Illegal or Abandoned Waste Disposal Sites: The Role of the Municipality

International Municipal Lawyers Association - Edmonton Conference

ILLEGAL OR ABANDONED WASTE DISPOSAL SITES: THE ROLE OF THE MUNICIPALITY

I - THE PROBLEM

Canadians have the dubious distinction of producing more waste on a per capita basis than any other country on earth. This should not lead to complacency on the part of our American neighbours, since they are reputed to be second. No one can deny that the North American continent produces an inordinate amount of waste, including sewage, domestic waste, industrial waste, construction debris, radio-active waste and a host of hazardous wastes, ranging from contaminated soils to highly toxic chemicals, such as PCBs.

All levels of government have from time to time expressed concerns about and have attempted to deal with:

(a) the generation of waste;

(b) the movement or transportation of waste; and

Generally, the North American public has been most preoccupied with the disposal of waste, ensuring that adequate sites were available and that appropriate standards were in place to regulate them. Even with adequate facilities in place and acceptable regulatory standards governing them, a host of new environmental problems have arisen. The construction of extensive interstate highway systems did not eliminate speeders, drunk drivers and accidents. Similarly, sophisticated facilities for the handling of waste and a host of cumbersome and detailed environmental statutes and regulations have not solved the problem. In fact, it could be argued that we have created new problems.

At one time, all liquid waste went into sewers and hopefully to the local sewage treatment plant, and all solid waste went to the municipal landfill site. Private industries created their own industrial dumps. One benefit of this rather primitive solution was that it was a cheap and convenient way of disposing of liquid and solid wastes, and generally you knew where it went. Of course, the result is that many municipal landfill sites have created environmental problems of staggering proportions, including the production of toxic leachates and the contamination of important aquifers. Industrial dumps have turned into "Love Canals" with prohibitive clean-up costs. New environmental standards have created disposal costs for liquid and solid wastes, which at one time were considered negligible, but now are an important aspect of the bottom line. In fact, some businesses simply cannot operate profitably if they have to dispose of their waste in accordance with the present environmental standards, since competitors in other jurisdictions may be operating at lower (and therefore cheaper) standards.

Local municipalities generally did not involve themselves with the shaping of environmental policies. Clearly, Federal and Provincial (or State) governments created these policies and the local municipality as well as its private and corporate citizens would adhere to them. Land use planning, to a large extent, focussed on dealing with the visual and economic impacts of development, and little attention was paid to the environmental impacts. Even if environmental impacts were considered, they were often considered only through the prism of Federal, Provincial (or State) regulations, and the ability of the developer to secure such regulatory approvals.

The Municipality of Metropolitan Toronto is Canada's largest city with a population of approximately 3 million. However, it is situate within an urbanized metropolitan area with a population in excess of 5 million. Yet within a few miles of the municipal boundaries of this urban centre known as the GTA (Greater Toronto Area) are numerous greenlands made up of farmlands, valleys and woodlots, the majority being protected through very restrictive land use controls implemented by the local municipality.

Although the GTA is in a recession at the present time, the rate of growth and the resulting new developments have generated a tremendous waste disposal problem for the community. The approval of new landfill sites through a complicated environmental assessment process has bogged down to the point where the Province has had to create a special legislative process to create three new sites for the GTA. Even that process is now subject to Constitutional challenge.

At the same time, the ever vigilant Environmental Ministry of the Province of Ontario has been reviewing local landfill sites in the smaller fringe municipalities and closing them down one by one as a result of not meeting clear environmental standards. The result has been that additional solid waste which was previously handled locally, has migrated towards the large "regional" sites.

As a result of all this, and in an effort to preserve capacity for the largest regional dump within the GTA, tipping fees were recently increased from $97.50 per tonne to $150 per tonne. Moreover, certain types of wastes are no longer accepted and must be handled by recyclers where specialized facilities are operated by the private sector.

Surplus fill from excavations for new developments are mostly hauled to approved lakefill sites, subject to environmental testing approving the fill for such purposes. A local contractor, bidding on a job, must calculate his costs for construction, by including the disposal of excess fill and often the disposal of obsolete structures on the lands generating a considerable amount of solid construction waste. Similarly, road builders need to dispose of old concrete sections of sidewalks and asphalt in undertaking municipal servicing contracts. To haul waste of any kind within the Province to a regulated and approved waste disposal site, requires the hauler to be licensed by the Province. Contractors generating the waste do not need to be licensed. To remove all the excess fill and construction waste from a development site could result in thousands of dollars of haulage and disposal costs. It is extremely tempting for a contractor to dispose of this material elsewhere, or for the licensed hauler not to pay the high tipping fees and transportation costs associated with dumping at an approved site.

Industrial users are also subject to a great deal of environmental control with respect to the disposal of industrial waste, whether it is toxic or otherwise. Often, industrial complexes would create "temporary storage" solutions to avoid disposal costs. Less scrupulous industrial users would find opportunities to dispose of waste illegally.

There are numerous examples within the Province of Ontario in the last ten years which point to environmental disasters as a result of owners, contractors, industries and haulers trying to avoid high waste disposal costs.

At the present time, the Ministry of the Environment in Ontario has identified approximately 365 illegal waste sites in the Central Region of the Province, comprising the GTA and some surrounding areas. 155 of these were identified as sites existing prior to 1991. Accordingly, at least 186 new sites are under investigation since January 1, 1992, a period of approximately eight months. The Ministry is taxed to the limit and has, as a matter of policy, elected to give priority to illegal wastes, where serious contamination is known or expected, or where environmental hazards or health risks are identified.

Local municipalities within the GTA are suddenly experiencing vacant lots being turned into overnight dump sites, truckers randomly dumping their loads along the sides of roads and on private property, haulers of industrial waste illegally burying the waste and the accumulation of large amounts of waste in temporary storage locations, creating severe environmental hazards.

As this paper will illustrate, the regulatory process has become so cumbersome and the environmental law field so litigious, that simple solutions are no longer taken for granted. As a result, local municipalities are now impacted by being caught in fast developing situations, for which there does not appear to be a simple regulatory solution.

II - JURISDICTIONAL ISSUES

There are significant constitutional differences between the American and Canadian structure as it affects municipalities. Nevertheless, there are similarities. For the purpose of this paper, we will be drawing primarily from the law of the Province of Ontario.

In Canada, there is no single document comparable to the Constitution of the United States, and the word "Constitution" accordingly lacks a definite meaning. The closest approximation to such a document is the British North American Act, 1867, which was renamed the Constitution Act, 1867, in 1982. The Constitution Act did not follow the model of the Constitution of the United States in codifying all of the new nation's constitutional rules. Rather, it only did what was necessary in order to accomplish confederation of three British colonies by creating the new Dominion of Canada, and providing the framework for the admission of all of the other British North American colonies and territories. At the present time, there are 10 provinces and two territories (soon to be three) with a clear division of powers between the Federal Government and the Provinces. Certain matters lie exclusively within Federal jurisdiction, whereas other matters lie exclusively within Provincial jurisdiction. Environmental matters are not assigned by the Constitution exclusively to one level of government. Since it is an aggregate of a number of issues, which come within various classes of subjects, some lie within Federal jurisdiction, others within Provincial jurisdiction.

Ontario municipal corporations are creatures of statute and are solely dependent on Provincial legislation for their authority. Legislators in Canada, as well as the United States, early came to realize that the statutorial corporation was a vehicle admirably suited to the needs of a municipal organization on this continent. In particular, it enabled the Legislature to confine the powers of the local authority to those which can be used to promote the welfare of the inhabitants of the locality having a common interest in one municipal government, by virtue of their proximity to one another. These powers could be enlarged or contracted as the need arose.1

Municipalities, though a distinct level of government for some purposes, lack constitutional status and are merely creatures of the Legislature, with no existence independent of the Legislature or government of the Province.2 In its dealings and relations with the executive government of the Province which created it, a municipal corporation is independent in the sense that it can challenge the right of the Legislature to make certain demands on it.3 Moreover, the Government, or any department thereof, does not have the right to veto or control the exercise of any statutory powers conferred on the municipality by the Legislature, unless such a veto or control is expressly given by a statute.4

It is a general proposition in Canadian municipal law, that a municipal corporation possesses and can exercise:

(a) powers expressly given by statute;

(b) those necessarily or fairly implied in or incident to the express powers; and

In the U.S., it is the Federal Government that has attempted to control the environment, through Federal imposition of national standards on States, to be enforced by State implementation plans. States embrace the Federal standards, in part, because Congress does have the power to regulate interstate commerce and to set the standards; in part, because Congress does have the power to grant or terminate Federal funding, depending upon the willingness of the State to implement Federal standards; in part, because of local political popularity of environmental regulations; and in part, because it was considered a lesser evil for the State to enforce the environmental standards than for it to reject the Federal standards and face the possibility of Federal enforcement actions within State boundaries.6

Thus, States created implementation plans, which were submitted for Federal approval. Once the implementation plans were approved, it was up to each State to use its police power to enforce its local regulations designed to implement Federal standards.

In both Canada and the United States, local municipalities have considerable authority in the area of zoning and land use controls. Moreover, there are numerous other areas of local regulation available to municipalities which allow a municipality to fill gaps in existing regulatory schemes and to define and structure regulations that operate concurrently with Provincial (or State) and Federal law, thereby more precisely catering to unique local needs and concerns.7

Canadian municipalities are somewhat similar to those American municipalities that operate under "Dillon's Rule". In those municipalities, the local Government is totally submissive to the State, except in those matters which are clearly local. In those States where municipalities have been provided with an alternative power or framework known as "Home Rule", those local governments derive powers specifically from their State Constitutions, which authorize the assumption of exclusive authority over municipal affairs by local government. However, with respect to both Dillon's Rule and Home Rule governments, State Constitutions implicitly recognize the superior authority of the State to regulate certain matters. In these matters, the State may always pre-empt local regulation.8 In Ontario, municipalities are subject to all regulatory schemes imposed upon them by the Province. Nevertheless they are given specific statutory authority to enact by-laws to regulate local matters. In addition, municipalities often seek special statutory powers (referred to as "Private Legislation") to give them additional powers recognizing certain unique problems to a municipality, and over which the Province has not exercised a satisfactory degree of control. Examples of such private legislation are those given to municipalities to prohibit or regulate the placing or dumping of fill on lands within the municipal boundaries, to prevent the cutting of trees, or to regulate certain particular types of local activities.

Notwithstanding the specific powers given to municipalities, municipal by-laws (ordinances) are inferior laws and cannot usurp the authority of or be contrary to the higher law. Accordingly, all by-laws are subject to the general law of the Province, and any by-laws which are inconsistent with general Provincial legislation, are void and have no effect, or else are superseded to the extent that the legislature has acted. A by-law may enhance the statutory standards but must not conflict with them.9

In the U.S., for non-Home Rule municipalities, the test utilized to determine whether local lawmaking in a given regulatory area has been implicitly preempted was established in Re Hubbard.10 Thus, when a regulatory field has been fully occupied by state legislation, both supplementary and complementary local regulations are prohibited, even if the subject were otherwise properly characterized as a municipal affair.11

While Home Rule governments can effectively pre-empt state law and the governing of municipal affairs, in matters of statewide concern, Home Rule charter cities remain subject to and controlled by applicable general state laws, regardless of the provisions of their Charters, if it is the intent and purpose of such general laws to occupy the field for the exclusion of municipal regulation.12 While the State is free to legislate on local matters and localities are free to legislate on matters that are not local in nature, each level of government has ultimate authority over those issues most relevant to its own affairs.13

III - APPLICABLE ONTARIO LEGISLATION

The Province of Ontario has legislated extensively in the waste management field. Although traditionally, solid waste management has been the responsibility of the local or regional governments, Part V of the Environmental Protection Act lays down all kinds of regulatory requirements. In addition, the Environmental Assessment Act requires proponents of waste management and undertakings to engage in an environmental planning process prior to the establishment of such an undertaking. Effectively, a person (which by definition includes a municipality) cannot use, operate, establish, alter, enlarge, or extend a waste management system or a waste disposal site, without a Certificate of Approval having been issued by the Province.14 The Act also provides that where waste has been deposited upon, in, into or through any land that has not been approved as a waste disposal site, the Director may order an owner or previous owner, occupant, previous occupant, person who has or had charge and control of the land to remove the waste and restore the site to a condition satisfactory to the Director.15 Furthermore, where a waste disposal site is not in conformity with Part V of the Act or the Regulations, the Province may order the owner or previous owner to take such action as may be required to bring the site into conformity.16

By definition, "waste" includes ashes, garbage, refuse, domestic waste, industrial waste or municipal refuse and a "waste disposal site" means any land or lands covered by water upon, into, in or through which, or building or structure in which, waste is deposited or processed. A "waste management system" includes all facilities, equipment and operations for the complete management of waste, including the collection, handling, transportation, storage, processing and disposal thereof. It is clear from the wording of the legislation that the Province is intending to cover every conceivable situation, and, by definition, could prohibit just about any storage or handling of any type of waste on any property, unless a prior Certificate of Approval was obtained through the Provincial administrative process.17

Any lands used for the disposal of waste, whether lawfully or unlawfully, may not be used for any purpose for a period of 25 years from the year in which the lands ceased to be used for disposal of waste, unless the prior approval of the Minister is obtained.18

The Act also creates offences for failure to comply with the administrative framework, such as failure to obtain required licences, certificates or permits, failure to provide information, failure to report spills, failure to clean up spills, and failure to comply with administrative orders. Penalties can include fines of up to $25,000 per day and imprisonment for a term of one year for personal defendants, and $200,000 per day for corporate defendants. If an adverse effect can be proven, a person can be liable for fines of up to $100,000 per day.19

Part XIV of the Environmental Protection Act gives the Ministry wide powers to cause the work to be done or do the work itself, and charge the cost to the offender. If the offender is the owner of real property, the Ministry's costs are recoverable in the same way and with the same priorities as municipal taxes. Effectively, the Ministry has priority for clean-up costs over all mortgagees and other encumbrancers.20

The Ministry maintains an environmental security account to finance investigations, clean-ups and restorations under the Environmental Protection Act, specifically with respect to costs incurred and which are now recoverable under Section 154 of the Act. The Ministry has issued guidelines and procedures which make it clear that the Ministry will not exercise its prerogative to conduct clean-ups and incur costs, even where such costs are recoverable, except in cases of serious or urgent environmental problems. This prioritizing by the Ministry essentially eliminates Provincial action or clean-ups for the majority of illegal dump sites, which are more likely to be an eye-sore and a nuisance than pose a serious environmental threat or harm. .Unfortunately, without a detailed environmental audit, the real environmental risks are often not exposed.

In Ontario, local municipalities have extensive zoning powers to regulate and control the use of lands and buildings through zoning by-laws. They can prohibit waste disposal sites, salvage yards, outside storage of goods and materials, landfill sites or dumps.21 Moreover, through development control powers, a municipality can require fencing and screening for new development, to visually protect adjoining owners against commercial users of land who may conduct unsightly activities on those lands.22 The Municipal Act also allows municipalities to pass by-laws to control industrial nuisances, prohibit or regulate the use of land for disposal of refuse, prohibit and regulate salvage yards, require vacant lots to be fenced and, generally, prohibit and abate public nuisances.23

Municipalities are given the usual police powers to enforce offences under its by-laws, by way of prosecutions in the Ontario Court (Provincial Division). Although the penalties vary under the various authorizing statutes, often the fines are insufficient deterrents. Moreover, since these are provincial offences, and the criminal law is within the exclusive jurisdiction of the Federal Government, the fines are collectable only through the civil process.

Where a local municipality has the authority to direct or require by by-law, or otherwise, that any matter or thing be done, the council may, by the same or another by-law, direct that in default of its being done by the person directed or required to do it, such matter or thing shall be done at the person's expense, and such expense may be recovered in a like manner as municipal taxes.24 This power gives the municipality, in appropriate cases, the right to conduct a clean-up of the property and charge it back to the owner. Unfortunately, the words "in like manner as municipal taxes" have been judicially interpreted to mean that the costs can be collected in such a manner as municipal taxes, but does not give the municipality a priority similar to municipal taxes.25 Accordingly, if there is no equity in the property, or a mortgagee is threatening to take action against the property, the municipality would be financially at risk in proceeding in this fashion.

The Municipality also has the power to obtain a restraining order from the Ontario Court (Provincial Division) when a conviction is entered.26 More importantly, a municipality can initiate a civil action under the authority of any of its enabling legislation, if such legislation is being contravened, for the purpose of obtaining a mandatory order or restraining order.27 In bringing such a civil action, it can seek interlocutory relief which can include mandatory injunctions and restraining orders. The normal tests with respect to private plaintiffs are somewhat different for a municipality, in the sense that a municipality need not show irreparable harm in seeking interlocutory relief.28

IV - ENFORCEMENT

Most environmental statutes are designed to protect the public interests and appear to create standards and an administrative process which are all encompassing. At first blush, there appears little left for the local municipality to do, other than to be concerned about compliance along with its private and corporate citizens. In the U.S., environmental statutes, in addition to stating lofty public goals, all manifest a commitment to making federalism work through federal imposition of national standards on states, to be enforced by state implementation plans.29 Once the state implementation plans are approved, it is up to each state to use its police powers to enforce its local regulations designed to implement federal standards. The problem is that enforcement at the state level is discretionary. For example, in the Rust Belt States, there has been a strong political incentive for elected governors to go slowly in the enforcement of their state implementation plans, for fear of creating unemployment.30

In Ontario, the Province has clearly indicated that it will only direct funds to projects that involve the implementation of remedial measures to protect against environmental damage and ameliorate fears where serious public health or safety is or appears to be in jeopardy.31 Even in a case where the Ministry had issued orders requiring a clean-up of an illegal waste disposal site, and where the owner had abandoned the property, the Ministry refused to exercise its prerogative to undertake a clean-up.32 Had the Ministry done so, it would have had priority over all mortgagees and other encumbrancers for the costs of the clean-up, and would have recovered its costs in full. The Ministry claimed that it was not in the public interest that it utilize its resources to remove waste which is not a public hazard.33

It is clear that both state or provincial and local governments have a duty to protect the public interest with respect to matters of public health, safety and welfare. On the surface at least, it would appear that both levels of government wish to pursue the same objectives, each complementing the other with respect to specific areas of concern. With respect to environmental matters, clearly the state or provincial governments have statutory authority to regulate a wide range of environmental matters and have not chosen to delegate this responsibility to the local municipality. Yet, it is the local municipality that is most directly affected and often seeks the most immediate response. Moreover, an environmental problem in one municipality which is predominantly industrial or urban, is totally different from a pristine rural municipality which is not accustomed to assaults on its environment, whether they be hazardous or only aesthetic in nature. Traditionally, land use planning in most jurisdictions has been focussed on local government as a direct response to local problems, whereas environmental law is focussed on state or provincial interests. Each system of law functions as though the other did not exist.34 In the absence of an effective integration of land use planning policies with state or provincial environmental regulations, a vacuum develops where the state, for political, financial or other policy reasons, neglects to deal with certain local environmental problems. Often, what is seen from a local point of view as a major problem, in the context of being a matter of state or provincial interest, it is a minor problem or not a problem at all. Nevertheless, by pursuing the principle of what is in the public interest in matters of public health, safety and welfare, the state may be abrogating its responsibility, unless it clearly delegates authority to the local municipality to deal with these issues.

In the absence of delegating such authority, municipalities must learn to be innovative. To begin with, they should use their zoning powers to make certain that offensive uses or activities which may be potentially deleterious to neighbourhoods, be prohibited or properly regulated. For example, a zoning bylaw prohibiting any manufacturing or processing use that was noxious or offensive by reason of the presence of emission or odour, fumes and noise, was held not to be in conflict with the Ontario Environmental Protection Act (which regulates air contaminants and emissions) or with the Ontario Public Health Act (which regulates noxious or offensive trades in order to maintain certain standards of public health). These statutes occupy different fields for different purposes and each statute provides for its own paramountcy in the event of a conflict suggesting that neither act be considered to be subordinate to the other. Accordingly, there were three different purposes manifested by the legislation, namely, land use, environmental control and public health, allowing each statute and the zoning by-law to operate effectively within their allotted spheres according to their particular objective.35 Similarly, where regulations under the provincial Energy Act and a zoning by-law, both regulated the storage and distribution of propane, the court held that there was no operative conflict and that the regulations and by-law did not cover the same ground to the extent that it would be necessary to choose between them. The by-law merely enhanced the regulations.36

The same principle was recognized by the California Court, where the Court upheld a city ordinance over state law. The Court definitively stated that the existence of state legislation will not automatically characterize a given field as a statewide concern, and that the courts will be the final arbiters in this determination. The Court noted that where state and local laws directly conflict, or state legislation discloses an express intent to pre-empt local regulation, the Court will determine which regulation will be given effect.37

In Ontario, if the zoning powers of the local municipality are used to prohibit waste disposal sites, such powers must be based on good planning principles, and are reviewable by a provincial administrative tribunal (Ontario Municipal Board). On the other hand, by-laws passed under the authority of the Municipal Act, are not reviewable by the Ontario Municipal Board, but may be subject to judicial review by the courts. By-laws cannot be discriminatory, nor can they be enacted for collateral purposes. Clearly, if a municipality is to rely on its power to prohibit a land use which may cause a nuisance, it must in fact establish that the land use would present a public nuisance or be a threat to the public health.

In the U.S., municipalities have been authorized to completely exclude waste disposal facilities found to constitute a public menace.38 In addition, significant restrictions on location, quantity of waste accepted and operation of disposal facilities have been upheld. However, courts have consistently defeated attempts by local governments to totally prevent the disposal of waste, either through permit refusal, or by zoning out sanitary landfills, unless it can be clearly shown that the landfill would present a public nuisance, would be a threat to the public health, or had failed to comply with established regulations.39

Often, by-laws can be struck by the courts on the basis that they are too specific and are designed to circumvent the provincial regulatory process. For example, by-laws enacted by a municipality to prohibit a cement company from burning contaminants known as PCBs, were quashed by the courts, on the grounds that a Certificate had been issued by the provincial Ministry, and accordingly, the absolute prohibition clashed with the provincial legislation. Moreover, the court held that legislative developments related to powers dealing with air pollution indicate that municipal councils no longer have the power to regulate air pollution under the authority to prohibit a public nuisance.40 Similarly, a township passed a by-law prohibiting the use of any land in the township for the dumping or disposal of garbage originating more than 25 miles away from such land. The applicant operated a garbage disposal business in the township under the authority of a provincial Certificate of Approval issued under the Environmental Protection Act. The by-law was held to be inoperable with respect to the applicant. The Provincial Certificate took precedence over the by-law.41

On the other hand, an application brought to quash a by-law requiring that all properties in the municipality be kept free and clear of garbage, refuse and domestic or industrial waste of any kind, was denied. The by-law was held to be valid, pursuant to the powers granted to the municipality under the Municipal Act, which made it clear that the municipality could require an owner to incur the expense of clearing his land of waste.42

If existing zoning by-laws cannot be used to eliminate an illegal dump, the municipality may be able to use coercive tactics to bring about the same result.

If any kind of municipal permits for the development or re-development of the property are required, such permits could be withheld until the provincial ministry has approved a remediation plan.43

Municipalities often shy away from seeking civil remedies in the courts, except as a last resort. Litigation is expensive, and often municipal legal budgets are consumed by the by-law enforcement process by quasi-criminal prosecutions, defending municipal liability actions, and defending attacks on municipal actions and decisions through the judicial review process. In 1982, Canada adopted a Charter of Rights and Freedoms, which has entrenched as a constitutional right certain fundamental rights and freedoms. Accordingly, all statutes and by-laws, as well as administrative actions, must recognize these fundamental rights, a fertile ground for new litigation.

Nevertheless, in exceptional cases, municipalities must be prepared to take extraordinary action. In situations where prosecutions and resulting fines become licences to commit unlawful activity, or where immediate action is required, it may be appropriate to commence an action for a restraining order, or mandatory injunction. Such remedies are referred to as "equitable relief" and therefore are discretionary. Nevertheless, the discretion must be exercised by the judge in accordance with judicial principles, which are well established. Moreover, such equitable relief can be granted on an interlocutory basis and can include a restraining order, mandatory order, or the granting or appointment of a receiver.44

In seeking a mandatory order against an illegal waste disposal site, a municipality would argue that the balance of convenience lies in its favour, and that there is a flagrant contravention of the municipality's by-laws. Moreover, one can, often through affidavit evidence, establish a potential for public harm, by referring to possible groundwater contamination, the likelihood of rat infestation, odours and similar environmental and public health concerns. Where mounds of various waste have accumulated, and no environmental audits have been conducted, a simple suggestion that hazardous waste may be involved, may be sufficient to tip the balance of convenience in favour of the municipality. Even where there is clear evidence that there is no public hazard or danger of any kind involved, continuous disregard of a municipal by-law, with contumacious intent, should result in court intervention.

In arguing whether a mandatory order should be made on an interlocutory basis (before trial), a municipality could argue that a restraining order would be an insufficient remedy with respect to the contravention. An injunction will not remove the visible waste, the public nuisance and the potential health or environmental hazard. In effect, the contravention will go unabated until such time as a mandatory order is made.

The discretion to grant or withhold a mandatory injunction, involves more than a consideration of the balance of convenience. It would be wrong to put undue emphasis on the state of affairs existing at the time of determination of the application for a mandatory injunction. If the defendants would have been stopped by a prohibitive injunction, before their own conduct made restorative measures necessary, the defendants should not now be in a better position, because they succeeded in the absence of a prohibitive order.45

Accordingly, the courts have held that a municipal corporation, in the enforcement of its by-laws, is in a different position from the ordinary litigant. If the court has no power to control directly the exercise of council's discretion in matters of by-law enforcement, it should not do so indirectly by refusing to grant injunctive relief. The rights of the community are paramount to the rights of the owner.46 A municipality, whose duty it is to enforce its by-laws, need not show irreparable harm in the same way that must be shown by a private plaintiff.47

Once the municipality has obtained a mandatory order against the offending parties, it is hopeful that compliance will take place. Careful attention should be paid to the drafting of the order to make sure that time limits are specified, so that there is a clear basis for re-attending before the court. Stepped-up orders (where additional consequences are triggered if there is default) should be used as much as possible, in order to avoid unnecessary attendances or having to re argue the entire issue before a different judge. Ultimately, the municipality hopes to use the interlocutory process as a means of achieving its final result, without the necessity of a complete trial on the merits. Accordingly, compliance with the order is essential. Ontario courts are even willing to fix the costs of the proceedings on an interlocutory basis, recognizing that the matter may never go to trial and the issue of costs may never be determined.

Some defendants will continue to disobey the order. In some cases, they will claim that they are impecunious and are unable to comply with the terms of the order. Counsel for the municipality should be careful to anticipate those kinds of defences. Often it can be illustrated that the defendants have benefitted from the wrongful use of their lands. In Ontario, by establishing an illegal waste disposal site, an unscrupulous landowner or tenant can pocket several hundreds of thousands of dollars in a short period of time, by charging tipping fees to its customers, but not having to pay them. A simple calculation of these "illegal profits" can very quickly be used to discredit a plea of impecuniosity.

In the event the orders are not complied with, a municipality continues to have the option to do the clean-up itself, and charge the cost in like manner as municipal taxes. Unfortunately, this self-help remedy in Ontario, does not give the municipality priority over existing mortgagees and other encumbrancers for the clean-up costs.48 Another remedy would be to pursue contempt proceedings. Knowledge of the existence of an injunction is sufficient to raise the obligation to comply.49 In order to establish contempt, it is not necessary to prove that the defendants intended to disobey or flout the order of the court. The offence consists of the intention of the doing of an act which is in fact prohibited by the order.50 In disposing of a motion for contempt under the Rules of Civil Procedure, a judge has a number of options ranging from imprisonment and fines to writs of sequestration against a person's property. A judge may also make such further orders as he considers necessary to bring about compliance.51 This is an opportunity for counsel of a municipality to become innovative, bolstered by a compelling argument: civil contempt proceedings are not for the benefit of the plaintiff or the parties to an action. It is for the good of the public that the orders of the court should not be disregarded, and that people should not be permitted to assist in the breach of those orders. If orders of the court can be treated with disrespect, the whole administration of justice is brought to scorn. It is the duty of the court, when matters such as this are brought to its attention, to take appropriate action, not only to protect itself, but the public to whom the administration of justice belongs.52

One innovative approach we used successfully for a municipality was to have the court appoint a receiver to conduct the clean-up of an illegal waste disposal site, in a contempt proceeding brought against defendants who were subject to a mandatory order to do such a clean-up, but failed to do so.53 In that case, the municipality had obtained a stepped-up order requiring the clean-up within a stated period of time, failing which the defendants were required to post the sum of $275,000 as security to allow the municipality to do the clean-up itself. In the event the security was not posted, the municipality would obtain judgment in that amount against the defendants. This judgment was subsequent in priority to a number of mortgages and thereafter ranked pari passu with other execution creditors. The defendants were insolvent and there was insufficient equity in the property to realize on the judgment. As a remedy in the contempt proceeding, the municipality argued that the court could make such interlocutory orders as are "just and convenient".54 The municipality then sought a receiving order against a defendant, which would allow the appointment of a receiver to clean up the property. The court agreed to the appointment of a receiver, and gave the municipality priority over all mortgagees and other encumbrancers. The court granted the priority to the receiver (even though, the first mortgagee strongly opposed the order) on the grounds that the mortgagee had taken no action, even though the owners had abandoned the lands. We argued that the appointment was in the public interest and that the expenses were for the necessary preservation and improvement of the property. The Province under provincial legislation had the clear authority to do the work and charge costs in priority to all other parties, but declined to exercise its authority. The decision is significant because it permits a municipality to step into the shoes of the provincial Ministry of the Environment, when the Ministry has 6refused to mount a clean-up for its own policy reasons.

The public interest argument justifying the priority has raised considerable interest. No one would disagree that the preservation of the environment is a matter of public interest. However, "environment" has been given a broad meaning and could be as far reaching as dealing solely with aesthetic matters.55 In the Rolex case, the Judge held that although a receivership would benefit all interested parties in that the waste would be removed, the benefit of the public (the local residents) outweighed the detriment to the mortgagee in having the receivership expense take priority over the mortgagees' interest. "If a receiver is not appointed, the garbage dump will remain a blight on the landscape of the Township. It is against the public interest of the community, who must continue to contend with the garbage dump in their midst because a secured creditor, with the greatest interest in the property, refuses to take any action to deal with the property".56

In the absence of any specific statutory authority or by-law contravention, an action could also be based on a claim in nuisance. In law, the person liable in nuisance is the occupier of the property from which the nuisance emanates. Thus, an action in nuisance may not be possible against an owner if the property is occupied by a tenant, unless the owner has authorized his tenant to commit the nuisance.57 Similarly, a mortgagee who is not in possession or control of the property, in law is not liable for any nuisance emanating therefrom.58

If all else fails and a Canadian municipality is stuck with an abandoned, contaminated site, it could apply for assistance under the National Contaminated Site Clean-up Program. This program was announced in 1989, as a Federal-Provincial cost-sharing program to clean up high risk "orphan" sites, where the contamination poses an existing or imminent threat to human health or the environment. At the time of the announcement, there were an estimated 1,000 contaminated sites in Canada, of which an estimated 50 were abandoned.

V – BANKRUPTCY AND INSOLVENCY

Increasingly, municipalities either as innocent by-standers or as active participants in the enforcement process, will be faced with illegal or abandoned waste disposal sites, as a result of a bankruptcy or insolvency. In the case of insolvency, the Rolex case59 51 illustrates that the courts are increasingly prepared to favour the public interest over the private interest. In another case, the court ordered the receiver to respond to the order of the Fire Marshall and demolish a number of housing units which were hazardous to the safety of others living near them. The owner of the housing units was bankrupt, so the question arose as to who had the responsibility of paying for the demolitions. The court found that the safety of individuals living near the housing units was of paramount importance, over and above even the need to payoff secured creditors. Mr. Justice Cory (now a Judge of the Supreme Court of Canada) gratuitously added that in his view, "there is a social duty to comply with an order such as this, which deals with the safety of individuals affected by an asset the receiver is managing". The Court of Appeal in upholding this order, stated that Mr. Justice Cory's reference to a "social duty" to comply with the order was inappropriate, since the duty involved was a statutory one and it was therefore unnecessary for him to consider the social implications of the order.60

Provincial authorities and the courts are however prepared to limit the liability of receivers.61

Before considering the effects of an insolvency, receivership or bankruptcy, regard should be had to the nature of the remedy being enforced. If the remedy is a provincial order under the general law, compliance with the order, whether it is by a trustee in bankruptcy or a private or court-appointed receiver, will be in priority to other creditors.62 Even where the regulatory authority has the power of a statute to carry out the work directed by the order, and thereby become a creditor for the sums expended, it can nevertheless avail itself of this alternative remedy. By doing so, the result is not a recovery of money by the public authority, but rather simply the enforcement of the general law. The enforcing authority does not become a "creditor" of the person on whom the duty is imposed. Accordingly, compliance with the order is a proper duty and expenditure of the receiver, in priority to any distribution to the secured creditor, similar to the payment of taxes or duties.

Trustees in bankruptcy are reluctant to assume responsibilities of an asset which is subject to clean-up orders which are expensive to comply with. Moreover, such clean-up orders often carry with them unknown or hidden costs which are dependent on an environmental audit. Once the trustee assumes responsibility for the property, there is also the concern that the clean-up order will impose a personal liability on the trustee in bankruptcy to comply with the clean-up order. On June 3, 1992, the new Bankruptcy and Insolvency Act received Royal Assent, containing a new provision limiting the liability of a trustee in bankruptcy with respect to environmental matters.63 As a practical matter however, an illegal or abandoned waste disposal site will still have to be remedied before the lands are saleable. The issue thus is, does the cost of remedying environmental damage rank in priority for pay-out in a bankruptcy. Following the recent trend in declaring that orders made under the general law took precedence over the rights of secured creditors, a decision of the British Columbia court applied the same principle to a trustee in bankruptcy.64 The court held that "the balancing of values in this case falls in favour of protecting the health and safety of society over the rights of creditors...but there is also need in modern society for trustees to take on the duty of winding up insolvent estates. The evidence before me indicates that no trustee can be found who will take on the bankruptcy...without a guarantee that he or she will be entitled to trustee's fees, to be deducted from the amount paid out under the order, and will have no personal liability for the costs of the clean-up of the contaminated site..."

In the U.S., the Supreme Court has also dealt with this issue in the Midlantic decision, where a trustee sought to abandon real property in New York that was contaminated by hazardous waste and personal property in New Jersey that consisted of hazardous substances.65 The lower courts authorized the abandonment, but the Third Circuit Court reversed these decisions, finding that the seemingly absolute abandonment power was limited so as to require compliance with laws designated to protect an important interest.66 The Supreme Court affirmed this decision and held "that a trustee may not abandon property in contravention of a state statute or regulation that is reasonably designed to protect the public health or safety from identified hazards".67 The Court emphasized that this restriction on the abandonment power was narrow. "It [did] not encompass a speculative or indeterminate future violation of [the state] laws...[the] abandonment power [was] not to be fettered by laws or regulations not reasonably calculated to protect the public health or safety from imminent and identifiable harm."68

In a recent commentary on the application of the Midlantic holding by the courts it was observed that:

Many have seized on footnote 9 and carved out an exception so as to allow abandonment if there was no imminent harm to the public or where the trustee took certain minimal precautions, short of full compliance with the environmental laws, to minimize the risk to the public. Others have forbidden abandonment regardless of the immediacy of the harm to the public, without full compliance with the environmental laws.

Those courts that have not allowed abandonment have had to face the problem of what to do with the property if the estate has insufficient funds to perform the cleanup. In some cases they have opted to dismiss the bankruptcy case, particularly in those cases where the inability to abandon has made it difficult to retain a trustee. It should be noted that this approach in cases of nonwillful environmental problems raises the spectre that bankruptcy laws were intended to prevent: the pursuit of a debtor by a creditor, mercilessly, without the protection of the laws, without hope of a fresh start, and with the threat of prison and harassment because of the unavailability of funds.

One court came up with the novel solution of conveying a possessory interest in the property to the EPA who would perform the cleanup. Upon completion, the possessory interest would revert to the trustee who would then sell the property and distribute the proceeds to the creditors of the estate. Of course, such a solution would only be viable if the government was willing to perform a cleanup and if the cost of the cleanup did not exceed the value of the property when clean.69

Apart from arguing the public interest, in a receivership, the municipality can also argue priority in favour of the other creditors on the basis that the cleanup costs are appropriate for the preservation and improvement of the property. Since lands in Ontario that have been used for waste disposal sites are subject to a 25 year moratorium for any other uses (unless a clean-up is conducted and a clean bill of health is given by the Ministry), the expenditure of moneys is required to make them saleable.

The general purpose of a receivership is to preserve and realize the property for the benefit of the creditors in general. No receivership may be necessary to protect or realize the interest of prior mortgagees or lienholders. In such cases, the mortgagees and lienholders cannot be deprived of their property, in such a way as to subject the mortgagees and lienholders to the charges and expenses of the receivership. Accordingly, under such circumstances there is no power to authorize expenses for improving or making additions to the property or carrying on the business of the defendant at the expense of prior mortgagees or lienholders, without the sanction of such mortgagees or lienholders.70 However, as an exception to this rule, it can be argued that the expenses incurred are for the preservation of the property and therefore for the benefit of all interested parties, including secured creditors.71 The same exception appears to exist in the U.S., if it can be established that the preservation costs are absolutely necessary and the receiver's services are of special benefit to the mortgagee.72

The reasoning of the courts in the Bulora, Northern Badger, Lamford and Rolex cases, all lead to a potential and fruitful exploitation by municipalities in the enforcement of their own remedies or judicial orders. Often, illegal or abandoned waste disposal sites will also offend local by-laws, and are subject to clean-up orders under property standards by-laws73 or under public nuisance by-laws enacted under the Municipal Act.74

VI - CONCLUSION

Municipalities have a significant role to play in protecting their local interests. Often, reliance is being placed on the state or provincial government, acting within the scope of its authority to solve local problems. Even where the province or state has clear authority to act, it may not respond to the satisfaction of the local municipality. The municipality should therefore be prepared to develop its own contingency plan to deal with such situations. Some general suggestions are

(a) take advantage of all statutory authority that is available to enact by-laws or ordinances that can be enforced against abusers and that contain self-help remedies if necessary;

(b) even where there is overlapping jurisdiction, enact by-laws that are complementary to the provincial or state legislation;

(d) be vigilant in your by-law enforcement and prosecute early in the game;

(e) seek restraining orders and mandatory orders, whenever possible; and

(f) be innovative in seeking remedies.

September 3, 1992

Ian MacF. Rogers, The Law of Canadian Municipal Corporations, Rogers, 2nd Edition, Vol. 1, p. 9
McCutcheon v. Toronto (1983), 41 O.R. (2d) 652 (Ont. H.C.)
Brandon v. Municipal Commissioner, [1931] 2. W.W.R. 65 (Man. C.A.)
Hoddinott v. Nickerson (1983), 22 M.P.L.R. 127 (N.B.Q.B.)
Rogers, supra, p. 309
Robert E. Manley, Federalism and Management of the Environment, the Urban Lawyer, Vol. 19, No. 3 1987)
Pamela Corrie, An Assessment of the Role of Local Government and Environmental Regulations, the Journal of Environmental Law and Policy, Vol. 4-5 (1985-1986) at p. 146
Idem, pp. 149-150
Uxbridge v. Timbers Brothers Sand and Gravel Ltd., [1973] 3 O.R. 107, aff'd 7 O.R. (2d) 484 (Ont. C.A.); Superior Propane Inc. v. City of York (1981), 6 O.R. (3d) 117 (Ont. Div. Ct.)
62 Cal. (2d) 119
Corrie, supra, p. 151
Bishop v. City of San Jose, 1 Cal. (3d) 56 at pp. 61-62 (1969)
Corrie, supra, p. 153
Section 27 of the Environmental Protection Act (Ontario)
Idem, Section 43
Idem, Section 44
Idem, Section 25
Idem, Section 46
Idem, Section 193
Idem, Section 154
Idem, Section 34 of the Planning Act (Ontario)
Idem, Section 41
Sections 134 to 140 of the Municipal Act (Ontario)
Idem, Section 326
Guarantee Trust v. Quality Steels, [1953] O.R. 434 (S.C.C.); Jones v. Gomes (1978), 20 O.R. (2d) 89 (Ont. H.C.)
Section 327 of the Municipal Act (Ontario)
Idem, Section 328
Municipality of Metropolitan Toronto v. N.B. Theatrical Agencies Inc. c.o.b. Danforth Hotel (1984), 24 M.P.L.R. 241 AT P. 249; Corporation of the City of Toronto v. Merit Corporation et al. (1983), 23 M.P.L.R. 125 at p. 130 (S.C.O.)
Manley, supra, p. 662
Idem, p. 667
Ministry of the Environment, Guidelines and Procedures for Environmental Security Account Projects (Dec. 1, 1987)
King (Township) v. Rolex Equipment Co. (1992) 8 O.R. (3d) p. 457 (Ont. C.J.)
Ibid.
Manley, supra, p. 674
Re Martin Feed Mills Ltd. and Township of Woolwich (1984), 46 O.R. (2d) 244 (Ont. Div. Ct.)
Superior Propane, supra
Bishop v. City of San Jose, supra
Township of Vanport v. Brobeck, 22, Pa.Comm.W., 523
Corrie, supra, pp. 158-159
Re Ontario (A.G.) and Mississauga (City) (1981), 33 O.R. (2d) p. 395 (Ont. C.A.)
St. Thomas Sanitary Collection Services Ltd. v. Southwall (Township) (1982), 134 D.L.R. (3d) 112 (Ont. H.C.)
Allan v. Hamilton (City) (1987), 59 O.R. (2d) 498 (Ont. C.A.)
See for example the power to withhold building permits under s. 6 of the Building Code Act (Ontario)
Section 101 of the Courts of Justice Act (Ontario)
Robert J. Sharpe, Injunctions and Specific Performance, 1983, Canada Law Book Limited, p. 27 para. 59
City of Toronto v. Polai, [1970] 1 O.R. 483 at pp. 491-492; City of Toronto v. Merit, supra, at p. 132;Magdalene Polai v. The Corporation of the City of Toronto, [1973] S.C.R. 38 at pp. 4-41 (S.C.C.)
Metropolitan Toronto v. N.B. Theatrical, supra; City of Toronto v. Merit, supra
Guarantee Trust v. Quality Steels, supra; Jones v. Gomes, supra
Canada Metal Co. Ltd. v. Canadian Broadcasting Corp. et al. (No. 2) (1974), 4 O.R. (2d) 167 at p. 603 (Ont. C.A.)
Re Sheppard and Sheppard (1976), 12 O.R. (2d) 4 at p. 8 (Ont. C.A.)
Rule 60, Rules of Civil Procedure (Ontario)
General Printers Ltd. v. Thomson et al., [1965] 1 O.R. 81 at p. 83 (Ont. H.C.)
King (Township) v. Rolex, supra
Section 101 of the Courts of Justice Act (Ontario)
Two recent Ontario decisions illustrate this point: In King (Township) v. Roles, supra, the Court referred to a visual "blight on the landscape". In Scarborough v. R.E.F. Homes Ltd. (1979), 10 C.E.L.R. 40 (Ont. C.A.), the municipality sued for damages for the wrongful removal of three large maple trees on the municipal road allowance. The Court in granting damages beyond mere replacement value stated: "In our judgment, the municipality is in a broad general sense, a trustee of the environment for the benefit of the residents in the area of the road allowance and, indeed, for the citizens of the community at large".
King (Township) v. Rolex, supra
Smith v. Scott, [1973] 1 Ch. 314 at p. 321
Ontario (A.G.) v. Tyre King Tyre Recycling Limited et al. (unreported) Ont. C.J. File 76986/91Q, released May 15, 1992. This is a case which resulted from the Hagersville Ontario tire fire disaster.
King (Township) v. Rolex, supra
Canada Trust Co. v. Bulora Corp. Ltd. (1980), 34 C.B.R. 145 (Ont. H.C.); aff'd (1981), 39 C.B.R. 152 (Ont. C.A.)
Bank of Montreal v. Lundrigans Ltd. (unreported) released by Nfld. S.C. on June 3, 1992. In some provinces, such as Ontario, the Provincial authorities are prepared to negotiate limited liability agreements; see also the lender liability rule under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA or "Superfund"). The rule will protect lenders from being exposed to CERCLA liability for engaging in their normal course of business.
Panamericana de Bienes Y Servicios, S.A. v. Northern Badger Oil & Gas Limited, [1991] 5 W.W.R. 577 (Alta. C.A.); Re Lamford Forest Products Ltd.(unreported) released by B.C.S.C. on Dec. 17, 1991, indexed as [1991] B.C.J. No. 3681
Section 14.06(2) of the Bankruptcy and Insolvency Act (Canada)
Re Lamford, supra
Midlantic National Bank v. New Jersey Department of Environmental Protection 474 U.S. 497 (1986)
Reported at 739 F.2d 912 (3d Cir. 1984), sub nom. In Re Quanta Resources
Midlantic, supra
Idem, at 507, Footnote 9
Mirsky, Conway, Humphrey, The Interface Between Bankruptcy and Environmental Laws, The Business Lawyer, Vol. 46, Feb. 1991
Robert F. Kowal Investments Ltd. v. Deeder Electric Ltd. (1975), 9 O.R. (2d) 84 (Ont. C.A.)
Kowal, supra; Rolex, supra
Clarke, The Law and Practice of Receivers (3d), Vol. 2 at pp. 1072, 1073, 1075, 1078 and 1080
Section 31 of the Planning Act (Ontario)
Section 326 of the Municipal Act (Ontario); Sharpe, supra

Illegal or Abandoned Waste Disposal Sites: The Role of the Municipality