Environmental, Indigenous and Natural Resources Blog

We previously reported on this case (at the Supreme Court Level) here.

On appeal (Cordy Environmental Inc. v. Obsidian Energy Ltd., 2024 BCCA 226) the B.C. Court of Appeal has now reversed that decision, and clarified the law on recoverability of contractor costs under the Environmental Management Act, SBC 2003, c.3 (the “EMA”).

In the decision below, the plaintiff, Cordy Environmental Inc. (“Cordy”), was a contractor providing remediation services. Cordy sued a previous owner of the property who was alleged to have contaminated the site. The apparent motivation was that Cordy’s customer, who now owned the site, had gone into receivership and its assets sold to a third party (free of any claim from Cordy).

The court below found that on the wording of the EMA, the former owner was a responsible person, and that Cordy was a “person” who had incurred costs of remediation and was therefore entitled to bring a cost-recovery claim under the EMA.

As we commented in our previous post, while following a literal reading of the language used in the EMA, this result was not in keeping with the purpose of the EMA, and could create significant practical difficulties (where a polluter would have separate and overlapping liability to numerous contractors with whom it had no relationship).

The B.C. Court of Appeal rejected the lower court’s analysis, relying on various sections of the EMA to inform its view of the word “person”, holding that the term effectively meant a “responsible person” (such as a current owner or operator of the site). The cost recovery provisions could not provide a cause of action to Cordy, who was effectively an unsecured creditor and limited to their claim in contract against their employer.

To get to this result, the Court of Appeal had to carefully tread around the fact that the relevant provision states “any person, including, but not limited to, a responsible person”. The Court did not offer a view on what other categories of persons this would capture, which remains an open question. Presumably there are categories of persons who are not responsible persons that can bring claims under the EMA, but the Court has made it clear that contractors and unsecured creditors cannot.

The practical effect is to limit the potential for claims against former owners and operators of contaminated sites. The prior decision risked creating uncertain liabilities, and overlapping and multiple claims. This is a common sense decision which should be welcomed by practitioners.