Involved in a Commercial Real Estate Transaction? Make Sure You Complete Your Due Diligence with Respect to Environmental Issues Due diligence is an essential part of any real estate transaction. In a residential real estate transaction, searches are typically performed to determine if there are any issues with respect to title, encroachments, work orders, open building permits, arrears in taxes or utility bills, and writs against the seller. Of course, every property is unique and additional searches may be required depending on the particular situation. In a commercial real estate transaction, it is important to conduct searches for not only the above-mentioned issues but also for additional matters that can especially affect commercial properties. Failure to conduct proper due diligence can expose the purchaser to significant liability. In today’s post, we will focus on liability for environmental issues and how you, as a purchaser of a commercial property, can take steps to protect yourself.Environmental LiabilityUnder Ontario’s Environmental Protection Act, RSO 1990, c E.19, current and former owners of a property can be held liable for environmental contamination, whether or not they are actually responsible for causing the contamination. In Hamilton Beach Brands Canada Inc v Ontario (Environment and Climate Change), 2018 ONSC 5010 (Div Ct) (leave to appeal to ONCA denied), the current owners and tenants of property were held liable for contamination that occurred at the hands of a former tenant decades earlier. As seen in the case of Midwest Properties Ltd v Thordarson, 2015 ONCA 819 (leave to appeal to SCC denied), corporate ownership of a property will not necessarily protect individuals from being held personally liable. Courts are willing to pierce the corporate veil and hold directors and officers liable for environmental contamination pertaining to properties owned by their respective corporations. Furthermore, a government order to remediate a property does not preclude a civil action for damages from owners of neighbouring properties that may be affected by the contamination.How Can You Protect Yourself?Before purchasing a commercial property, it is important to thoroughly investigate the history of the property and determine if it is possible that contamination occurred on the property at any time in the past. This may require determining all the previous owners and uses of the property. The Ontario Ministry of the Environment, Conservation and Parks (MECP) should be contacted to determine if there are any records of contamination relating to the property in question. If there are any storage tanks on the property, their history should be investigated. Since 2002, all underground fuel storage tanks must be registered with the Technical Standard Safety Authority, and larger tanks require annual testing. In some cases, it may be necessary to perform a Phase I or even a Phase II Environmental Site Assessment (ESA) to determine if any contamination exists on the property, either above or below the surface or in the groundwater. If there are plans to change the use of a property, the MECP may require that a Record of Site Condition be filed which in turn requires completion of an ESA.If you have any questions regarding liability for environmental contamination or environmental due diligence that should be completed prior to purchasing either a residential or commercial property, please contact Laura Rosati, Commercial Real Estate Lawyer at Devry Smith Frank LLP, at 289-888-6643 or laura.rosati@devrylaw.ca “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Real EstateNovember 4, 2020March 20, 2024
The Importance of Having Legal Counsel for your Aggregate Extraction Licence Aggregate (sand, gravel, stone) extraction is one of the most controversial and heavily regulated industries in Ontario. Necessary to build infrastructure in the province, it is often misunderstood and underappreciated. The industry is governed by a complicated web of legislation and policies: the Aggregate Resources Act (the “ARA”), the Ontario Water Resources Act, the Environmental Protection Act, the Endangered Species Act, the Federal Fisheries Act, the Planning Act, the Provincial Policy Statement and, in some cases, the Growth Plan. It is further subject to a complex set of rules and procedures. Licensing Approval Process An operator cannot operate a pit or quarry without first securing a licence from the Minister of Natural Resources and Forestry (the “Ministry”). The terms and conditions of the licence will depend on a number of factors, including whether the extraction is above or below the water table, whether the extraction is on private or public land and how much aggregate is proposed to be extracted. There are 15 categories of licences. The process of obtaining a licence can take years and involves a process of comprehensive consultation with the local community and, where applicable, First Nations. It generally requires the production, and peer review, of environmental, noise, traffic, dust and water reports. Applications for local planning permissions (official plan and zoning by-law amendments) are often required. It engages a number of agencies, including municipalities, the Ministry and Conservation Authorities. A crucial part of the process is the negotiation of the terms of the site plan which sets out the requirements under which the pit or quarry will operate, outline what must be done to mitigate potential adverse impacts and what must be done to rehabilitate the site once the extraction process has finished. It may also be necessary to enter into agreements with the local municipality are often required as a condition of achieving a licence or planning permission. Often an application will need to be considered by the Local Planning Appeal Tribunal, a court-like body that will hear evidence, consider objections to a licence and decide whether it should be issued. Factors which determine if a licence will be issued The general factors to be considered in issuing a licence are listed under s. 12 of the ARA. These factors, designed to protect the public interest, are broad and subject to considerable interpretation. As a result, it is important to engage a lawyer early on to help guide the application successfully through the process. As an example of a successful intervention, DSF lawyers were at the forefront of seeking amendments to the ARA to prohibit municipalities from demanding fees from aggregate operators to pay for road maintenance and repairs. This has resulted in significant cost savings for existing and future clients. The Importance of Experience DSF Lawyers in Aggregate Approvals A successful licence application, requires a keen understanding of the applicable law, sound planning and solid execution. Our experienced lawyers at DSF are ready to help you. David White and Marc Kemerer are leading lawyers in the area, having had notable success in securing licences and planning approvals for a wide variety of extraction proposals, including those which faced strong municipal and local opposition. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Planning and Development LawSeptember 29, 2020July 5, 2023