Canadian Lawyer InHouse

By John M. Buhlman, Partner, and Robert B. Warren, Partner, WeirFoulds LLP Your company is selling a processing facility that it no longer requires. The facility is known to be contaminated so the agreement of purchase and sale provides that the purchaser assumes all liability for the contamination and indemnifies the vendor for any claims that may arise from the contamination and covenants to clean up the contamination. The purchase price is discounted significantly because of the contamination. Is the company protected from future orders by the Ministry of the Environment? Legal interests in the pipeline You are in-house counsel for a petroleum processing company with some properties to sell and some environmental issues to address. How do you guide your company safely through these matters? A purchaser offers to purchase one of your industrial properties, which is contaminated, and to convert it to another industrial use. The purchaser inserts as a condition of closing that the vendor provide a record of site condition asserting that the vendor is obligated to provide one. You, as the vendor, refuse, taking the position that an RSC is not required. Who is correct? The property is sold relying on the purchaser's assumption of liability and the indemnity, but the purchaser goes bankrupt two years after the closing without cleaning up the contamination. An order to clean up the property is issued to the vendor by a director of the Ministry of the Environment. As in-house counsel, you are also a director and officer of the vendor company. Do you have any personal responsibility for ensuring that the order is complied with? A process engineer calls you and tells you he has come up with a modification to a process that will not only save the company money but will reduce air emissions. He explains that the company has a Certificate of Approval that was issued 10 years ago for the process and there have been no amendments to the Certificate of Approval. He proposes to go ahead with the modification without obtaining from the Ministry of the Environment an amendment to the approval or a new approval since the modification will reduce emissions. The process engineer is correct, no approval for the modification is necessary. Your company has an environmental management system in place, designed and implemented by its management consultants. The company has a spill, arising from the failure of one of the components of a wastewater treatment system for which the company holds an environmental compliance approval. The MOE imposes an administrative monetary penalty. The company seeks a reduction in the size of the AMP because, at the time of the spill, it had an EMS in place. Does the company qualify for such a reduction? After the spill, reports to senior management describe the circumstances causing the spill, the measures taken to clean it up, and the measures taken to prevent a recurrence. Has the company done enough? INHOUSE APRIL 2012 • 15 1 2 3 4 5 6 b) No a) Y es b) No a) Y es T rue or False? b) No a) Y es b) The vendor a) The pur b) No a) Y es chaser

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