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Sunrise Propane explosion – landlords added to class action

Here’s an update on the Sunrise Propane explosion in Downsview, Ontario, and the gradual progress of the class action by the aggrieved neighbours.

In July 2012, the Ontario’s Superior Court of Justice certified a class action against all proposed defendants except the Teskey defendants, which owned the properties on which the Sunrise propane facility was located (2094528 Ontario Inc. (“Teskey 209”), Teskey Construction Co. Ltd., Teskey Concrete Co. Ltd. and HGT Holdings).  The Court found that the plaintiffs had failed to establish the first criterion of the 5-part test for certification [ s. 5(1)(a) of the Class Proceedings Act, 1992] i.e., the proposed class proceeding failed to disclose a cause of action.

In November, the Court heard a motion by the plaintiffs seeking to amend the statement of claim and certify the action against the Teskey defendants.  The plaintiffs dropped the trespass action, leaving three causes of action remaining: negligence, nuisance and strict liability.

In one of the first analyses by a Court in a post-Smith v. Inco world, Mme Justice Horkins found that the plaintiffs failed to follow the clear directions set out in that case, by not pleading the four criteria required to support a claim in strict liability. Thus, their strict liability (Rylands) claim failed.

Nor did the plaintiffs correctly plead nuisance; instead of describing the tort in conformity with its legal definition, the plaintiffs defined it in terms of a “dangerous propane condition”, which is not, per se, a nuisance.  Justice Horkins noted that an essential element of nuisance is significant interference with a plaintiff’s land; in this case, the interference arose only when the explosions occurred and the propane escaped onto adjacent property. Even reading the pleading generously to allow for frailties in drafting, the nuisance claim would fail: the Teskey defendants did not reasonably contemplate that Sunrise would permit illegal truck-to-truck propane transfers or smoking in the area, and that this would create the possibility of an explosion occurring causing such damage.

The plaintiffs pleaded negligence based on the Occupiers’ Liability Act; this cause of action failed, as under that Act, the occupier owes a duty to “persons entering onto the premises”, not to those who were not on the premises. At no time did the plaintiffs allege that anyone in the class entered the Murray Road premises.

As for common law negligence, the Teskey defendants argued that there was no landlord/tenant relationship between Sunrise and Teskey Concrete, Teskey 209 or HGT. Only Teskey Construction was a party to the Sunrise lease, and as landlord exercised no control, therefore did not owe the plaintiffs a duty of care.

The Court disagreed with the Teskey defendants’ argument that, at common law, a landlord is immune from the negligence of its tenant.  The Teskeys relied on cases that predated the Occupiers’ Liability Act, and which dealt with losses that occur on the landlord’s property; here, damage occurred off site. The judge found the law is not settled in this area, and the negligence cause of action should not be struck as against Teskey Construction.   It was not clear that the other three Teskey defendants  were not landlords.

Held: The Court certified the action as a class proceeding based on negligence.  The proposed statement of claim met the s. 5(1)(a) criterion and granted the plaintiffs leave to amend the statement of claim to reflect a single cause of action: in negligence, against the Teskey defendants.

Both Teskey and the Plaintiffs have brought Motions seeking leave to appeal Justice Horkins’ decision. Teskey wants out completely. Plaintiffs want the other causes of action included. The Motions seeking Leave are scheduled to be heard on April 17, 2013.

By Jackie Campbell

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