Court File No.

: 12023/01

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: WILFRED ROBERT PEARSON Plaintiff -andINCO LIMITED, HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, THE CORPORATION OF THE CITY OF PORT COLBORNE, THE REGIONAL MUNICIPALITY OF NIAGARA, THE DISTRICT SCHOOL BOARD OF NIAGARA, and THE NIAGARA CATHOLIC DISTRICT SCHOOL BOARD Defendants Proceeding under the Class Proceedings Act, 1992

AFFIDAVIT OF DAVE LEONARD McLAUGHLIN

I, DAVE LEONARD McLAUGHLIN, of the City of Toronto, Province of Ontario, do hereby make oath and swear as follows:

1. I have been an employee of the Ontario Ministry of the Environment (the MOE) working in the area of phytotoxicology since 1977. I have personally conducted soil and vegetation investigations in the Port Colborne area since 1977. I am currently the Standards Development Branchs Senior Project Coordinator dealing with the production of the MOEs March 2002 Soil Investigation and Human Health Risk Assessment report for the Rodney Street Community, Port Colborne, a position I have held since April 2001. Previously, I was the Supervisor of the Branchs phytotoxicology program, a position I have held since 1990. From 1977 to 1990, I

2 was a MOE phytotoxicology scientist investigating the effects of pollution on soil and vegetation through out the province of Ontario.

2. Academically, I hold bachelor and graduate degrees in forestry and environmental ecology. Professionally, I have extensive experience in most aspects of terrestrial ecological science, specifically in relation to environmental pollutants. A copy of my curriculum vitae is attached hereto as Exhibit A.

3. As a result, I have knowledge of the matters to which I depose in this affidavit, except where I have been advised of such matters by others, in which case I believe such information to be true.

NEGLIGENCE

4. In this action, the plaintiff alleges that the Crown was negligent in various ways. Paragraph 45 of the Fresh Amended Statement of Claim states:

45. (a) (b)

Since beginning its operational activities at the Refinery, HMQ has: failed to properly inspect, monitor and investigate the Refinery; failed to properly issue or ensure compliance with Certificates of Approval issued in relation to the Refinery;

(c)

failed to warn Class Members of known hazardous emissions, defects and other failures at the Refinery;

(d)

specifically failed to warn Class Members that they were, and still are being exposed to high doses of the known carcinogen nickel oxide;

(e)

failed to obtain, in a timely fashion or at all, adequate information or advice in order to rectify known defects and failures at the Refinery;

3 (f) failed to respond to complaints made by Class Members about the Refinery, its emission of contaminants and other activities; (g) failed to conduct or to cause to be conducted, accurate and complete studies of the impacts of the Refinery, in a timely fashion or at all; and (h) failed to apply or enforce the Environmental Protection Act, R.S.O. 1990, c. E.19.

5. The issues raised by the above allegations appear to break down into the following broad categories of inquiry: i. Failure to respond to complaints of Class members (f); ii. Failure to study Refinery impacts accurately, completely or fast enough (g); iii. Failure to warn Class members about hazardous emissions from the Refinery (c&d); iv. Failure to properly inspect or abate problems with the Refinery (a&e); v. Failure to properly issue approvals for the Refinery (b); vi. Failure to enforce the EPA (h).

6. In my view, no conclusion could be reached with respect to any of these issues without a detailed examination of the individual circumstances of each Class member, on a property-by-property basis, over time. This inquiry will necessarily involve consideration of soil contaminant levels on each Class members property, air pollution levels on each Class members property, normal land use of each Class members property (eg residential, agricultural), and the kind and use of vegetation on each Class members property (eg vegetable garden, farm, urban landscaping). In addition, it will be necessary to consider the specific

characteristics and lifestyles of each of the Class members to assess any potential damages.

Complaints

7. Whether any given Class member actually complained to the MOE and whether the MOE responded is an individual issue.

8. The possibility of a Class member suffering an adverse effect is propertyspecific and Class member-specific and cannot be determined without an investigation of the property in question. As a result, whether the MOEs response was adequate in the circumstances will require a review of the data available with respect to a particular property at a particular point in time.

Studies of refinery impacts

9. Although the MOE did many studies over the years, until 1997, when the first MOE Human Heath Risk Assessment (HHRA) was conducted, these studies were all directed to observable ecological impacts (i.e., to plants, soil, surface water, ground water). Studies done by my unit, the Phytotoxicology Section (PS) of the MOE, were directed towards soil and vegetation impacts. Data from these PS studies were used to evaluate the potential for human health impacts in the 1997 HHRA. Historically, the PS either responded to individual complaints made by particular Class members, or it conducted annual surveys or special investigations.

10. In terms of general surveys, the PS sampled at the same general sites from year to year to track changes in environmental conditions over time. Vegetation surveys documented plant injury and determined changes in air pollution levels from year to year, and soil investigations determined whether soil contaminant levels were increasing or decreasing over time. These surveys were changed from time to time

5 as new information became available. This is demonstrated by Exhibits B and C attached. An example of a special investigation is attached as Exhibit D.

11. These surveys found different levels of contamination at different properties. Studies conducted by the PS found plant impacts at some properties but not others. The observed plant injury was very site specific and depended on the species of vegetation, the degree of soil contamination, and the physical and chemical characteristics of the soil.

12. Where plant impacts (i.e., adverse effects) were found, the owner of the particular property was advised of this fact and was provided with a copy of the PS report.

13. Whether any given study was inaccurate or incomplete is a question which is specific to individual properties. The investigations conducted by the MOE were tailored to the allegations of the property owner, with the result that the number and type of samples collected varied from property to property.

14. The MOE conducted appropriate inspections under the circumstances, and whenever any member of the public complained about an actual plant impact, the MOE investigated and determined whether an impact had occurred and whether Inco was the cause. As a result, all actual impacts significant enough to warrant a public complaint were investigated. The MOE also did surveys and special investigations. The surveys were similarly restricted to areas that the MOE believed were impacted (based on the presence of vegetation injury and the known northeasterly pattern of the Inco plume). The special investigations were concentrated on a few specific agricultural properties that had experienced chronic pollution damage.

15. If the plaintiff takes the position that the MOEs studies were not broad enough geographically and that the MOE should have inspected other properties for which no complaint had been registered, the plaintiff will have to prove that owners of those other properties had, in fact, experienced unreported plant or health impacts or that they had levels of contamination sufficient to cause actual plant or health impacts.

16. The plaintiff will also have to show that these properties were so situated geographically, having regard to historic activities of Inco, wind directions and their usage by the property owners, that it would have been reasonable for the MOE to conclude that these properties might have levels of contamination sufficient to cause plant or health impacts such as would warrant further or expanded study.

17. Only after an individualized examination of the property, the types and use of both the property and its vegetation, and the actual levels of contamination on each property would the plaintiff be able to argue that the MOEs failure to conduct broader studies resulted in incomplete studies.

Warnings

18. Whether the MOE should have warned any given member of the Class about contamination would also depend upon an individual examination of: i. whether the MOE inspected their property; ii. whether the MOE found an adverse effect; iii. whether the MOE failed to warn the Class member about the adverse effect.

7 19. It cannot be said that the MOE owed a duty to warn all Class members about the existence of pollution in the soil or air, regardless of any individualized assessment of contamination levels on each property or the likelihood of the pollution causing an adverse effect.

20. It is my understanding that the EPA only permits the MOE to act to prevent or alleviate adverse effects. Emissions themselves do not constitute an adverse effect under the EPA. It is only an adverse effect when sufficient nickel has accumulated in the soil to result in the potential to injure the natural environment or human health.

21. An adverse effect requires a finding by the MOE that the use of property has been impacted or that there is the potential for injury to the natural environment or human health. I have been advised by MOE lawyers that adverse effect does not include diminution of property value or purely economic considerations.

22. If the MOE is under a duty to warn citizens of any level of pollution, whether or not it is causing an adverse effect, the MOE would have to warn virtually every Ontarian of the many potential contaminants being inhaled and ingested daily, since virtually everyone in Ontario is subjected to pollution levels of some kind or another. This is particularly true for those living in urban areas or in communities with past or present industrial activities.

23. The fact of the matter is that years of MOE study have shown that soil nickel levels in Port Colborne are only capable of having an impact upon sensitive crops and trees when they reach a particular level. Government studies of ecological impacts in Port Colborne as early as 1960, and MOE studies in Port Colborne through the 1970s and 1980s all support a no observable effect level, or NOEL, of

8 about 2000 ppm nickel in soil and a lowest observable effect level, or LOEL, of about 3000 ppm. I have been informed by Incos consultant that current studies being conducted for the Community Based Risk Assessment (CBRA) support the same NOEL and LOEL levels. Even if these soil nickel levels were present, an adverse effect on vegetation would only occur if the sensitive plant species were being grown on the property. On the human health side, there has been no confirmation of health impacts from soil nickel exposure.

24. To determine whether the MOE ought to have warned any Class member about potential plant or health impacts, one must necessarily determine (among a host of other individual issues) whether the soil contamination level on the property of the Class member exceeded the relevant thresholds from year to year for the entire time the Class member resided on the property.

25. Whether in fact the MOE warned each Class member who needed to be warned of potential plant impacts is, therefore, an individual issue which will require examining the actual level of contamination and the possibility of plant impacts on each property.

26. Whether in fact the MOE ought to have warned each Class member who needed to be warned of potential health impacts is also an individual issue for the same reason - at a minimum, it will require an examination of the actual level of contamination and possibility of health impacts on each property. The MOE has warned all Class members that it currently knows may be exposed to potentially harmful soil nickel levels when it released its HHRA report in March 2001, its revised draft HHRA report in October 2001, and again in March 2002 when it released its final HHRA report.

9 Inspections of the Refinery

27. Whether the MOEs inspections and abatement activities in relation to the Refinery itself were adequate will also require a property-by-property and personby-person determination of which class members were inadequately protected and in fact impacted by those inspection and abatement activities. This conclusion flows from the following facts.

28. As noted above, the studies done by the PS only determined the existence of contamination attributable to Inco in a particular plume or swath extending to the north-east of the Refinery. The studies by the PS were only concerned with plant impacts. Although plant impacts are an adverse effect, the observed impacts were mostly to a few specific properties immediately downwind of the Refinery upon which grew certain specific sensitive plant species. The impacts were periodic in nature, and were largely addressed by Inco through financial compensation to farmers for occasional crop loss, and in some cases through property purchase.

29. Moreover, as a study done by Incos consultant Jacques Whitford Environmental Ltd. (JWEL) in 2001 indicates, 97% of all the nickel emitted by Inco over the operating lifetime of the refinery was emitted by 1960. In other words, virtually all of the nickel currently in the soil in Port Colborne had been deposited by 1960. A copy of the JWEL study is attached as Exhibit E to this affidavit.

30. In his affidavit, Allen Baldwin confirms that the MOE has been aware of this fact since the early 1980s. Therefore, MOE inspections and abatement of the Refinery operations were concerned with the remaining 3% of total nickel being emitted to the air.

10

31. This means that had the MOE completely abated Incos emissions (i.e., shut down Inco) in 1970, when the MOE was first created as a ministry, it would have made no measurable difference in the soil nickel levels currently known to exist in Port Colborne.

32. For the plaintiff to establish that the ongoing nickel emissions from Inco from 1960 onward (the remaining 3%) were so severe in their impact as to warrant more stringent inspection and abatement actions by MOE than actually were conducted from 1970 onward, the plaintiff will have to show that those 3% air emissions were causing not just occasional plant impacts (which were in fact being investigated by the MOE and compensated by Inco), but were also causing unreported and unobserved plant and/or health impacts at each property or upon each person of each Class from year to year during this lengthy time period.

Issuance of Approvals

33. The plaintiffs contention with respect to this issue appears to be that the air approvals issued by the MOE to Inco from the 1970s onward either should not have been granted, or did not contain sufficiently stringent conditions to prevent the impacts to plants and health which occurred as a result of air emissions.

34. This raises precisely the same questions as the preceding heading dealing with Inspections of the Refinery. At the end of the day, for the plaintiff to prove his contention that the air approvals should not have been issued (i.e., Inco should have been closed down completely) or should only have been issued with more stringent conditions sufficient to prevent adverse effects, it will be necessary to examine the

11 actual level of air pollution and possibility of plant and health impacts at each property and upon each Class member from year to year during this lengthy time period.

Enforcement of the EPA

35. It is unclear which, of a broad range of possible MOE activities, the plaintiff is referring to when he alleges that the MOE failed to apply or enforce the EPA. The EPA can be applied or enforced in a myriad of ways, most of which are entirely discretionary on the part of the Minister, Director, or Provincial Officer.

36. For example, the Minister has the discretion to issue stop orders in certain circumstances, effectively closing an industry entirely. The Director has the discretion to issue approvals (dealt with above) or a wide variety of control orders or clean up orders, depending upon the particular circumstances. An MOE Provincial Officer has the discretion to lay charges under the EPA leading to the prosecution of a company for an environmental offence.

37. I am advised by Jack Coop that, generally speaking, a failure by the MOE to exercise a discretion is not reviewable by a court for negligence.

38. However, even assuming that the court will review the alleged failure to exercise an enforcement discretion, the assessment of whether this alleged failure constitutes negligence on the MOEs part will again involve consideration of a wide variety of individual issues.

39. For example, whether or not MOE officials were justified in failing to exercise these discretions will require a consideration of what adverse effects existed from

12 year to year, at each property, and for each person within the proposed Class. All the discretions require, as a precondition to their being exercised, that the MOE official has reasonable and probable grounds for believing that an adverse effect has occurred or has the potential to occur.

40. Thus, if a given Class members property was not suffering plant impacts or a Class member was not suffering health impacts as a result of Incos operations, MOE officials could not be faulted for failing to take steps to protect that individual.

41. As a result, to assess whether an alleged failure to apply or enforce the EPA amounted to negligence with respect to any given resident will require the same sort of detailed, property-by-property and person-by-person analysis of

contamination and causation as has been undertaken by the MOE with respect to the Rodney Street community in its March 2002 HHRA and March 2002 Order and as is currently being conducted by Inco under the CBRA process. The complicating difference is that the negligence analysis will be required to examine not current conditions, which are verifiable, but rather historic property and health conditions, for which there may or may not be records or information available.

Conclusion on negligence

42. In summary, regardless of the allegation of negligence considered, each will require a detailed examination of the individual circumstances of each Class member. Investigations would need to be specific to each Class member, specific to each Class members property, and specific in time.

NEGLIGENT MISSTATEMENT

13

The reports in question

43. I am advised by Jack Coop that all the allegations of negligent misrepresentation made by the plaintiff against Her Majesty the Queen in Right of Ontario in this action are based upon specific MOE reports and letters referenced in paragraphs 33 and 39 of the plaintiffs Fresh as Amended Reply to Demand for Particulars of Her Majesty the Queen in Right of Ontario (Reply).

44. The actual reports and letters may be found at Exhibits D to P of the Affidavit of Lynne McArdle, sworn October 18, 2001, in support of the Crowns motion for further and better particulars, as follows:

a.

Exhibit D - Assessment of Potential Health Risks of Reported Soil

Levels of Nickel, Copper and Cobalt in Port Colborne and Vicinity: May 1997, MOE; b. Exhibit E - Phytotoxicology Soil Investigation: INCO - Port Colborne

(1998), MOE ; c. MOE; d. Exhibit G - Technical Report - Assessment of Potential Health Risks of Exhibit F - Phytotoxicology Soil Investigation: Port Colborne, 1999,

Reported Soil Levels of Nickel, Copper and Cobalt in Port Colborne and Vicinity: May 1997, MOE; e. Exhibit H- Soil Contamination in Selected Port Colborne Woodlots:

2000, MOE; f. Exhibit I - Phytotoxicology Soil Investigation: School Yards and

Beaches Port Colborne (April 2000), improperly referred to as Soil Investigation of Port Colborne Schools - 2000, MOE in the Reply;

14 g. Exhibit J - Soil Investigation and Human Health Risk Assessment for

the Rodney Street Community, Port Colborne, March 2001, MOE; h. Exhibit K - Phytotoxicology 2001 Investigation: Resampling of Soil at

Humberstone School and Arsenic in Soil at All Schools - Port Colborne, MOE; i. Exhibit L - Phytotoxicology 2001 Investigation: Resampling of Soil at

St. Therese Catholic School, Port Colborne, MOE; j. Exhibit M - Fact Sheet: Environmental Sampling Program Confirms

Metals Do Not Pose a Health Risk at Port Colborne Schools; January 25, 2001, MOE; k. Exhibit N - Letter to Rodney Street Community Residents; May 2,

2001, MOE; l. Exhibit O - Letter to Rodney Street Community Residents; June 6,

2001, MOE; and, m. Exhibit P - Letter to Port Colborne Residents and Frequently Asked

Questions; July 16, 2001, MOE.

15

The alleged distribution

45. The plaintiff states that these reports and letters were distributed by the MOE to proposed Class members. Alternatively, it is pleaded that alleged

misrepresentations in them were disseminated to proposed Class members by the media and through public meetings. As a result, it is alleged that Given the extremely widespread distribution of these misrepresentations, it is clear that they were heard or read at some point by all Class Members including Pearson.

The actual distribution

46. I have reviewed each of these documents, and have made inquiries of the MOE staff responsible for distributing the documents and speaking to the media about them. Based upon my review, I am able to make the following detailed

observations about how each report was distributed. a. Exhibit D - Assessment of Potential Health Risks of Reported Soil Levels of Nickel, Copper and Cobalt in Port Colborne and Vicinity: May 1997, MOE (the 1997 HHRA); his was a limited government green cover print run (the number of copies printed is unknown, but it is reasonable to assume that it was in the 50 -100 copies range, as this was typical), circulated to the MOE District and Regional Offices (perhaps one dozen), and to the MOEs Public Information Centre at 135 St. Clair Avenue West, Toronto (most copies). It was the responsibility of the District/Regional offices to distribute the report locally, but this typically would have included a few copies to the Regional Niagara Public Health Department (RNPHD), and Municipal authorities. No hardcopies were known to be distributed directly to the public. A single copy was placed in

16 the Port Colborne library in the summer of January 2000. It was also placed on the MOE web page Port Colborne hyperlink. b. Exhibit E - Phytotoxicology Soil Investigation: INCO - Port Colborne (1998), MOE ; This was published in 2000. It was distributed in the same manner as Exhibit D. c. Exhibit F- Phytotoxicology Soil Investigation: Port Colborne, 1999, MOE; This was published shortly after Exhibit E. It was distributed in the same manner as Exhibit D. d. Exhibit G Technical Report - Assessment of Potential Health Risks of Reported Soil Levels of Nickel, Copper and Cobalt in Port Colborne and Vicinity: May 1997, MOE, Revised January 2000 (the 2000 HHRA); This was published in January 2000. It is a revised version of Exhibit D. It was distributed in the same manner as Exhibit D. e. Exhibit H - Soil Contamination in Selected Port Colborne Woodlots: 2000, MOE; This was published in February 2000. It was never bulk printed, being a technical memorandum report. The District and Regional Offices would have received 1 or 2 copies each. One copy was placed in the public library. No copies were sent to Public Information Centre. It was placed on MOEs web site Port Colborne hyperlink. No hard-copies were distributed directly to the public. f. Exhibit I- Phytotoxicology Soil Investigation: School Yards and Beaches Port Colborne (April 2000), improperly referred to as Soil Investigation of Port Colborne Schools - 2000, MOE in the Reply; This was published in December 2000. It was distributed in the same manner as Exhibit H. Additionally, 1 hard-copy was distributed to each school and both school boards.

17 g. Exhibit J- Soil Investigation and Human Health Risk Assessment for the Rodney Street Community, Port Colborne, March 2001, MOE (the March 2001 HHRA); This was published in March 2001. It was bulk printed (about 400 copies). District and Regional Offices received about 30 copies. One copy was placed in the Port Colborne public library. One copy was delivered to every household in the Rodney Street community (200 copies). About 100 copies were sent to the MOE Public Information Centre. It was also placed on MOEs web page Port Colborne hyperlink. It was available to the public at the MOE April 2001 open house meeting. h. Exhibit K Phytotoxicology 2001 Investigation: Resampling of Soil at Humberstone School and Arsenic in Soil at All Schools - Port Colborne, MOE; This was published in April 2001. It was distributed in the same manner as Exhibit I. i. Exhibit L Phytotoxicology 2001 Investigation: Resampling of Soil at St. Therese Catholic School, Port Colborne, MOE; This was published in April 2001. It was distributed in the same manner as Exhibit I except that it was only distributed to St. Therese school and the Catholic school board. j. Exhibit M Fact Sheet: Environmental Sampling Program Confirms Metals Do Not Pose a Health Risk at Port Colborne Schools; January 25, 2001, MOE; This was published in January 25, 2001. It was posted on the MOEs web page Port Colborne hyperlink and placed in the Port Colborne public library. RNPHD received a copy. It was also distributed to the schools.

18 k. Exhibit N Letter to Rodney Street Community Residents; May 2, 2001, MOE; This was published on May 2, 2001. One copy was sent to every Rodney Street community household. RNPHD received a copy. One copy went to the Port Colborne public library. It was posted on the MOEs web page Port Colborne hyperlink. l. Exhibit O- Letter to Rodney Street Community Residents; June 6, 2001, MOE; This was published on June 6, 2001. Same distribution as Exhibit N. m. Exhibit P - Letter to Port Colborne Residents and Frequently Asked Questions; July 16, 2001, MOE. This was published on July 16, 2001. This was the first time any document was sent by the MOE to all households of Port Colborne (delivered Canada Post). Again, RNPHD received a copy, as did the Port Colborne public library. It was posted on the MOEs web page Port Colborne hyperlink.

47. From the above, it is clear that, although most of these reports were officially published by the MOE, their distribution was not always the same. A limited number of copies were made and some were web-posted only. Only one of the reports, the letter of July 16, 2001, was circulated to all of the households in Port Colborne. They were certainly not distributed to all proposed Class members, as defined in the Claim. Only one of the reports (the March 2001 HHRA) and the three letters were circulated to all the households in the Rodney Street community. The 2000 Health Study was not publicly circulated and was only posted on the MOEs web page in the summer of 2000. Most of the reports were technical reports and, as a result, they were not bulk printed and were not distributed to the public, but rather were made publicly available through the local library (one copy) and the internet. It is unknown how many proposed Class members were aware of the

19 library and internet copies and how many actually read them. Copies of some reports which were bulk printed and sent to the MOEs Public Information Centre in Toronto would have been available upon request by any member of the public. However, there are no records of how many people requested copies from the Public Information Centre or who the people were who requested copies (i.e., if they were even Class members).

48. To the best of my recollection, having been personally involved in Port Colborne soil and vegetation studies at the time of their production and publication, the 1997 and 2000 Health Studies (Exhibits D and G) generated minimal media coverage. As well, all other reports published prior to the spring of 2000 (Exhibits E, F, and H) received minimal media coverage. Few, if any, interviews were given by the MOE in respect to them.

49. However, commencing in the spring of 2000, with the establishment of the Public Liaison Committee (PLC) under the CBRA process, and the holding of regular monthly PLC meetings, the media started to follow environmental issues in Port Colborne much more carefully. The PLC had its own independent expert, Beak International, reviewing and critiquing the MOE reports. As a result, all of the MOE reports published subsequent to the summer of 2000 received a much higher level of media scrutiny, much of it critical of the MOEs conclusions and findings.

50. This is reflected in the sort of media coverage received by the March 2001 HHRA. This was the first comprehensive human health risk assessment conducted by the MOE after the discovery in the fall of 2000 of higher than expected levels of total nickel on some properties in the Rodney Street community. As a result of this discovery, and further as a result of the commencement of this action in March 2001

20 and media publicity actively sought by plaintiffs counsel, the March 2001 HHRA received considerable media attention in the local media, most of it highly critical.

51. By March 2001, and continuing throughout the months that followed, the residents of Port Colborne were broadly aware of this legal action and were exposed to numerous media reports distributed by plaintiffs counsel expressing intense criticism of the March 2001 HHRA and its conclusions.

52. Given the highly critical nature of press coverage of the MOE reports since the summer of 2000, it remains very much a question in my mind the extent to which residents of Port Colborne would have accepted the conclusions and findings of the MOE reports at face value.

The alleged misrepresentations

53. I have reviewed the Amended Amended Statement of Claim and the Reply, and understand that it is alleged that these reports and letters contained two false statements. The first was that emissions from the Refinery have not posed any immediate risk, or any risk to human health. This is allegedly false because, it is pleaded, Class members have been exposed to the risk of harm and to actual harm as pleaded elsewhere in the Claim and Reply. The second alleged misrepresentation is that one of the substances that Class Members were being exposed to and are still being exposed to is nickel, and not the known human carcinogen nickel oxide. This is allegedly false because, it is pleaded, Class members have not been exposed to nickel, but instead have been primarily exposed to the known human carcinogen nickel oxide.

21 54. Jack Coop advises me that the plaintiff cannot succeed in his claim based on the alleged misrepresentations. First, the reports in question do not contain the two statements referred to above. Furthermore, the first statement, even if it were contained in the reports, is a true statement.

The actual representations

55. The allegation that all of the documents referred to above contain the first statement, emissions from the Refinery have not posed any immediate risk, or any risk to human health, is not accurate.

56. Some of the documents, notably the 1997 and 2000 Health Studies and other reports which quoted from them prior to the fall of 2000, concluded with words to the effect that no adverse health effects are anticipated to result from exposure to soil metal contamination in the Port Colborne area. This conclusion was based on the best information available at the time, that contamination levels of nickel in the community did not exceed 9,750 ppm nickel.

57. After the MOE discovered in the fall of 2000 elevated levels of nickel contamination above 9,750 ppm in the Rodney Street community and, as a result, began investigations leading up to the March 2002 HHRA, the MOE qualified its communications to the public, to the effect that the MOE (and the RNPHD) did not believe there was any immediate risk to human health while further studies were being conducted.

58. Contrary to what the plaintiff alleges, the MOEs statements have at all times been true, based on the information available at the time. Moreover, based on

22 information provided by the RNPHD, it appears that there has been an absence of any overt evidence of health impacts to this community related to current exposure to environmental soil contaminants. Even the MOEs latest HHRA (the October 2001 draft, finalized March 2002 HHRA) confirms that potential health risks are confined to a small number of Rodney Street Community properties (25), and that those risks will only continue to exist until the properties are cleaned up.

59. The allegation that any of these documents contain the second statement, that one of the substances that Class Members were being exposed to and are still being exposed to is nickel, and not the known human carcinogen nickel oxide, is completely false. No document contains such a statement.

60. Moreover, to the extent that the pre-2001 documents refer to nickel, they are referring to the total amount of nickel that can be identified using standard, widely used chemical analysis protocols, most commonly ICP (Inductively Coupled Plasma) spectroscopy. This is an industry standard in which all nickel compounds that are present in the soil are dissolved by acid into elemental nickel. It yields a concentration which is commonly and universally called total nickel. To the best of my knowledge, when the analytical protocols are followed, these total nickel measurements are accurate and there has never been any suggestion to the contrary by any experts of which the MOE is aware.

61. The reporting on the species of nickel in question changed in 2001 with the preparation of the March 2001 HHRA. In 2000, MOE staff working on the Port Colborne project reviewed historic MOE records which led to the discovery of a 1978 memorandum from Inco in MOE files which summarized the analyses of a few samples of dust collected from inside the Inco refinery that were found to contain several species of nickel, including nickel oxide. The MOE also did some limited

23 speciation work in the fall of 2000, the results of which were received in January 2001, which suggested that most of the nickel in the soil in the Rodney Street community was nickel oxide. As a result, from March 2001 on, the MOE reports state that the species of nickel in question is nickel oxide, and make clear that inhalation of nickel oxide can be carcinogenic. There is no scientific evidence that nickel oxide is carcinogenic through exposure pathways other than inhalation (eg. ingestion, dermal contact).

62. There are a number of reasons why earlier reports made no mention of nickel oxide. On the practical side, it is because, at the time of their writing, the MOE had no reason to believe that most of the total nickel was, in fact, nickel oxide. As well, the analytical process for determining the precise species of nickel in the soil was and still is research oriented; it is not an operational analytical protocol. It is timeconsuming, requires the use of special laboratories, and specially trained scientists, and it is quite costly. As well, there was then and still is no accredited method for speciating nickel, such that the results from one laboratory cannot necessarily be reliably duplicated by analysis in another laboratory. Moreover, the speciation of nickel was unnecessary as the type of nickel species was, and remains, irrelevant to phytotoxicological impacts and is of limited relevance to health impacts, for reasons set out below.

63. There is no basis to conclude from reading the earlier reports that the MOE had ruled out the presence of nickel oxide. The most one can reasonably conclude from reading them is that the writers did not think that the species of nickel was particularly relevant to the reports findings. The scientists conducting the earlier studies used standard investigative and analytical techniques and protocols in place at the time and these did not include the routine nickel speciation of

24 environmental samples. I believe that the investigative approach that was used was appropriate for the objectives of the studies being conducted.

64. As the presence of nickel oxide is entirely irrelevant to plant impacts, the fact that these soil and plant investigation reports make no mention of nickel oxide is hardly surprising, and is not in the slightest misleading.

65. Moreover, as the March 2002 HHRA shows, in the establishment of the MOE soil nickel intervention level of 8,000 ppm, the presence of nickel oxide is of limited relevance. Nickel oxide is only potentially carcinogenic if inhaled. As set out in the March 2001 and March 2002 HHRAs, the primary nickel exposure pathway in Port Colborne is through ingestion, and not inhalation. Inhalation accounts for 0.1% of total nickel exposure for Rodney Street community residents, where soil nickel levels are the highest in all Port Colborne.

The issue of detrimental reliance

66. It has been explained to me by the Crowns lawyer, Jack Coop, that for the representative plaintiff to prove negligent misrepresentation, he will have to prove detrimental reliance by each proposed Class member. I understand this to mean that he will have to prove that each proposed Class member: i. read or otherwise received the alleged two false statements referenced above, ii. interpreted what they read or heard to mean that the MOE had expressed the alleged two false statements referenced above, and, iii. as a result of receiving these two false statements, each proposed Class member relied upon those statements as true with the result that they have

25 suffered damages that they would not have suffered had the MOE told the truth.

67. For the reasons set out above, I doubt that most proposed Class members ever read or even heard about the conclusions of most of the reports published by the MOE up to 2000. After the establishment of the PLC in the spring of 2000, most residents would have been aware of the issue of elevated soil metal levels, but it is unlikely that they would have read the MOE reports and understood the specific conclusions in them.

68. I also doubt that any Class members who did read or did hear about the reports concluded that they contained the second statement referred to above, since none of the reports contain that statement. Moreover, since at least March 2001, the MOE has publicly taken the position that the nickel in the soil is mostly nickel oxide.

69. Equally, none of the reports contain the first statement as alleged. To the extent that they contain any conclusions about potential impacts to health, those conclusions were and remain true. Thus, it is difficult to imagine how any Class member who heard of them would have acted any differently had they been told the truth.

70. If it is the plaintiffs contention that the MOE should have warned about the presence of a known human carcinogen nickel oxide as early as 1997, any responsible warning would have gone no further than what is reported in the MOEs 2001 and 2002 HHRAs (i.e., an explanation that nickel oxide is present but of limited potential impact given that the primary pathway for exposure is ingestion and not inhalation). It would have been alarmist and negligent for the MOE to make

26 the sort of unqualified and misleading statements as are contained in the plaintiffs pleadings.

71. Despite the release of the March 2001 HHRA and despite repeatedly misleading and alarmist news releases by plaintiffs counsel concerning the health impacts of nickel oxide on the people of Port Colborne, I have no personal knowledge of, nor have I been informed of, any evidence of a mass exodus of residents from Port Colborne or mass change in behaviour in residents.

72. It is true that the MOE and MOH have issued precautions to the people of Port Colborne to reduce their exposure to nickel contamination in the soil. However, those precautions are just common sense and would have been done by most residents anyway.

73. Based on all the above, it is highly doubtful in my view that members of the proposed Class (whether inside or outside the Rodney Street community) would have behaved differently had the 1997 study mentioned the possible presence of nickel oxide in a responsible manner, that is, in the same way as the MOE 2001 and 2002 HHRA does.

74. Of course, without further inquiry, one cannot be sure whether any particular member of the proposed Class actually read or heard about each of the above reports and letters, how they responded to what they read or heard, and whether they would have responded differently had different information been included in those reports. The only way to ascertain these facts would be to conduct an individualized inquiry into the circumstances of each person.

PREFERRED ALTERNATIVE

27

75. I am advised by the Crowns legal counsel, Jack Coop, that under the Class Proceedings Act a plaintiff must establish a t the certification hearing that the class proceeding would be the preferable procedure for the resolution of the common issues.

76. I have reviewed the affidavit of Richard Lindgren, sworn January 15, 2002. I disagree with his assertion in paragraph 12 that this case would appear to be particularly suited to being advanced as a class proceeding.

77. To the contrary, based upon my analysis set out earlier in this affidavit, a class action would require an extremely lengthy, individualized, property-by-property and person-by-person inquiry into historic facts for the purposes of determining liability, which will be impractical or impossible in light of the finite historic soil contamination records which exist. Such an inquiry serves no useful purpose in light of the solution offered by the CBRA process.

78. A class action will also require an equally lengthy, individualized, property-byproperty and person-by-person inquiry into current facts for a determination of future damages which might be sustained by each Class member. Again, such an approach would merely duplicate the CBRA process.

79. I therefore believe that a class action will inevitably force the parties and the court to devote a significant amount of their resources to property and personspecific investigations. This does not offer a practical alternative process to the CBRA and Order processes which have been set out in the affidavits of Kal Haniff and Jim Smith, sworn March 28, 2002.

28 80. Using Mr. Lindgrens paragraph 12 as a template, I would observe the following:

a. There are a large number of potential claimants (20,000 or more).

b. Their claims do not arise out of the same or similar facts, but rather out of very different facts. Whether any given resident will require remediation at their property, the type of remediation required, and the type and extent of any damages suffered will require a detailed property by property and person by person assessment. This can more effectively be done under the CBRA process.

c. For reasons more completely detailed in my affidavit, above, the very complex issues of liability raised by the action concerning negligence and negligent misstatement by the Crown will necessarily require a very individualized assessment of facts in relation to each alleged proposed Class member. The complex issues of liability are not common to all potential plaintiffs. Instead, they are highly individualized.

d. If the vast majority of Class members have damage claims that are modest, as alleged by Mr. Lindgren, those claims could be better addressed under a voluntary and cost-free (to the class members) CBRA process, rather than through lengthy discovery processes in the litigation setting.

e. Whatever damage claims any proposed Class members have, these could be addressed through the CBRA process.

f. Mr. Coop advises me that Mr. Lindgren is correct in his statements that actions of this nature frequently require the expenditure of large amounts of time and

29 money on expert witness fees and other disbursements. Furthermore, very large amounts of legal time are normally required. However, in my view, what Mr. Lindgren ignores is that proposed Class members can already participate fully in the CBRA process on a no-cost basis. The Public Liaison Committee, which represents the public in the CBRA process, has its own independent expert fully paid for by Inco. No lawyers are required for the CBRA process, but neither are they excluded from representing the interests of any particular property owners who feel their interests are not being fully represented by the PLC and its experts.

g. Given the complexity of the environmental issues requiring a determination, this situation is particularly well-suited to the multi-level, consultative CBRA process involving participation of experts and peer reviewers. The CBRA process allows all stakeholders to participate in creating a consensual solution for the community. The litigation process does not support this initiative, but rather isolates and makes adversarial the parties and their experts.

h.

As noted by Mr. Lindgren in his affidavit in paragraph 12(i), there are

potentially hundreds, if not thousands of individual claims. Should these come before the Court as individual actions, the burden on the court system would be immense. Where we part company with Mr. Lindgren is that we do not share his belief that a class action will avoid the necessity of each individual claim being heard, even to establish liability.

i. Contrary to Mr. Lindgrens suggestion in paragraph 12 (j), substantial documentary production will be required from each member of the proposed Class for this matter to proceed as a class action.

30 j. I strongly disagree with Mr. Lindgrens suggestion in paragraphs 12 (k)

and (l) of his affidavit, that this court action has somehow prompted increased study and analysis by any of the defendants. The MOE and RNPHD had already undertaken human health risk assessments in 1997 and 2000. Inco had already commenced the CBRA process with full participation of the City, the RHPHD and the MOE long before this action was launched. In fact, all of the environmental studies conducted to date and all of the environmental initiatives currently underway in Port Colborne were started before the class action was launched in March 2001. It was as a result of the MOEs normal operating and investigative procedures, on which the CBRA is based, not any legal proceeding, that unexpectedly high levels of soil contamination were discovered in 2000 in the Rodney Street community by the MOE. It was as a result of this discovery, and not any legal proceeding, that the MOE initiated and completed a six month study leading up to the publication of the March 2001 HHRA, and proposed the March 2001 Directors Order which culminated in the final March 2002 report and Order. This legal action has been largely responsive to, and parasitic upon, the extensive work already done by public authorities to safeguard the interests of this community.

k. This action, and the conduct of plaintiffs counsel promoting it, have done nothing to advance the environmental well-being or interests of the residents of Port Colborne. Instead, there has emanated from the plaintiff, through his counsel, a series of misleading and alarmist press releases, not founded on scientific fact or medical evidence, which have needlessly alarmed the community of Port Colborne and have probably had a more profound negative impact on property values in the City than the presence of soil contamination could have had. The plaintiff, through his legal counsel, has variously threatened to close private and public schools without scientific justification, has warned

31 residents that they will suffer severe health ailments as a result of soil nickel levels without scientific basis, has opposed Incos voluntary remediation efforts, and has repeatedly misapplied the MOEs guidelines to suggest that an exceedence of Table A generic health-based value of 310 ppm nickel in soil means there has been damage to the community despite express MOE advice to the contrary. Indeed, the latest affidavit materials filed by the plaintiff on this motion, suggesting that there is some basis for concluding that proposed Class members have been damaged by exceedences of the Table F (backgroundbased) value of 43 ppm nickel in soil or the Table A (effects-based) value of 200 ppm nickel in soil, the MOEs clean up guidelines, are a case in point. Under the guidelines, these generic values point to a need for further site-specific investigation. One cannot assume that their exceedence denotes an adverse effect.

l.

This litigation is not required to modify the behaviour of any defendant. From the beginning, the regulators have been actively engaged in assessing and safeguarding the health interests of the public and the natural environment in the vicinity of Port Colborne. Inco has voluntarily advanced the CBRA process, which will address not only health and ecological effects but a lso property value impacts. Inco has made a public commitment to complete that process. The MOE has ordered Inco to take the necessary steps to immediately alleviate currently known potential health effects to the community

81. I swear this affidavit in response to the certification motion of the plaintiff dated January 17, 2002, and for no improper purpose.

SWORN before me at the City of

32 Toronto, in the Province of Ontario, this 28th day of March, 2002 ) ) _______________________ DAVE LEONARD MCLAUGHLIN

________________________________ A Commissioner, etc.