REALLY? LEGAL FEES CAN BE RECOVERED AS CLEAN-UP COSTS? – WHAT THE BRAND NEW JANSEN CASE SAYS…

Whenever resorting to legal action to get money back, for anything, many would say the proposition is already a challenging one. So the question becomes, is claiming against a polluter for costs put into a clean-up any better?

Under our Environmental Management Act, we have in BC a ‘cost recovery action’ (s. 47(5)). This section creates a right to sue where one incurs costs of remediation at a contaminated site, and does so reasonably, as long as one is pursuing those ‘responsible’ for the contamination, as defined in the Act. But this section does something else. It defines such costs to include ‘legal costs’ (s. 47(3)(c)). This seems out of place because anyone in any Supreme Court action can claim legal ‘costs’ in the normal sense of the term. So why does a lengthy, detailed and specialized environmental statute specifically cite legal costs in addition to consultant costs as ‘costs of remediation’ recoverable under a unique cost recovery right of action that the statute creates? Well, it is not all good news, but not all bad either. And, the Jansen (Jansen, 2019) case helps us understand how the courts are going to interpret this section.

In short, following older decisions, the court in Jansen held that legal costs for the actual conduct of the litigation – pursuing the cost recovery action – are not recoverable as ‘costs of remediation’. For these costs, litigants have the costs provisions of the Rules of Court that reward successful parties with a relatively small portion of actual legal fees. But, ‘costs of remediation’ are also not restricted to clean-up costs such as environmental engineer and contractor fees. Rather, the court found that certain legal costs that, although not proven in the Jansen case because evidence in that case was lacking, could be pursued as costs of remediation because they are necessary costs arising from the remediation and not conduct of the litigation (Jansen, para. 62). The court used the negotiation of a settlement document (BC Ferries agreement) as an example of a potentially recoverable legal cost as a ‘cost of remediation’.  The court underscored that s. 47(3) lists examples of costs of remediation and that the list is not exhaustive, leaving plenty of room for creative arguments to recover various types of non-litigation related legal costs.

The result of Jansen is mixed, but here is the upside. Developers and landowners of all stripes encounter lands that are contaminated. Sometimes they clean up the lands at significant expense where they played no part in dirtying them. In many of these cases, such parties need legal counsel to assist in addressing the contamination, following applicable regulations and pursuit of those responsible. In each such case, it is necessary early on to seek an opinion from counsel about pursuing legal costs from responsible persons. The door to seek those costs is open more than a crack.

Questions? Comments? Please contact Richard Bereti at rbereti@harprgrey.com or anyone else from our team listed on the Authors page.

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