Class Action certification for property damage due to TCE contamination upheld by the Alberta Court of Appeal


Last month the Alberta Court of Appeal upheld the certification of a class action against the Canadian Pacific Railway Limited relating to TCE contamination. The action alleged that the putative class members had suffered a diminution in property values and the loss of rental income as a result of TCE contamination of the groundwater under their properties originating from a degreasing solvent used in a CPR shop in Ogden, in southeast Calgary. The case management judge had found that the test for certification was met as (1) the pleadings disclosed a cause of action; (2) there is an identifiable class of two or more persons; (3) the claims of the prospective class members raise a common issue; (4) limiting the class to the defined boundaries (by way of certain Calgary streets) is logical and reasonable; (5) the temporal limit has a rationale connection to the claims arising from the ongoing remediation efforts; and (6) there is a logical connection among the TCE vapour claim, the alleged corresponding damages and the proposed class definition.

 

On appeal, CPR argued that case management judge erred in concluding that the class was sufficiently narrow to be an identifiable class within the meaning of the legislation when in fact the proposed class definition was both arbitrary and illogical, that he failed to properly address the minimum evidentiary standards such that the decision to certify was based on insufficient evidence, and that the judge erred in concluding that a class proceeding was the preferable procedure.

 

After reviewing the existing case law on class actions, the Court concluded that the case management judge did not commit a reviewable error and that CPR's contentions that the geographic limitation is arbitrary and both under-inclusive and over-inclusive, and that the class definition creates a conflict of interest between potential members, are without foundation. Furthermore, the Court dismissed the arguments that the class definition was merit based and that the decision to certify was based on insufficient evidence. Relying on the decision in the Supreme Court of Canada in Rumley v. British Columbia, [2001] 3 S.C.R. 184, the Court concluded that the fact that individual litigation of the relatively narrow issue of quantifying the effect of the contamination on particular properties would be required, does not prohibit certification. The decision can be found at the Canadian Legal Information Institute's website.

 

It should be noted that this case is strictly limited to damages for lost property value and rental income. We understand that a separate action has been commenced for health related issues. In Ontario, the only "environmental" class action that has been certified to date has been limited to damages for devaluation of property, Pearson v. Inco, [2005] O.J. No. 4918 (C.A.).

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