Soil Contaminated Sites [Continued] #139

Jul 01, 1989

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By Gerry Neely
B.A. LL.B.

A whole new growth industry is developing of scientists, engineers, law professors, lawyers, columnists, experts and others, around the pollution of the environment and the liability for doing so. An increased awareness by the public of environmental hazards which pose a risk to health, brings an increased risk to licensees who fail to make themselves aware of the hazards of toxic waste to real property.

A licensee's duty is to: "obtain all of the information that is relevant and necessary so that the prospective purchasers are able to make a value judgement as to whether to acquire the property." (Column 66). A licensee must exercise a reasonable degree of skill and care in informing himself of the risks involved in dealing with potentially contaminated real property to be able to advise prospective purchasers of that risk.

This does not mean that the licensee is an insurer or guarantor against the loss which results from the discovery of contaminated soils after the purchase is complete. It does mean that licensees must know enough to recognize the "red flag" signifying a potential environmental hazard. The licensee should then advise the prospective purchaser to investigate the risk of environmental harm before an offer is made to purchase the property.

Where does one obtain information of contaminated or potentially contaminated sites? There is no central registry. While the Waste Management Branch is looking at the creation of one, a lack of funds together with the need to build up the information required for a registry means a long delay. The Waste Management Branch is able to provide some information, either as a result of permits issued by it, or from information provided by the public. It is also developing programs designed to inform the public about the environmental risks.

The Branch does have the right to file a notice under the Land Title Act, against the title of land contaminated by special waste which poses a danger to health.

The City of Vancouver has adopted a policy with respect to industrial lands which are intended to be redeveloped for another purpose. No rezoning is permitted unless the Waste Management Branch confirms that the property is either not contaminated, or that the contaminants can and will be removed. A number of other mainland municipalities are discussing similar bylaws with the Waste Management Branch.

For the moment then, perhaps the most that a licensee can do is to advise a prospective purchaser of property either to do an investigation of the use to which the property has been put, or engage a consultant to do an environmental audit. The necessary information may come as a result of City Archives, air photos, maps, fire insurance, interviews with present or former employees, or neighbours, and land title historical searches. Testing the soil may be essential.

Both licensees and lawyers should consider the clauses to be incorporated in agreements for the sale of land which is or may be contaminated. Owners may be asked to file written disclosure statements of their knowledge of the presence or absence of hazardous wastes, and their knowledge of the uses of the property. They may be required to represent and warrant the condition of the soil. They may be reluctant to do so because of the potential for substantial damages. The onus to establish the presence or absence of contaminated soils may be shifted to the purchaser by making it a condition that the purchaser satisfy himself by his investigation that the site is not contaminated.

Licensees will wish to protect themselves by raising the issue of environmental hazards with both parties, and having the parties acknowledge that they, rather than the licensee, shall be responsible for the disclosure or assessment of the potential risk. Standard clauses will be developed, but for complex transactions, licensees may also shift the risk to the legal profession of deciding what clauses are appropriate.

The risk for the person who may be found liable is in the difficulty of measuring the extent of the damages. It is relatively easy to measure the cost of the removal of UFFI from a home. The cost of the cleanup of the Expo site is an example of the high expense which may be involved in the removal of hazardous waste. While some hazardous waste can be easily neutralized, the inability of the Atomic Energy Control Board to find, after six years, a suitable site for the storing of radioactive material illustrates the difficulty of finding a place removed from population or water courses in which to store hazardous waste.

This is a topic which is most likely to affect licensees engaged in the sale of commercial or industrial properties. However, hazardous wastes can be found upon farms where pesticides or herbicides were stored, or on the site of an apartment condominium on former industrial land rezoned for residential purposes.

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