Class Actions

In November, the Ontario Court of Appeal released its decision in Pearson v. Inco Ltd. to overturn the decisions of two lower courts and approve certification of an environmental class proceeding against the steel corporate giant Inco. As a result, class actions in the sphere of environmental law will likely become more prevalent. Actions that would not be economical for individuals to pursue will become affordable when pursued as a class action representing a group of people. Potential defendants in such cases, including of course professional engineers, should be aware of these developments.

A class proceeding is one that is brought by a representative plaintiff on behalf of him or herself and all others similarly situated. An order certifying the action as a class proceeding and appointing a representative plaintiff must be obtained.

Under Ontario’s Class Proceedings Act, 1992, S.O. 1992, c. 6, a court must certify a class proceeding under certain conditions. For example, there must be an identifiable class of persons whose claims raise common issues, and there must be a representative plaintiff who fairly and adequately represents the interests of the class.

Numerous courts, including the Supreme Court of Canada, agree that class proceedings can be important vehicles in pursuing environmental claims but have been reluctant to certify such proceedings in the past. Most notably, the Supreme Court of Canada refused to certify a class proceeding in Hollick v. Toronto of 2001, a case involving people living close to Toronto’s Keele Valley Landfill who complained of a variety of environmental and health effects.

Pearson v. Inco

Inco operated a nickel processing refinery in Port Colborne that released nickel oxide, a known carcinogen, into the Port Colborne environment for over half a century. In 2000, the Ministry of the Environment released a report which stated that Inco had discharged contaminants that posed a risk to the natural environment and to human health. The plaintiffs claimed that the report had a serious impact on property values in the Port Colborne area.

While two lower courts had refused to certify the class action, two important developments had since arisen which led the Ontario appeal court to a different decision. First, the plaintiffs had narrowed their claim significantly to include only damages for the devaluation of real property values arising from the release of the 2000 Ministry of the Environment report. Second, the Court of Appeal decision in Cloud v. The Attorney General of Canada (2002) had been released in December 2004 and it suggested that a more liberal approach to class proceedings was warranted.

The Court of Appeal concluded that the Pearson v. Inco case should proceed as a class action, based on the following:

* A cause of action was disclosed that was framed in nuisance, negligence, trespass and strict liability.

* Once the claim was narrowed to the decrease in property values, a class of persons was identifiable. The class consists of those who owned property within a specific area of Port Colborne when the 2000 Ministry of the Environment report was released.

* The claims of the class members raised common issues, a fact with which Inco did not disagree.

The case also satisfied the criteria that a class action was the preferable procedure for the following reasons. Judicial economy is achieved because the claim involves common issues, which was the case when the claim was narrowed to exclude claims of injury to health. Access to justice is achieved because many of the people whose property values were most seriously impacted would otherwise be unable to seek redress. Behaviour modification is achieved because similar industries may be influenced to modify their behaviour to ensure no harm is caused to the community.

Implications

The decision of the Ontario Court of Appeal signals a more liberal approach to certifying (and thereby, permitting to proceed) environmental class actions — at least where the claims relate to property damage.

Claims involving the effects of environmental contaminants on human health, on the other hand, still appear to remain unlikely candidates for certification.

Inco is seeking leave to the Supreme Court of Canada to appeal the Ontario decision.CCE

Michelle Fernando is an environmental lawyer with Miller Thomson LLP, barristers and solicitors, in Markham, Ontario.