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When to Extend the Limitation Period in Environmental Claims: Alberta Court of Appeal Issues Its Latest Ruling

March 14, 2024

The Alberta Court of Appeal issued its decision in Paramount Resources Ltd. v. Grey Owl Engineering Ltd. on February 21, 2024. This decision represents the latest pronouncement on the potential application of section 218 of the Alberta Environmental Protection and Enhancement Act (EPEA) to extend the limitation period for cases involving the release of pollution to the environment. It also clarifies the scope of the term “person responsible” under the EPEA.  


Paramount Resources Ltd. (Paramount) owned a steel pipeline in Alberta that began operating in 2001. In 2004, Paramount installed a fibreglass liner in the pipeline. Grey Owl Engineering and the other defendants (collectively, the “Defendants”) were all involved in supplying and/or installing the liner or getting regulatory approval for the liner. Grey Owl Engineering, for example, was hired to prepare a regulatory application relating to liner installation.

Between 2004 and 2015, Paramount operated the pipeline without incident. After discontinuing operations for a few years, Paramount obtained regulatory approval to reactivate the pipeline in early 2018 and operations began on March 20, 2018. A leak was identified shortly thereafter, on April 11, 2018. 

The technical specifications for the fibreglass liner stated that installation below the frost line was necessary to avoid damage that can be caused by water freezing inside the pipeline. Paramount’s investigation determined that the pipeline was incorrectly installed above the frost line and that freezing water had damaged the liner and caused the leak. 

Basis of Claim

Paramount remediated the contamination caused by the leak at an estimated cost of C$20-million in 2018. In February 2019, it sued the Defendants in both tort and contract, alleging they failed to ensure the pipeline and liner were installed below the frost line as required. 

The Defendants argued that Paramount’s claim was time barred. The fibreglass liner was installed in 2004, and Paramount had filed its claim long after the 10-year ultimate limitation date in the Alberta Limitations Act had passed. In contrast, Paramount argued its negligence claim was a claim for contribution and indemnity concerning the costs and expenses associated with its statutory obligation to remediate the release. As such, the limitation “clock” did not begin to run until the statutory remediation obligations arose in 2018. In the alternative, Paramount brought an application seeking an extension of the limitation period under section 218 of the EPEA. Section 218 allows a judge to extend the limitation period where the claim at issue alleges that the release of a substance into the environment has caused an adverse impact.

The chambers judge found in favour of the Defendants. Paramount appealed the decision. 

Issues Before the Court

Contribution Versus Indemnity

The Court of Appeal spent considerable time analyzing the basis of a claim for contribution versus a claim for “indemnity.” It confirmed that “a true claim for contribution arises from shared liability [between the claimant and the claimee] to a third party.” In this instance, Paramount had not established the Defendants could have been directly liable to the Director of Alberta Environment and Protected Areas (Director) for the environmental damage. Since it was not demonstrated that the Defendants had shared liability with Paramount to a third party (such as the Director), no claim of contribution arose. 

Scope of “Person Responsible” Under the EPEA

Although the definition of “person responsible” is often broadly interpreted, the chambers judge noted it is not intended to capture “everyone who was ever involved in construction of a pipeline.” The chambers judge also noted that construction of a pipeline does not amount to having charge, management or control of the substances within the pipeline as required under the definition of “person responsible.” 

The Court of Appeal not only upheld the chambers judge’s decision regarding the interpretation of “person responsible,” it also noted there was no evidence the Director ever considered the Defendants liable under the EPEA as a “person responsible for the contaminated site.” Finally, Paramount’s statement of claim did not suggest the Defendants had or breached any duties owed under the EPEA. 

Should Section 218 of the EPEA Apply to Extend the Limitation Period?

Any decision pursuant to section 218 of the EPEA must consider the purposes of both the Limitations Act and EPEA and the policy considerations underlying each act. On the one hand, the Limitations Act is an act of finality. It requires actions to be commenced within certain periods of time to protect defendants from ancient obligations and ensure disputes are resolved while evidence is still available and memories are fresh. In contrast, the EPEA invokes the “polluter pays” principle, and section 218 of the EPEA enables an extension of limitation periods to ensure that, in some circumstances, a polluter does not escape liability by the mere passage of time. Furthermore, because environmental contamination may be difficult to detect, strictly applying the “discoverability” rule under the Limitations Act to all environmental claims may result in unreasonable or unfair results.

The result is that any decision under section 218 of the EPEA requires a balancing act, where: 

The judge must consider when the alleged adverse effect occurred, whether it ought to have been discovered by the claimant had the claimant exercised due diligence, potential prejudice to the defendant and, as well, “any other criteria the court considers to be relevant.”

In upholding the chambers judge’s decision to dismiss Paramount’s section 218 extension application, the Court of Appeal held the chambers judge committed no reviewable error in balancing the objectives between the Limitations Act and the EPEA and finding no extension ought to be granted. In that regard, the Court of Appeal stated: 

Finally, the chambers judge may properly consider the relationship between the claimant and the party against whom its claim is brought, along with the facts related to the pollution — its magnitude and the events leading up to it. While the fact that the claim for contribution is from one polluter to another also does not categorically preclude a s. 218 extension from being granted, the relationship between the claimant, the claimee and the pollution is a factor that can properly be considered in exercising the chamber judge’s discretion under s. 218.


As noted, the pipeline belonged to Paramount, and had since its construction in 2001, and Paramount had legal responsibility to remediate the leak from that pipeline. Until Paramount raised it in the context of these applications, there was no suggestion that the defendants were considered responsible under the EPEA.  


This decision provides clarity regarding the definition of the term “person responsible” under the EPEA. It reconfirms that the definitive factor is the control over the substances that were released at the time of the release, as opposed to historical involvement in the construction or approval of the pipeline or other container in which the substances were being transported or stored.

The decision also provides additional insight into the factors the courts should consider when reviewing limitation period extension applications under section 218 of the EPEA. In many respects, these factors are quite broad, and the Court of Appeal confirmed that section 218 “does not create categories of permitted and unpermitted claims for which an extension can (or cannot) be granted.” For example, its provisions do not prohibit one responsible party from claiming against another. Similarly, its provisions are not restricted to undetected historic releases, but can also apply to releases that were quickly detected. Instead, the court must exercise its discretion to consider the factors specifically identified in section 218 “as well as any criteria the court considers relevant” to the particular case.

Finally, although not its main focus, the decision succinctly analyzes and explains the difference between claims for contribution and indemnity claims. Such clarity will only serve to assist parties when trying to characterize the nature of their respective claims and defences thereto.

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