Disclose that contamination? Or not?
07 Jan 2014 | By Dianne Saxe
Owners of contaminated sites are sometimes reluctant to disclose what they know, hoping to get rid of the liability with the property. Anyone who is so tempted will want to follow what happens in 1623242 Ontario Inc. v. Great Lakes Copper Inc., 2013 ONSC 7935 and 2013 ONSC 2548.
In this case, Wolverine Tube 1 sold a property in Fergus, Ontario, to 1623242 Ontario Inc. ("162"), without disclosing that its predecessor, Wolverine Ratcliffs Inc. ("Wolverine"), had contaminated the property with PCB's. Wolverine Tube 1 took a substantial vendor-take-back mortgage, which it assigned to a related company, 3072453 Nova Scotia Company ("307").
The Ministry of the Environment discovered the contamination and ordered both present and past owners to remove the contaminants.
Great Lakes Copper (GLC), which 162 says is also Wolverine's successor, removed the contaminants, but charged 162 for the clean-up. 162 says it had not agreed to pay for this.
Everyone then sued.
162 began a fraud action against Wolverine and its successors and related companies, Wolverine Tube 1, 307, and GLC, (collectively, "the Wolverine group"), alleging that they conspired to induce 162 to buy the property at an inflated price by not disclosing its contamination, and then charged it for the clean-up with a view to re-possessing the Property ("the fraud action"). GLC began two construction lien actions against 162 in Guelph, based on its refusal to pay it for the clean-up that GLC performed ("the lien actions"). 307 began a foreclosure action against 162 in London, based on its failure to continue making mortgage payments ("the foreclosure action").
The purchaser, 162, successfully asked the court to consolidate all the lawsuits, and was awarded costs. The central issue will now be decided in the fraud action: was failure to disclose the PCB contamination fraud?