Soil Contaminated Sites #138

Jul 01, 1989

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By Gerry Neely
B.A. LL.B.

What do gas stations with underground tanks, sawmills, pulp mills, paint manufacturing shops, dry-cleaners, shipyards, truck parking yards for moving or fuel companies, junkyards, farms and 63 McClure Crescent, Scarborough, Ontario have in common? With the exception of 63 McClure Crescent, each is a potential site for soils contaminated by the deposit of hazardous waste.

Environmental issues now successfully compete for headlines, stories, and television time with free trade, the deficit, higher interest rates, loonies, and safe sex. When the Financial Post offers tips on environmental stocks, when Hollywood gives up red, white & blue for green, and President Bush advocates the reduction of acid rain, it is evident that in the 1990's the broader environmental hazards to land and buildings will engulf UFFI as the new source of liability affecting licensees, appraisers and lawyers.

Which brings us back to number 63, a property actually containing radioactive soil.

McClure Crescent had been the site of a 10 acre farm upon which rags used in the 1940's for luminous dial painting, had been burned in a pot bellied stove to reduce and concentrate the radium in the ashes. The ashes, when collected, were shipped to Eldorado Nuclear for processing. Small amounts of the radioactive material were lost in the soil and the distribution of this radioactive material took place when the 10 acre farm was subdivided and roads were excavated. The excavated material was then distributed throughout the subdivision.

When the owners listed their property, they knew that some parts of the Crescent were contaminated, including the house directly opposite number 63. They believed their property to be uncontaminated, a reasonable belief based upon the investigations of the Atomic Energy Control Board (AECB). They accepted a conditional offer which was subject to raising a mortgage upon terms which included a rate of interest no greater than 16%. The agent persuaded the purchasers to remove the condition before they applied for the mortgages, believing that there would be no trouble in obtaining it.

Shortly after the agreement became unconditional, the purchasers read a newspaper report about the radioactive material in the area, and telephoned the Atomic Energy Control Board. The purchasers were assured that there was no contaminated soil at number 63. They were also advised that the radioactive material in the area was of low level and would be removed within two months by the Government.

Then the AECB discovered that there was radioactive material in a twenty square foot area buried about two feet below the surface in the backyard of number 63. AECB advised the vendors of this, but not the purchasers, because of a policy of disclosing this information only to the owners of the affected properties.

After their purchase, the purchasers discovered that number 63 was contaminated. They also learned that AECB could not fulfill its promises to remove the radioactive material. In over 6 years of looking, neither it nor the federal or provincial governments had been able to find a disposal site. In 1984, number 63 was sold at a loss and the purchasers sued the vendors, the agent, and the AECB, and were awarded damages of $19, 846.00 plus prejudgement interest.

Fifty percent of this was paid by the vendors. Their liability arose from their breach of duty to disclose the latent defect in the area, and their further failure to disclose the latent defect they knew about after the contract was signed but before the sale completed. The latent defects were so detrimental to the purchasers that they might have rendered the premises unfit for habitation or dangerous in themselves. The Judge made a special point of stating that the vendors had a duty to advise the purchasers of the changed circumstances which occurred between the date the parties made the contract, and the date of closing.

AECB had said without qualification, that there was no contaminated soil at 63 McClure Crescent, and that a disposal site for radioactive material would be found within two months. AECB failed to advise the purchasers about its policy of limited disclosure, and failed further to warn the purchasers that they should keep in touch both with AECB and with the vendors because AECB was still checking the extent of contamination in the area. For these breaches of duty to the purchaser, AECB was held to be liable for 40% of the damages.1

Had the agent not removed the condition, the purchasers could have avoided the purchase, because they subsequently discovered they had to pay 16l/2% on their mortgage. The agent and her employer were liable for failing to meet the level of competence expected of her, and paid the remaining 10%. No claim was made against the agent for not being aware of the radioactive material in the area. [to be continued in the next column].

  1. Sevidal v. Chora, 64 O.R. (2nd) 169.

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