) ) Wayne Allan Gendron Plaintiff – v. –, 2017 ONSC 4009

CITATION : Gendron v. Thompson Fuels, 2017 ONSC 4009 LINDSAY COURT FILE NO.: 073/11 DATE: 20170717 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) Wayne Allan Gendron Plaintiff – and – Doug C. Thompson Ltd. operating as Thompson Fuels, Technical Standards and Safety Authority, and Les Reservoirs D’Acier de Granby Inc. Defendants ) ) ) ) ) ) ) ) ) ) ) ) ) Martin Forget and Fahreen Kurji, for the Plaintiff Albert Wallrap, for the Defendant, Doug C. Thompson Ltd.

Operating as Thompson Fuels Adam Grant and Miranda Serravalle for the Defendant, Technical Standards and Safety Authority ) ) ) ) ) HEARD: November 7, 14, 16-18, 22-25, 28- 30, 2016; December 1, 2, 5, 6, 9, 12-15, 2016; January 4-6, 26-27 and 31, 2017 REASONS FOR DECISION TABLE OF CONTENTS Page Introduction 3 Facts 5 1) Oil Tank Installation 5 2) Thompson Fuels Becomes the Fuel Supplier 8 3) Fuel Delivery 10 4) Cause of the Oil Leak 10 5) The Regulatory Changes in 2001 and the TSSA Inspection Program 13 6) Grandfathering Prior Installations 15 7) Annual Inspections 15 8) Alternative Inspection Program 16 9) Did Thompson Fuels Complete a Comprehensive Inspection before May 1, 2007? 18 10) Subsequent Regulatory Requirements – post – May21, 2002 21 11) Minimum Clearance Requirements and the Service Calls in 2006 and 2007 22 12) The Spill and Reporting the Spill 25 13) The TSSA 26 14) The TSSA Order 28 15) Consequence of Mr.

Gendron’s Delay in Reporting Spill 30 16) Off-site Remediation 32 17) On-site Remediation 35 Analysis 35 1) Liability 35 Thompson Fuels 35 Customer Service Agreement 38 TSSA 41 Application of the Cooper/Anns Test 42 The TSSA Inspection 44

TSSA ’s Statutory Duties 48 Granby 52 2) Contributory Negligence 55 (

i) Improper installation of the tank. 55 (ii) Failure to maintain the tank by having annual inspections. 55 (iii) Improperly introducing water into the incident tank. 55 (iv) Failure to promptly report the leak. 56 (

v) Improperly extending the Big O drainage to the catch basin, allowing for a direct connection to the lake. 56 3) Apportionment of Fault 57 4) Damages 58 (

i) Was the Cost of the Off-site Remediation Reasonable? 58 (ii) Demolition of the House 64 (iii) Estimated Cost of Replacing the House 66 (iv) Soil Excavation at 93 Hazel 69 5) Contribution and Indemnity Under s. 100.1(6) of the Environmental Protection Act 71 (

i) Background to EPA Claim 71 (ii) Limitation Period 75 (iii) Owner or Person Having Control of the Pollutant 77 Conclusion 79 CHARNEY J.: Introduction [ 1 ] The plaintiff, Mr. Wayne Gendron owned a house across the road from Sturgeon Lake, Ontario. The house was heated by an oil furnace supplied by two oil tanks in the basement of his home. At approximately 4:15 p.m. on December 18, 2008, Thompson Fuels delivered 700 litres of fuel oil to his home. The oil was delivered through a fill pipe located outside of the home. [ 2 ] Mr.

Gendron arrived home from work about one hour later and smelled oil coming from his basement. He went downstairs and saw oil on the basement floor. Mr. Gendron examined the tanks to find the source of the leak, but the tanks were installed tight against the wall and he could not find any holes. He did see oil leaking from the end of the tank against the wall, and set about collecting the leaking oil in Tupperware containers. He continued to collect the leaking oil into the early morning hours, until the tanks were empty.

Using these containers he gradually collected and filled 7 “jerry cans” of 25 litres each. [ 3 ] Except for the small amount of oil on the basement floor (which he cleaned up with a rag), Mr. Gendron thought that he had succeeded in collecting all of the oil in the tanks. He went to sleep, and called Thompson Fuels later in the afternoon on December 19, 2008. He did not call to report a leak, but called to complain that Thompson Fuels had not delivered the full 700 litres of oil he had ordered.

He believed that he had mopped up or collected all of the oil that had leaked from the tanks, and this could not possibly have amounted to 700 litres. He was irate because he was being charged for 700 litres of furnace oil that he believed had not been delivered. [ 4 ] As events unfolded over the next few days, it became apparent that the oil leaked from one of the oil tanks (the tank with the leak is referred to as the “incident tank”, the tank that did not leak is referred to as the “non-incident tank” or the “good tank”) and found its way to a crack between the basement wall and the floor.

Some of the oil remained under Mr. Gendron’s house, but some of it made its way through a drainage system under his house into the city’s culvert and from there into Sturgeon Lake. [ 5 ] Nearly $2 million was spent to remediate the oil that spilled into Sturgeon Lake, and Mr. Gendron’s house was eventually demolished to remove the contaminated soil under the foundation. [ 6 ] Mr. Gendron claims that Thompson Fuels, which acted as both Mr. Gendron’s fuel supplier and service technician, failed to properly inspect the oil tanks, which caused the spill and the damages. [ 7 ] Mr.

Gendron claims that the Technical Standards and Safety Authority ( TSSA ), the administrative authority responsible for regulation and enforcement of fuels in Ontario, which was advised of the spill on December 19, 2018, failed to properly inspect the spill and failed to advise Mr. Gendron of the immediate need to respond to the emergency situation to avoid further environmental damage. [ 8 ] Finally, Mr.

Gendron claims that the oil tank manufacturer, Les Reservoirs D’Acier de Granby Inc. (Granby), manufactured an oil tank that it knew was prone to internal rust that could result in premature failure and leaks, and failed to provide warnings or an instruction manual to the consumer. [ 9 ] Mr. Gendron alleges that each of these defendants was negligent and seeks damages against them. Each of the defendants denies liability, and argues that Mr.

Gendron was primarily responsible for leak and ensuing damages, and, in any event, that the cost of remediation was unreasonable and excessive and not reasonably foreseeable in the circumstances. Facts

1) Oil Tank Installation [ 10 ] In order to understand why the oil tank leaked in 2008 we have to start in 2000, when Mr. Gendron’s home, located at 93 Hazel St., Dunsford Ontario (93 Hazel) was heated by an oil furnace supplied by an underground oil storage tank located outside his home. [ 11 ] In the summer of 2000 Mr. Gendron, with the assistance of two casual labourers, removed the underground storage tank and discarded it. [ 12 ] In November 2000 Mr. Gendron purchased two new Granby above ground indoor tanks from a fuel supplier named British Empire Fuels. British Empire Fuels is not a party to this action.

At that time British Empire Fuels supplied the oil to Mr. Gendron’s oil tanks. [ 13 ] The tanks were both 910 litre (200 gallon) ULC-S602 certified 14 gauge (1.8 millimetre) steel above ground fuel oil tanks manufactured by Granby in 1999. This type of tank is referred to as a “side” or “end” outlet tank because the oil outlet is on one of the end sides of the tank about 2 inches from the bottom of the tank. This is in contrast to what is known as a “bottom outlet” tank where the outlet is located at the bottom of the tank.

The ULC is the Underwriters’ Laboratories of Canada and is an independent product safety testing and certification organization that develops safety standards for products including furnaces and oil tanks. [ 14 ] Installation of oil tanks by a qualified Oil Burner Technician (OBT) was both the law and the industry practice and standard in the year 2000. Pursuant to s. 29(2) 9 of Ontario Regulation 348/96 (Certificates) enacted under the Energy Act , R.S.O. 1990, c.

E.16, only a person holding an OBT certificate was authorized to install above-ground tanks. [1] [ 15 ] The installation of oil tanks was also governed by the National Standards of Canada “ Installation Code for Oil Burning Equipment ”. The fifth edition of this code was published in 1991 and is referred to as “B139-M91”. B139-M91 established the industry standards and was followed by qualified installers in the industry. B139 was prepared by the Canadian Standards Association and approved by the Standards Council of Canada.

B139 established the minimum requirements for the installation of oil burning equipment including oil tanks. [ 16 ] The sixth edition of B139 was published by the National Standards of Canada in April 2000 (B139-00). B139-00 was formally adopted as part of the fuel oil regulations by the TSSA when new regulations were enacted on June 1, 2001. [ 17 ] Granby did not sell oil tanks directly to homeowners or to retailers like Home Depot because homeowners were not qualified to install oil tanks.

Granby sold tanks only to wholesalers in the expectation that the wholesalers would sell the tanks to professional installers who would ensure that they were installed by a qualified OBT. Granby did not publish an installation manual until 2004. [ 18 ] The Granby oil tank was manufactured to the standards established by B139-M91 (see s.6.1.1.1 (

i) of the fifth edition). [ 19 ] Both B139-M91 and B139-00 required that all oil tanks “be installed in accordance with the manufacturer’s instructions and the appropriate ULC standard(s)” (at s.6.3.2). Granby did not provide “manufacturer’s instructions” for its oil tanks at this time, and the expectation was that the tank would be installed buy a qualified OBT in accordance with standards set out in B139. [ 20 ] British Empire Fuels did not install the oil tanks, nor did Mr. Gendron have a qualified OBT install his oil tanks. His friend Andrew (who is not a party to this action) told Mr.

Gendron that he could install the tanks even though he was not licenced to do so. The two tanks were installed side-by-side in the basement by Mr. Gendron and his friend Andrew. [ 21 ] I heard evidence from a number of experts with expertise in the regulatory standards applicable to fuel oil and fuel oil handling. As a general proposition, expert opinion evidence on domestic law is not admissible since domestic law is a matter for legal argument and legal analysis (Lederman, Bryant & Fuerst, The Law of Evidence in Canada , 4 th ed. (LexisNexis Canada Inc., 2014) at para. 12.164).

As lawyers with legal training we can all review the relevant statute and regulations for the purpose interpreting the legal requirements and obligations prescribed therein. [ 22 ] Sometimes, however, the subject matter of a regulation will include a technical component that is not comprehensible to persons without the relevant technical training. That is certainly the case with regard to a number of the regulatory standards at issue in this case.

I advised counsel that I would consider the evidence of those experts in regulatory standards to the extent that their evidence could help me to understand the technical aspects of the regulations. I found some of their evidence to be quite helpful in this regard. Their evidence was also helpful in tracing and explaining the history of the relevant regulations, since regulatory standards evolved with new technology and as the industry gained experience, and implementation and enforcement were postponed on a number of occasions for practical reasons not necessarily apparent on the face of the regulation.

At the end of the day, however, my legal

interpretation of the regulations is based on the legal analysis and arguments of counsel rather than the opinions proffered by the technical experts. [ 23 ] The two oil tanks were “twinned” (joined by a two inch transfer pipe that had a T connection that led to the furnace). One tank would be filled and the oil would flow from the fill tank through the transfer pipe to the other tank, so that an equal amount of oil would end up in both tanks. [ 24 ] Mr. Gendron did not install a shut-off valve for each oil tank.

There was only one shut-off valve installed near the furnace and beyond the transfer pipe joining the two tanks. This meant that if one tank failed and began to leak there was no way to shut off or isolate the leaking tank from the good tank, and the oil from the good tank would flow through the transfer pipe into the leaking tank and also escape. [ 25 ] The experts disagreed on whether the standards in force at the time required each tank to have its own shut-off valve as near as practicable to the tank.

In other words, if there are two tanks, did the B139 require two shut-off valves? [ 26 ] I am satisfied based on the wording of B139-M91 and B139-00 that the requirement that each tank have its own shut-off valve

close to the tank outlet was an industry standard in 2000 when the tanks were installed, and that the installation of the tanks did notcomply with the industry standard in this regard. [27]

Section 8.4.1 of B139-M91 and s.8.4.1 of B139-00 provided “A shut-off valve shall be installed in the fuel line… and as nearas practicable to the exit from the supply tank”. While the 1991 and 2000 versions of B139 did not provide an illustration of what wasmeant, the language remained unchanged in subsequent versions (see s. 8.4.1 of the 2006 edition). The 2006 version also included adiagram that demonstrated quite clearly that each tank was to have its own shut-of valve near the outlet from the tank.

This requirement was also made explicit in the 1996 version of the Canadian Oil Heating Manual, 2nd ed., at p.11, published by the Canadian Oil HeatAssociation. The requirement of one shut-off valve for each oil tank was an important safety requirement. It meant that if one of thetanks leaked it could be shut off and isolated from the other tank. [28] While the illustration in the 2006 version is helpful, in my view the language in the earlier version: “as near as practicable tothe exit from the supply tank” is clear and unambiguous even without the illustration. The shut-off valve installed by Mr.

Gendron wasnear the furnace; it was not “as near as practicable to the exit from the supply tank”, and therefore did not conform to the requirements ofB139 in the year 2000 (see: Maddock v. McRobert Fuels Ltd., (ON SC), at paras. 15-16) [29] In addition, the oil tanks were located too close (within 5 feet) to the furnace, contrary to s. 6.4.7 of the B139-00. [30] The tanks were installed very close to the exterior wall of the basement. The non-outlet end of each tank was tight against theinsulated exterior wall, perhaps ½ inch or less at various points due to irregularities in the insulation.

The sides of the two tanks werealso very close together, approximately 1 inch apart. These conditions did not violate any written standards in force in 2000, but wouldmake proper inspection of the tanks virtually impossible. [31] The tanks were installed on metal “cradles” or “saddles” of equal height, so that if the floor were level the tanks would also belevel. This did not violate any written standard or industry practice when the tanks were installed in the year 2000.

At that time there wasno requirement that indoor tanks be level or slope toward the outlet or away from the outlet.[2] [32] There was no evidence that the installation of the tanks was ever inspected by British Empire Fuels, and I find that BritishEmpire Fuels did not conduct any such inspection. 2) Thompson Fuels Becomes the Fuel Supplier [33] In 2001, Mr. Gendron contacted Thompson Fuels with the intention of switching fuel suppliers from British Empire Fuels toThompson Fuels. Mr. Lynch, the sales representative for Thompson Fuels visited Mr. Gendron at 93 Hazel in November 2001 to haveMr.

Gendron sign a contract for the supply of fuel oil. On November 2, 2001, Mr. Gendron signed a Customer Service Agreement withThompson Fuels. The agreement correctly stated that the house had two 910-litre oil tanks that had been manufactured in 1999. [34] Mr. Gendron ordered “Automatic Delivery”, which meant that Thompson Fuels would estimate the amount of fuel being usedand automatically refill the tanks as needed without being called by the customer. Mr. Gendron did not order the “Furnace ProtectionPlan”.

The furnace protection plan provided an annual inspection and tune-up of the furnace and equipment, and the costs of labour andparts in the event that the furnace broke down. It cost approximately $265 per year. [35] Immediately above the line for the customer’s signature the contract states “TERMS AND CONDITIONS ON REVERSE”The reverse side of the Customer Service Agreement sets out the terms and conditions of the agreement.

It contains eight paragraphs. [36] The terms of the agreement relevant to this litigation were as follows: Thompson Fuels is not responsible for the inspection and/or maintenance of any fuel oil tank located on the premises. Thompson Fuels shall not be liable for any injury or damage to any person or property resulting from the existence and operation or nonoperation of any oil burning installation at your premises.

Further Thompson Fuels shall not be liable for any damage caused by furnacefailure while your residence is vacant nor for any special or consequential damages resulting from the failure to perform its obligationsunder this contract. [37] Mr. Lynch testified that he would have pointed out the fact that the terms and conditions were on the back of the contract, buthe would not have reviewed the terms unless asked to do so by the customer. While only a photocopy of the front page of the Gendroncontract could be found, I am satisfied on the basis of Mr. Thompson’s evidence and Mr.

Lynch’s evidence that the reverse page of theGendron contract was identical to the reverse page provided as an exhibit by Thompson Fuels, and contained the exclusionary clausesreferred to above. [38] Mr. Lynch testified that his practice was to review the “Sales Kit” with potential customers. As a commissioned salesman itwas in his interest to sell the Furnace Protection Plan to all customers.

The Sales Kit explained that the Furnace Protection Plan providedan annual furnace tune-up and inspection and efficiency test as well as parts and labour and after-hours charges for the “21 most vitalcomponents of your furnace”. The Sales Kit stated: “Included in your Protection Plan is an Annual Maintenance Tune-Up and Inspectionso that you will always be in compliance with Ontario’s new heating regulations”. [39] The Sales Kit indicated that there were two options for the Furnace Protection Plan, the “Comprehensive Service and PartsProtection Plan” and the “Annual Maintenance Plan”.

Both options included a “TSSA oil tank inspection and report” and a “TSSAcomprehensive system inspection and report”. [40] Mr. Gendron did not remember reviewing these options with Mr. Lynch and testified that he did not think that these serviceoptions were reviewed. Given that the meeting with Mr. Lynch happened nearly fifteen years ago, I accept Mr. Lynch’s evidence that hisusual practice was to review the information in the Sales Kit with the customer because he wanted to sell the Furnace Protection Plan.

[ 41 ] While neither Mr. Lynch nor Mr. Gendron had a specific recollection of this meeting, it is apparent from the agreement that Mr. Lynch did at least a cursory inspection of the equipment because the agreement identifies the make and approximate age of the furnace and the size and year of manufacture of the oil tanks. [ 42 ] Mr. Lynch was not a qualified OBT, although he did take a course in doing “basic inspections”, a term we will come back to when we consider the legislative scheme and the TSSA inspection program. Mr.

Lynch could not recall whether he had taken the basic inspection course before or after his November 2001 meeting with Mr. Gendron. [ 43 ] Mr. Lynch wrote into the agreement under “Comments”: “customer building firewall”, which recognized that the oil tanks were located too close (within 5 feet) to the furnace, contrary to s. 6.4.7 of the B139-00. A firewall was never built. 3) Fuel Delivery [ 44 ] Following the signing of the customer service agreement Thompson Fuels began supplying fuel to 93 Hazel in November 2001.

The fill pipe was located outside the home, and so the fuel delivery person would not see the oil tanks when fuel was delivered. [ 45 ] While Mr. Gendron initially requested automatic delivery, he soon fell into financial difficulty and in 2004 agreed to pay Thompson Fuels in advance for a specified quantity of fuel oil as his tank approached empty. He rarely paid to fill the tank, and instead purchased just enough fuel oil to heat his house until he could afford to buy more. [ 46 ] Mr.

Gendron also acknowledged that when he was short of money he would “occasionally” fill the oil tanks himself with jerry cans of “stove oil” purchased from a local First Nations Reserve.

The stove oil was less expensive than the fuel oil purchased from Thompson Fuels. 4) Cause of the Oil Leak [ 47 ] There is no dispute among the experts that the immediate cause of the leak was internal corrosion referred to as “Microbiologically Influenced Corrosion” (MIC) caused by the build-up of water and sludge inside the incident tank, which, combined with microbes results in the production of sulphur and organic acids within the tank.

These acids lead to corrosion from the inside, which results in perforation of the tank. [ 48 ] Internal corrosion is more likely to develop in end-outlet tanks than in bottom-outlet tanks. Water can collect in oil tanks as a result of condensation or the introduction of water contamination from other sources. Condensation is influenced by temperature fluctuations (a greater problem for outdoor tanks) and is exacerbated where homeowners do not keep their tank full.

Water is heavier than oil, and will always settle at the bottom of the tank. [ 49 ] If water develops in an end-outlet tank it will accumulate below the outlet, which is usually 2 inches from the bottom. [3] While I heard a great deal about the slope of the tank, it is possible for water to accumulate in an end-outlet tank regardless of whether the tank is level, sloped toward the outlet end, or sloped toward the non-outlet end, since the water level may never rise above the outlet regardless of the slope.

Sloping toward the outlet may limit the accumulation of water, but does not eliminate it since all of the water cannot drain from the tank. [ 50 ] Mr. Flynn suggested that if the water is deep enough and the tank is sloped toward the outlet end, the water will flow out the outlet, and even if not eliminated, the flow of water will decrease the likelihood of corrosion, because corrosion occurs when water is stagnant. Mr. Sparling’s evidence was that while a slope to the outlet end could decrease the likelihood of corrosion, the slope of the tank was not a significant factor in the tank failure in this case.

The utility of a slope to the outlet end depends on the depth of the water that accumulates. In this case, I accept the evidence of Mr. Sparling that the slope of the tank was not a significant factor in the failure of the incident tank and would not constitute an “unacceptable condition” as that term was defined by the regulations. [ 51 ] The corrosion occurs at the “tide-line” where the water meets the oil. Due to corrosion the tide-line leaves a visible line or mark along the inside of the tank. After the incident tank failed, the experts cut the tank open to determine where the corrosion occurred.

The inside of the tank had pitting along the tide-line. The tide-line indicated that the incident tank was sloped toward the non-outlet end of the tank. There were two tide-lines indicating that the water had been in the tank for some time and that the volume of water increased over time. [ 52 ] The fact that the tide-line sloped toward the non-outlet end came as a surprise to the investigators because both tanks were installed on cradles or saddles of equal height, and when measured with a level from the outside by Mr.

Flynn, the incident tank appeared level. [ 53 ] Thompson Fuels took the position that the fact that the tide-line showed a slope toward the non-outlet end of the tank, but that the tanks appeared level when measured by the investigator, Mr. Flynn, after the leak, indicated that at some time after their installation (and perhaps even after the incident) the tanks were moved by Mr. Gendron.

Thompson Fuels took this position to suggest that the non- outlet end of the tanks (where the leak occurred) was not always tight against the outside wall, a point that becomes significant with the enactment of minimum clearance requirements in 2003. [ 54 ] Mr. Flynn, who prepared a spill investigation report and measured the level of the tanks after the spill, could not explain this discrepancy, but took the position that based on his examination of the tanks the tanks had not been moved.

There were no marks on the bottom of the tanks to suggest that they had been moved or slid along the cradles, and once installed and even partly filled with oil they would be very heavy (at least 300 lbs. each) and difficult to move or slide on their cradles. Given the dimensions of the room where the tanks were located, Mr. Flynn did not see how they could be moved. [ 55 ] Mr. Gendron expressly denied moving the tanks after installation or after the leak.

[ 56 ] Based on the evidence provided, I am satisfied that the tanks were never moved after installation in 2000. I accept that they were too heavy to slide, and that there was really no room to slide them. Since the tanks were twinned and connected with a 2-inch pipe, they would have had to be moved at the same time if moved before the leak. While the tanks were disconnected after the leak, I accept the evidence that they were not pushed closer to the wall after the leak.

Accordingly, I conclude that the installation as found on the day of loss was the same as the installation that existed when Thompson Fuels first accepted Mr. Gendron as a customer. [ 57 ] This finding also means that Thompson Fuels could not have known that the incident tank was sloped toward the non-outlet end when Thompson Fuels conducted its service calls. Measured from the outside the incident tank appeared level. [ 58 ] There is some debate as to how the water got into the incident tank. All experts agreed that at least some of the water was the result of condensation. Mr.

Gendron did not keep his tank full, and all of the experts agreed that this would increase the amount of condensation that accumulated in the tanks. [ 59 ] I accept the evidence of Mr. Perovic and Mr. Sparling that condensation was not the only source for the accumulation of water in the incident tank. Mr. Sparling pointed out that the non-incident tank had much less water accumulation and much less corrosion than the incident tank. Mr.

Perovic estimated that the incident tank contained approximately three times more water than the non-incident tank, and agreed that the non-incident tank was in relatively good shape. The tanks were twinned, and if condensation were the only source of water one would expect an equal amount of water and corrosion in both tanks. Mr. Sparling’s and Mr.

Perovic’s evidence was that the incident tank could only have more water and corrosion if water and microbes were introduced from another source when filling the tanks. [ 60 ] The evidence indicates that Thompson Fuels could not have been the source of the water, because Thompson Fuels has strict monitoring for water contamination in its oil storage tanks. [ 61 ] I accept Mr. Perovic’s and Mr. Sparling’s evidence that Mr.

Gendron likely introduced water and microbes into the incident tank, probably when he filled the tanks with less expensive stove oil purchased from the local First Nations Reserve, either because the water and microbes were in the oil or in the jerry cans he used to fill the tanks. I accept Mr. Perovic’s evidence that the incident tank was the fill tank, and that the water in the fill tank did not flow through the transfer pipe into the non-incident tank because the transfer pipe was above the water line.

As a result the non-incident tank had less water and less corrosion. [ 62 ] No other explanation was provided for the discrepancy in water levels between the two tanks, and there is evidence (such as that at p. 4 of Mr. Flynn’s report and the statement recorded by Geoff Richardson when he visited 93 Hazel on December 30, 2008) that Mr. Gendron changed the fill and vent arrangement after the leak in order to have fuel oil delivered to the non-incident tank.

Since this alteration occurred after the incident, the alteration itself has no effect on the issue of liability, but does explain how the incident tank accumulated more water and microbes than the non-incident tank. [ 63 ] While the MIC corrodes the steel tank wall, it does not corrode the paint on the outside of the tank.

All of the experts agreed that the MIC had corroded through the steel wall of the tank creating a small hole (there was some dispute about the size of the hole, but I accept that it was larger than a pinhole and likely the size of two toothpicks), and for some time the only thing keeping the oil in the tank was the paint on the outside of the tank. When the tank was filled on December 18, 2008, the pressure from filling the tank finally caused the paint holding the oil to break, and the tank began to leak. [ 64 ] Once the corrosion begins, it is very rapid at the rate of 2 – 10 mm. per year.

This tank was only 2 mm. thick, meaning that the perforation in the tank could have taken less than a year, although there is no way to calculate the rate at this time. According to Mr. Sparling, because the corrosion is so rapid and develops inside the tank, it is possible that an inspection of the outside wall of the tank would not see any external sign of corrosion (such as blistering or bulging paint) unless the inspection occurred within the year the tank actually failed (i.e. after December 2007).

Given that the leak occurred on the end of the tank that was tight against the insulated exterior wall, inspection for signs of corrosion (such as blistering or bulging paint) was impossible. 5) The Regulatory Changes in 2001 and the TSSA Inspection Program [ 65 ] On June 27, 2001 the Ontario government enacted Ontario Regulation 213/01 (Fuel Oil) under the Technical Standards and Safety Act, 2000 , S.O. 2000, c. 16 (TSSA). This regulation imposed on fuel oil distributors like Thompson Fuels an obligation to inspect furnaces and fuel oil tanks before they could supply fuel oil to the tank.

Section 7 of the Regulation provides: 7.

(1) No distributor shall supply fuel oil to a container or tank system that is connected to an appliance or work unless the distributor is satisfied that the installation and use of the appliance or work comply with this Regulation and, (

a) unless the distributor has inspected the appliance or work at least once within the previous 10 years; or (

b) unless the distributor has inspected the appliance or work in accordance with a quality assurance inspection program.

(2) A distributor shall prepare a report on each inspection made under subsection (1) and shall retain the report until the next inspection and report are completed.

(3) An inspection shall be carried out by a person who is the holder of a certificate for that purpose. [ 66 ] Section 7(2) of the Regulation is significant in this case. As will be discussed in greater detail below (at paras. 87-95), Thompson Fuels was of the mistaken view that one of its OBT service technicians prepared an inspection report for 93 Hazel on February 27, 2002 in accordance with s. 7(2) of the Regulation. In fact, no such inspection report was ever prepared. [ 67 ]

Section 19 of the Regulation imposed an obligation on homeowners to maintain the oil tank in safe operating condition. It provides:

19. No person shall operate or permit to be operated an appliance or tank system unless it is maintained in a safe operating condition and it complies with this Regulation. [ 68 ]

Section 20 prohibits the fuel oil supplier from providing fuel oil if the furnace or oil tank does not comply with the regulations: 20. No person shall supply fuel oil to or use an appliance, container, equipment, tank system or other thing employed in the handling or use of fuel oil or used oil unless it complies with this Regulation. [ 69 ] Sections 7 and 20 were significant changes to the law and industry practice that had existed until that time.

Since fuel oil suppliers deliver the fuel oil through a fill pipe located outside of the house many suppliers had no idea of the condition of the furnace or oil tank they were filling.

Unless the supplier also provided a repair or maintenance service, they might never see the furnace and the oil tank. [ 70 ] Pursuant to s. 23 of the Regulation, a fuel deliverer who found, during delivery operations or during an inspection, that the condition of the tank constituted an immediate hazard was required to shut-off the system (referred to as “tagging-out”) and immediately cease supplying fuel oil to the tank. [ 71 ] If the distributor discovered an unacceptable condition that was not an immediate hazard, s. 24 required the distributor to give the operator up to 90 days to fix the problem, and, if not fixed, shut it down.

Section 24(1) provides: 24.

(1) A distributor who is informed or who finds, during delivery operations or during an inspection, that an appliance or tank system is, in the opinion of the distributor, in an unacceptable condition but that an immediate hazard does not exist, shall, (

a) give to the operator a description of the condition; (

b) promptly provide a notice to the operator indicating that the distributor will cease supplying fuel oil to the appliance or tank system if the condition is not corrected within the period of time specified in the notice; (

c) affix the notice under clause (

b) to the appliance or tank system; and (

d) forward a copy of the notice to the designated administrative authority.

(2) The period of time set out in the notice under clause (1) (

b) shall not exceed 90 days. …

(5) A distributor who gives a notice under subsection (1) shall cease supplying fuel oil to the appliance or tank system if the unacceptable condition described in the notice is not corrected within the period of time specified in the notice. [ 72 ] Pursuant to s. 22(1) of the Regulation an “unacceptable condition” included: (

c) with respect to an appliance or work, that the conditions of the tank… is likely… to impair its safe operation, or does not conform to this Regulation, or (

d) with respect to equipment, that the condition of its state of repair, its mode of operation or its operating environment is likely to impair its safe operation or does not meet the requirements of this Regulation [ 73 ] Accordingly, if the condition, mode of operation or operating environment of the oil tanks did not meet the requirements of the regulation, the distributor would be obliged to tag-out the system as either an immediate or a non-immediate hazard. 6) Grandfathering Prior Installations [ 74 ] Ontario Regulation. 213/00 included a “grandfathering” provision to protect prior installations installed in compliance with the predecessor regulations. Section 1(3) provided:

(3) Unless otherwise specified in this Regulation or the code adoption document, equipment installed in accordance with the predecessor of this Regulation shall be deemed approved under this Regulation on the day this Regulation comes into force if the equipment complied with the predecessor regulation at the time that it was installed. 7) Annual Inspections [ 75 ] As indicated above, the sixth edition of B139 was published by the National Standards of Canada in April 2000 (B139-00). B139-00 was formally adopted as part of the Fuel Oil regulation by the TSSA on June 1, 2001.

Sections 14.1 and 14.2.1 of B139-00 required that at least once per year all fuel oil tanks had to be inspected for leaks. B139-00 did not indicate who was responsible for this inspection, but, pursuant to s. 19 of the Regulation, the onus was on the “operator” (generally the homeowner) to ensure the proper maintenance and inspection of the fuel tank. Unfortunately, homeowners generally do not have a copy of B139-00 at their disposal and are unaware of this obligation unless advised by the fuel oil distributor. [ 76 ] Thompson Fuels did send out newsletters to its customers to advise them of this obligation.

These newsletters were sent with the customer invoice. For example Thompson Fuels’ newsletter for spring 2002 included a document entitled “IMPORTANT NOTICE” which advised homeowners of the recent “dramatic changes to Ontario’s Fuel Safety Code, and reproduced the TSSA ’s January 2002 bulletin which stated: Do you heat your home with fuel oil? If so, read this…

Homeowners are required to annually maintain their fuel oil appliances… by having a TSSA certified Oil Burner Technician service and clean their appliance. Homeowners are required to have their fuel oil appliance installations safety inspected by their fuel oil supplier. Fuel oil suppliers that find unsafe equipment are required to stop the delivery of fuel oil until the equipment is fixed. [Emphasis in original] [ 77 ] The second page of the 2002 newsletter had a heading titled “What do I have to do now”, and set out 3 options.

The first two options applied to customers who were enrolled in Thompson Fuels’ service plan or who had their oil furnace cleaned annually by Thompson. These customers were advised that the TSSA report would be performed as part of their regular service visit or annual cleaning. The third option was for customers like Mr. Gendron who had not agreed to one of the optional service plans.

They were advised to “Contact our office to have the necessary TSSA inspections done” or “Have your preferred licenced heating contractor perform the necessary TSSA inspections and forward a copy to Thompson Fuels for filing to ensure an uninterrupted supply of fuel oil.” [ 78 ] Mr.

Gendron did neither, and as I will discuss below, no TSSA inspection was ever performed, but Thompson Fuels continued to deliver fuel until December 18, 2008 because a systems error incorrectly indicated that an inspection had been conducted on February 27, 2002. [ 79 ] Thompson Fuels customers were reminded about their obligation to have their fuel tanks checked and encouraged to call Thompson Fuels for “a complete inspection of your tank” in Thompson Fuels newsletters sent out in 2003, 2004 and 2005. [ 80 ] The 2004 newsletter warned the homeowners of oil tanks rusting from the inside.

The 2004 newsletter stated: TIP: Most Oil Tanks Rust From The Inside Out . Always top your tank up at the end of the heating season to prevent water buildup created by summer condensation which can create rust on the inside of your tank. 8) Alternative Inspection Program [ 81 ] The TSSA , which was charged with enforcement of the new regulation, recognized that the requirement that all oil furnace installations be inspected by the fuel oil distributor prior to the delivery of fuel oil would be impossible to implement without some time to complete the inspections.

Accordingly, on June 28, 2001 the TSSA issued a “Director’s Variance to Regulations Requirements” stating that “the requirement for the distributor to inspect appliances under section 7(1) of the regulation shall become effective on May 1, 2002.” [ 82 ] A TSSA Advisory dated September 1, 2001 reiterated that while the requirement to inspect appliance was delayed until May 1, 2002, the obligation on a distributor who discovers an unsafe installation to take definitive action under either s. 23 or s. 24 of the regulation was effective immediately. [ 83 ] Even the postponement of the s. 7 inspections until May 1, 2002 proved difficult for the industry to implement.

Accordingly, in an Advisory dated March 21, 2002 the TSSA announced the establishment of an optional “Alternative Inspection Program”. The Alternative Inspection Program granted the distributors a further postponement of the s. 7 inspection obligation. It permitted fuel oil distributors to conduct a “basic inspection” of all installations by May 1, 2004, and a “comprehensive inspection” of all installations by May 1, 2007. [ 84 ] The Advisory stated:

d) A basic inspection must be completed of all installations by May 1, 2004.

e) Concurrently, effective May 1, 2002, a comprehensive inspection must be conducted on at least 20% of a distributor’s client base per year. An appropriate certificate holder must conduct the comprehensive inspection. …

g) A comprehensive inspection must be completed of all installations by May 1, 2007. [ 85 ] The TSSA also distributed an Inspection Checklist that was developed by the TSSA and fuel oil industry representatives. The Advisory stated: “the checklists are the minimum standards for conducting mandatory distributor inspections.

Distributors are welcome to expand, reformat the checklists, and replace the TSSA logo with one of their own as long as the information remains complete.” [ 86 ] While there was a basic checklist and a comprehensive checklist for the “appliance” (the furnace), there was only one checklist for the tanks. The checklist for the tank contains 18 questions, including the following three questions that are relevant to this case: 2. Does the tank appear to have been installed in accordance with the fuel oil code, the certification document and the manufacturer's instructions? … 15.

Is an approved shut-off valve installed? …

18. Is the tank located at least 5 feet from the appliance or is the tank protected from the appliance by a fire rated wall. 9) Did Thompson Fuels Complete a Comprehensive Inspection before May 1, 2007? [ 87 ] Mr. Gendron takes the position that had his oil tank been properly inspected by Thompson Fuels it would not have met the three requirements in Questions 2, 15 and 18 and, pursuant to s. 24 of Ont.

Reg. 213/01, Thompson Fuels was required to give him notice that he had up to 90 days to correct these errors or no fuel would be delivered. [ 88 ] Thompson Fuels contends that it completed the comprehensive inspection on February 27, 2002. Since the regulation required that the comprehensive inspection had to be done only once every ten years, this comprehensive inspection was sufficient for the period covering the oil leak in 2008. [ 89 ] On February 27, 2002, Mr. Gendron contacted Thompson Fuels to address a “no-heat” problem. Mr. Thompson sent one of his OBT service technicians, Mr.

Robert Nicholson, to investigate. [ 90 ] The invoice prepared by Mr. Nicholson indicates that he was at 93 Hazel for 3 hours, and states that Mr. Nicholson replaced a nozzle, replaced and installed an oil filter and cleaned out the gaskets. The invoice indicates that he performed an efficiency test. There is no indication on the invoice that Mr. Nicholson inspected the oil tanks. The checklist for oil tank inspections created by the TSSA was not yet published on February 27, 2002 (it was published three weeks later on March 21, 2002). Since Mr. Nicholson did not testify there is no evidence that Mr.

Nicholson inspected the oil tanks. [ 91 ] Thompson Fuels did call other service technicians employed by Thompson Fuels who testified that it is their practice to do a visual inspection of the oil tanks whenever they are called to do a service call on the furnace. This includes an inspection with a mirror to see parts of the tank (such as the bottom) that are not otherwise visible. These other employees could not, of course, know whether or to what extent Mr. Nicholson conducted an inspection on February 27, 2002. [ 92 ] I find that Mr.

Nicholson either did not perform an inspection or did not perform a “comprehensive” inspection of the oil tanks when he attended 93 Hazel on February 27, 2002. It was clear on that date that the installation of the oil tanks did not comply with the requirements of B139-00 (or its predecessor B139-M91) and certain corrections were required.

A comprehensive inspection would have discovered, recorded and reported these areas of non-compliance. [ 93 ] The evidence indicates that the shut-off valves were not properly installed in accordance with B139-00 or its predecessor B139-M91 (there was only one valve for the two tanks, and it was not located “as near as practicable” to the tank), the tanks were within five feet of the furnace (an issue identified by Mr. Lynch), and no firewall was ever built. These code violations would both qualify as “unacceptable conditions” as defined by s. 22(1) of Ont.

Reg. 213/01, although not an immediate hazard as per s. 24(1). Any reasonable inspection of the tanks on February 27, 2002 would have revealed the absence of compliance and would have resulted in the system being tagged-out as a non-immediate hazard and would have prompted a further inspection to ensure compliance. [ 94 ] After the oil spill was reported to the TSSA in December 2008, Mr. Paul Thompson, the president of Thompson Fuels, was asked by the TSSA to provide all relevant documents relating to 93 Hazel. Mr.

Thompson assumed that Thompson Fuels had an inspection report on file somewhere because the computer system indicated that the inspections were performed on February 27, 2002. He advised the TSSA that he could not locate the inspection report from that date. Mr. Thompson acknowledged in his evidence that this was a systems error because there was no inspection report on file. He stated: “Our system suggested that we had accomplished the inspection report requirement.

That proved to be false.” [ 95 ] Subsequent to the February 27, 2002 service call, Thompson Fuels service technicians attended 93 Hazel to perform service calls four more times before the oil leak in December 2008. These service calls were on October 25, 2006, January 22, 2007, February 19, 2007 and November 8, 2007. After each of these four service calls Mr. Gendron was provided with an invoice, and each invoice had printed in the top left corner the following notation printed by Thompson Fuels’ computer system: “Last Inspection: 02-27-02”.

These invoices confirm that none of the subsequent service calls qualified as a comprehensive inspection; if they had the “Last Inspection” date would have been updated. In short, because of a systems error, Thompson Fuels proceeded on the assumption that it had completed a comprehensive inspection of the oil tanks at 93 Hazel on February 27, 2002, although no such inspection had in fact been completed on that date or on any subsequent date. [ 96 ] That being said, the code violations that existed in 2002 did not cause the oil leak that occurred in December 2008.

With respect to the shut-off valves, the location of the shut-off valves did not cause the internal corrosion that led to the leak in the incident tank, nor would proper installation of the shut-off valves have prevented the corrosion. It is likely however, as I will explain later in these reasons, that the improper location of the shut-off valve contributed to the amount of oil that escaped and, therefore, the damages sustained. If the non-incident tank had its own shut-off valve near the outlet, Mr.

Gendron (or Thompson Fuels if they had been called in time) could have shut off the valve when he discovered the leak and any oil remaining in the non-incident tank would not have transferred into the incident tank from where it leaked. Accordingly, the damages were, at least in part, caused by the failure to install a shut-off valve on each tank. [ 97 ] With respect to the lack of firewall, Mr. Lynch, on behalf of Thompson Fuels, had already brought the need for the firewall to the attention of Mr. Gendron in November 2001, and Mr. Gendron evidently undertook to construct a firewall.

This is confirmed by the Service Agreement signed by Mr. Gendron in November 2001. The lack of a firewall did not in any way cause or contribute to the internal corrosion that led to the leak in the incident tank or cause any damages when the leak occurred. In addition, the five-foot clearance requirement in s. 6.4.7 of B139-00 was reduced to .6 metres (~2 feet) in January 2003, at which point Mr.

Gendron’s furnace was in compliance with the regulation even without the firewall. [ 98 ] There is also evidence that the furnace was installed directly on 2”X8” wood, which was in violation of the relevant standards for the installation of furnaces. This issue was identified by a Thompson Fuels’ OBT when he examined the tank and furnace after the leak in December 2008. Assuming that the furnace was installed on 2”X8” wood when Mr. Nicholson inspected the furnace in 2002 (Mr. Gendron testified that he did not change the furnace or oil tank arrangements over the years), this arrangement would have been a

non-immediate hazard that had to be corrected. It did not, however, in any way cause or contribute to the internal corrosion that led to the leak in the incident tank. [ 99 ] Accordingly, while Thompson Fuels did not conduct a comprehensive inspection on February 27, 2002, the failure to conduct the inspection on that date did not cause the oil leak. If Thompson Fuels had conducted a proper inspection on that date and notified Mr. Gendron pursuant to s. 24 of Ont.

Reg. 213/01 that he had to install two shut-off valves, build a firewall between the furnace and the oil tanks, and remove the wood under the furnace, the incident tank would still have developed a leak in December 2008.

The failure to conduct the comprehensive inspection did, however, cause or contribute to the damages caused by the leak because the non-incident tank could not be shut off and isolated from the incident tank when the leak occurred. [ 100 ] That, however, is not the end of Thompson Fuels responsibility, because the fact remains that Thompson Fuels was required by law to conduct a comprehensive inspection by May 1, 2007, and Thompson Fuels failed to do so, notwithstanding that they made four more service calls to 93 Hazel in 2006 and 2007. [ 101 ] Thompson Fuels failed to conduct the comprehensive inspection because of a systems error that led it to believe that it had conducted the comprehensive inspection in 2002.

In the absence of a comprehensive inspection before May 1, 2007 Thompson Fuels was not permitted to deliver fuel to 93 Hazel after that date, but it did deliver fuel on December 18, 2008, and the delivery of fuel on that date was a direct cause of the oil leak. [ 102 ] Significantly, the evidence before me was that testing for water in indoor oil tanks was not the industry standard in 2002. It was not specifically referenced in the TSSA Inspection Checklist issued on March 21, 2002, the month after Mr. Nicholson’s service call at 93 Hazel.

Accordingly, Thompson Fuels’ failure to test the tanks for water on February 27, 2002 did not fall below the legal or industry standard of care with respect to testing of indoor tanks in 2002. It is also unlikely that a test conducted in February 2002 would have found any significant amount of water in the tanks given that the tanks had been installed just over one year earlier in November of 2000. [ 103 ] This does not, however, end the analysis.

The regulatory changes made after March 21, 2002 must also be considered. 10) Subsequent Regulatory Requirements – post-May 21, 2002 [ 104 ] On January 21, 2003 the TSSA issued a regulatory bulletin amending ss. 6.4.7 and 6.4.8 of B139-00 “in anticipation of the next edition of CSA-B139, Installation Code for Oil Burning Equipment”. [ 105 ] These amendments, which were effective immediately, established minimum clearance requirements for oil tanks, adding the following provisions to B139-00: 6.4.9.1 Supply tanks shall be accessible after installation so that they can be inspected. 6.4.9.2 Single-wall, and double-wall supply tanks without interstitial monitoring shall be installed so that there is at least 450 mm (18 in) clearance along one side and one end of each tank. 6.4.9.3 The end or side of a supply tank shall be at least 50 mm (2 in) from a wall. 6.4.9.4 When two supply tanks are installed side-by-side, the space between the two tanks shall be at least 100 mm (4 in). [ 106 ] Mr.

Gendron’s twinned tanks did not comply with these new requirements. The non-outlet ends of each tank were less than 2 inches from the wall, the side-by-side walls of the tanks were less than 4 inches apart, and the incident tank had less then 18-inch clearance along the other side of the tank. [ 107 ] On November 8, 2005 the TSSA issued an Advisory setting out a “process to address the high number of ‘unacceptable conditions’ that pose minimal risk and that have been identified from fuel oil distributor inspections”.

The Advisory recognized that a high number of long standing “unacceptable conditions” had been identified during the inspection process, but that due to the limited supply of OBTs “there are challenges in correcting unacceptable conditions within the 90 day allowable time period.” Accordingly, the TSSA permitted distributors to extend the 90-day allowable time period to correct these identified unacceptable conditions to 365 days, provided that the distributor applied for an extension and met other safety conditions.

This process applied only to non-compliances that did not pose an immediate hazard in existing equipment installations. [ 108 ] A new version of B139 (the Ontario Installation Code for Oil-Burning Equipment ) was published on October 18, 2006, and adopted by the TSSA effective March 1, 2007. This new version included several new provisions with regard to oil tanks. Sections 6.4.1 – 6.4.4 duplicated the clearance requirements introduced in the TSSA Advisory dated January 21, 2003 (see paras. 104-105 above). [ 109 ]

Section 13.2 of the Ontario Installation Code for Oil-Burning Equipment required “the owner of the oil-burning equipment” to ensure “at least once per year”: (

a) that the fuel oil tank was inspected for leaks (s. 13.2.2 (a)) (

b) the slope of the tank and correct the slope if necessary (s.13.2.2(b)) (

c) for metallic end outlet tanks, test for water at the bottom of the tank, where water is found remove the water (s.13.2.2.1) [ 110 ] This was the first time that a requirement to test for water at the bottom of the tank was established for indoor end-outlet tanks

like the tank owned by Mr. Gendron. Seven months later, on October 11, 2007, the TSSA amended the Ontario Installation Code for Oil-Burning Equipment by revoking s. 13.2.2.1 as applied to indoor tanks, and replacing it with a requirement to test only tanks installed outdoors for water: 13.2.2.1 Metallic end outlet tanks installed outdoors, test for water at the bottom of the tank. When water is found, remove the water. [ 111 ] Thus, the statutory requirement to test indoor tanks for water existed only between March 1, 2007 and October 11, 2007. There was no other statutory requirement to test for water.

None of the Thompson Fuels service calls at 93 Hazel fell between those two dates. [ 112 ] In addition, the requirement to test for slope applied only to bottom-outlet tanks (s.6.4.7.2(c)). It did not apply to side-outlet tanks like Mr. Gendron’s. 11) Minimum Clearance Requirements and the Service Calls in 2006 and 2007 [ 113 ] As indicated above, Thompson Fuels conducted Service calls at 93 Hazel on October 25, 2006, January 22, 2007, February 19, 2007, and November 8, 2007.

By this date the minimum clearance requirements for oil tanks as set out in the January 21, 2003 TSSA regulatory bulletin had been in place for over three years. The installation of Mr. Gendron’s oil tanks did not meet these minimum clearance requirements (see para. 106, above). [ 114 ] Mr. Gendron argues that the OBT sent by Thompson Fuels to repair the furnace should have “tagged out” the furnace at any of these service calls.

The issue with the shut-off valves referred to above (see paras. 26, 28 and 93) remained. [ 115 ] In addition, the OBT could not inspect the non-outlet ends of the tanks that were tight against the wall (which is where the leak developed in the incident tank), and could not inspect either of the side walls of the incident tank, one of which was too close to the twinned tank and the other too close to a wall that had been constructed by Mr. Gendron on the other side of the incident tank, likely sometime after the February 2002 inspection.

This created an unsafe situation and a “non-immediate hazard” and the tank should have been tagged-out for this reason as well. [ 116 ] I have already dealt with the single shut-off valve for twinned tanks. With respect to the minimum clearance requirements, Thompson Fuels argues that the installation of the tanks was subject to the “grandfathering” or “legal non-conforming use” exception established under s.1(3) of Ont. Reg. 213/01 because the minimum clearance requirements were not in force when the tanks were installed.

As such the tanks were deemed to be in compliance with the regulations and there was no requirement to tag out the tank or stop delivering fuel. [ 117 ] The experts called by each side disagreed on their

interpretation of s.1(3) of Ont. Reg. 213/01. I did not find their analysis particularly helpful because this is primarily a legal issue. My analysis is however influenced by a publication prepared by the TSSA after the introduction of the 2001 regulation. The TSSA developed a mandatory training course for OBTs and published “The Oil Burner Technician Update Workshop Handbook” as a “companion document” to the regulations.

The Handbook was intended to provide guidance to OBTs in the application of the new regulations in the field. [ 118 ] One of the issues dealt with by the Handbook was the “Application of Current Code to Existing Installations”. The Handbook stated: Code requirements change in response to problems identified in the field or new technology and information.

In some cases these changes mean that existing installations no longer comply with the current code… Appliances installed before that code change could remain in operation since they were “in accordance with the code at the time of installation” but any installations after the code changed had to comply with the new requirement… Unless the regulation or code specifically states that action must be taken to bring existing installation into compliance with new requirements, existing installations are considered to be in compliance.

The terms “grandparented” and “legal non-conforming” are often used to describe these installations that do not comply with current requirements. … Due diligence must be applied to any situation where it is found that the installation does not meet current requirements but is proven to have been installed in compliance with the requirements at the time of installation.

The reason or intent of the change must be considered and the appropriate action taken to ensure that the installation is safe . (Emphasis in original) [ 119 ] The Handbook gives as an example the use of a chimney liner, which was not required until 1992.

Even if a pre-1992 chimney qualified as a “legal non-conforming” use, the OBT would be required to carefully inspect the chimney for signs of deterioration, and, if problems were found that rendered the chimney unsafe, “the installation must be brought into compliance with current requirements.” [ 120 ] The B139 for 2006 did not specifically state that action must be taken to bring existing fuel tank installations into compliance with the minimum clearance requirements of the new code.

So long as the installation was safe there was no need to correct the installation or tag out the furnace. [ 121 ] On the other hand, the reason or intent of the minimum clearance requirements was to permit inspection of the surface of the tank for leaks or external signs of corrosion. The fact that the non-outlet ends were tight against the wall meant that it was impossible to inspect those sides of the tank to determine whether they were safe.

I do not accept Thompson Fuels’ argument that while visible signs of corrosion would qualify as a non-immediate hazard, keeping the signs of corrosion hidden from view is not a safety issue. I agree with the plaintiff that given the intent of the minimum clearance requirement, the tanks’ proximity to the wall created an unsafe situation such

that the “legal non-conforming use” exception no longer applied and an order should have been issued to bring the tanks into compliance with the 2003(and B139 2006) clearance requirements. [ 122 ] Thompson Fuels takes the position that it did not conduct an inspection after 2002 because Mr. Gendron never asked or contracted with them to conduct one. Regardless of whether Mr. Gendron requested or contracted with Thompson Fuels to inspect the oil tanks, Thompson Fuels, as the distributor, had a legal obligation to conduct a comprehensive inspection prior to May 2007.

Without such an inspection Thompson Fuels was prohibited from delivering fuel to 93 Hazel. Thompson Fuels never performed a comprehensive inspection as required by the TSSA . Thompson Fuels failed to conduct a comprehensive inspection on February 2, 2002, and it failed to conduct a comprehensive inspection on any of the service calls in 2006 or 2007.

If it had conducted a comprehensive inspection of the oil tanks in 2006 or 2007, it should have tagged-out the tanks because it was not possible to inspect the non-outlet end of the tanks, and this constituted a non-immediate hazard that had to be corrected before Thompson Fuels could deliver fuel to 93 Hazel. [ 123 ] The inability to visually inspect the non-outlet end of the tank in 2006 or 2007 may have contributed to the leak. As indicated above, signs of internal corrosion like blistering might be visible from the outside of the tank, although this may not be visible until shortly before the tank leaks.

Had it been possible to visually inspect the non-outlet end of the tank when the service calls were conducted in 2006 or 2007, it is possible that there would have been evidence that the tank was corroding from the inside. [ 124 ] In any event, the best way to guard against internal corrosion is to test the tank for water, and drain the water from the tank if water is detected.

Given the inability to visually inspect the non-outlet end of the tank, the testing for water was all the more important. [ 125 ] As indicated above, the legal requirement to test indoor tanks for water existed only between March 1, 2007 and October 11, 2007. Thompson Fuels conducted service calls at 93 Hazel on January 22, 2007, February 19, 2007 and November 8, 2007.

At the time that these service calls were made, therefore, there was no regulatory requirement to test the tank for water. [ 126 ] While there was no regulatory requirement to test for water when Thompson Fuels conducted its service calls in 2006 and 2007, I find on the evidence that testing for water was the industry standard at that time. [ 127 ] Granby, the oil tank manufacturer, began to conduct seminars for the members of the fuel oil industry in 2003 and 2004 setting out the best practices for the installation, operation and maintenance of residential fuel tanks.

These seminars, which were attended by Thompson Fuels OBTs, stated that all tanks had to be inspected once a year and that the “most important thing to do is to check for the presence of water in the tank. As we will see further, water is the tank’s #1 enemy”. The seminar advised that inspecting for water “is probably the most important part of the inspection. It is probably the most overlooked”. The importance of testing for water was also set out in the Granby Installation and Maintenance Guideline published in January 2004. [ 128 ] The evidence of Mr.

Geoff Richardson, an OBT service technician who made the service call to 93 Hazel on February 19, 2007 was that it is a “standard practice” to inspect for leaks and “dip” the tank for water whenever a service call is made. Dipping is a relatively simple procedure performed by the OBT removing the fuel gauge and inserting a tape into the tank that changes colour if it detects water. There is no evidence that dipping for water was ever performed by any of the OBTs who conducted the four service calls in 2006 or 2007.

Given the evidence that the water had accumulated over a lengthy period of time, I find that a dipping test would have detected significant water accumulation in the incident tank had it been performed in 2006 or 2007. Mr. Richardson agreed that he would not be doing his job if he attended a service call and did not do an inspection of the oil tanks. 12) The Spill and Reporting the Spill [ 129 ] At approximately 4:15 p.m. on December 18, 2008, Thompson Fuels delivered 700 litres of fuel oil to 93 Hazel. The oil was delivered through a fill pipe located outside of the home. [ 130 ] Mr.

Gendron arrived home from work about one hour later and smelled oil coming from his basement. He went downstairs and saw oil on the basement floor. Mr. Gendron examined the tanks to find the source of the leak, but he could not find any holes. In order to better examine the incident tank he had to cut a hole in the drywall wall on the far side of the incident tank. He did see that oil was leaking or drizzling, apparently coming from the end of the tank against the external insulated wall, but he could not see the hole because the end of the tank was tight against the insulation.

He set about collecting the leaking oil in Tupperware containers, using the hole he had cut in the drywall to access the area under the incident tank. He continued to collect the leaking oil into the early morning hours of December 19 (perhaps as late as 5:00 a.m.), until the tanks were empty.

Using these containers, he gradually collected and filled 7 “jerry cans” of 25 litres each. [ 131 ] Thus, according to this account the oil leaked or drizzled from the hole in the end of the tank for approximately 12 hours. [ 132 ] Except for the small amount of oil on the basement floor (which he cleaned up with a rag), Mr. Gendron thought that he had succeeded in collecting all of the oil in the tanks. He went to sleep, and called Thompson Fuels at approximately 3:00 p.m. on Friday, December 19, 2008, nearly 24 hours after he first discovered the leak.

He did not call to report a leak, but called to complain that Thompson Fuels was “ripping him off” because it had delivered only 150 litres of fuel oil and not the full 700 litres of oil he had ordered. [ 133 ] The office manager at Thompson Fuels confirmed that 700 litres had been delivered on December 18, 2008, and asked him why he thought he had only 150 litres. Mr. Gendron explained that he had been up all night catching fuel oil that was leaking from the tank and collecting it in Tupperware containers.

When asked why he did not call the Thompson Fuels 24-hour emergency number as soon as he learned of the leak, he replied that he had it under control. He was irate because he was being charged for 700 litres of furnace oil that he believed had not been delivered. [ 134 ] Thompson Fuels immediately sent its service technician, Brady Germyn, to 93 Hazel to inspect the spill. He made a note of his inspection the same day. Mr. Germyn arrived within approximately 30 minutes. He observed an oil stain on the concrete floor approximately ten to twelve feet long and four feet wide.

There was no oil pooled on the floor – just a stain. The tanks were empty above the outlet. Based on the information given by Mr. Gendron regarding the collection of dripping oil in the jerry cans, Mr. Germyn calculated that approximately 600 litres of fuel oil had leaked out. Mr. Germyn advised Mr. Gendron that Mr. Gendron was required to

report the spill to the Ministry of Environment’s Spills Action Centre. Mr. Gendron still did not believe that 700 litres had been delivered and rather than calling the Spills Action Centre, threatened to call the police to report that Thompson Fuels had not delivered the 700 litres he purchased. [ 135 ] Mr. Germyn returned to Thompson Fuels and advised Paul Thompson of the spill. Paul Thompson called the Spills Action Centre to report the spill at 4:22 p.m. and advised them that 93 Hazel fronted on to Sturgeon Lake. [ 136 ] The Spills Action Centre called Mr. Gendron at 4:37 p.m. to ask about the spill. Mr.

Gendron told them that he was not concerned about the drinking water since it came from a drilled well, and he was convinced that the oil did not go into the ground. Mr. Gendron told the Spills Action Centre that the home was built on a 7 inch thick slab of concrete without drains or a sump pump. The Spills Action Centre advised Mr. Gendron that it would write up a report to forward to the TSSA , but did not know when the TSSA would “get over to investigate”, and that “they will deal with it in their time”. [ 137 ] Mr.

Gendron was not instructed by the Spills Action Centre to take any action. 13) The TSSA [ 138 ] The Spills Action Centre sent a report to the TSSA technical desk and to the Ministry of the Environment. The TSSA technical desk closed at 4:30 p.m., and the report was sent after the TSSA was closed for the weekend.

The TSSA also had an after-hours emergency number that could have been called by the Spills Action Centre, but was not. [ 139 ] A TSSA employee who happened to come into the office when it was closed picked up the Spills Action Centre’s report on the afternoon of Sunday December 21, and emailed it to one of the fuel safety inspectors, Mr. Anthony Janes. Mr. Janes retrieved the email on the morning of Monday, December 22, 2008. [ 140 ] Mr. Janes immediately contacted Thompson Fuels and attempted to contact Mr. Gendron. When he did not receive an answer from Mr. Gendron, Mr.

Janes went to 93 Hazel to inspect the property. Mr. Janes arrived at 93 Hazel at 11:16 a.m. Mr. Gendron was home. Mr. Gendron continued to insist that he had collected all of the oil that leaked from the tank and he believed 700 litres of oil had never been delivered. [ 141 ] Mr. Janes did a visual inspection. He estimated that approximately 450 litres of oil had leaked from the tank. He found no evidence that the oil went down the basement drain pipe. It appeared as though the oil had likely migrated through a gap where the concrete floor met the foundation wall. [ 142 ] Mr.

Janes testified that he went outside but could not see or smell any oil. He noted that the source of the leak was approximately 87 feet from the lake. Mr. Janes went to the road to see the lake, and could see no evidence of oil at the lake or the culvert that emptied into the lake. He did not walk down to the shoreline and did not look inside the culvert. It was difficult to see, however, because the area was covered with snow and ice. He proceeded on the premise that the oil remained on site. Mr. Janes did not ask Mr. Gendron any questions about drainage on the property, and Mr. Gendron did not inform Mr.

Janes that there was a “big O” drainage pipe running around the foundation of the property that emptied into the city culvert. [ 143 ] Mr. Janes remained on the property for 1-2 hours. Before leaving the site he called Cathy Curlew, a Provincial Officer at the Ministry of Environment, and asked her if she wanted to investigate. She advised him that she would wait to see his report. [ 144 ] Mr. Janes’ notes confirm that he advised Mr. Gendron that he would issue an “Order for Remediation within 120 days”. There was some dispute whether Mr. Janes issued something called a “verbal order” to Mr.

Gendron on December 22, 2008. Based on Mr. Janes’ testimony and his notes I find that while Mr. Janes did advise Mr. Gendron that he would issue an Order for Remediation, such advice cannot fairly be described as a “verbal order”. In fact, as I will discuss below, the TSSA never issued an order for remediation. [ 145 ] Mr. Janes testified that he recalled telling Mr. Gendron to contact his insurance company about the oil leak when he inspected the tank on December 22, 2008, and that such advice is his standard practice when dealing with homeowners. Mr.

Janes testified that December 22, 2008 was the only day that he attended the property. [ 146 ] Mr. Gendron remembered Mr. Janes telling him to contact his insurer, but took the position that he was not advised to do so until December 29, 2008, and he contacted his insurer promptly on that date. While Mr. Gendron thought that it was Mr. Janes who told him to contact his insurance company on December 29, 2008, he indicated that if Mr. Janes did not visit the property on that date it must have been someone else from the TSSA . [ 147 ] This is not a dispute that I have to resolve.

In my view the TSSA had no private law duty to advise Mr. Gendron to contact his insurance company. While it is no doubt good practice to provide such advice, the resolution of this factual dispute is not relevant to the legal analysis that I have to undertake. I note that there is no written record of such advice being given on December 22, 2008 or on any other date. 14) The TSSA Order [ 148 ] On December 24, 2008 Mr. Janes prepared the TSSA Order, which was sent to Mr. Gendron by express post registered mail on that date.

I found both the Order and the accompanying correspondence confused and confusing. [ 149 ] The cover letter states: Please find enclosed Inspectors Master File Number FS INC… regarding a reported oil leak at 93 Hazel… on December 18, 2008. It is a requirement of the Technical Standards and Safety Act (Section 17)… where it appears that… leak… has occurred because of the use storage or handling of fuel oil, in the province of Ontario, shall be inspected.

The inspection will generate an invoice as TSSA operate as a not for profit regulatory authority operating on a cost recovery basis. Submission of the invoice to your insurer is standard practice. [ 150 ] This letter does not provide Mr. Gendron with any information other than that he will receive an invoice for the inspection that had already occurred on December 18, 2008, and that a copy of that invoice should be forwarded to his insurer.

The letter purports to enclose the “Inspectors Master File Number FS INC”, but does not explain what that is, or indicate that a copy of something called an order is enclosed, and does not advise Mr. Gendron to forward a copy of the order to his insurer. The invoice referred to in that letter was sent in a separate letter on January 5, 2009. [ 151 ] Mr. Janes testified that the December 24, 2008 letter was a template letter. It is, to say the least, peculiar that TSSA would send a cover letter with its order advising Mr.

Gendron that he will be receiving an invoice in the future but making no reference to the fact that a TSSA order is attached or advising what action he must take in response to the attached order. [ 152 ] The attached Order is equally baffling. [ 153 ] The order is entitled “Fuel Safety Inspection Report”. It states: When an inspector’s order is issued, time limits for compliance reflects the severity of the violation. [ 154 ] The compliance date is April 24, 2009, or 120 days from the date the order was issued. [ 155 ] The order makes no reference to remediation. The order sets out five subparagraphs from

a) to e). Subparagraphs

b) to

e) have what can only be described as a square “tick” box beside each letter. None of the boxes are ticked, and Mr. Janes testified that he did not know why the boxes were there, and he was not told to check off the boxes. It was his understanding that all five subparagraphs applied in each order.

The subparagraphs required the owner of the oil tank to: i. forthwith notify the director in the event of a fire or explosion and remove any potential for fire or explosion hazard ii. provide all information to the Director or an inspector, as required iii. cease the use of and empty products from any leaking part of the storage tank system iv. repair, replace, remove all defective…storage tank systems or equipment, and v. do everything practical to comply with the “Environmental Management Protocol for operating Fuel Handling Facilities in Ontario”. [ 156 ] The second paragraph required Mr.

Gendron to “provide an assessment report, from a Professional Engineer or Geoscientist that delineates the full extent of all petroleum impacts to both soil and groundwater”. The assessment report must meet the criteria as set out in the “Environmental Management Protocol for operating Fuel Handling Facilities in Ontario”. [ 157 ] The term “remediation” is not found anywhere in the order. There is nothing in the order that required Mr. Gendron to restore the environment. On its face, the order merely required Mr.

Gendron to obtain a professional assessment report “that delineates the full extent of all petroleum impacts to both soil and groundwater” within 120 days (by April 24, 2009). [ 158 ] If “time limits for compliance reflects the severity of the violation”, the TSSA ’s 120 days to delineate suggests that it did not consider the violation to be particularly severe. Mr. Janes testified that the usual time limit is 90 days, but an additional 30 days was provided because the leak occurred at the end of December and the TSSA recognized that the remediation could not be completed before the spring thaw. [ 159 ] Mr.

Janes appeared completely oblivious to the fact that his order did not in fact order the remediation of the oil spill or the restoration of the environment. He testified that the order he prepared was the only type of order issued by the TSSA in response to fuel spills. He testified that there was no distinction between a delineation order and a remediation order. [ 160 ] The TSSA argues that paragraph e) of the order specifically required Mr.

Gendron to comply with the “Environmental Management Protocol for operating Fuel Handling Facilities in Ontario”, and the protocol “speaks to the requirement to remediate the site”. I make three points in response to this. [ 161 ] First, Mr. Gendron would obviously have no idea what is contained in the Environmental Management Protocol unless the order set out the requirement in clear terms.

Orders must set out with some precision the action required or prohibited, and not just referentially incorporate a 17-page technical document. [ 162 ] Second, the Environmental Management Protocol itself distinguishes between delineation and remediation and does not use those words interchangeably. [ 163 ] Third, the Environmental Management Protocol provides that a Fuel Safety Program inspector of the TSSA may require an environmental remediation “if immediate corrective action is deemed necessary based on the site conditions”.

The protocol notes that immediate corrective action is necessary to eliminate “the potential for off-site migration of a petroleum product and related contaminants”. A reasonable person in Mr. Gendron’s position receiving the TSSA order would have no way of knowing whether the TSSA inspector deemed immediate corrective action to be necessary in his situation unless it was specifically set out in the order. Accordingly, I find that while it was certainly open to Mr. Janes to order environmental remediation in

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