Court Appointed Receiver
October 24, 2015
By By John Tidball and Joseph Marin, Miller Thomson LLP
After a manufacturer went bankrupt and left behind a contaminated site, consulting engineers took on an unusual role in the environmental remediation.
From the October-November 2015 print edition, page 81.
The award of a Canadian Consulting Engineering Award to Dillon Consulting for its work on the Outboard Marine in situ environmental remediation project (see p. 59) affords an opportunity to explore the experience of a Canadian consulting engineer acting in a very non-traditional role – that of court-appointed receiver.
Outboard Marine Corporation of Canada (OMCC) operated a manufacturing facility in Peterborough, Ontario until 1990, when it began a systematic decommissioning of the facility. As a result of a bankruptcy filing by, and subsequent liquidation of, its parent corporation, all of the directors and officers of OMCC resigned in 2001. The situation left a contaminated site with no corporate governance and a problematic environmental legacy for the Peterborough community.
In January 2000, the Ontario Ministry of the Environment had issued an Order requiring investigation and remediation of the legacy environmental issues. Dillon had been OMCC’s environmental consultant through the 1990s. The engineers had already undertaken a significant amount of investigative work at the site, although not all of the environmental issues had been fully investigated.
Dillon had concluded that there were two contaminant plumes originating from two distinct source areas on the OMCC property. The plumes merged to form a single off-site plume that extended a distance downstream from the site. Off-site groundwater extraction wells were in operation to hydraulically control the migration of contaminants, but no steps had yet been taken to remediate the east and west source areas.
In many similar cases, the story would have ended there. Fortunately for the environment and the Peterborough community, the OMCC story did not. With the assistance and cooperation of the Ministry of Environment, Dillon worked with Ernst & Young (the monitor in OMCC’s insolvency proceedings) and its respective legal counsel (including the authors), to come up with a creative plan to fund and undertake the remediation of the two source areas.
In late-2001, Dillon was appointed by the Ontario Superior Court of Justice as Environmental Remediation Receiver of OMCC. Ernst & Young was appointed as Disbursement Receiver to collect and disburse the funds of OMCC.
Dillon’s initial mandate was restricted to the construction of an in situ barrier to contain the west plume source area, but it soon broadened to include any environmental remediation activities approved by the Court. This receivership was initiated with the concurrence of OMCC’s stakeholders (principally property owners adjacent to the OMCC facility) and the Ministry, with whom a consultative process was implemented for approving all proposed remediation activities. The scope of remediation activities that Dillon could undertake was always subject to the amount of funds available for that purpose and the resultant need to prioritize the components of the remediation plan.
The funds of OMCC at the outset of the receivership were enough to fund remediation activities for no more than two years. However, these funds were supplemented by the collection of receivables, refunds of tax instalments paid by OMCC prior to the receivership and the liquidation of distributions from an OMCC subsidiary, and by funds provided in trust by the Ministry for remediation purposes. The latter were primarily from financial assurance funds committed by OMCC prior to the receivership.
The Dillon receivership continued until 2013, when Dillon was discharged as Environmental Remediation Receiver by the Court. Between 2001 and 2013, counsel for the receivers appeared 15 times to seek Court authorization for the expenditure of funds to investigate and remediate the OMCC contamination. The Court approved the expenditure of millions of dollars to fund contracts for the excavation and rehabilitation of the east plume source area, and the much more complicated remediation of the west plume source area.
In addition to operating in the capacities of environmental consultant and consulting engineer in the vacuum of any OMCC management, Dillon staff were vitally important in the receivership process. Every motion made to the Superior Court to authorize remediation expenditures was accompanied by a lengthy Environmental Remediation Receiver’s Report and a schedule of proposed remediation activities. Legal counsel were accompanied and assisted by Dillon Consulting engineers Andrew Wilson and the late Sean Salvatori at the hearing of every motion.
The OMCC remediation was achieved in highly unusual circumstances that may be an anomaly in the world of legacy contaminated sites. The project is testimony to the use of a creative Court-approved framework that maximized funds available for remediation activities, all within a consultative framework.
John Tidball and Joseph Marin are partners at Miller Thomson LLP in Toronto. E-mails email@example.com