Environmental Law

Heighington v. Ontario 60 O.R. (2d) 641
HIGH COURT OF JUSTICE
24TH JULY AND SEPTEMBER 15, 1987.

R.E. HOLLAND J.:— These actions are brought on behalf of owners and former owners of residences on McClure Cres. and Neilson Rd. in Scarborough against Her Majesty the Queen in right of Ontario and the Ontario Housing Corporation for damages for negligence and breach of contract in connection with the sale to them of residential lots alleged by the plaintiffs to have been contaminated with radioactive material.

The properties owned, formerly owned or leased by the plaintiffs are all part of a plan of subdivision M-1518.

The lots and municipal numbers for McClure Cres. and part of Neilson Rd. are shown on ex. 16 reproduced overleaf.

(a) The "Ivanenko farm", consisting of about 10 acres which
made up the easterly part of the subdivision;

The Ivanenko farm was owned by Nicholas Ivanenko until the property was expropriated by the province in September, 1953. In June, 1972, the property was transferred to Ontario Housing Corporation.

The road allowance was transferred from the Borough of Scarborough to Ontario Housing Corporation in September, 1973.

The Neilson property was transferred to the province in 1960 and was then transferred to Ontario Housing Corporation in June, 1972.

The province introduced the home-ownership-made-easy plan (H.O.M.E.). Under the plan subdivision lots were leased by the province to builders who then assigned the leases to home buyers who had entered into contracts with the builders for construction of residences at fixed prices. In October, 1973, Ontario Housing Corporation advertised the Malvern subdivision with details of the scheme. Because of the number of applicants, successful applicants were chosen by random draw.

The plaintiffs were successful applicants. As an example, the plaintiffs Heighington entered into a transfer of the leasehold interest with Riverdale Towers Limited, the builder, for a consideration of $16,450, being the price of the house, of which $822.50 was paid in cash with the balance of $15,627.50 secured by a mortgage to Housing Corporation Limited.

In 1976, the province offered to sell the lots to the tenants at market value. The province assisted by taking back a mortgage for the full purchase price. The mortgage back was in two parts. The Heighington lot, for example, was purchased for $26,000 with a mortgage for the full sum of $26,000 divided into one part of $6,300 and another of $19,700. The sum of $6,300 bore interest at 111/2% per annum. No interest was payable on the balance of $19,700 unless the property was transferred. The term "transfer" included a sale, bankruptcy or death of the mortgagor or either of them. The mortgage could be extended to July 1, 2011.

In 1986, as a result of developments to be outlined below, the province offered to repurchase certain of the properties and some of the plaintiffs accepted the offer.

In 1929, Eldorado Gold Mines Limited staked property at Great Bear Lake, N.W.T., containing rich deposits of pitchblende. In 1933, in order to handle these deposits, the company built a radium and uranium refinery at Port Hope, Ontario.

In 1944, by Order in Council under the War Measures Act, R.S.C. 1927, c. 206, all the shares of Eldorado were expropriated by the federal government and a new Crown corporation was formed.

In 1945, it appeared that 30 grams of radium were missing from the operation of Eldorado at the Port Hope Refinery. J. Grant Glassco of Clarkson, Gordon and Co., chartered accountants, was appointed by Order in Council of the federal governmment to investigate.

At the time of the institution of the inquiry stringent secrecy and security provisions were in effect in connection with developments in the field of atomic fission. The Eldorado mine was an important source of uranium required for the production of atomic bombs. The first atomic bomb was exploded over Hiroshima on August 5, 1945.

Prior to the institution of the inquiry there had been an ongoing investigation for some months by officers of the Foreign Exchange Control Board, assisted by the R.C.M.P., into a series of transactions related to the sale of radium by Eldorado.

These earlier investigations indicated that Boris Pregel, a Russian-born citizen of France and a resident of the United States of America, had become the sales agent of Eldorado in 1940. Associated with Mr. Pregel was Carl French, a resident of Toronto, who was secretary treasurer and director of Eldorado. A third individual whose activities came under investigation was Marcel Pochon. He was employed by Eldorado as chief chemist and radium specialist in charge of the Port Hope Refinery. Mr. Pochon also received salaries from certain U.S. companies owned or controlled by Mr. Pregel. John J. Robinette, K.C., was appointed as counsel to the investigation. As a result of the investigation criminal charges were laid against Messrs. Pregel, French and Pochon, but these charges were not proceeded with because of possible breaches of security.

Terence Guernsey was an investigating officer with the R.C.M.P. at the time. He testified that Messrs. Pregel, French and Pochon needed a legitimate source of radium to cloak the sale of radium obtained from Eldorado and, as a result, carried on private refining activities at 103 Church St. and 54-56 Lombard St. in Toronto and also at the Ivanenko farm in Scarborough.

Dr. Leslie Cook was a chemist with the National Research Council at the time and was retained as a private consultant in the investigation. He went to the Ivanenko farm with Mr. Guernsey. He found that there was not over 2.5 grams of radium on the premises, distributed in a barn, shack and in barrels and boxes. Radioactive scrap was burnt in a small stove in the shack. The ashes were sifted and stored in metal drums in the shack or barn. At the time of Dr. Cook's visit the metal drum beside the stove contained about one gram of radium. This amount would give the operator at the stove his or her daily permissible limit of radiation in about one minute.

	It is quite impossible to sift ashes without breathing in dust; and since the deposition of 1/1,000,000 gram of radium in the lungs will usually cause lung cancer in about 15 years, while 1/100,000 gram will usually cause lung cancer and leukemia in 2-3 years, the inhalation of even small amounts of ash dust is very serious.
	I recommend that the attention of the proper authorities be called to this situation; that further operations under present conditions be immediately prohibited; and that Mr. and Mrs. Ivanenko, the present operators, be sent to the National Research Council, Ottawa, for an examination of the radon content of their breath to determine how seriously they have been poisoned already.

On June 8, 1945, as a result of Dr. Cook's investigation, the secretary of the Foreign Exchange Control Board wrote to the Deputy Minister of Health in Toronto and quoted extracts from Dr. Cook's report dealing with the Lombard St. laboratory and the Ivanenko farm.

Shortly after June 8, 1945, Dr. Cook met with officials of the Department of Health at Queen's Park and reviewed his findings. Apparently experiments had also been carried out at the farm to ascertain if radium was a good fertilizer and ash from the burnt scrap had been scattered over the fields. It is not clear whether or not this information was made known to officials of the department. It is alleged that the burning shack was curtained at night because of the luminous glow. As a result of the information received from Dr. Cook, officials from the Department of Health visited the farm.

In 1946, Mr. French wished to resume operations at the farm. On August 31st of that year, Drs. Leppard and Bulmer of the Department of Health wrote a memorandum to Dr. Cunningham, the director of the division of industrial hygiene. They reported that on a visit to the farm a miscellaneous assortment of radioactive scrap was found including white and black ash. Above tolerance radiation was found within 10 or 15 feet of the shed where the work was carried on and inside the shed radiation was about 20 times tolerance. As much as five or six grams of radium was present in the scrap. One of the recommendations was that field inspections be conducted on the first day of operation and at intervals thereafter. Apparently there is no further information on file dealing with the resumption of operations.

In 1975 Dr. James Aitken was chief of Radiation Protection Services with the Ministry of Health in Toronto. He had replaced Dr. Leppard.

A photographer working at 103 Church St. found that his unexposed film was fogging up. He reported this to Dr. Aitken in February of 1975. Dr. Aitken instituted an investigation as a result of which high levels of radiation were discovered. The building was eventually decontaminated. There was, however, considerable publicity concerning the incident, not only in Canada but also in the U.S.A.

Mr. Guernsey read about the Church St. incident and was concerned. He telephoned Dr. Aitken to advise him of the possibility of contamination at the Ivanenko farm and also supplied Dr. Aitken with the concession, lot and plan number of the farm. Mr. Guernsey suggested that Dr. Aitken communicate with Dr. Cook.

Dr. Cook was living in the U.S.A. at the time. He read about the Church St. incident in the New York Times of February 27, 1975. He said that some months later Dr. Aitken telephoned him and asked if there were any other locations that should be investigated. Dr. Aitken, according to Dr. Cook, said that he was unaware of the Scarborough farm. Dr. Cook sent Dr. Aitken a copy of his 1945 report. Dr. Aitken's recollection of the conversation with Dr. Cook is somewhat different. However, as a result of these telephone conversations, Dr. Aitken was advised of the possible contamination of the Ivanenko farm and of its location.

Dr. Aitken said that he was told by Dr. Cook that radium had been used as a fertilizer. He checked the area by car with a radiation survey meter but failed to obtain any elevated readings. The federal government was also involved in attempting to locate areas of raised radioactivity. Federal investigators took soil samples from road allowances in the area but again the results were negative. Dr. Aitken examined aerial photographs of the area that had been taken prior to and during the development of the subdivision. It appeared to him from examining the photographs that top soil had been scraped off the subdivision and then respread after the houses had been built. Because of this, and because of the information that radium had been used as fertilizer, he assumed that any radioacative contamination had been dispersed over a large area. He explained that the investigators were looking for amounts of radioactivity that would constitute a hazard to health.

We have not yet been able to determine the precise location where the burning of radium luminous waste took place at this site. A document dated June 1945 suggests that there might be as much as six grams of radium at this site which is now part of the Malvern Housing Development at the junction of Neilson Road and Sheppard Avenue.

The precise location of the farm in the Scarborough area (mentioned in last month's report) has not yet been established. However, the radium-contaminated area (if any contamination remains) is now believed to be in a built-up area. This makes it much more difficult to pinpoint the exact location since it would be undesirable to alarm a large number of residents by moving in people with instruments. Further efforts are being made, in collaboration with the Atomic Energy Control Board, to pinpoint the area more precisely by using aerial photographs which have been taken over the intervening years.

Geoffrey Knight was an engineer with the Atomic Energy Control Board at the time. He reported on May 26, 1975, in part, as follows:

	Scarborough Township Farm
		Mr. French confirmed that experiments were conducted in which tailings from Port Hope were mixed with fertilizer and spread over the whole 10-acre area. He also confirmed that 3 barrels of ashes were obtained from burning radium-contaminated waste some of which was shipped to Mount Kisko, N.Y. and some was sent to Mr. Pochon in Port Hope for extraction of the radium. However, the inventory taken on 29 June 1945 shows that at that time there were about 3.37 grammes of radium in ashes and a further 1.67 grammes distributed between 19 barrels, 9 wooden cases, 26 boxes, and a few other different containers. Mr. French was unable to account for the disposal of these latter items.
		Aerial photographs taken on 2 July 1946 and on 19 April 1974 have been compared and suggest that the shed where the above materials were stored and the incinerator used for burning the waste stood in what are now the back yards of a new housing development. Dr. Aitken and Mr. Jack and I are planning to take soil samples and make a radiation survey in the area later this week.

The precise site of an operation by C.P. French, involving the reduction to ash of scrap material containing radium, appears to be in the Malvern Housing Development. ... It will be necessary to approach a few householders and ask permission to survey their property for radioactivity. This will be done in a few days using as low-keyed an approach as possible.

On May 27, 1975, Mr. Knight set out a proposal for a survey of the Scarborough farm using a provincial survey crew:

	... they apparently have a legal right to enter anybody's property providing they do no damage, and they could establish the location of the barn and burning shed with better accuracy.
	We would accompany the survey crew and make radiation measurements.

On May 28, 1975, Dr. Aitken and Dr. Muller, also of the department, met with Mr. Ivanenko. Mr. Ivanenko said that the work at the Malvern farm involved the testing on the property of radioactive materials as fertilizers. Other work involved the burning of scrap and clothing from Church St. Mr. Ivanenko described "spaghetti-like" plastic which was luminous. This material was buried on the Malvern farm because it would not burn. Dr. Aitken reported that:

	At some stage through the Malvern operation, a laboratory (Mr. Ivanenko's term) was built on the Malvern farm due south of the storage shed and incinerator. Evidently, some preliminary ... work was done in this laboratory. Operations ceased on the Malvern site in 1945. We could not find out what clean-up measures were taken, but Mr. Ivanenko was sure that we would be able to detect radioactivity on the site. …
	We asked Mr. Ivanenko about medical tests on himself and his wife in 1945. He said they were done by the Department of Health in Toronto and he was told that his wife had a greater level than he had and that they both had something detectable. ... He said his wife died last year of cancer of the bowels….
	He might be able to point out locations at Malvern since he seems to be aware of the changes which have taken place there over the years. However, we did not ask him to accompany us to the site.

Mr. Knight reported that on June 5, 1975, he met with members of the Ministry of Transportation and Communications for Ontario and considered aerial photographs of the area. The photographs confirmed that the developer had removed all the top soil and stored it at one side of the site and, further, when construction was completed, the top soil was redistributed. He said that it was agreed that a sufficiently representative number of sites for obtaining soil samples could be found on the local rights of way, i.e., sampling could be carried out without disturbing the local residents. He reported that 24 soil samples were taken. Measurements were taken of radiation levels in contact with each soil sample, in contact with the ground at each sample site and other general measurements at waist height. The readings were "close to the normal radiation background" and he reported that the results of the survey suggest that there is not a significant contamination problem at the site.

The initial check at the Malvern Housing Development area has turned up no sign of radium contamination. ... It is likely that we will be able to give this site a clean bill of health shortly.

On October 27, 1975, Dr. Aitken reported to Dr. Abbott, the medical officer of health for Scarborough, that:

	The laboratory report indicates that the Radium-226 content of the soil is not significantly higher than three reference samples taken elsewhere in the Metro area. My own opinion is that, if fertilizer containing radium ever was used in this area, it is now so dispersed that it would be practically impossible to find it.
	I hope we will be able to send you a more complete report later, showing the location of the shack where the radium work was carried out.

It appears that no further work was done in connection with suspected contamination of the Malvern area at this time.

In 1980 Frank Giorno was a journalism student at Ryerson Polytechnical Institute in Toronto. He had a summer job with Pollution Probe and became interested in the disposal of radioactive waste. As part of his research he interviewed Mr. Ivanenko. He determined that the most likely place to look for radioactivity was at 110 McClure Cres. Mr. Giorno borrowed a Geiger counter and located an elevated radioactivity reading between Nos. 110 and 108 McClure. The assistance of a professor at the University of Toronto was obtained who confirmed the finding. Mr. Giorno and his co-investigator, Janel Glassco, wrote an article which, with the assistance of reporters, was published in the Globe and Mail on November 20, 1980. The article produced great concern on the part of residents of the Malvern development and also promises of action by the federal and provincial governments.

On November 20, 1980, the Atomic Energy Control Board (A.E.C.B.) authorized MacLaren, Engineers, Planners and Scientists Inc. (MacLaren), to conduct radiation surveys of the area to determine the extent of radium contamination. The surveys showed that none of the houses demonstrated above-average radon daughter levels. Radon is produced through the decay of radium and radon daughters through the decay of radon. Four of the structures, however, exhibited above-background concentrations of radon gas. The source of the elevated radon levels could be traced to contaminated soil adjacent to the exterior of the structures.

Seventy-two bore holes were drilled. The report concluded that: "... the total quantity of both contaminated and native soil to be removed is estimated at this time to be 2900 cubic yards or approximately 4000 tons".

No soil could be removed in the winter of 1980-81 because of the weather conditions.

In June, 1981, A.E.C.B. entered into agreements with a number of the owners to remove the contaminated soil. MacLaren was retained as programme manager.

In a letter to the residents in July, 1982, Thomas L. Wells, the Minister of Intergovernmental Affairs, referred to the provincial government's commitment to move the soil and sent the residents a copy of the Malvern Waste Removal Act.

The problem was that although the Act authorized the Cabinet to designate a place to which the Malvern waste would be transported, the consent of the owner and occupier was required before the place could be designated. No one was prepared to consent.

In November, 1983, the federal and provincial governments entered into an agreement concerning the removal of the soil. The plan was that the soil would be removed "as soon as the ground is in reasonable working condition in the spring [of 1984]".

But again, although many sites were considered, no site could be found and the soil is still there.

Because of the difficulty in finding a site to which the soil can be moved, the province has offered to buy many of the residences in the area at market value, as if the area had not been contaminated, without prejudice to other claims of the owners. Many owners have taken advantage of the offer and have sold and moved away. Some of the residences are vacant and some have been rented by the government after the repurchase. The whole area has deteriorated and the community spirit that existed before 1980 has been destroyed.

(1) depreciation in the value of the properties of the
plaintiffs that have not been sold to the province;

(2) the financial loss sustained on the resale of the
properties to the province due to the loss of the interest-free
portion of the mortgage;

At the opening of the trial it was agreed that the evidence would initially be limited to liability in connection with the first four heads of damages and that, should I find liability, the parties would have the opportunity of calling evidence and making submissions on all claims for damages. It may be that some of the claims will be referred for assessment to the master at Toronto.

During the trial the limitation period defence raised under the Public Authorities Protection Act, R.S.O. 1980, c. 406, was abandoned.

No claim is made for injury to health. The evidence indicates that, based on today's standards, there is no serious danger posed by the contamination.

Section 5 of the Proceedings Against the Crown Act, R.S.O. 1980, c. 393, provides in part as follows:

	5(1) ... the Crown is subject to all liabilities in tort to which, if it were a person of full age and capacity, it would be subject,
	(a) in respect of a tort committed by any of its servants or agents;…
	(c) in respect of any breach of the duties attaching to the ownership, occupation, possession or control of property;

No claim is made based on negligence in connection with the failure to remove the contaminated soil quickly after it was discovered in 1980. The province recognized a moral obligation to rectify the situation and made attempts to do so but this does not equate to a legal obligation to pay damages.

I am left to consider the negligence, if any, of provincial employees in 1945 and 1946 and again in 1975.

The province through its employees knew that activities involving radioactive material were being conducted at the Ivanenko farm. It is not clear whether or not there was an awareness that radioactive material was being spread as fertilizer.

Provincial officials were rightly concerned about the danger to health of those involved but did not seem to be particularly concerned about making sure that any radioactive material, waste or contaminated earth was safely disposed of either in 1945 or in 1946 when the operations at the farm apparently continued. The provincial officials may not have known that radioactive material was being used as fertilizer but Dr. Cook and Mr. Guernsey were told of the experiment and the provincial officials could have found out if they had inquired.

Were these officials negligent in not making sufficient inquiries and in not ensuring the clean-up of the radioactive material and contaminated soil? With hindsight it is easy to say that they were negligent because if they had made a thorough investigation in 1945 and 1946 and if the radioactive material and contaminated soil had been safely cleared up at that time then there would have been no problem today. Although standards in 1945 were not as strict as they are today, the danger of radioactivity was well recognized.

In all the circumstances, I have come to the conclusion that the provincial officials were negligent in failing to ensure that any radioactive material, including contaminated earth, was safely removed after the operations at the farm ceased. It was foreseeable that if such material was not removed the health of future occupants of the land could be endangered. Development of the land into a subdivision for residential dwelling was permitted. This surely would not have occurred if the contaminated earth and material had been located in 1945 and 1946 and not removed. The province had a statutory duty when considering a draft plan of subdivision to have regard "to the health, safety ... and welfare of the future inhabitants" including "the suitability of the land for the purposes for which it is to be subdivided": see the Planning Act, R.S.O. 1970, c. 349, s. 33(4)(c).

It is submitted that the province was negligent in failing to find the area of heightened radioactivity, the "hot spot", in 1975.

In retrospect, it would be easy to make this finding when two young journalism students with a borrowed Geiger counter went right to the "hot spot" and found it after federal and provincial authorities had failed.

In my opinion the provincial officials were not negligent in 1975. The Ivanenko farm was not the only investigation being undertaken at that time and staff was limited. Dr. Aitken had good reason to believe that any contaminated material had been widely spread and that there was no health hazard. He decided that, in the circumstances, he was not warranted in unduly alarming the residents by any invasive investigation. Although subsequent events proved him wrong, I cannot find him negligent for this exercise of judgment.

Under the H.O.M.E. plan builders sold the houses and the Ontario Housing Corporation leased and sold the land.

The claims against Ontario Housing Corporation are for breach of contract. There was no express warranty that the subdivision lots would be reasonably fit for the purpose of residential housing and there was no clause excluding implied warranties of fitness.

The question to be answered is whether or not a warranty of fitness for the purpose may be implied by law in the circumstances of this case.

The general rule is expressed in the following passage from 42 Hals., 4th ed., p. 49, para. 54:

Prima facie the rule "caveat emptor" applies also to latent defects of quality or other matters (not being defects of title) which affect the value of the property sold, and the vendor, even if he is aware of any such matters, is under no general obligation to disclose them. There is no implied warranty that land agreed to be sold is of any particular quality or suitable for any particular purpose.

The courts, however, have been prepared to imply a warranty of quality in the case of a purchase of an incomplete house from a builder: see Fraser-Reid et al. v. Droumtsekas et al. (1979), 103 D.L.R. (3d) 385, [1980] 1 S.C.R. 720, 9 R.P.R. 121. The courts will not imply such a warranty in the case of a sale of a vacant lot: see Edwards et al. v. Boulderwood Development Co. Ltd. et al. (1984), 64 N.S.R. (2d) 395, 30 C.C.L.T. 223, 34 R.P.R. 171 (C.A.).

In the case of the sale of goods there is an implied condition of reasonable fitness for a particular purpose and the distinction between the law governing the sale of goods and the law governing the sale of land has been criticized: see Laskin, "Defects of Title and Quality: Caveat Emptor and The Vendor's Duty of Disclosure" (1960), L.S.U.C. Special Lectures 389, and Haskell, "The Case for an Implied Warranty of Quality in Sale of Real Property" (1965), Georgetown L. Rev. 633.

Under the present state of the law in Ontario no warranty of fitness can be implied.

Land was sold, however, containing contaminated soil. Soil contaminated with radioactivity is a latent defect. If the vendor, Ontario Housing Corporation, knew of the contamination then there is no doubt that it was under a duty to make disclosure.

The question remains, can Ontario Housing Corporation be held liable for a latent defect of which it had no knowledge? In McGrath v. MacLean et al. (1979), 22 O.R. (2d) 784 at p. 792, 95 D.L.R. (3d) 144 at pp. 151-2, Dubin J.A. (as he then was) said this:

	I am prepared to assume that, in an appropriate case, a vendor may be liable to a purchaser with respect to premises which are not new if he knows of a latent defect which renders the premises unfit for habitation ... in such a case it is incumbent upon the purchaser to establish that the latent defect was known to the vendor, or that the circumstances were such that it could be said that the vendor was guilty of concealment or a reckless disregard of the truth or falsity of any representations made by him….
	Similarly, I am prepared to assume that there is a duty on the vendor to disclose a latent defect which renders the premises dangerous in themselves, or that the circumstances are such as to disclose the likelihood of such danger, e.g., the premises being sold being subject to radioactivity.

No representation was made here, and on the evidence, it cannot, in my opinion, be shown that Ontario Housing Corporation was "guilty of concealment" when the land was leased or sold. I have already found that the provincial officials were not negligent in their investigation in 1975. Consequently, the circumstances were not such "as to disclose the likelihood of the premises being sold being subject to radioactivity".

An appeal by the province was dismissed in July 1989,. In giving judgment for the Ontario Court of Appeal, Houlden J.A. stated:

“In all the circumstances, the provincial officials were negligent in that, in breach of the Public Health Act, they failed to take reasonable steps to cause to be removed such radioactive material, including contaminated soil, as might endanger the health of future occupants of the land…. In our opinion, the claims here were the result of damage to property caused by the negligence of the provincial officials, and this being so, the plaintiffs were entitled to recover damages for economic loss flowing from or consequent upon that damage.”