Legally Speaking - May 2015 (478)
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Legally Speaking (478, May 2015)

 

Number 478, May 2015

ENVIRONMENTAL LIABILITY

Mike ManganIn Dolinsky v. Wingfield, oil from a leaky underground tank contaminated the property next door.1 When the affected property's owner sued to recover clean-up costs, the court held several current and former owners of the source property liable.

In this case, the properties were adjacent, with Ms. Dolinsky's property downhill. Further downhill, beneath both properties, lay the Gorge Waterway.

On March 4, 2012, District of Saanich engineers discovered oil in the Waterway. Initially, they traced the oil to Ms. Dolinsky's property. In early December, oil once again appeared in the Waterway and the Ministry of Environment took charge. Their investigators found a leaking underground tank on the property above the Dolinsky property. The Ministry removed the tank and its contents.

It would cost Ms. Dolinsky roughly $123,000 to remediate her property. To recover her loss, she sued the current and several previous owners of the source property. Dolinsky's claim against two previous co-owners is especially instructive.

In late March 2012, a couple bought the source property to fix and flip. In August 2012, they sold the property. When sued, the couple claimed they were exempt from liability as innocent buyers.

Under the Environmental Management Act (Act), a purchaser may claim an innocent buyer exemption if they can show that when they acquired the property, it was already a contaminated site, and there was no reason to know or suspect contamination.2 They must also show that before acquiring the property, they made all appropriate inquiries into the site's previous ownership and uses.3

If an underground oil tank contaminates a site, the owner must remediate the property. Where the owner reasonably incurs clean-up costs, that owner may recover those costs from any other responsible person, including a property's current or previous owner.4 A responsible person is liable for clean-up costs, unless he or she falls within one of the Act's exemptions.

By the time of the couple's purchase, the District had installed on Dolinsky's property a special dam to collect the oil, plus warning signs. Before buying the source property, the couple waived a Property Disclosure Statement and did not check for a tank or contamination, as recommended by their property inspector. Later, when Ms. Dolinsky asked permission to look for the oil's source on the source property, they refused.

Though Dolinsky and others warned the couple there was contamination, the court found that the couple turned a blind eye. Had they cooperated earlier, the leaky tank could have been removed much sooner to minimize contamination. The court found the couple jointly and severally liable for 35 per cent of Ms. Dolinsky's clean-up costs.

To successfully rely on the Act's innocent buyer exemption, a purchaser must make all appropriate inquiries into the site's previous ownership and uses before acquiring the property. A buyer agent should warn the buyer to inquire into a site's previous ownership and uses, and document all inquiries, before purchasing the property.

If a buyer's agent reasonably suspects there may be a tank, the licensee must use reasonable efforts to determine if one is present. If there is no clear answer, the licensee must warn the buyer to obtain appropriate professional advice (e.g. from an environmental engineer or lawyer).5 If a buyer's agent knows that a property contains an unused underground oil tank, it is essential to warn the buyer that the tank's presence may expose the buyer to significant financial liability.

If a listing licensee has reason to believe that an out-of-use underground oil tank may be present, the licensee should warn the seller to determine if one is there. Otherwise, the discovery of a tank later may expose the seller to significant liabilities.6

Mike Mangan
B.A., LL.B.

  1. Dolinsky v. Wingfield, 2015 BCSC 238.
  2. Environmental Management Act (EMA), S.B.C. 2003, s. 46(1)(d).
  3. To decide if a person made all appropriate inquiries, s. 28 of the Contaminated Sites Regulation, BC Reg. 375/96 lists additional, related factors that the court must consider.
  4. EMA, s. 47(5).
  5. Real Estate Council of British Columbia, Professional Standards Manual, online: (2015), Trading Services 4(a)(xxiv)(6), What To Do If You Are Representing A Buyer, www.recbc.ca/psm_section/general-information-trading-services.
  6. Real Estate Council of British Columbia, Professional Standards Manual, online: (2015), Trading Services 4(a)(xxiv)(6), What To Do If You Are Representing A Seller, www.recbc.ca/psm_section/general-information-trading-services.
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