When contamination flows offsite, can a subsequent purchaser of the downgradient parcel successfully sue the upgradient polluter?
Most caselaw suggests that the buyer is out of luck. Caveat emptor, let the buyer beware, is still a fundamental principle of real estate law. The buyer who asks no questions can have nasty post-closing surprises. Depending on the terms of the agreement of purchase and sale, the buyer may have a contractual claim against its vendor. But the only claim it can have against the upgradient polluter is in tort. And, by definition, the tort is over before the purchase.
However, a recent New Brunswick case has given such buyers some hope. In Cousins v. McColl Frontenac, Cousins bought three parcels of land. In 1986, he bought a closed Texaco gas station, “as is, where is”. The station was known to have had a leaking tank. Texaco, now McColl Frontenac, agreed to remove the tanks but would do no more. The next year, Cousins bought an adjoining parcel from the local Bishop. 16 years later, in 2003, he accepted a deed from the Town of a third parcel, a roadway. All proved to be badly contaminated with gasoline from the station.
Cousins sued Texaco. He lost his claim for compensation for the gas station parcel (because he bought it “as is”), and for the Town parcel (because he must, by 2003, have known it was contaminated). However, without giving detailed reasons, the Court of Appeal did award Cousins damages for the Bishop parcel. This parcel was, the court said, already contaminated beyond remediation when Cousins bought it; it didn’t matter that additional contamination continued to flow into the Bishop parcel from what was by then the Cousins parcel, the original gas station. Nowhere does the court identify the tort that, it says, Texaco committed to Cousins, by contaminating the Bishop parcel before he bought it. Any such tort would have been committed against Bishop, whose loss, if any, occurred twenty years ago and should be statute barred.
This case is very hard to reconcile with established tort rules, and may not be good law. But as a decision of a Court of Appeal, it cannot be ignored, and may spark many more lawsuits.