Canadian National Railway v. ABC Recycling Inc.

CN v. ABC Recycling concerned a cost recovery action commenced by the plaintiff, CN, to recover its costs in remediating a contaminated site. The decision is the first in which the British Columbia Supreme Court had considered many of the provisions of the Waste Management Act (now the Environmental Management Act), including the tests for determining reasonably incurred “costs of remediation” and whether an innocent property owner is entitled to recover its actual legal costs. The trial was heard over nine days commencing on March 14, 2005, and judgment was rendered April 29, 2005.

CN was the owner of an approximately 80-acre parcel located on the north bank of the Fraser River in Burnaby, British Columbia. ABC Recycling was the neighbouring property owner and operated a scrap metal and auto-wrecking business. As early as 1997, ABC Recycling’s operations had encroached onto CN’s property and caused contamination of CN’s lands including metals, hydrocarbons and PCBs. In 1999 and 2000, ABC Recycling removed its products from the CN lands and conducted an excavation of the affected soils. In 2000, CN conducted further investigations as part of its efforts to obtain a Certificate from the Ministry of Water, Land and Air Protection in support of the sub-division and sale of its property. This investigation and analysis revealed that CN’s property was still contaminated.

Following the remediation of the contamination, CN sought recovery of its costs for remediation from ABC Recycling. ABC Recycling refused to pay and the litigation was commenced by CN.
ABC Recycling admitted at trial that the CN property was a “contaminated site,” that ABC Recycling was a “responsible person,” that ABC Recycling caused the contamination and that CN incurred “costs of remediation,” all as defined in the statute. The issues to be determined at trial were whether CN’s “costs of remediation” were “reasonably incurred” and whether CN was entitled to recover its legal costs under an indemnity basis or a tariff basis as set out in the Rules of Court.

At trial the Court found in favour of CN and awarded $322,288.60 of the $340,998.13 sought as costs of remediation, plus its reasonably incurred actual legal costs. The Court applied an objective test in determining whether the costs incurred were reasonable and held that the burden was on the plaintiff to prove the reasonableness of those costs, however independent, expert evidence was not required in order to do so. Perhaps the most significant finding was that the Court, for the first time in considering the cost recovery provisions of the legislation, held that reasonable legal costs incurred to pursue those parties responsible for the contamination are recoverable on a full indemnity, actually incurred basis, rather than a tariff basis.
CN was represented by Graham Walker and Rick Williams of Borden Ladner Gervais LLP. ABC Recycling was represented by David Perry of Singleton Urquhart.