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Courts refutes Inco class action status, plaintiffs appeal

The Divisional Court recently concluded that a class action was not the "preferable procedure" for advancing the cl...


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March 15, 2004 by Hazmat Management

The Divisional Court recently concluded that a class action was not the “preferable procedure” for advancing the claims against Inco Limited with regard to the damages suffered and property devaluation in Port Colborne, Ontario as a result of the operation of Inco’s nickel ore refinery.

The case involves Wilfred Robert Pearson and other Port Colborne residents, who brought forth claims against Inco Limited, the Government of Ontario, the City of Port Colborne, the Regional Municipality of Niagara, the District School Board of Niagara, and the Niagara Catholic District School Board.

Subsequent to the recent decision, the Government of Ontario has decided to settle and has removed itself from the case, saying it won’t be involved in the litigation — a move that the plaintiff’s lawyer Eric Gillespie of Markle May Phibbs says strengthens their ability to appeal.

A notice was in fact filed with the Court of Appeal seeking leave from this recent decision, and Mr. Gillespie says they are optimistic that the class action status will eventually be granted. He has advised his clients to hold off on individual suits as they are currently engaged in the leave-granting process that takes about six to eight weeks.

As reported in HazMat Management in the October/November 2003 edition (“Risky Business”) and in the Gowlings Environmental Bulletin, in July 2002, Justice Nordheimer of the Superior Court dismissed the plaintiff’s motion for certification of the action as a class proceeding under ss. 5(1) of the Class Proceedings Act. The judge subsequently awarded costs against the plaintiff in favour of the defendants Inco and the Crown. The plaintiff appealed the order dismissing the certification of the action and the costs award to the Divisional Court.

As reported in the March 2004 edition of the Gowlings Environmental Bulletin, the Divisional Court found that Judge Nordheimer had not erred in finding that the common issues were overwhelmed by the individual claims and defences.

At the Divisional Court the representative plaintiff indicated that he was amending his claim to delete the claims on behalf of the proposed class in respect of health hazards. As such, the proposed class was reduced from approximately 20,000 to 8,000 and the claims were limited to damages for the devaluation of their real property arising from contamination of the soil from Inco’s operations. The Divisional Court, over the objection of the defendants, agreed that the appeal of Nordheimer’s decisions could proceed as applied to the narrowed claims for relief.

The Court concluded that the claims of the proposed class, even if restricted to impairment in property value, would involve individual proof of damage and could entail individual defences, including limitation period defences. The plaintiff had not satisfied the Court that losses could be established on a class wide basis. The Court agreed with Nordheimer that the process of determining whether a causal link exists for any given class member with respect to any given allegation of harm would be extensive and very much individualized. Therefore a class proceeding would not be expedient.

The Court agreed with the Crown’s observation that the presence of contaminants exceeding background levels under the Guideline for Use at Contaminated Sites in Ontario would be insufficient to establish an effect on property value. Furthermore, the judge indicated that there would have to be multiple trials to determine whether the property interests of individual members of the class had been affected.

The Divisional Court also upheld the decision to award costs to the successful parties, holding that there was no reason to depart from the usual rule respecting costs. While there were broad interests involved in the proceedings, it could not be said that the action involved the “public interest.”

The terms of the settlement with the Government of Ontario are confidential at this time.

The full text of the decision of the Divisional Court is available on-line at:
http://www.canlii.org/on/cas/onscdc/2004/