair your credit and truly maximize your purchasing power. Repairing your credit rating is one of the most important things you can do to restore your finances, as you could face trouble if this problem doesn’t get sorted out. As well as getting in touch with The Credit People for help, you can also do a bit of research on what the best credit cards for building credit are so that you have the best chance of building up your credit score. This will give you some benefits that can ensure you have better control of your credit card spending. Having bad credit can prevent you from accessing many financial services and can also put up a barrier to you obtaining loans, insurance, a mortgage, and more; it is possible to repair credit scores and credit reports and you can find services online to help you do this.

We now routinely use a Phase I for every property transaction that takes place. Lenders demand it (despite the fact that they get a special extra CERCLA exemption). So this notion of taking an “initial study” to see if there might be a “release of hazardous substances” that requires assessment and remediation gets routinely applied to all deals. And each time it follows the set rules about how to address the issue. And at no point did anyone ever consider – why are we doing this for property that has already been studied, assessed AND remediated, all under the watchful eye of a regulator? What is the point of a Phase I in that situation, other than to merely confirm that a property has been through the process, and is (often enough, these days) already redeveloped. This is frequently a mixed use project, commercial on the ground floor, tenants in apartments or condos above, bringing new life to an area that probably needed it. A brownfield.

Consultants regularly scratch their heads at this one. The point of the Phase I is lost – it really doesn’t matter anymore for CERCLA – and it instead becomes a detailed examination of lengthy documents, most often in the public record, that describe the remediation process. In itself that should be OK (except for the clients who now have to pay to have an additional set of eyes go over things that have likely had several sets of eyes already). Having the watchers watch the watchers who are watching is an essentially Seussian concept that government seems to encourage. But there is considerable room for mischief, and mischief knows no end of ways to pop up.

First – a number of these consulting firms who do these Phase I reports are national, and often staff the work from offices in states far flung from California. Each state has its own regulatory system, and California’s is somewhat more Byzantine than most. If you don’t really know your way around the double handful of agencies you might not know how to get to the heart of a property’s regulatory status. I’ve seen it happen more than once, and it is often a source of consternation for the lender, sometimes causing a deal to blow apart. Second – too many consulting firms like to show their clients why they are so much smarter than others that they often go looking for things in the record that they can point a finger at and raise questions about. Most records of cleanups are not as clear and complete as they could be, and trying to recreate why people did things a certain way (especially years later) can lead to wasteful reexamination. Third – some in the consulting community view the Phase I as some sort of blessing that their companies lend to past actions, when it’s true purpose is just to report on those past actions. Phase I consultants are not guarantors of site conditions, they are supposed to be scribes of what the record shows.

Once again, we in brownfields are subject to the law of unintended consequences. We all thought that the new and elaborate Phase I requirements would safely distinguish between those who should be “innocent landowners” and those who don’t. Frankly, Scarlett, I’m not sure why we give a damn.


This article was originally published in in San Diego UrbDeZine. It is intended for general informational purposes only and not to provide specific legal advice.

About the Author

Richard Opper has had a career in government service and private practice, and his academic and professional achievements are notable. During his most active years, “SuperLawyer” magazine regularly selected Mr. Opper as one of the top environmental lawyers in southern California. Early in his career he served as Attorney General for the Territory of Guam, after which he began his private practice in San Diego, working on a variety of complex natural resource matters. Since that time, Mr. Opper’s practice has focused primarily on brownfields – the redevelopment of contaminated properties – and one of his successes was his work in support of the development of Petco Park.

Mr. Opper, although now less active professionally, still represents public and private clients throughout the state. He is active in several not-for-profit organizations, particularly concerning photography and bicycling, two of his paramount interests. He is on the Board of Trustees for the Museum of Photographic Arts, and on the Board of Directors for the NTC Foundation. Mr. Opper’s academic work, since his graduation from UCLA School of Law in 1976, was stimulated when he attended Harvard University’s Kennedy School of Government (MPA, 1987), and has resulted in publication of articles and essays on a variety of topics, most often related to environmental conditions at the U.S. – Mexico border or the evolving politics of brownfield redevelopment in California.

Ontario Superior Court finds insurer obliged to share equally in defence of Pollution Claim

Author Michael S. Teitelbaum

In Aviva Insurance Co. of Canada v. Intact Insurance Company, Ontario Superior Court Justice Cavanagh granted Aviva’s request for a declaration that the CGL policy issued by Intact’s predecessor company, Cornhill, to Avondale Stores Limited, effective from 1983 to 1986, is triggered by the allegations made against  Avondale in an Ontario Superior Court action brought by Crombie Property Holdings Limited.  The underlying action alleged contamination of Crombie’s property as a result of alleged migration of fuel oil from Avondale’s neighbouring property.

His Honour also ordered Intact to defend Avondale and/or participate in the defence of Avondale with respect to the allegations made against it in the underlying action.

His Honour noted that Avondale tendered the underlying action to all of its liability insurers seeking a defence and indemnity.  All of the liability insurers with the exception of Aviva denied coverage to Avondale.  Aviva has acknowledged that, with the exception of Intact, the other Avondale liability insurers were entitled to take a denial position based upon the language of the pollution exclusions in their respective policies.  Aviva acknowledged that it has a duty to defend under the Aviva umbrella policies which were in place from January 15, 1993 to January 15, 1997 because it concluded that, given the allegations in the Statement of Claim in the underlying action, it was unable to determine if the discharge, dispersal or escape of pollutants was “sudden and accidental”.  Aviva denied coverage under the Aviva primary policies and the Aviva umbrella policies from January 15, 1997 to January 15, 1999, as those policies contain pollution liability exclusionary wording which, according to Aviva, justify denial of coverage.

Aviva appointed defence counsel to defend Avondale.  As of September 29, 2016, Aviva has incurred defence costs totaling $103,939.23 inclusive of HST and disbursements.

Intact’s response was that the damages claimed as described in the Claim in the underlying action are specifically excluded from coverage under all three Cornhill policies. With respect to the Intact 1983-86 Policy, Intact relied upon the environmental liability exclusion.  Intact declined to provide a defence.

Given the allegations in the Claim, His Honour found that he did not have to determine “whether the word ‘sudden’, as used in the exception [to the subject pollution exclusion], does or does not have a temporal component.  Therefore, I do not find it necessary to decide which of the divergent lines of judicial authority with respect to the interpretation of the term “sudden and accidental” in the exception is correct.”  He noted this determination should be made based on a proper evidentiary record.

In respect of apportionment, given both insurers were on risk for a period of four years each, His Honour ordered equal sharing of the defence costs.

His Honour’s Analysis reads:

[19] Whether Intact has a duty to defend Avondale in the Underlying Action depends upon whether it has satisfied its onus of demonstrating that there is no possibility of coverage under the Intact 1983-86 Policy for the claims made against Avondale based upon the allegations in the Statement of Claim because such claims are excluded from coverage by the environmental liability exclusion clause in the Intact 1983-86 Policy.

[20] Whether there is a possibility of coverage under the Intact 1983-86 Policy for property damage arising out of the discharge, dispersal, release or escape of “Contaminants” (as defined in the Statement of Claim) depends upon whether it is possible that the environmental liability exclusion will not apply because it is possible that the exception to this exclusion applies, because the discharge, dispersal, release or escape of “Contaminants” out of which the property damage arises is determined to be “sudden and accidental”.

[21] Intact acknowledges that if there is a “mere possibility” that a claim falls within coverage, it will have a duty to defend and the application will succeed.  However, Intact submits that there is no such possibility.

[22] There are divergent authorities in both Canada and the United States concerning whether the word “sudden” as it is used in the exception to the applicable environmental liability exclusion clause in relation to the discharge, dispersal, release or escape of the contaminants means only “unexpectedly” or “without warning”, or whether there is also a temporal component of “briefness”.

[23] There are three cases in Ontario that have addressed the interpretation to be given to the term “sudden and accidental” as it appears in the exception to the environmental liability exclusion clause that has the same language as the clause in the Aviva 1993-97 Umbrella Policies and the Intact 1983-87 Policy.  Each of these cases involved leaks from fuel oil tanks.

[24] In Murphy Oil Co. v. Continental Insurance Co., the trial judge found as a fact that water in the well on property owned by the plaintiff in the underlying action was rendered useless for human consumption by reason of the escape of a quantity of gasoline from the area of the underground storage tanks and pipes located on the insured’s premises.  The trial judge accepted evidence that the underground installation on the insured’s premises was defective in that there was leakage from a pipe or pipes and that the gasoline which escaped seeped into the well on the adjacent property of the plaintiff in the underlying action.

[25] The trial judge in Murphy considered whether the exception to the environmental liability exclusion provision in the applicable policy applied.  The trial judge concluded that if a leak occurs in a pipe, it occurs suddenly in the sense that at one point in time the pipe is not defective and at another point in time there is a leak in the pipe.  The trial judge decided that, in this context, it was not necessary to consider the cause of the leak.  The trial judge decided, therefore, that the exception to the environmental exclusion clause applied.

[26] The second Ontario case that addressed the exception to the environmental exclusion clause based upon a sudden and accidental discharge of fuel oil is Zatko v. Paterson Spring Service Ltd., 1985 CarswellOnt 796 (Ont. S.C.).  In Zatco, there was a settlement with the defendant’s insurer but additional property damage was discovered later, and the plaintiffs sued the defendant for damages resulting from the subsequent property damage.  The defendant brought a third party claim against its insurer for indemnification for liability for damages caused by the subsequent property damage.  The trial judge decided both (i) whether the defendant was liable to the plaintiffs for damages caused by a flow of oil from property occupied by the defendant, and (ii) whether the defendant was entitled to indemnification from its insurer.  The insurance policy had the same environmental liability exclusion provision as the provision in the Aviva 1993-97 Umbrella Policies and the Intact 1983-86 Policy.

[27] In Zatko, the trial judge found that the oil drained out of the tank over a considerable period of time and gradually, through the action of water, moved towards, onto and under the plaintiffs’ property.  The trial judge, at para. 33, cited a U.S. case that followed one line of the divergent authorities and concluded that there was “no doubt” that the original escape of oil was sudden and accidental and that the original property damage (that was the subject of the settlement) was covered by the insurance policy.  The trial judge held, however, that because the plaintiffs knew about the leak that resulted in the original dispersal, the subsequent property damage was not accidental. The third party claim against the defendant’s insurer was dismissed.

[28] The third Ontario case that addressed this exception to the environmental exclusion clause is BP Canada Inc. v. Comco Service Station 1990 CarswellOnt 637 (Ont. S.C.).  This decision was made on a motion for an order declaring that a third party insurer is obliged to defend claims made against its insured.

[29] At the hearing of the motion in BP Canada, an affidavit was admitted into evidence on consent of the parties.  The motion judge, Sutherland J., accepted, for purposes of the motion, that the gas had leaked from a cracked coupling in the storage system on the defendants’ property, that the coupling had been defective from the time of its installation, and that the leak had been going on for a considerable although unspecified period of time. Sutherland J. considered the meaning of the term “sudden and accidental” as it is used in the environmental exclusion clause.  He reviewed the U.S. authorities as well as the Murphy and Zatko decisions in Ontario and concluded that the word “sudden” means something more than “undesired, unintended and unexpected”.  Sutherland J. decided that the term “sudden and accidental” definitely includes a temporal element and is clearly not to be extended to include unintended consequences that are not sudden.

[30] In each of the three Ontario cases where the court considered the meaning of the word “sudden” as it is used in the exception to the environmental liability exclusion clause, there was evidence (and, in BP Canada, also the agreement of the parties) concerning the cause of the oil leak.  In contrast, the Statement of Claim in the action brought by Crombie against Avondale does not allege facts that would allow one to know whether it is alleged that the escape of Contaminants onto the Source Property was caused by something such as, for example, an accidental puncture or rupture of the underground fuel oil tank during construction, or an accidental spill of fuel oil from a delivery truck, which would have resulted in the escape of Contaminants onto the Source Property over a short period of time, or by another cause that would have resulted in a slow and gradual escape of Contaminants over an extended period of time. The Statement of Claim also does not allege when the escape of Contaminants occurred.

[31] It is therefore possible, depending upon the evidence tendered in the Underlying Action and the findings at trial, that the court could decide that fuel discharged, dispersed, released or escaped onto the Source Property over a short period of time before it migrated to the Contaminated Property.

[32] Intact submits that, in its Statement of Claim, Crombie uses the term “migrate” repeatedly and that the meaning of this term is equivalent to the meanings of the words “drift”, “wander” or roam”, all of which stand in contrast to terms such as “burst”, “rupture”, “torrent”, “surge” or “rush”, none of which is used in the Statement of Claim.  Intact submits that the true nature and substance of Crombie’s claim, as shown by its repeated use of the term “migrate”, is that there was a gradual movement of pollutants over the Source Property and eventually onto the Contaminated Property.  Intact submits that these are the precise circumstances in which the environmental liability exclusion clause is meant to apply. [33] In my view, the submission by Intact concerning the use of the term “migrate” in the Statement of Claim does not address the main area of contention in respect of the interpretation to be given to the word “sudden”, that is, whether in relation to the escape of Contaminants “into or upon land, the atmosphere or any water of any description no matter where located or how contained” (the language in the environmental liability exclusion clause), the meaning of this word should include a temporal component of briefness.  While the damage to the Contaminated Property may have been slow and gradual because of migration of contaminants from the Source Property over a period of months or years, the exception may still apply, in my view, if the discharge, dispersal, release or escape of Contaminants onto the Source Property was accidental and happened over a brief period of time.  Such a determination is possible whether or not the word “sudden” as used in the exception, properly interpreted, has a temporal component.

[34] In Murphy, the trial judge addressed the submission that the discharge, dispersal, release or escape of a petroleum product was not “sudden” because the product found its way into the well on the plaintiff’s property only gradually. He wrote, at para. 6:

It must be borne in mind that upon a close reading of this clause it is the emission that must be sudden and accidental, not the damages resulting therefrom, in order to afford the plaintiffs coverage under the policy.  Let us consider a situation when the cause of the emission was an explosion and not leakage.  Clearly the explosion would be sudden.  Let us further suppose that the explosion did not cause immediate contamination but as a result thereof the petroleum product which escaped seeped into a well over a period of time.  Could this defendant then be heard to say that the damages were only caused gradually and that there is no coverage under the policy?  If that is what was intended by the clause now being considered, than the language used is quite inadequate to express it.  Based upon this reasoning, it is possible that the word “sudden” as used in the exception will be held to relate to the discharge, dispersal, release or escape of contaminants out of which damage to property arises, and not to the damage to property arising therefrom.

[35] Intact’s submission in relation to the use of the word “migrate” in the Statement of Claim does not address the initial escape of Contaminants, as pleaded in paragraph 21 of the Statement of Claim, “from the Service Station and underground tanks into the natural environment” of the Source Property, but focuses exclusively, incorrectly in my view, on the pleaded allegations that Contaminants had migrated and continue to migrate from the Source Property onto the Contaminated Property.  It is not possible to know from the allegations in the Statement of Claim how or when the Contaminants escaped onto the Source Property including, in particular, whether such escape occurred over a brief period of time or over an extended period of time.

[36] I have concluded that Intact has not satisfied its onus to demonstrate that all of the claims made against Avondale are excluded from coverage by the environmental liability exclusion clause in the Intact 1983-86 Policy because it is possible, based upon the evidence to be adduced and the findings to be made at the trial of the Underlying Action, that the exception to the environmental liability exclusion clause will be held to apply.  The same approach was followed by Dunphy J. in Aquatech Logistics v. Lombard Insurance Co., 2015 CarswellOnt 14289 who concluded, at para. 33, that “it would be mere speculation to assert what facts the plaintiffs may succeed in proving at trial”, where the exact means by which the incident was caused was not pleaded and remained for the plaintiffs to establish.

[37] My conclusion does not depend on whether the word “sudden”, as used in the exception, does or does not have a temporal component.  Therefore, I do not find it necessary to decide which of the divergent lines of judicial authority with respect to the interpretation of the term “sudden and accidental” in the exception is correct.  This interpretation should be made based upon a proper evidentiary record: Privest Properties Ltd. v. Foundation Co. of Canada Ltd., 1991 CarswellBC 142, at paras. 309-310.
Apportionment of Defence Costs

[38] Where there are multiple insurers whose duty to defend is triggered by allegations in the Underlying Action, the insurer that accepts the duty to defend may compel a contribution to defence costs from any other insurer which improperly denies the duty to defend. The respective obligations of the insurers, while not a matter of contract, are governed by principles of equity and good conscience: Broadhurst & Ball v. American Home Assurance Co., 1990 CarswellOnt 638 (C.A.), at para. 41. [39] Aviva submits that I should determine an appropriate apportionment of defence costs between Aviva and Intact, which is a matter of equity.  Aviva submits that the apportionment of defence costs is not determined by a simple formula, nor by the application of principles of time on risk, although these are factors that can be considered. Aviva submits that both it and Intact provided coverage for approximately the same length of time (four years), and it would be reasonable to apportion defence costs equally based upon the relative exposure and time on risk of Aviva and Intact, respectively.

[40] Intact submits that apportionment of defence costs need not be addressed on this application and, if Aviva is successful, the parties may agree on the amount of contributions to be made to the expenses for defence costs already incurred and to the additional costs going forward, failing which resort may be had to the court.  Further, Intact submits that it is unable to make an informed decision on the reasonableness of the defence costs incurred to date because the invoices provided by Aviva are redacted, and omit a description of the services provided. [41] With respect to the question of apportionment of the costs already incurred by Aviva and the defence costs going forward, both the Intact 1983-86 Policy and the Aviva 1993-97 Umbrella Policies provide coverage for defence costs in four policy years.  In my view, given these circumstances, the most equitable apportionment is that each of Aviva and Intact should share equally in the obligation to provide a defence to Avondale.  Accordingly, Aviva should be reimbursed by Intact for one-half of the expenses for defence costs already incurred by Aviva (subject to satisfaction by Intact of the reasonableness of the charges or, if necessary, determination by the Court of the amount to be reimbursed).  The expenses for defence costs going forward should be paid equally by Aviva and Intact. [42] Aviva has introduced evidence that it has incurred defence costs in the amount of $103,939.23 to date, inclusive of HST and disbursements.  The descriptions of the services provided by the law firm in the invoices that were put into evidence are redacted in their entirety.  Only the date of the service, hours, hourly charge and the initials of the lawyer are shown.  I have no reason to question the reasonableness of the charges, but I accept that Intact should have more information about the services provided before it agrees, or is ordered, to pay one-half of the charges for defence costs already incurred by Aviva.


[43] For the foregoing reasons, I make an order:

  1. declaring that the Intact 1983-86 Policy is triggered by the allegations made against Avondale in the Underlying Action and requires Intact to participate in the defence of Avondale with respect to the allegations made against it in the Underlying Action;
  2. declaring that Aviva and Intact shall share equally in the costs of defending Avondale with respect to the allegations made against it in the Underlying Action and directing Intact to contribute equally with Aviva to payment of expenses incurred for defence costs of the Underlying Action going forward; and
  3. adjourning the portion of the application whereby Aviva requests an order directing Intact to reimburse it for Intact’s proportionate share of all expenses and defence costs incurred by it to date, in order to enable Intact to obtain information with respect to the services provided by the law firm that is representing Avondale in the Underlying Action. Counsel are directed to contact my assistant within 30 days to schedule a date for the hearing of this portion of the application, if necessary, or as I expect, to advise that this remaining portion of the application has been resolved.


About the Author

Michael S. Teitelbaum practices civil litigation with particular emphasis on insurance coverage and policy interpretation on behalf of both insurers and insureds.  He provides insurance coverage and policy drafting advice to, and engages in all forms of dispute resolution, including litigation, on behalf of commercial and governmental institutions.  He also focuses on professional liability, governmental liability, products liability, environmental law, personal injury, and defamation matters. Michael has appeared before all levels of the Ontario courts and various administrative tribunals.

He is certified by the Law Society as a Specialist in Civil Litigation.  He is Peer Rated as Martindale-Hubbell Distinguished for High Professional Achievement and High Ethical Standing.  He has been selected by his peers for inclusion in The Best Lawyers in Canada in the field of Insurance Law, beginning with the 2009 edition, and including the 2017 edition, and in the 2011 to 2016 Canadian Legal Lexpert Directory as a leading practitioner in “Litigation — Commercial Insurance”.  He has been listed in the 2015 and 2016 editions of “Who’s Who Legal: Insurance & Reinsurance”, and in the Insurance & Reinsurance chapter of “Who’s Who Legal: Canada 2016”, which identify a select group of lawyers with expertise in representing insurance underwriters and corporate insurers, among others, regarding the resolution of insurance disputes.

Michael heads the firm’s Insurance Coverage Counsel Group, and also acts as the firm’s Knowledge Management Partner.


This article was originally published in in Duty to Defend web “BLAWG” of Hughes Amys LLP.  It is intended for general informational purposes only and not to provide specific legal advice.  This article does not constitute legal or other professional advice and no lawyer-client or other relationship is created between the reader and Hughes Amys LLP or its lawyers.

Industry asks U.S. DOT to Issue Hazmat Safety Rule

In a letter sent on recently to incoming U.S. Secretary of Transportation Secretary, Elaine Chao, 22 corporations and trade associations sought “the earliest possible approval” of a final rule that would address hazmat transport safety issues by harmonizing the U.S. hazardous materials regulations with international dangerous goods standards that took effect on January 1st, 2017.  The White House currently has a regulatory freeze that prevents the any new regulations from becoming law.

The release and publication of U.S. DOT’s Pipeline and Hazardous Materials Safety Administration final rule was initially posted on the Federal Register website but was put on hold per the regulatory freeze imposed by the January 20th 2017 White House memorandum to the heads of all federal departments and agencies.

In reference to the harmonization regulation, the letter states: “Its promulgation will not create any new risks in transport.  In fact, it will ensure the U.S. hazardous materials regulations maintain alignment with international standards, thus assuring safety and avoiding disruptions to supply chains.  Avoidance of such disruption is critically important to all of the undersigned manufacturers, retailers, wholesalers, exporters, importers, carriers, and industries.”

“Our endorsement of the regulation also is consistent in our long-standing endorsement of harmonizing the U.S. HMR (hazardous materials regulations) with international standards. Harmonization avoids confusion among shippers, carriers and others in the logistics chain, maximizes safety, and reduces costs for U.S. businesses,” the letter said.

Signatories to the letter include numerous corporations and an array of trade associations representing airlines, battery and electronic product manufacturers, outdoor equipment and power tool manufacturers, the security industry, shippers of dangerous goods, and sporting arms and ammunition manufacturers.

The Rechargeable Battery Association Executive Director, George Kerchner, said trade association members were prepared to comply with the PHMSA regulation’s new labeling, packaging and testing requirements for lithium batteries that match the stringent international standards.  “Different regulations create a fog of confusion that undermines safety while forcing companies to comply with inconsistent regulations when shipping domestically and internationally,” Kerchner emphasized.

Contaminated mine “an embarrassment to Canada”

As reported by the CBC, a Yukon judge recently gave a scathing assessment of the clean-up efforts at the Mount Nansen mine.   Formerly owned by BYG Natural Resources Inc., the Mount Nansen mine is an abandoned former gold and silver mine located in the heart of the Yukon Territory in northwestern Canada.  It is currently under government care.

Yukon Supreme court justice Ron Veale approved a clean-up plan for the abandoned Mount Nansen mine in the spring of 2016.  However, he issued his written decision only recently.

In the decision, the judge heavily criticizes the former owner of the mine, BYG Resources, for an “unscrupulous history of … operational mismanagement” that left a big, toxic mess is to be clean-up using Canadian taxpayers’ money.

“This case stands as a painful reminder of the lasting and egregious damage that unscrupulous and unchecked profiteering can bring about in the mining sector.  It is an embarrassment to Canada, Yukon and the responsible mining community,” Veale’s decision reads.  “It is my opinion that an account of BYG’s historical activity in the Yukon should be brought to the attention of the federal and territorial taxpayers, who remain fiscally responsible for remediation efforts.”

History of the Mine

BYG began mining gold and silver at the Mount Nansen site in 1996.  By 1999, the company ceased operations as it was unable to meet the requirements of its water licence.

Immediately after shutdown, BYG appointed a receiver to the site.  In July 1999, the receiver abandoned the property.  The Government of Canada took control of the site and began implementing care and maintenance operations.

In 2003, under an agreement between the Yukon and Canadian governments, the Yukon government became responsible for the property along with the development and implementation of a remediation plan.  The financial responsibility for the site resides with the Government of Canada.

In a 2007 decision by the Yukon Supreme Court ruled on environmental charges, the court found the company guilty of “raping and pillaging” the Yukon’s resources.

A 2011 environmental assessment at Mount Nansen estimated about 55,000 cubic metres of contaminated soil, 300,000 cubic metres of tailings and 500,000 cubic metres of waste rock at the site.

To date, it is estimated that approximately $25 million has been spent by the government to monitor and control the site.

Business Opportunity

The mine currently for sale to whomever is willing to take on a “government subsidized remediation project,” according to Veale.

In late 2016, pwc, the court-appointed receiver for the mine, announced a shortlist of proponents who successfully responded to a Request for Qualifications on the purchase of assets and remediation work.  The successful respondents are as follows:

  • 536086 Yukon Inc. (lead respondent Merit Consultants International)
  • Alexco Environmental Group Inc. (lead respondent)
  • Morgan Construction & Environmental Ltd. (lead respondent)

It is expected the pwc will issue a Request for Proposals shortly.  The costs to implement the remediation plan would be paid by the Government of Canada.

Under the conditions of sale, the purchaser will be required to prepare a detailed design for the remediation plan, subject to peer review, and approval under the Yukon Environmental and Socio-Economic Assessment Act.

Required remediation tasks include de-watering the existing pit in preparation to accept the waste rock, tailings, and contaminated soil, then sealing the pit with a permanent liner.  The plan calls for a clean up “as close to walk away as possible,” with nothing left on site that is not required for long term monitoring and maintenance.

The winning proponent will have up to 10 years to complete the tasks required, and could then acquire permits to mine any viable mineral deposits on the property.

$130,000 in Penalties for Improper Storage of Petroleum Products

The Clearwater River Dene Nation, the Clearwater Store, and band administrator, Walter Hainault, were recently sentenced in the Provincial Court of Saskatchewan after pleading guilty to failing to comply with an environmental protection compliance order (EPCO) issued by Environment and Climate Change Canada (ECCC).  The Clearwater River Dene Nation was fined $100,000; Clearwater Store was fined $25,000; Walter Hainault was fined $5,000.

The EPCO was issued following an inspection at the store to verify compliance with the Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations.  Charges were laid under the Canadian Environmental Protection Act, 1999 after the EPCO failed to bring about full compliance with the Regulations.

EPCOs are issued under the Canadian Environmental Protection Act, 1999 by ECCC enforcement officers to direct that various measures be taken to stop or to prevent the commission of an alleged contravention of the Act or its regulations.

The purpose of the Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations (SOR, 2008-197) is to reduce the risk of contaminating soil and groundwater due to spills and leaks of petroleum products and allied petroleum products from storage tank systems.  The regulations establish technical standards for the design and installation of storage tank systems, and include requirements for operation, maintenance, removal, reporting and record-keeping.

The fines collected will be directed to the Environmental Damages Fund. The Environmental Damages Fund (EDF) follows the Polluter Pays Principle to help ensure that those who cause environmental damage or harm to wildlife take responsibility for their actions.  The EDF is a specified purpose account, administered by ECCC, to provide a mechanism for directing funds received as a result of fines, court orders, and voluntary payments to priority projects that will benefit our natural environment.