Law Times

October 31, 2016

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Law Times • OcTOber 31, 2016 Page 11 Inform clients of environmental hazards: lawyer BY MARG. BRUINEMAN For Law Times A recent case serves as a reminder for lawyers to beware of environ- mental hazards in any real estate deal, say members of the profession. It also raises the question for some of how far lawyers should go in their reporting obligations when searching titles. In Dobara Properties Lim- ited et al. v. Arnone et al, a Ha- nover, Ont. law firm was fined for having missed the limitation period for its clients. At issue was a piece of commercial prop- erty Dobara Properties Limited, through its sole shareholder Ez- zat F. Gindi, had purchased in Marathon, Ont. in 2005 for $575,000, though he later learned it had once been occupied by a gas station. Gindi and his com- pany were suing their original at- torney, Gino Arnone, and Erick- son & Partners, who had acted for both seller and purchaser. The reminder for real estate lawyers is to be alert of any en- vironmental concerns and to notify the client if there is any in- dication of a concern, says Arnie Herschorn, who represented de- fendants Barbara Hicks, Selwyn Hicks and Hicks & Hicks PC, in a later claim involving the property. Herschorn is a civil litigator with Minden Gross LLP in Toronto. Former gas stations, oil stor- age and dry cleaning businesses are all enterprises that have the potential of leaving a negative impact on properties, says Her- schorn. "In this day and age, past use for something like a service sta- tion is a red f lag for a real estate lawyer. You better follow up on that. You have to warn your cli- ent that there may be an envi- ronmental problem," says Her- schorn. In the case at hand, Gindi found out the property was once occupied by a gas station, after an expired lease on the company indicated Shell Oil had been lo- cated there. Gindi indicated the original lawyer didn't advise him about the oil company hav- ing once occupied the property. Six months after the sale closed, the insurer alerted Gindi about its history, and Gindi con- tacted the lawyer, Gino Arnone. Arnone responded that his firm had discharged the Shell lease, which showed that Shell had op- erated a gas station and kept five underground gasoline storage tanks on the property. An attempt to sell the prop- erty in 2008 failed when the new purchaser had assessments done on the property and was unable to secure financing because of the tanks left by the former gas station. In 2011, Dobara's Gindi spent $56,712.31 to remove the soil on the property contaminated with gasoline and retained Hicks & Hicks to sue the original lawyer. "The client was left with the cost of doing investigation and remedial work. Environmental concerns should have been on the radar for any real estate law- yer," says Herschorn. When the case first came be- fore the Ontario Superior Court in 2014, Justice Sidney Lederman determined the two-year limita- tion period began to run in 2008 during the failed sale. He also had found that it had expired by the time the legal action was launched and dismissed the case. Dobara again turned to the courts in his attempt to get com- pensation. This time he went after the second set of lawyers, Barbara Hicks, Selwyn Hicks and Hicks & Hicks. The Hicks defendants ad- mitted liability at trial, but they denied that Dobara Properties had sustained any damages that should be compensable. "In my view, these remedia- tion expenses are a reasonably foreseeable consequence of the Arnone defendants negligence. There is no dispute that the plain- tiffs purchased a contaminated property that they would not have purchased if they had known that the property was a former gaso- line station," wrote Justice Mario Faieta of the Superior Court of Justice earlier this year. Environmental lawyer Paula Boutis of Siskinds LLP in To- ronto says a generally safe ap- proach for real estate lawyers is to just assume any property is at risk of having some sort of envi- ronmental concern. "What we say to people is whenever you're dealing with commercial properties or indus- trial properties you should just assume there was likely to have been an environmental risk as- sociated with the property. It depends where, but for the most part almost anywhere in On- tario where you had commercial properties, you should assume, as your starting position, there was probably some sort of harm- ful environmental activity there unless your search is telling you differently," she says. "It's that common, especially gas stations, which are every- where, have been everywhere. That's true even in residential neighbourhoods." Aaron Atcheson, a partner with Miller Thomson LLP in London, Ont., agrees and sug- gests even more can be read into this case. He is concerned about the responsibility upon the law- yer to review title for any environ- mental risks dealing with deleted instruments. Dobara involved an old notice of lease of an occu- pant no longer on the property. "What's concerning about this was based on the agreed statement of facts," he says. "Gen- erally, real estate lawyers aren't in the business of identifying envi- ronmental problems. They're in the business of, on that side, of advising their clients to consider whether or not they need to get environmental help on this." He suggests the best approach in most commercial real estate transactions is to consider explor- ing possible environmental issues related to the property. That, he says, is not a far stretch for com- mercial property in Ontario. "In any environment real es- tate transaction these days, you should consider whether you should get an environmental site assessment," says Atcheson. LT FOCUS Arnie Herschorn says a recent case is a reminder for real estate lawyers to be alert of any environmental concerns. Innovation + Ideas in Leasing Toronto • Online | November 2016 COURSE LEADER Stephen J. Messinger, Senior Partner, Minden Gross LLP, Lexpert® Top Ranked in Property Leasing in the 2016 Canadian Legal Lexpert® Directory COURSE HIGHLIGHTS • State of the Art • The Art of Negotiation DATE & LOCATION Toronto: November 16th, 2016 St. Andrews Club and Conference Centre 150 King St West, 27th Floor, Toronto, ON, M5H 1J9 Live webinar: November 16th, 2016 FOR QUESTIONS AND GROUP RATES, PLEASE CONTACT: Toll-Free: 1-877-298-5868 Direct: 416-609-5868 Fax: 416-609-5841 Email: Website: Register online at For more information, please contact Lexpert® Professional Developments at 1-877-298-5868 8TH ANNUAL DEALING WITH THE LEASE Untitled-6 1 2016-10-24 3:17 PM

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