Connolly v. Jones et al. Date:, 2014 BCPC 149

Citation: Connolly v. Jones et al. Date: 20140715 2014 BCPC 0149 File No: 38844 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: SEAMUS JOSEPH CONNOLLY and ALEESHA FAWN CONNOLLY CLAIMANTS AND: JOHN T. JONES, MARGARET R. JONES and D. DILLMAN ENTERPRISES LTD. et al. DEFENDANTS AND: D. DILLMAN ENTERPRISES LTD. THIRD PARTY REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S.R. HARRISON Appearing on their own behalf: Mr. Seamus Connolly and Ms. Aleesha Connolly Counsel for the Defendants: Mr. Jeff Frame and Mr. Courtney AuBuchon Counsel for the Third Party : Mr. Rod McLeod

Place of Hearing: Kamloops , B.C. Dates of Hearing: October 7 to 9, 2013, April 28 and 29, 2014 Date of Judgment: July 15, 2014 INDEX INTRODUCTION 1. EVIDENCE A. The Underground Fuel Storage Tank B. Contamination C. The Engineer D. Offer to Buy Back E. Credibility 2. FINDINGS OF FACT 3. THE CLAIMS A. Negligent Misrepresentation by Mr. and Mrs. Jones a. Was there a “Special Relationship”? b. What was the Nature of the Representation? c. Was the Representation Made under Question 1 G Relied on in a Reasonable Manner? B. Negligent Misrepresentation by Dillman a. Was there a “Special Relationship”? b.

What was the Nature of the Representation? c. Was the Representation by Dillman Relied on in a Reasonable Manner? d. Did the Reliance Result in Damages? C. Breach of Contract by Mr. and Mrs. Jones D. The Claim under the Environmental Management Act a. Determination of a Contaminated Site b.

Section 45 - Persons Responsible for Remediation of Contaminated Sites c.

Section 46 - Persons not Responsible for Remediation (

i) The Connollys

(ii) The Joneses (iii) Dillman 4. DAMAGES INTRODUCTION [ 1 ] The Claimants, Mr. and Mrs. Connolly, were a young couple looking to purchase a family home. On August 13, 2009, they entered into a contract to purchase an older property on Westsyde Road in Kamloops at a market price of $380,000. The vendors, Defendants Mr. and Mrs. Jones, are retired.

The contract for the purchase and sale of the property was subject to a number of time- limited conditions for the benefit of the Connollys, including satisfactory financing, insurance and a home inspection. [ 2 ] A standard form disclosure statement, completed by the vendors and incorporated into the contract, represented that the Joneses were not aware of any underground oil storage tanks or any “material latent defects” on the property.

The Connollys’ home inspection on August 16, 2009 uncovered an underground oil tank on the property, buried close to the west wall of the house near the southwest corner of the structure. [ 3 ] The parties agreed that Mr. and Mrs. Jones would see to the removal of the underground oil tank. Mr. Jones then engaged the services of the Defendant company, D. Dillman Enterprises Ltd. (“Dillman”), for that purpose.

The tank was excavated and taken away by Dillman on August 19, 2009. [ 4 ] The “subject to” clauses in the purchase contract were to be removed by August 22, 2009, however the date for removal was extended twice by agreement. The sale proceeded and was completed October 20, 2009. The Connollys took possession the following day. [ 5 ] Less than two months later, on December 13, Mrs.

Connolly became aware of the smell of petroleum fuel in the basement room at the southwest corner of the house, close to the location where the tank had been buried. [ 6 ] The Connollys retained the services of an environmental engineer, Greg Danyluk. In February, 2010 Mr. Danyluk was to assess the extent of any contamination and remediate as required. [ 7 ] Mr. Danyluk detected excessive petroleum hydrocarbon contamination in about 80 cubic meters of subsoil taken from or near the area where the tank had been situate. This soil was treated over the summer of 2010.

By September of the same year, petroleum hydrocarbon concentrations had been reduced to permissible levels. [ 8 ] The Connollys brought this action against the various Defendants for damages suffered by them due to the oil contamination. The Claimants have put their legal claims against the present Defendants on the following footings: 1. That the Defendants Mr. and Mrs. Jones made negligent misrepresentations in

section 1 of the property disclosure statement portion of the contract of purchase and sale relating to their awareness or lack of awareness of any underground storage tanks or of any material latent defect on the property. 2. The Defendant Dillman made negligent representations in the endorsement they placed on their August 19, 2009 invoice to Mr. Jones, which representations were relied upon by the Connollys in purchasing the property. 3. That the Defendants Mr. and Mrs.

Jones breached clause 8 of the contract of purchase and sale which required that the property would be “in substantially the same condition at the possession date as when viewed by the buyer on August 13, 2009.” 4. The Defendant Dillman and Mr. and Mrs. Jones are liable for remediation cost recovery under

Part 4 of the Environmental Management Act , S.B.C. 2003, c. 53, (“ EMA ”) and the Contaminated Site Regulation (“ CSR ”) made under the EMA . [ 9 ] The Defendants Mr. and Mrs. Jones deny any responsibility for the contamination but have brought a third party action against

Dillman, whom they engaged to remove the tank. The Defendant Dillman asserts that they removed tank carefully and in accordance with standard, accepted practice, there was no indication of fuel contamination at the property when the tank was removed and that they made no negligent misrepresentations to the Connollys. The Defendant Dillman has denied any responsibility for the soil contamination and any negligence in performing the work. [ 10 ] Other Defendants, named realtors and realty companies, were included in the amended Notice of Claim but did not appear as parties in the trial. 1. THE EVIDENCE A.

The Underground Fuel Storage Tank [ 11 ] Mr. and Mrs. Jones bought the property in 1988. No documents relating to the purchase and sale of the property at that time were produced. Mr. and Mrs. Jones said that they did not know of the presence of the underground oil tank until it was discovered in the course of the home inspection by the Connollys. They had no knowledge at all of oil-burning furnaces or underground storage tanks. So far as they knew, they said, the house had always been heated by a natural gas furnace. Mr. and Mrs. Jones are Australians by origin. Mr.

Jones said that oil heating and storage systems are unknown in Australia. Their Canadian homes have always been heated by natural gas. [ 12 ] There were however visible signs of the presence of a fuel tank at the property. The Connollys’ home inspector found vent and fill pipes indicative of an underground oil storage tank near the southwest corner of the house. The vent pipe is shown in photographs as emerging vertically through concrete steps near the southwest corner of the house. The visible portion of the vent pipe runs up the south wall of the house for roughly two metres.

The file pipe was located nearby, within a metre of the west wall of the house, above ground level. [ 13 ] Mr. Jones said he was aware of the vent pipe but had never been sure what it was. Mrs. Jones commented on the fill pipe and thought it was a vent to a cool storage room in the basement of the house. She said the lead cap to the top of the fill pipe had broken at some earlier point so she had put a ceramic pot over the top to keep water out. [ 14 ] As a consequence to the home inspection, Mr. and Mrs. Jones were advised by their realtor, Mr. Albers, of the presence of the tank. Mr.

Jones said that he and his wife were very surprised to hear of the existence of the tank. Mr. Albers told the Joneses that it was likely their obligation to have the tank extracted before the subject conditions were removed. Mr. Jones understood that the sale would not go through unless the tank was removed. [ 15 ] Mr. Jones then hired Dillman to remove the tank. David Dillman has been the owner and operator of Dillman since 1976. He was aware that the sale of the property was pending and accepted the job on short notice.

Dillman commonly worked in construction excavations as well as commercial and residential demolitions. [ 16 ] Mr. Dillman said that over the years Dillman had removed many underground storage tanks, probably over a hundred. They had received appropriate training in removing underground fuel tanks by Jim Harker, then Fire Marshall in Kamloops, and from Mr. Redford of the provincial Ministry of Environment. Mr. Dillman said that he and his son, D.J.

Dillman, were well aware of the proper procedures for tank removal under the EMA and the BC Fire Code understood the proper handling of hazardous materials. [ 17 ] On August 18, 2009 Mr. Dillman Sr. and his son, D.J., first attended the property. D.J. soon located the tank under a flower bed along the west side of the house near the southwest corner. The filler pipe was within a metre of the wall of the house. The cap was gone but a container had been placed over the top of the pipe. [ 18 ] Using a dipstick inserted through the fill pipe, Mr.

Dillman determined that there was about 16” - 18” of clean oil in the tank. David Dillman estimated that this represented about 45 gallons of oil in a 500 gallon tank. [ 19 ] Mr. Dillman Sr. stated that the presence of clean oil in the tank signified to him the likelihood that the tank was intact and safe. A dry tank would have suggested that any residual oil had leaked into the surrounding soil. Had that been the case, he said, his practice was to refuse the job and recommend that environmental experts be brought in to clean up. [ 20 ] D.J. Dillman had worked with his father’s company for more than 20 years.

He had removed 20 to 30 underground storage tanks himself, many times in the presence of Fire Marshall Harker. [ 21 ] The following day the Dillmans attended the property with two trucks and a mini-excavator. D.J. Dillman used a hand shovel and the excavator to uncover the tank. He found the two 3/8” copper feed and return tubes below grade, still attached to the tank. He cut those tubes near the house foundation, crimped them closed with pliers and bent them upwards in accordance with the procedure under the BC Fire Code as instructed by the Fire Marshall. The exposed ends would later be covered with backfill.

D.J. Dillman made no attempt to drain the tubes of any residual oil which might have been present. [ 22 ] One of the Dillman trucks held a 45 gallon drum and two smaller containers to hold the oil still in the tank. Using a manual pump with a long hose, the two men removed the oil from storage tank. The pump-out amounted to a little more than 45 gallons. Both Dillmans said there was no leakage of fuel during the pump-out. [ 23 ] Mrs. Jones gave evidence that she was watching the tank as it was uncovered and then removed by the Dillman excavator. She commented the fuel tank was not emptied before it was moved.

David Dillman said Mrs. Jones was mistaken about this and that the tank would likely have broken free during the lift had it not been pumped out first.

[ 24 ] After the pump-out, a chain was attached to the empty tank and it was lifted out of the ground and placed on the back of a truck. While it was out of the ground, D.J. Dillman used a shovel to knock dirt off the tank. Both men said that the tank was in good condition, with no signs of rust, corrosion or leakage. [ 25 ] The hole from which the tank had been lifted was described as silty, dry, dusty and without odour. D.J. Dillman said he went into the hole to check it. He took a handful of soil and smelled it for signs of fuel contamination, as he had been instructed by Fire Marshall Harker. D.J.

Dillman said detected no smell or any other sign of contamination in the hole. No soil samples were requested or taken for testing. [ 26 ] Mrs. Jones saw D.J. Dillman go into the hole just briefly, though she could not say what, if anything, he did there. Mr. Jones said that he had watched the excavation around the tank but left to walk his dog when the tank was still in the ground. When he returned, the tank was in the Dillman truck. The Dillmans told him “everything was good.” [ 27 ] The tank was secured and removed from the scene by David Dillman.

He confirmed the integrity of the tank when he later drilled it, drained any oil remaining and purged the tank with truck exhaust before delivering it to the scrapyard. Clean fill was brought in to the site from the Dillman yard and was used by D.J. Dillman to backfill the hole where the tank had been. [ 28 ] Mr. Jones was billed $1,249.50 by Dillman for the work. The Dillman invoice, which was paid by Mr. Jones, included the endorsement that: Tank appeared to be in sound shape when removed with no visible oil leak observed.

Tank properly decommissioned and removed as per environmental management act. [ 29 ] A copy of the invoice was provided by Mr. Jones for the Connollys who had not been present at the excavation or removal of the tank. [ 30 ] As mentioned, Mr. Jones had been present for some of the Dillman excavation but he left to walk his dog before the tank was removed. Mrs. Jones was present through most of the process and took a series of photographs and a video of the tank coming out of the hole. The photographs were entered as exhibits but the video was said to be lost after Mrs.

Jones took her computer to be repaired. [ 31 ] None of those present during the Dillman work, the Dillmans, Mr. and Mrs. Jones and Mr. Albers, noticed any sight or smell suggestive of a fuel leak. B. Contamination [ 32 ] The first sign of fuel contamination at the property was observed by Mrs. Connolly on December 13, 2009, just about two months after the Connollys took possession and about four months after the underground tank had been removed by Dillman. [ 33 ] On that date, Mrs. Connolly went to the bedroom in the southwest corner of the basement.

This was the room closest to the area in which the underground fuel tank had been located, just outside the west wall of the house. Mrs. Connolly was in the process of changing bedding in the room when she noticed that the sheets on the bed smelled of fuel. [ 34 ] The Connollys investigated the source of the smell over the following days. Mr. Connolly said it smelled like fuel, but he wasn’t sure. The smell grew stronger towards the southwest corner of the basement room. The Connollys removed wall paneling along the west wall and drywall from the south wall.

They observed and photographed dark staining on the back of a number of panels. [ 35 ] The insulation under the panels and drywall was covered in what appeared to be a brown industrial paper. The paper was darkly discoloured in places, particularly at the lower parts of the wall near the southwest corner. This discolouration extended from the west wall around the southwest corner and onto the south wall. Some of it had adhered to the panelling. Wooden strapping attached to both walls near the southwest corner exhibited similar discolouration, as did some areas of the concrete itself.

None of the discoloured paper, wood or concrete was preserved or tested for the presence of contaminants. [ 36 ] Mr. Connolly spoke with Mr. Jones and Mr. Dillman Sr. Mr. Jones came to the house and into the room. He noticed an odd smell but did not identify it as fuel, although as he stated, his sense of smell was not very good due to sinusitis. Mr. Jones confirmed that he had used that room frequently over many years and had never noticed any peculiar odours. Mrs. Jones said she had never smelled a petroleum odour in the basement. C.

The Engineer [ 37 ] In February, 2010, the Connollys retained the services of Mr. Danyluk, a professional engineer qualified and experienced in the field of environmental engineering. He has a particular expertise and 20 years’ experience in assessing contaminated sites and buildings. He was accepted as an expert witness in these fields and was qualified to give opinion evidence within his areas of expertise. [ 38 ] Mr.

Danyluk was hired by the Connollys to assess any petroleum content in the subsurface soils at the former location of the heating oil tank or near the southwest corner of the house and to remediate any contamination. He was not asked to determine the source of any contamination. [ 39 ] Mr. Danyluk said that inside the Connolly home, he noticed “a weathered fuel smell” as he often does on contaminate sites. Mr. Danyluk gave evidence that petroleum contamination will migrate through soil and that the speed of migration will depend on the soil

type. Without the implementation of remediation measures, it could take many years for the contamination to break down [40] On February 12, 2010, Mr. Danyluk arrived at the property and found an open excavation with about 20 m³ of soil placedbeside the excavation. No tank was present. Mr. Danyluk directed the equipment operator from Twin Valley Contracting to excavate afurther 20 m³. [41] Mr. Danyluk took soil samples from the base and walls of the excavation as well as from the soil excavated. He looked forvisible oil staining in the soil, but he said that the soil there looked the same. It was all silty sand.

It was rare to see visible oil staining,he said, particularly if the contamination was fresh. [42] As a result of his field test results, Mr. Danyluk sent soil samples to Maxxam Analytics for analysis in particular as to thepresence of any light or heavy extractable petroleum hydrocarbons (“LEPH” or “HEPH”) in excess of the level allowed by the CSRResidential Land use standard (“CSR RL”). [43] Mr.

Danyluk stated that the hydrocarbons tested for and found by the laboratory were typical for a diesel heating oil product. [44] The soil chemistry test results for each sample sent for analysis were in evidence and attached to Mr. Danyluk’s report. Thelocations of the samples taken were plotted on his plan view and placed in evidence. [45] Three of the soil samples sent for analysis were taken at depths of 3.4 m, 3.7 m and 1.5 m. These three samples were all taken ator close to the former location of the tank.

The two deeper samples were taken from a level probably lower than the bottom of the tank.The shallower sample was taken from an area close to the former location of the tank fill pipe. [46] The analyses of these samples all confirmed the presence of LEPH contamination well in excess of the CSR RL standard of1,000 micrograms/gram. The particular sample taken at 3.7 m showed the highest degree of LEPH contamination at a concentration inexcess of 16,000 micrograms/gram. [47] Mr.

Danyluk referred to this as a significant concentration and suggested that if it had been caused by a spill in August, 2009, itwould have involved a spill of more than five litres of fuel. Beyond that, Mr. Danyluk could not identify when, where or how the fuelcontamination had occurred, or the volume of the spill. [48] On April 22, 2010, Mr. Danyluk returned to the property and directed the contractor to remove another 40 m³ of soil from theexcavation. Further soil samples were taken and analysed. [49] Two samples were removed from the north and east walls of the excavation at a depth of 3.4 m.

This was still relatively close tothe former location of the tank but probably deeper. Both samples showed LEPH contamination in excess of the CSR RL limits. [50] More soil was excavated in June, 2010 at Mr. Danyluk’s direction. Soil samples taken then confirmed that the excavation sitewas free of hydrocarbon contamination above the regulation standard. [51] Over the course of the summer of 2010, the contaminated soil was spread out on the property for remedial treatment. By theend of September, soil sample analysis showed the formerly contaminated soil to be within CSR RL limits.

The soil was cleared for use atthe excavation site. [52] The Kinder Morgan Trans Mountain pipeline passes underground along a right of way about 15 m from the south west cornerof the house. In cross examination Mr. Danyluk was asked about the possibility that this contamination was associated to leakage orspillage from refueling heavy equipment during pipeline construction. Mr.

Danyluk considered that the chances that the contaminationobserved in and around the house in 2009-2010 had derived from the construction of the pipeline in the 1950s and that over that time ithad migrated to the south west corner of the house were negligible. D. Offer to Buy Back [53] There was some evidence that after the fuel contamination was identified on the property Mr. Jones verbally offered to buy backthe home from the Connollys. The offer, if an offer it was, was not made in writing and did not include any of the common elements ofan offer, including price, closing date, subject conditions or the like.

I conclude that the offer was no more than an invitation to enter intodiscussions. Those discussions were not pursued by either party and were overtaken by subsequent events. E. Credibility [54] In Bradshaw v. Stenner, 2010 BCSC 1398 at para. 186, Madame Justice Dillon summarised some of the factors to beconsidered in assessing witness credibility. She said: Credibility involves an assessment of the trustworthiness of a witness’ testimony based upon the veracity or sincerity of a witness and theaccuracy of the evidence that the witness provides (Raymond v.

Bosanquet (Township) (1919), (SCC), 59 S.C.R. 452,50 D.L.R. 560 (S.C.C.)).

The art of assessment involves examination of various factors such as the ability and opportunity to observeevents, the firmness of his memory, the ability to resist the influence of interest to modify his recollection, whether the witness’ evidenceharmonizes with independent evidence that has been accepted, whether the witness changes his testimony during direct and cross-examination, whether the witness’ testimony seems unreasonable, impossible, or unlikely, whether a witness has a motive to lie, and thedemeanour of a witness generally (Wallace v. Davis (1926), 31 O.W.N. 202 (Ont. H.C.); Faryna v.

Chorny, (BCCA), [1952] 2 D.L.R. 354 (B.C.C.A.) [Faryna]; R. v. S.(R.D.), (SCC), [1997] 3 S.C.R. 484 at para.128 (S.C.C.)).

Ultimately, the validity of the evidence depends on whether the evidence is consistent with the probabilities affecting the case as a whole and shown to be in existence at the time ( Faryna at para. 356 ). [ 55 ] The Claimants submitted that the credibility of Mr. and Mrs. Jones was in issue. Firstly, it was argued, Mrs. Jones no longer had the video she made of the tank removal as it was lost during a computer repair. She had made no effort to have the computer technicians recover a potentially very important piece of evidence. Mrs.

Jones said that her knowledge of computers was not sophisticated and that she was unaware that lost computer files might be recoverable. This was not a demonstrably unreasonable explanation for the loss of the video footage. If Mrs. Jones had wished to mislead the court, it would have been a simple matter to have made no reference at all to the video. [ 56 ] Secondly, Mrs. Connolly pointed to the fact that on or about the date the Connollys took possession of the property, Mrs. Jones was observed by Mr. Connolly to be painting the stairwell to the basement with an exterior oil-based paint. Mrs.

Connolly suggested that such an unnecessary and unusual repair was an attempt by Mrs. Jones to mask the smell of fuel oil in the basement. Mrs. Jones denied that she painted the stairwell to disguise any smell. She said that the painting was done because she felt the stairs were shabby and she didn’t want to leave them in that condition for the Connollys. [ 57 ] Mrs. Connolly submitted that the Court should conclude that before Mrs. Jones moved off the property, she was aware that fuel contamination had occurred and she was attempting to disguise that fact. That seems an unlikely explanation for the painting.

Painting the stairwell could not have masked the smell of fuel for any significant length of time and certainly not for the weeks or months that passed until the Claimants first noted it. [ 58 ] The Connollys had been in that basement room after taking possession of the property. A guest bed had been made up in the room, but no smell had been noticed by the Claimants before December 13 when Mrs. Connolly changed the bedding. [ 59 ] I observed Mrs. Jones, and listened carefully to her evidence in light of all the other evidence given.

While the ability of any witness to recall accurately events occurring more than four years before may be an issue, there is no basis upon which I could find that she lied or tried to mislead the court in regard to the events surrounding removal of the tank. Neither can I draw an inference that Mrs. Jones was aware of fuel contamination before the Connollys took possession. [ 60 ] I did not find anything suspicious in Mr. Jones taking his dog for a walk rather than staying to watch the fuel tank being lifted from the hole. I accept Mr.

Jones’ evidence that from his perspective, Dillman seemed to know what they were about, appeared to have the matter in hand, and that he felt that his presence was not required during the work. [ 61 ] The Dillman witnesses were contradicted by Mrs. Jones who noted that the tank was not pumped out before being lifted. Mr. Dillman Sr. disagreed and said that proceeding in that fashion would have likely have caused the tank to breakaway during the lift. Mrs. Jones observed D.J. Dillman’s brief presence in the hole.

It was at this time that he had just a brief opportunity to check the soil at for any fuel smell that would signify contamination. [ 62 ] The Dillman evidence was not otherwise contradicted in any significant fashion - other than by the subsequent discovery of fuel contamination at the site. 2. FINDINGS OF FACT [ 63 ] LEPH contaminated soil was found on the property in, around and under the area where the underground fuel tank had sat. The hydrocarbons tested for and found by the laboratory were typical for a diesel heating oil product.

A number of these LEPH contaminated soil samples exceeded the standards permitted by the CSR RL . This was, I’m satisfied, a contaminated site. [ 64 ] The high probability is that the fuel contamination found in subsoil in close proximity to the tank came from the tank or its fittings. The sequence and timing of events suggests more than a merely temporal connection between the removal of the tank and the contamination evidenced by the arrival of the fuel odour into the house. [ 65 ] In December, 2009, four months after the tank was removed, the odour of fuel became noticeable to Mrs. Connolly.

This was inside the basement room nearest the former location of the tank. The odour was still present when Mr. Danyluk attended in February, 2010. I’m satisfied on the strength and location of the odour evidence that the fuel contamination had migrated from the area around the tank into the house. The dark tar-like staining of the paneling, wooden studs, insulation and concrete in that room was caused, more probably than not, by the same fuel contamination which created the smell. [ 66 ] According to Mr. and Mrs.

Jones, the tank lay buried on the property unused, untouched and unnoticed for more than twenty years without any observable sign of contamination. It seems highly improbable that soil contamination should have occurred during the active life of the fuel tank, that is at some time prior to 1988, or in the two decades following during which the tank lay dormant, but that within weeks of the tank’s removal in 2009 such old contamination should now become evident inside the house. [ 67 ] I note Mr.

Danyluk’s comment that the contaminated subsoil was not oily in appearance, and that this was not unusual, particularly where the contamination was more recent.

[68] Notwithstanding the evidence of the two Dillmans, it is a reasonable and compelling inference that the petroleum contaminationwhich first became apparent in the house in December, 2009 was caused during the removal of the underground fuel storage tank inAugust of the same year. [69] I’m satisfied to the standard required that there was a spill or leakage of at least five litres of fuel during the DefendantDillman’s removal or handling of the fuel tank and its fittings. The Dillman personnel present at the site failed to observe or respond tothis contamination. 3.

THE CLAIMS [70] In every civil case, Claimants have the burden of proving the case against the Defendants on a balance of probabilities. If thatburden and standard of proof is not met with respect to an element of a claim, that claim will fail. I will deal with each of the claims inturn. A. Negligent Misrepresentation by Mr. and Mrs. Jones [71] The elements of the tort of negligent misrepresentation are set out in Queen v. Cognos Inc. (SCC), [1993] 1S.C.R. 87 at 110.

In order to establish negligent misrepresentation, the Plaintiff or Claimant must prove: 1. a duty of care based on a "special relationship" between the person making the representation and theperson to whom it was made; 2. that the representation in question is untrue, inaccurate, or misleading; 3. that the person making the representation acted negligently in making it; 4. that the person to whom the representation was made relied on it in a reasonable manner; and 5. that the reliance was detrimental in the sense that damages resulted. a.

Was there a “Special Relationship”? [72] The Joneses were the vendors of the property and the Connollys were the purchasers. Mr. and Mrs. Jones were aware that Mr.and Mrs. Connelly would be relying on any assertions they made with respect to the state of the property and their knowledge of it. Thatrelationship between a vendor and a purchaser is a sufficiently special relationship to give rise to a duty of care: Aldred v. Colbeck, 2010BCSC 57 at paragraph 20. b. What was the Nature of the Representations? [73] The Claimants allege that the Defendants Mr. and Mrs.

Jones made untrue, inaccurate, or misleading statements in the propertydisclosure statement incorporated into the contract and that they did so negligently. [74] The property disclosure statement recorded that Mr. Jones, on behalf of the vendors answered “No” to three questions in section1: G. Are you aware of any underground oil storage tank(

s) on the property? N. Are you aware of any material latent defect as defined in Real Estate Counsel of British Columbia Rule 5-13(1)(a)(

i) in respect of theproperty or premises? O. Are you aware of any material latent defect as defined in Real Estate Council of British Columbia Rule 5-13(1)(a)(ii) in respect of theproperty or premises? [75]

Section 1 G asks whether the vendors were aware of any underground oil storage tank. Mr. Jones on behalf of the vendorsanswered “No.” The Claimants say this statement was untrue, inaccurate, or misleading.

[ 76 ] The vent and fill pipes associated with the tank were prominently situated and were seen by Mr. and Mrs. Jones, no doubt over many years. The pipes and their significance were quickly identified in the course of the Claimants’ home inspection and the presence of the tank discovered. [ 77 ] Even so, I’m satisfied that in answering “No” to the question in

section 1 G Mr. Jones gave an answer which accurately reflected his lack of awareness of the presence of an underground oil storage tank on the property. [ 78 ] The answers to the questions set out in sections 1 N and 1 O relate to Mr. Jones’ lack of awareness of material latent defects. The Claimants submit that Mr. Jones gave untrue, inaccurate, or misleading statements by answering “No” in respect of the questions in sections 1 N and 1 O as set out above. As a statement of fact, I’m satisfied that his answers “No” accurately represented his lack of awareness of any fuel tank. [ 79 ] However, even if Mr.

Jones had been aware of the presence of the tank at the time of that representation, in the circumstances of this case it would not have amounted to a “material latent defect.” The disclosure form set out the Real Estate Council of British Columbia Rules , Rule 5-13(1)(a)(

i) and (ii) which rule defines “material latent defect” for the purposes of the questions:

(1) For the purpose of this section: Material latent defect means a material defect that cannot be discerned through a reasonable inspection of the property including any of the following: (

a) a defect that renders the real estate (

i) dangerous or potentially dangerous to the occupants (ii) unfit for habitation [ 80 ] In Paniccia v. Eckert , 2012 BCSC 1428 , at para 70 , Mr. Justice Barrow described that part of Rule 5-13 quoted above as a codification of the common law doctrine of caveat emptor , "let the buyer beware,” and its exceptions. The general rule is that vendors needn’t do anything to inform themselves about the quality of the property sold or of any defects.

That responsibility belongs to purchasers. [ 81 ] If the doctrine is a caution to prospective purchasers, it will not protect a vendor from the breach of express terms in a contract relating to the condition of the property.

Neither will it protect a vendor where the vendor knows of a latent defect rendering the property dangerous or unfit for habitation. [ 82 ] Here, the questions asked and answered in 1 N and 1 O confirmed that the vendors were not aware of any “material latent defect” including any which would render the property dangerous, potentially dangerous or unfit for habitation. [ 83 ] Justice Barrow quoted Madam Justice Balance in Cardwell v. Perthen , 2006 BCSC 333 (affirmed 2007 BCCA 313 ), on the distinction between latent and patent defects: [122] ...

Patent defects are those that can be discovered by conducting a reasonable inspection and making reasonable inquiries about the property. The authorities provide some guidance about the extent of the purchaser's obligation to inspect and make inquiries. The extent of that obligation is, in some respects, the demarcation of the distinction between latent and patent defects. In general, there is a fairly high onus on the purchaser to inspect and discover patent defects.

This means that a defect which might not be observable on a casual inspection may nonetheless be patent if it would have been discoverable upon a reasonable inspection by a qualified person: 44601 B.C. Ltd. v. Ashcroft (Village) , [1998] B.C.J. No. 1964 (S.C.) [ Ashcroft ] ; Bernstein v. James Dobney & Associates , 2003 BCSC 986 [ Bernstein ]. In some cases, it necessitates a purchaser retaining the appropriate experts to inspect the property (see for example Eberts v.

Aitchison (2000), 4 C.L.R. (3d) 248, 2000 BCSC 1103 . [ 84 ] In the case at bar, the existence of the underground tank in these circumstances was a patent defect which could be and indeed was “discerned through a reasonable inspection of the property” in the words of Rule 5-13(1)(a). The existence of the tank was not a “material latent defect” as that expression is defined in the contract.

[ 85 ] The closely related issue of potential fuel contamination on the site, whether pre-existing or arising in the course of the tank removal, should under this rule have surfaced as an issue for prudent purchasers in the Connollys’ position, warranting further inspection if the sale was to proceed. [ 86 ] As Justice Balance remarked in Cardwell , there is a fairly high onus on the purchaser to inspect and discover patent defects. In the present case, the purchaser’s responsibilities would have included retaining someone with a particular expertise, like Mr.

Danyluk perhaps, to inspect the property for defects like fuel contamination which might not be readily apparent to an ordinary observer. [ 87 ] Fuel contamination present prior to or in the process of tank removal was surely discoverable upon reasonable inspection. It was not therefore a material latent defect as that phrase was used in the contract. It follows that the representation as to a lack of awareness of a material latent defect was not untrue, inaccurate, or misleading. [ 88 ] The Connolly’s claim of negligent misrepresentation by Mr. and Mrs.

Jones in respect of their answers to questions 1 N and 1 O for all these reasons must fail. c. Was the Representation Made under Question 1 G Relied on in a Reasonable Manner? [ 89 ] Even if Mr.

Jones’ 1 G representation was untrue, inaccurate, or misleading and he acted negligently that in making that representation, the representation was shown to be unreliable before the subject conditions were removed. [ 90 ] No reasonable purchasers in the Connolly’s situation would have relied on a representation that the vendors were not aware of an underground tank after the purchasers were alerted to the presence of the tank. The Connollys might have sought other terms requiring an assessment of any contamination, indemnification or they might simply have walked away.

Instead, they elected to proceed with the purchase. [ 91 ] As the Connollys did not reasonably rely upon the 1 G representation of Mr. Jones, the fourth test in Cognos is not met. As a result, this aspect of the claim of negligent misrepresentation against Mr. and Mrs. Jones fails as well. B. Negligent Misrepresentation by Dillman [ 92 ] The corporate Defendant Dillman completed the work of removing the oil tank on or about August 19, 2009 and delivered an invoice to Mr. Jones.

The description of the work reported on that invoice included the following endorsement: Pump out and remove 45 Gal Fuel Tank - general clean-up of area Haul and dispose of Fuel Tank. Price includes drilling hole in bottom of tank, removing sludge and leftover oil, making tank safe for disposal. Environmental Fee for disposal of fuel including price of barrel. Tank appeared to be in sound shape when removed with no visible oil leaks observed.

Tank properly decommissioned as per environmental management act. [ 93 ] The Claimants say that this endorsement amounted to a representation by Dillman that there was no fuel contamination present on removal of the tank and that it amounted to a negligent misrepresentation in the circumstances. [ 94 ] The five above-listed factors set out in Queen v. Cognos Inc. are to be applied.

a. Was there a “Special Relationship”? [ 95 ] The Defendant Dillman did not dispute that there was a duty of care based on a "special relationship" between Dillman and the Connollys. Dillman was fully aware that the property was being sold, that the new purchaser would likely receive a copy of the invoice and his comments regarding potential oil leaks, and that they would rely on them. I’m satisfied that a special relationship existed which gave rise to a duty of care by Dillman to the Connollys. b.

What was the Nature of the Representation? [ 96 ] Dillman denies that the representations contained in the document were untrue, inaccurate, or misleading as required in the second test in Cognos , or that Dillman was negligent in making the representations it did. Dillman takes the position that the endorsement was an accurate reflection of their work and observations according to the best of their experience, skill and ability, but that it did not amount to a guarantee that there was no soil contamination. [ 97 ] I disagree.

The reasonable and intended meaning to be associated with the Dillman endorsement, taken as a whole, was broader than Dillman now asserts. The statement that that the tank had been properly decommissioned conveyed to the prospective purchasers that the tank and its removal “had not damaged the property and did not threaten the environmental integrity or safety of the property”: see also Aldred v. Colbeck , at paragraph 29 . I find that the statements contained in the Dillman invoice were untrue, inaccurate, or misleading and amounted to misrepresentations. [ 98 ] Were the statements negligently made?

The standard of care making representations is defined by the standard of the reasonable person. It is an objective test. The point was addressed in Aldred at paragraph 33 , citing Cognos : Neither party called expert evidence regarding the standard of care to be applied in relation to the management of an underground oil tank on residential property. The standard of care must nonetheless be defined in accordance with generally applicable standards.

In Cognos, the Supreme Court of Canada addressed the issue of standard of care at paras. 55 and 63: The applicable standard of care should be the one used in every negligence case, namely the universally accepted, albeit hypothetical, “reasonable person”. The standard of care required by persons making representations is an objective one: para. 55.

Although the representor’s subjective belief in the accuracy of the representations and his moral blameworthiness, or lack thereof, are highly relevant when considering whether or not a misrepresentation was fraudulently made, they serve little, if any, purpose into an inquiry into negligence. As noted above, the applicable standard of care is that of the objective reasonable person. The representor’s belief in the truth of his or her representations is irrelevant to that standard of care: para. 63. [ 99 ] Did Dillman exercise a reasonable standard of care? Mr. Dillman Sr. and D.J.

Dillman were both experienced with fuel tanks and were well aware of the requirements of handling underground fuel tanks and the need for compliance with the EMA and the requirements under the BC Fire Code . The potential impact of a fuel spill was well understood by them, as it should have been by people engaged in underground fuel tank removal. [ 100 ] I have found that there was a spill or leakage of at least five litres at the time of the removal of the tank, its fittings and contents by Dillman.

In light of this finding, I am satisfied that the misrepresentations contained in the invoice did not meet the standard of the reasonable person and were made negligently. c. Was the Representation by Dillman Relied on in a Reasonable Manner? [ 101 ] I’m also satisfied that the misrepresentation by Dillman was relied upon by the Connollys as it was intended to be. d. Did the Reliance Result in Damages?

[ 102 ] Absent those assertions by Dillman, I accept that the Connollys would not have proceeded with the property purchase as they did and would not have exposed themselves to the losses they have consequently suffered. The Connollys relied on the representation and suffered damages as a consequence. [ 103 ] The Connollys have made out their claim against Dillman for the tort of negligent misrepresentation and Dillman is liable for the reasonably foreseeable damages which resulted. C. Breach of Contract by Mr. and Mrs. Jones [ 104 ] The Claimants also assert that the Defendants Mr. and Mrs.

Jones breached clause 8 of the contract of purchase and sale. That clause reads as follows: 8. VIEWED: The property and all included items will be in substantially the same condition at possession date as when viewed by the buyer on August 13, 2009. [ 105 ] The Claimants submitted that the property viewed by them on August 13, 2009 did not include any fuel contaminated soil. [ 106 ] The Defendants Mr. and Mrs. Jones have responded that the Connollys expressly agreed to the removal of the tank and to proceed to completion of the sale.

The purchasers had access to the same information on the underground tank and the potential for contamination as the vendors did. The parties might have undertaken or requested further investigation as to possible fuel contamination, but did not. [ 107 ] In these circumstances, I agree that clause 8 does not operate now to permit the Claimants to recover their losses from the Defendants Mr. and Mrs. Jones. D. The Claim under the EMA [ 108 ] The scheme set up by

Part 4 of the EMA and the CSR allows cost recovery actions for the remediation of contaminated sites. EMA s. 47(5) provides that a person, including a person responsible for remediation, who incurs reasonable costs in carrying out remediation of a contaminated site may commence an action against other responsible persons for recovery of those costs. [ 109 ] Sections 45 - 47 of the EMA and s. 35 of the CSR are reproduced as Appendix A below. a.

Determination of a Contaminated Site [ 110 ] Where remediation has been carried out at a site and a director has not made a determination under s. 44 of the EMA that the site was or is a contaminated site, the Court is required to make that determination pursuant to s. 47(8). [ 111 ] As a director has not made a determination in the present case, the Court is obliged to do so. It is clear on the evidence of Mr.

Danyluk that the property, specifically that portion of the property excavated and remediated by or at his direction as represented in the site profile exhibited, was a contaminated site within the meaning of the EMA and regulations, and I so find. b.

Section 45 - Persons Responsible for Remediation of Contaminated Sites [ 112 ] Remediation is defined in s. 1 of the EMA , "remediation" means action to eliminate, limit, correct, counteract, mitigate or remove any contaminant or the adverse effects on the environment or human health of any contaminant, and includes, but is not limited to, the following: (

a) preliminary site investigations, detailed site investigations, analysis and

interpretation, including tests, sampling, surveys, data evaluation, risk assessment and environmental impact assessment; (

b) evaluation of alternative methods of remediation; (

c) preparation of a remediation plan, including a plan for any consequential or associated removal of soil or soil relocation from the site; (

d) implementation of a remediation plan; (

e) monitoring, verification and confirmation of whether the remediation complies with the remediation plan, applicable standards and requirements imposed by a director;

(

f) other activities prescribed by the minister; [ 113 ] Under s. 45(1) (

a) and (

b) of the EMA respectively, both current and previous owners of a contaminated site are prima facie persons responsible for remediation. This will take in both the Connollys and the Joneses in the present circumstances. [ 114 ] Section 45(1)(

d) provides among those persons who are prima facie responsible for remediation are included those who transport a substance and cause the substance to be handled in a manner that, in whole or in part, causes the site to become a contaminated. Given the findings of fact made in this case, this provision encompasses the Defendant Dillman as a person also responsible for remediation. c.

Section 46 - Persons Not Responsible for Remediation [ 115 ] The potential for liability established by s. 45 is subject to s. 46 of the EMA . Section 46(1) sets out circumstances in which a person caught by s. 45 will not be responsible for remediation of a contaminated site. Section 46(3) provides that a person seeking to establish that he or she is not a responsible person under subsection (1) bears the burden of proving all elements of the exemption on a balance of probabilities. (

i) The Connollys [ 116 ] Mr. and Mrs. Connolly claim an exemption provided by s. 46(1) (

d) of the EMA . That subsection reads as follows: 46

(1) The following persons are not responsible for remediation of a contaminated site: … (

d) an owner or operator who establishes that (

i) at the time the person became an owner or operator of the site, (

A) the site was a contaminated site, (

B) the person had no knowledge or reason to know or suspect that the site was a contaminated site, and (

C) the person undertook all appropriate inquiries into the previous ownership and uses of the site and undertook other investigations, consistent with good commercial or customary practice at that time, in an effort to minimize potential liability, (ii) if the person was an owner of the site, the person did not transfer any interest in the site without first disclosing any known contamination to the transferee, and (iii) the owner or operator did not, by any act or omission, cause or contribute to the contamination of the site; [ 117 ] In Aldred , at paragraph 54 , Mr.

Justice Pitfield pointed out that the word “and” is used conjunctively in relation to subparagraphs (i), (ii) and (iii), and in relation to clauses (A), (B), and (C). Failure to prove any of these factors will result in liability. [ 118 ] I am satisfied that the Connollys have shown that they fall within each of the necessary elements of subsection 46(1) (

d) and that they are entitled to the exemption. Specifically with respect to subparagraph (i), I’m the contamination arose before they became owners. They had no reason to suspect contamination in light of the Dillman representations, they undertook all appropriate inquiries and they conducted themselves in accordance with good commercial and customary practice to minimise potential liability. As in Aldred ,

paragraph 74 , this is not a situation where caveat emptor has application. (ii) The Joneses [ 119 ] Section 46(1)(d), which availed the Connollys, does not assist Mr. and Mrs. Jones because they cannot establish the requirement that the property was a contaminated site at the time they became owners in 1988. [ 120 ] The Joneses do however qualify for an exemption granted by s. 46(1)(

n) as persons “in a class designated in the regulations as not responsible for remediation.” [ 121 ] CSR subparagraph 19(b)(ii) designates as not responsible for remediation anyone who “by contract, agreement or otherwise” merely required: compliance with environmental laws, standards, policies or codes of practice of government which applied at the time of producing, transporting or arranging for transport of the substance. [ 122 ] Mr. and Mrs.

Jones had no knowledge of or expertise in the disposal, handling or treatment of a fuel tank or its contents and they gave no instructions to Dillman beyond that required to execute the removal. They relied entirely upon the advice and judgment of Dillman and it was an implied term of the contract that he would comply with all the required laws, standards, policies or codes of practice of government . Accordingly, Mr. and Mrs.

Jones are not persons responsible for remediation. (iii) Dillman [ 123 ] The Defendant Dillman is not exempted by any provision of s. 46 of the EMA from the responsibility for remediation imposed by s. 45. 4. DAMAGES [ 124 ] The Connollys seek recovery of the costs of remediation under the EMA , and for damages at common law for the oil contamination. The available remedies under the EMA are set out in s. 47(9) :

(9) The court may determine in accordance with the regulations, unless otherwise determined or established under this Part, any of the following: (

a) whether a person is responsible for remediation of a contaminated site; (

b) whether the costs of remediation of a contaminated site have been reasonably incurred and the amount of the reasonably incurred costs of remediation; (

c) the apportionment of the reasonably incurred costs of remediation of a contaminated site among one or more responsible persons in accordance with the principles of liability set out in this Part; (

d) such other determinations as are necessary to a fair and just disposition of these matters.

[ 125 ] Further guidance is found in s. 35 of the CSR , which provides as follows:

(1) For the purposes of determining compensation payable under section 47(5) of the Act, a defendant named in a cost recovery action under that

section may assert all legal and equitable defences, including any right to obtain relief under an agreement, other legislation or the common law.

(2) In an action between 2 or more responsible persons under section 47(5), the following factors must be considered when determining the reasonably incurred costs of remediation: (

a) the price paid for the property by the person seeking cost recovery; (

b) the relative due diligence of the responsible persons involved in the action; (

c) the amount of contaminating substances and the toxicity attributable to the persons involved in the action; (

d) the relative degree of involvement, by each of the persons in the action, in the generation, transportation, treatment, storage or disposal of the substances that caused the site to become contaminated; (

e) any remediation measures implemented and paid for by each of the persons in the action; (

f) other factors relevant to a fair and just allocation. [ 126 ] The costs of remediation claimed by the Connollys include the following invoiced expenses: $7,682.07 Engineering costs $3,057.60 Associated excavation costs $1,568.00 Restorative landscaping $ 437.74 Miscellaneous clean-up costs $ 983.48 Restoration of basement room $13,728.89 Total

[ 127 ] These are the reasonably incurred costs of remediation paid for by the Connollys and they are compensable by Dillman under both the EMA and in tort. [ 128 ] Other miscellaneous amounts were claimed by the Connollys. These included wage loss for time spent “seeking contributions from other responsible persons,” gasoline for a trip to a lawyer’s office, loss of the use of the basement room, postal expenses, natural gas bills for heating the house, pain and suffering, home insurance costs and sundry parking expenses.

These expenses are not included in the award under the EMA or at common law as they are in my view non-compensable as being too remote, factually unclear, not reasonably incurred or otherwise not made out. The claim for damages for pain and suffering in particular has not been proven and is in any event not foreseeable on these facts. [ 129 ] In the event that the Claimants have received payments in settlement of the claim from those Defendants who did not participate in the trial, those amounts will need to be deducted from the damages found above.

The Claimants are not entitled to double recovery. [ 130 ] The Claimants are also entitled to filing fees and pre-judgment interest. If the Claimants and the Defendant Dillman are not able to agree the amount and terms of the payment order, they may bring the matter back before me on or before August 15, 2014. _______________________________ Stephen R. Harrison Provincial Court Judge