Canada: Alberta Court Declines To Extend Limitation Period For Contamination Claim

Environmental Protection and Enhancement Act Does Not Lengthen Limit for Contamination Claims Against Other Contributors

Section 218 of Alberta's Environmental Protection and Enhancement Act, RSA 2000, c E-12 (EPEA) is not available to extend the limitation period for a party liable for remediation costs to make claims against other alleged contributors, the Court of Queen's Bench has recently ruled.

In Paramount Resources Ltd v Grey Owl Engineering Ltd, 2022 ABQB 333 [Paramount] the Court found that section 218 could not save a pipeline owner's claim against an engineering firm whose allegedly negligent construction work in 2004 contributed to a spill that occurred in 2018. The case adds clarity to the application of this unusual environmental remediation provision to claims for contribution from third parties in respect of remediation orders issued under the EPEA.

Background

Section 218 of the EPEA permits a judge to extend any limitation period provided in an Alberta law, including the 10-year ultimate limitation period under Alberta's Limitations Act, RSA 2000, c L-12, where the basis for the proceeding is an alleged adverse effect resulting from the alleged release of a substance into the environment. The EPEA provision is unique among Canadian provinces. Most provincial legislation offers no exception to the limitation period for environmental contamination claims. In Saskatchewan, section 97 of the Environmental Management and Protection Act, SS 2010 c E-10.22 exempts all environmental claims (as defined in that Act) from the application of Saskatchewan's 15-year ultimate limitation period set out in The Limitations Act, SS 2004, c L-16.1, and extends the limitation period for environmental claims to six years from the discovery of the environmental contamination (as opposed to the standard limitation period of two years). In Ontario, section 17 of the Limitations Act, 2002, SO 2002, c 24, provides that there is no limitation period in respect of an environmental claim that has not been discovered. Section 218 of the EPEA is unique in its explicit requirement that judges consider whether or not an extension of a limitation period is justified in the individual circumstances.

In considering an application for extension under section 218 of the EPEA, a judge must consider the factors enumerated at subsection (3), including when the alleged adverse event occurred, whether the claimant was duly diligent in uncovering the contamination, potential prejudice to the defendant, and "any other criteria the court considers to be relevant." In Brookfield Residential (Alberta) LP (Carma Developers LP) v Imperial Oil Limited, 2019 ABCA 35 [Brookfield], a unanimous Court of Appeal provided guidance on how far a court may extend the limitation period in the context of contamination that had gone long undetected and was subsequently discovered by an innocent purchaser. We discussed both the lower court and the appellate decisions in Brookfield in two earlier posts, When is an Environmental Contamination Claim Too Old to Extend the Limitation Period?, and When Is It Too Late to Sue for Environmental Contamination? The ABCA Rules.

The Court of Appeal in Brookfield held that a decision to extend a limitation period under section 218 must balance the objectives underlying that section against the competing policy objectives of the Limitations Act. The facts in Paramount required for the first time that the Court consider these objectives in the context of a relatively recent claim brought by a party subject to a remedial order (and associated remediation costs) under EPEA against an alleged third-party contributor.

The Court's Findings in Paramount

In Paramount, the Court noted that the 10 year ultimate limitation period had passed (as the pipeline had been constructed in 2004 and the release had occurred in early 2018) and clearly stated that, absent clear legislative language or appellate guidance, exceptions to limitation periods are few and should not be expanded lightly. The Court went on to consider if the limitation period should be extended under section 218. The Court characterized the objectives of section 218 as "...ensuring that there is someone to pay for the cost of environmental damage that would otherwise be borne by society." Section 218 was not intended to remedy unfairness between parties responsible for environmental remediation, but is more narrowly focused on the "societal injustice that can result when polluters escape expensive environmental remediation bills which, by their very nature, often go undetected for long periods of time."

The Court distinguished Brookfield on the basis that the plaintiffs in Brookfield were not liable for the cost of remediation under the EPEA. The plaintiff in Paramount was a "person responsible for the contaminated site" under the EPEA, and was therefore strictly liable for remediation. Despite the plaintiff's attempt to characterize the action as a claim for contribution to its statutory remediation obligations, its claim against the defendant was found to arise outside the EPEA in simple negligence. As the Court explained, "Whether there is anyone to bear the cost is not at issue here, this dispute is about who will pay" [emphasis in original].

When, as in Paramount, the facts clearly establish a responsible party who is available to pay, the factors weighing in favour of applying section 218 to extend the limitation period are accordingly diminished, and the objectives of the Limitations Act in creating finality with respect to ancient claims and avoiding the practical problems at trial arising from lost records and faded memories will likely prevail. Despite the plaintiff having sought a relatively short extension compared to the extensions sought in Brookfield and prior cases, the Court ultimately found "no path to granting an extension" in Paramount, and summarily dismissed the plaintiff's claim.

Key Takeaways

Paramount reinforces that section 218 is generally an exceptional remedy. The case confirms that this remedy will not be available to parties who have been deemed responsible under the EPEA who then seek damages through a civil claim in negligence before the courts against third parties who may have contributed to the contamination.

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