Decision Date: February 17, 2015

Panel: Alan Andison

Keywords: Environmental Management Act – ss. 80, 104; preliminary decision; stay application; RJR-MacDonald Inc. v. Canada (Attorney General) (1994), 111 D.L.R. (4th) 385 (S.C.C.); cost recovery certificate; hazardous substances; fish habitat

Executive Flight Centre Fuel Services Ltd. (the “Company”) and Danny La Sante filed separate appeals of a cost recovery certificate (the “Certificate”) issued by the Director, Environmental Management Act (the “Director”), Ministry of Environment (the “Ministry”). The Certificate states that the Company and Mr. La Sante are jointly and separately liable for the government’s “reasonable costs” of $127,161.89 incurred in responding to a spill of hazardous substances into Lemon Creek on July 26, 2013. As a preliminary matter, the Company and Mr. La Sante requested a stay of the Certificate.

On July 26, 2013, the Ministry of Forests, Lands and Natural Resource Operations was fighting wildfires in the Slocan Valley and requested that the Company provide fuel for helicopters working out of a staging area located along a road off of Highway 6. A tanker truck, operated by the Company and driven by Mr. La Sante, turned off Highway 6 onto a small forest service road (the “Lemon Creek Road”), located adjacent to Lemon Creek, intending to deliver fuel to the staging area. After driving some distance, Mr. La Sante realized it was the wrong road and proceeded back towards Highway 6 via Lemon Creek Road, when the shoulder of Lemon Creek Road collapsed and the truck overturned, spilling over 30,000 litres of fuel into Lemon Creek, a fish-bearing stream.

Following the spill, a class action was filed in the BC Supreme Court by property owners seeking compensation for harm they allegedly suffered due to the Lemon Creek spill. The Company, Mr. La Sante and the Province were named as defendants. The Province made claims against the Company and Mr. La Sante, among others, seeking contribution and indemnity in respect of the claims against it. In addition, the Company made a third party claim against the Province for contribution and indemnity in respect of the claims against it in the class action, and sought to recover from the Province its remediation costs and any amount recoverable against it (including those in the Certificate).

Aside from that litigation, as of December 2014, the Company and the Province face charges under the Fisheries Act in relation to the spill.

Meanwhile, in October 2013, the Director issued a certificate naming Wayne Smook, the Company’s Senior Vice President of Airport Services, as the person responsible for paying the Ministry’s spill response costs of $127,161.89.

Mr. Smook appealed that certificate to the Board, and requested a stay “pending apportionment of fault for the spill in the litigation”.

Shortly after that appeal was filed, the Director advised that he consented to a stay of the certificate, until the courts deal with the apportionment of clean-up costs, or until a further order of the Board.

In November 2014, the Certificate naming the Company and Mr. La Sante was issued. In February 2015, the Director advised the Board that the certificate issued to Mr. Smook was cancelled effective January 13, 2015. The Board then closed its file on that appeal.

After the Certificate was issued and appealed, the Company and Mr. La Sante requested that the Board issue a stay of the Certificate, pending the Court’s determination of liability for the spill.

The Director opposed the stay applications.

In determining whether a stay application ought to be granted, the Board applied the three-part test set out in RJR-MacDonald Inc. v. Canada (Attorney General). With respect to the first stage of the test, the Board found that the appeal raised serious issues to be decided. Consequently, the Board proceeded to consider the next part of the test.

Regarding the second part of the test, the Board held that the Company’s and Mr. La Sante’s interests would suffer irreparable harm if a stay was denied. The Board found that the Company and Mr. La Sante may incur significant damage to their business/professional reputations, and Mr. La Sante may suffer irreparable harm to his personal finances if a stay was denied. While any amount paid under the Certificate could be reimbursed if the appeals are successful, it was unclear whether an indemnity or insurance would cover the payments in the interim.

Turning to the third part of the test, the Board weighed the potential harm to the interests of the Company and Mr. La Sante, if a stay was denied, against any potential harm to the Director or the public interest in cost recovery of the Province’s expenses if a stay was granted.

Specifically, the Company advised that it has spent approximately $5 million on remediation following the spill. The Board noted that a stay would not delay the remediation of the spill, and would not directly affect health or the environment. The Board held that any inconvenience or harm to the Province’s financial interests, if a stay was granted, did not outweigh the risk of irreparable harm to the Company and Mr. La Sante if a stay was denied. In particular, based upon the Director’s actions to date, and the evidence before the Board, it does not appear to be an urgent matter for the Province to recover the costs under the Certificate. The Province’s spill response costs were incurred from July 26 to August 12, 2013, and the Certificate was not issued until November 2014. The previous certificate was issued in October 2013 and the Director voluntarily agreed to a stay of that certificate until it was cancelled early in 2015. There was no evidence that the Director or the Province would suffer significant harm or inconvenience by waiting until after the appeals are resolved.

Accordingly, the stay applications were granted, pending the Board’s final decision on the appeals of the Certificate.