When will a Court grant an extension of the 10-year limitation period pursuant to the "Environmental Protection and Enhancement Act"?
Market Insight 27 February 2023 27 February 2023
In a 2022 case, the Court of King’s Bench of Alberta ruled that the limitation period should not be extended on the facts before it.
In Paramount Resources Ltd. vs. Grey Owl Engineering Ltd, the Court of King’s Bench of Alberta addressed what constitutes a claim for contribution as per Section 3 of the Limitations Act (the “Act”), which allows for a claim to be filed within a 10-year limitation period. The Court also addressed the possibility of requesting an extension for this limitation period in the context of environmental matters.
Paramount Resources Ltd., the owner and operator of a pipeline, had sought to convert its pipeline from a simple steel pipe to a carrier pipe. Grey Owl Engineering Ltd, W.F. Holdings Ltd., Custom Fiberglass Contractors Ltd, Chief Pipeline Contractors Limited and Crossfire Energy Services Inc. (collectively the “Defendants”) were involved in this matter as project managers, fiberglass installers and suppliers. On April 11, 2018—14 years after the construction work had ended—, an environmental leak occurred, costing $20 million in damages. Paramount claimed that the Defendants had failed to inform it of the situation in a timely manner and to bury the pipeline deep enough in the first place.
On February 6, 2019, Paramount filed a suit against the Defendants, alleging negligence with respect to deficiencies in the construction of the pipeline. The Defendants responded with a motion for summary dismissal of the negligence claim, arguing that the suit had been filed after the 10-year limitation period pursuant to Section 3(1)(b) of the Act. Paramount contested that this period had passed or, in the alternative, cross-applied for an extension of the limitation period under Section 218 of the Environmental Protection and Enhancement Act (the “EPEA”). According to this section, a judge may extend a legally enforced limitation period in Alberta for the commencement of a civil proceeding that is based on allegations of adverse effects caused by a substance released into the environment.
Extension of Limitation
Since the 10-year limitation period provided by Section 3 of the Act had expired, Paramount requested an extension pursuant to Section 218 of the EPEA. This section indicates that the Court may grant the extension in an environmental matter, even if the request is made after the expiry of the limitation period.
In deciding whether to approve this request, the Court found that it was necessary to balance the objectives of the Act (ending potential liabilities so that people can move forward and recognizing practical problems of lost records and faded memories) against those of the EPEA (protection of the environment and acknowledgment of the reality that environmental damages can go undetected for long periods of time). In this case, the Court found that documents were missing due to the passage of time, which confirmed that the Act’s objectives conflicted with the basis of considerations for an extension.
Even if the extension requested by Paramount was relatively short compared to previous requests in similar cases where Section 218 of the EPEA was invoked, the Court held that this matter was different from the others, as it did not involve long-term undetected emissions. Moreover, the Court noted that a review had been conducted one week prior to the leak and that nothing abnormal had been reported.
In a context where the damages were caused by a defendant’s negligence, the Court recognized that there would be an injustice if such a claim would not be considered simply because the 10-year limitation period had passed. Furthermore, the Court added that Section 218 of the EPEA does not exist as a remedy for the unfairness ensuing from limitation-barred claims.
As a result, the extension requested by Paramount was declined and the action was dismissed.