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The Supreme Court Clarifies the Application of the St. Lawrence Cement Inc. v. Barrette Decision

Date

April 8, 2013

AUTHOR(s)

Michel Gagné


On March 7, 2013, the Supreme Court of Canada (SCC) rendered a decision in which it clarified the application of St. Lawrence Cement Inc. v. Barrette1 (St. Lawrence Cement), a decision that had recognized a strict liability regime for neighbourhood disturbances in Québec, a liability regime similar to that of common law nuisance. Such lawsuits can be instituted by class action which may have major consequences for corporate defendants.

In Antrim Truck Centre Ltd. v. Ontario (Transportation)2 (Antrim), the SCC clarified the criteria for nuisance in a case involving a claim for injurious affection under the Expropriation Act3 of Ontario.

The Facts of the Antrim Case

The appellant in this case was the owner of a lot on Highway 17 in Ontario on which it operated a truck stop with a restaurant and a gas station. It enjoyed the patronage of drivers travelling along the highway. In 2004, the Ministry of Transportation of Ontario opened a new section of Highway 417. The construction of the 417 Highway significantly altered the conditions from which the appellant benefited, as the motorists on the new stretch of highway had no direct access to the truck stop. This situation led the appellant to close his truck stop, causing him damages for loss of market value of property and loss of business.

The SCC recognized that such circumstances may give rise to compensation for the adverse effect under the Expropriation Act (Act) of Ontario. To be entitled to compensation, the appellant has to meet three statutory requirements, namely:

  1. the damage must result from action taken under statutory authority;
  2. the action would give rise to liability but for that statutory authority; and
  3. the damage must result from the construction and not the use of the works.

When these three conditions are met, the Act entitles the plaintiff to compensation for such reduction in the market value of the land attributable to the infringement of his rights, and such personal and business damages.4

The first and third conditions were clearly met in this case, and the SCC had to determine whether the second requirement was met. The SCC ruled in favour of the appellant and decided that the second requirement was met, confirming the decision of the Ontario Municipal Board to grant compensation and to reverse the decision of the Ontario Court of Appeal. The issue addressed by the SCC was whether the appellant could have, under the law of private nuisance, obtained damages if the construction of the highway was not made under statutory authority. The SCC gave an affirmative answer to this question because of the particular facts of the case. As part of its judgment, it went through a comprehensive review of the rules relating to nuisance.

The Clarifications Brought to the Principles Laid Out in St. Lawrence Cement

The recognition by the SCC in 2008 of a strict liability regime for neighbourhood disturbances had raised concerns from industry. In effect, the SCC had recognized that a business could be held liable for having caused abnormal disturbances to its neighbours without having committed a fault. The circumstances giving rise to the recognition of abnormal disturbances were not elaborated upon in detail by the SCC in its decision in St. Lawrence Cement. Such a principle of no-fault liability raised legitimate concerns with regard to the predictability of the law by businesses whose operations cause some inconvenience to neighbours and were concerned about ensuring that their business activities did not incur their liability.

In Antrim, the SCC made some clarifications that could turn out to be very useful in the application of the liability regime applicable to common law nuisance and neighbourhood disturbances in civil law.

The SCC elaborated upon the constitutive elements of a nuisance claim in referring to the St. Lawrence Cement decision as its most recent analysis of the concept of nuisance. It specified in Antrim that the elements of a nuisance claim are based on a two-pronged test. Such a claim must be based on an impairment that is both a substantial and an unreasonable interference with the occupation or enjoyment of land by its owner. A substantial interference is one that is non-trivial. The SCC stated that if this test is met, the focus is then on whether the non-trivial interference was also unreasonable in light of all the circumstances.

The SCC stated that the threshold of substantial impairment highlights the importance of the fact that not all interferences, however slight or trivial, would give rise to an action in nuisance; certain interferences constitute the normal "give and take" expected of everyone as part of normal life in society. The SCC recalled that, in applying this threshold of substantial impairment, minor inconveniences will not be compensated. The SCC stated that only interferences that significantly alter the nature of the complainant’s property or interfere, to a significant extent, with the actual use are sufficient to ground a claim in nuisance. The SCC also considered that substantial impairment caused to a landowner is one that is more than a slight annoyance or a trifling interference. Claims based on the prompting of excessive delicacy and fastidiousness do not meet the threshold of substantial impairment.

The SCC indicated that nuisance may take a variety of forms and may include not only actual physical damage to land, but also interference with the health, comfort or convenience of the owner or occupier.

Then, the SCC stated how the reasonableness test must be applied to the interference, particularly in the context where it is caused by projects that further the public good. The SCC noted that, in all nuisance cases, the reasonableness of the interference must be assessed in light of all of the relevant circumstances. The SCC suggested that this balancing exercise focus on whether the interference is such that it would be unreasonable in all of the circumstances to require the claimant to suffer it without compensation. The gravity of the harm, on the one hand, and the utility of the defendant's conduct, on the other hand, must be balanced. To assess the gravity of the harm, the character of the neighborhood, the sensitivity of the plaintiff, as well as the frequency and duration of the interference are relevant factors to be taken into account.

Even if the analysis of reasonableness of the interference is focused on the nature and extent of the interference with the plaintiff’s property rather than the defendant's conduct, the latter is not an irrelevant consideration. Evidence that the defendant took all possible precaution to avoid harm may have a bearing on whether he or she subjected the plaintiff to an unreasonable interference. The fact that work is carried out with reasonable care and due diligence for the citizens affected is part of the analysis of the reasonableness of the interference. The SCC noted that there is no doubt that everyone must put up with a certain amount of temporary disruption caused by essential construction. Prolonged interferences are more likely to give rise to compensation than temporary interferences.

The Application to Québec of the Right to Compensation in a Similar Context to the Antrim Case

The right to be compensated in a similar context to that which gave rise to the Antrim case is less clear in Québec, because unlike Ontarian law, the Québec Expropriation Act5 is silent on the matter. The conditions giving rise to compensation for injurious affection of a work of public utility were integrated into the Ontario legislation and were derived from the rules laid down by authors and case law on the subject. Thus, the right to compensation in similar circumstances had already been recognized by the SCC in a 19626 decision on a case from Québec. We can therefore assume that these principles would probably still be applicable today in Québec, despite the fact that they are not explicitly codified in Québec’s Expropriation Act.

Conclusion

When the SCC recognized a strict liability regime for neighbourhood disturbances in the St. Lawrence Cement case, many feared that this would open the door to compensation for the slightest inconveniences imposed on neighbours of industrial facilities. Many also feared that this no-fault liability regime would prevent businesses from knowing with a reasonable degree of certainty that their operations respecting all applicable standards and laws and would not incur any liability.

The Antrim case provides useful clarifications with regard to how the principle of strict liability recognized in St. Lawrence Cement should be applied; these clarifications are positive for businesses. Indeed, minor and slight inconveniences to neighbours are expected to be tolerated and not give rise to compensation so long as they do not become substantial. It is also reassuring that the SCC clearly recognized that the defendant's conduct and compliance with applicable standards remain relevant in cases of neighbourhood disturbances. We can now safely assume that St. Lawrence Cement will not have consequences as adverse to industry as many thought in 2008.


1
(2008) 3 S.C.R. 392.
2 2013 S.C.C. 13.
3 L.R.O. 1990 ch. E.26.
4 Art. 1(1) et 21, L.R.O. 1990, ch. E.26.
5 L.R.Q. c. E-24.
6 The Queen v. Loiselle (1962) S.C.R. 624.

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