Last month we explained that the decision to act as an executor is not one to be taken lightly – it is a role that comes with significant duties and exposure to risk. We had initially intended to discuss the duties of an executor in this month’s post, but a recent question inspired us to first discuss one of the risks instead. This month, we will draw attention to a risk that often catches our clients by surprise – the risk that contaminated property can pose.
Examples of potentially contaminated sites can include property that has been used as a:
- dry-cleaners, photo lab, service station; or
- has been used for metal fabrication, production or preservation of textiles or wood products, vehicle repair or maintenance, printing or publishing; or
- a variety of other similar activities.
As a result of British Columbia’s Environmental Management Act (the “EMA”), all current and previous owners or operators of a “contaminated site” as defined under the EMA are responsible for remediation of the site and are jointly and severally responsible for remediation costs. Clearly, this can have significant liability and estate planning implications for the owner of a contaminated site while the owner is alive. However, a person may or may not be aware that they own a contaminated site, and even if they are aware, they may not yet have remediated the site before their death. This can have significant implications for their executor.
Section 27(2) provides that an executor is generally not personally responsible for remediation of a contaminated site (that they did not contaminate or allow to become contaminated). Unfortunately for executors, this does not mean they are off the hook; Section 27(3) provides that an executor is, “designated as responsible, in his or her role as a trustee and to the extent of the trust, for remediation of a contaminated site.”
For people who own property that may be a contaminated site, it is important to determine whether it is a contaminated site, and to respond accordingly, both in one’s lifetime and in one’s estate planning. Similarly, because an executor is responsible, to the extent of the estate, for remediation of any contaminated site that they hold as trustee for the estate, it is important for an executor to make reasonable inquiries to determine whether any property they hold as trustee may be a contaminated site.
Because the costs of remediation of a contaminated site can be quite significant, an executor who has any reason to suspect that a property forming part of the estate might qualify as a contaminated site would be prudent to seek legal advice regarding the duties and liability that may be imposed on them by the EMA and the regulations enacted under it.