January 15, 2004, E.C.B. No. 02/97/246

REASONS FOR DECISION

1.  INTRODUCTION

[1]  This decision concerns whether the claimant, Spur Valley Improvement District (the "District"), is liable in proceedings before the board to compensate the respondent, Checkman Holdings (Calgary) Ltd. ("Checkman"), for alleged damages suffered and costs incurred as the result of an expropriation begun in November, 1995 but ultimately discontinued in February, 2002 under the Water Act, R.S.B.C. 1996, c. 483, and the Water Act Regulation, B.C. Reg. 204/88 (the "Water Regulation").

[2]  Checkman filed with the board a notice of motion seeking an order that the District pay it compensation pursuant to section 19(4) of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Expropriation Act" or the "Act"). Section 19 is headed "Abandonment" and section 19(4) addresses compensation to an owner where an expropriation is abandoned. It provides:

Checkman's application was supported by an affidavit sworn by Ronald Csokonay, one of its directors and officers.

[3]  The District raised a preliminary objection and, after obtaining an adjournment of the hearing of Checkman's application, filed with the board a notice of motion seeking the following:

1. A declaration that the board has no jurisdiction to award compensation to Checkman in this proceeding pursuant to section 19(4) of the Act;

2. An order that Checkman's application be dismissed.

[4]  A hearing on the District's jurisdictional motion was held by teleconference. Counsel for both parties provided written submissions to accompany their oral arguments. The submissions ranged somewhat beyond the question of the board's jurisdiction to apply section 19(4). They included consideration of whether the board has jurisdiction in this instance to award compensation under section 41 of the Expropriation Act, which deals with injurious affection where no land has been taken, or to award costs under section 32 of the Water Regulation, which deals with the costs of expropriation proceedings. I heard this matter alone in my capacity as chair of the board and in exercising the powers and jurisdiction of the board under section 26(5) of the Act. Although strictly speaking my decision need not go beyond resolving the issue squarely raised in the notice of motion, I propose to deal as well with the parties' submissions on these other issues in order to save a further application. I was not asked to consider whether the District is entitled unilaterally to discontinue expropriation proceedings before the board at any time and I have not addressed any such question here.

2.  BACKGROUND

[5]  The present application arises out of a dispute between the District and Checkman over the ownership, access to and operation of a waterworks system near Radium, B.C. used by both parties. Most of the existing works which include an intake structure, tank, pipeline and pumphouse are situated on property owned by Checkman. The dispute has resulted in protracted litigation in the courts and also led to the District, as the holder of two water licences, commencing expropriation proceedings.

[6]  The chronology of proceedings in the courts and before the board relevant to the present application is summarized in the paragraphs which follow.

[7]  On February 21, 1995, the District began proceedings in the Supreme Court of British Columbia, seeking a declaration that it owned all right, title and interest in the assets comprising the waterworks system. Checkman sought dismissal of the District's claims. The matter was heard before Justice McEwan on August 1, 1997.

[8]  On November 20, 1995, the District, as the holder of conditional water licence no. 62656 over a watercourse known as Luxor Creek which runs through the Checkman property, began expropriation proceedings against Checkman under section 27 of the Water Act and section 26 of the Water Regulation. In accordance with the prescribed procedure, a notice of intent to acquire the land together with plans and other documents were served on the Comptroller of Water Rights under cover of a letter of that date. The documents were also filed in the Nelson Land Title Office on December 13, 1995, and registered on title to the Checkman property as a notice of expropriation.

[9]  On February 23, 1996, the District passed bylaws authorizing the foregoing expropriation. Checkman applied to the Supreme Court to have these bylaws quashed on the grounds that the District, as an entity incorporated under the Municipal Act, R.S.B.C. 1979, c. 290, was not entitled to expropriate an interest in land which lay outside its boundaries. The matter was heard before Justice Vickers in chambers on November 26, 1996.

[10]  On October 23, 1996, the District amended its expropriation documents to incorporate provision for conditional water licence no. 109234 over a watercourse known as Csokonay Creek, part of which also crosses the Checkman property.

[11]  On November 28, 1996, Justice Vickers, in his judgment subsequently reported as Checkman Holdings (Calgary) Ltd. v. Spur Valley Improvement District (1996), 60 L.C.R. 266 (B.C.S.C.), upheld the validity of the expropriation bylaws adopted by the District as a licensee under the Water Act.

[12]  On January 3, 1997, the District filed with the board an application under section 30 of the Water Regulation which provides:

[13]  On November 19 and 20, 1997, I conducted on behalf of the board the first stage of an anticipated two-stage hearing with respect to the District's expropriation. The first stage was confined to hearing evidence and argument in order to determine the nature and terms of the conveyance or instrument required, pursuant to section 30(b) of the Water Regulation. Once matters in the first stage of the hearing had been determined and the parties were then able to marshal appraisal and other evidence based upon them, it was expected that I would convene the second stage in order to determine the amount of compensation to be paid, pursuant to section 30(a) of the Water Regulation.

[14]  On June 11, 1998, Justice McEwan rendered judgment addressing the issue of ownership of the waterworks system: see Spur Valley Improvement District v. Csokonay (1998), 80 A.C.W.S. (3d) 674 (B.C.S.C.). He found in favour of the District's entitlement in all material respects and went on to express the view that the District enjoyed "proprietary rights", including the right to whatever was reasonably necessary by way of licence, easement, right of way or deed on the Checkman property to allow the District to properly carry out its undertaking. Justice McEwan added: "This right I have found to exist differs from the right of expropriation in that it requires no assessment of compensation …". He left for further submissions the question of the precise nature of the interest reasonably required to give effect to the District's purposes.

[15]  On June 1, 1999, in written reasons subsequently reported as Spur Valley Improvement District v. Checkman Holdings (Calgary) Ltd. (1999), 67 L.C.R. 106 (B.C.E.C.B.), I made reference to the proceedings in the Supreme Court and commented at p. 114:

Whether in light of Mr. Justice McEwan's comments it was necessary for the District to embark upon a course of expropriation under the Water Act, the fact is that a formal expropriation did take place. Accordingly, I am satisfied that, for the purpose of making the determinations requested in the first instance, the board has authority to proceed.

I then proceeded to determine, pursuant to section 30(b) of the Water Regulation, that the locations reasonably required for the statutory rights of way expropriated by the District on the Checkman property were those locations identified in two plans prepared by a surveyor retained by the District. The plans corresponded with works authorized under the District's water licences pertaining respectively to Luxor Creek and Csokonay Creek. I also determined what I considered reasonable terms and conditions to be included in an easement agreement between the parties.

[16]  On July 27, 1999, the District applied to the board to set a date for the second stage of the hearing to determine the compensation payable. The matter was set down to be heard from March 13 to March 15, 2000. It was adjourned in advance of those dates while the parties awaited the further judgment of Justice McEwan on the submissions made to him in November, 1999 as to the precise nature of the interest in the waterworks system the District reasonably required.

[17]  On November 28, 2000, Justice McEwan rendered his further reasons for judgment, finding that an easement rather than either a statutory right of way or a licence was required, and that: "The easement shall be over that portion of Checkman's lands defined in the draft plan of easement submitted to the Expropriation Compensation Board." Justice McEwan did not address the District's request for an order that it be at liberty to install a water line from Csokonay Creek to the pumphouse located on Checkman's property beyond stating that he required further submissions if the District was of the view that such an order was still required in view of his rulings.

[18]  On February 11, 2002, the District filed with the board a notice of discontinuance dated February 5, 2002, which stated that the District "hereby discontinues expropriation proceedings against the Respondent in respect of both water licences Nos. 62656 and 109234."

3.  POSITIONS OF THE PARTIES

3.1  The District's Position

[19]  The District submits that the board is without statutory authority or jurisdiction to consider Checkman's application for compensation in the nature of damages and costs and the application must therefore be dismissed. The District's argument flows from the uncontentious proposition that the board as a creature of statute has only those powers which the applicable legislation delegates to it. The board does not have inherent or equitable jurisdiction.

[20]  According to the District, the limitations on the board's jurisdiction operate in the present instance as follows:

• The Expropriation Act only applies to expropriations under the Water Act to the extent provided for in the Water Act and the Water Regulation.
• The Water Regulation incorporates certain sections of the Expropriation Act, but none of those sections empowers the board to award compensation in the form of damages or costs following the discontinuance of an expropriation proceeding begun by a licensee under the Water Act. In particular, section 19(4) of the Expropriation Act is not incorporated into the Water Regulation and does not apply.
• Furthermore, the board has no authority to award compensation where no interest in land has been obtained through expropriation. In the present instance, the District did not obtain an interest in land pursuant to expropriation proceedings before the board. Rather, it obtained the necessary interest pursuant to an order of the Supreme Court, which also held that the District was entitled to a water system and supply of water without payment of compensation. This finding renders the board functus with respect to any determination of compensation.
• The board also has no authority to award costs in this matter except in accordance with section 32 of the Water Regulation. That section only applies where the board has made a determination under section 26(1)(c) and (d) of the Expropriation Act and no such determination has occurred in this instance.

3.2  Checkman's Position

[21]  Checkman submits that the legislature clearly intended the board to have jurisdiction to determine compensation payable in respect of an abandoned expropriation under the Water Act. The necessary statutory authority in this instance can be found in section 26(1)(c) of the Expropriation Act which provides that the board must determine compensation to be paid "or any other matter to be determined" if jurisdiction is given to it under an enactment.

[22]  According to Checkman, the judgments of Justice McEwan in the Supreme Court action are not determinative of proceedings before the board nor has the board as a result been rendered functus with respect to an award of compensation. The two proceedings are completely separate and arrive at differing conclusions. The District has not only abandoned the expropriation of the area of Checkman's property applicable to the District's water licence over Luxor Creek for which Justice McEwan found an easement to exist. It has also abandoned the expropriation of that area of Checkman's property applicable to the District's water licence over Csokonay Creek which the learned judge declined to address.

[23]  Checkman says its claim for compensation for damages and costs upon a discontinued expropriation can also be framed as a claim under section 41 of the Expropriation Act for injurious affection where no land is taken. Checkman asserts that no land was taken in this instance since the expropriations were begun but never completed. Nevertheless, during the intervening seven years in which expropriation proceedings subsisted, Checkman incurred legal and appraisal costs and also suffered damages as a result of being precluded from developing the affected portions of its property, particularly in the vicinity of Csokonay Creek. Checkman cites the judgment of the Supreme Court of British Columbia in Hidden Bar Ranch Ltd. v. Wilson (1986), 36 L.C.R. 318 as clear authority that the board has jurisdiction to adjudicate a claim such as this for injurious affection.

4.  BOARD'S ANALYSIS AND CONCLUSION

4.1  Jurisdiction in Light of the Supreme Court Judgments

[24]  I propose to deal first with the effect on the board's jurisdiction of the judgments pronounced by Justice McEwan. The District submits that those judgments have led to the discontinuance of its expropriation proceedings and now, in essence, foreclose the board from dealing with questions of compensation under any of the provisions of the Expropriation Act or the Water Regulation.

[25]  Contrary to what the District says, I find that the judgments in the Supreme Court are not res judicata in proceedings before the board. Neither do they somehow render the board, which has yet to consider any question of compensation, functus officio with respect to an award of compensation in this matter.

[26]  Although Justice McEwan found that the District enjoyed proprietary rights to the waterworks system and was entitled to an easement over a portion of Checkman's property without payment of compensation, he made clear that those rights were different than what might be obtained through other means including expropriation proceedings. At paragraph 9 of his judgment of November 28, 2000, he wrote:

There is no question that there are alternatives that might arguably improve the plaintiff's situation, including expropriation proceedings (which would require Spur Valley to pay compensation) or the incorporation of a new utility (which would require an expensive new water system conforming to current standards).

At paragraph 12, in limiting the precise nature of the District's interest over Checkman's property, Justice McEwan further stated:

I do not think a right of way that would potentially impair the defendants' ability to develop its lands in the future is necessary, particularly when it is evident that the plaintiff has other alternatives by way of expropriation or incorporating a new utility.

[27]  Accordingly, the issue of the board's jurisdiction must be determined with reference to the expropriation proceedings rather than the proceedings in the Supreme Court.

4.2  Jurisdiction Under Section 19(4) of the Expropriation Act

[28]  The main question posed by the District's application is whether the board has jurisdiction to consider a claim by Checkman for compensation for damages and costs resulting from the abandonment of an expropriation pursuant to section 19(4) of the Expropriation Act. In my view, this question must be answered in the negative for the reasons which follow.

[29]  The board as a statutory body has only that jurisdiction which the applicable legislation confers on it either expressly or by necessary implication. Justice Vickers in his judgment found that, although the District was an entity incorporated under the Municipal Act, the District's expropriation was one undertaken wholly in its capacity as a licensee under the Water Act and not under the expropriation provisions of the Municipal Act. That being so, the board's jurisdiction in the present case is expressly limited by section 2(3) of the Expropriation Act, the relevant portion of which provides that the Act does not apply to expropriations under the Water Act except to the extent provided for in the Water Act.

[30]  The Water Act in section 27 establishes a licensee's right to expropriate land but does not specifically refer to the Expropriation Act. However, under section 46(2)(c) of the Water Act the Lieutenant Governor in Council is empowered to make regulations in respect of:

[31]  Pertinent regulations have been developed under Part 5 (sections 24 through 34) of the Water Regulation. Section 30, headed "Applications to Expropriation Compensation Board", has already been set out above. Section 31, headed "Procedures on application, and method and basis of compensation", is of particular significance to the District's jurisdictional application. The immediately relevant portions provide:

[32]  Noticeably absent from among those sections of the Expropriation Act enumerated in section 31(1) of the Water Regulation is section 19, the abandonment section. If section 31(1) of the Water Regulation is read together with section 2(3) of the Expropriation Act, it becomes clear that the board has not been given the power to award damages and costs following the abandonment of an expropriation under the Water Act within the meaning of section 19. One possible explanation for the omission lies in the fact that under section 19(1) abandonment is expressly linked both with the inquiry process under sections 10 through 17 and with the advance payment process under section 20 of the Expropriation Act. These processes usually occur near the outset of an expropriation but neither process applies to expropriations under the Water Act. In any event, I am inclined to agree with the District's submission that, if the legislature or the government had wished to provide the board with authority to award damages or costs following abandonment of expropriation proceedings brought under the Water Act, it could have specifically provided for such authority. In my view sections 31(2) and (3) of the Water Regulation, although they address the board's procedural powers in making determinations under section 30, also do not confer jurisdiction under section 19(4) of the Expropriation Act.

[33]  Checkman has argued that the board's jurisdiction in this matter is established by section 26(1)(c) of the Expropriation Act which provides:

According to Checkman, the determination of compensation for damages and costs following abandonment falls within the scope of "any other matter to be determined".

[34]  A strikingly similar argument was raised and rejected in the board's interlocutory decision in Whitechapel Estates Ltd. v. British Columbia (Ministry of Transportation and Highways South Coast Region) (1994), 54 L.C.R. 306. In that case the claimants applied for an order requiring the respondent to create and deliver to them an appraisal report pursuant to what is now section 20 of the Act. The expropriation in question took place some years before the Act came into force making the delivery of such reports mandatory. The board stated at pp. 314-315:

According to the claimants, the words "any other matter to be determined" gives the board an express general jurisdiction to deal with matters which come before it while the words "any enactment" mean or include the Act.

The board is unable to accept the claimants' interpretation of the effect of this provision. In the board's view, the operative words are "where jurisdiction is given to it". Section [26(1)(c)]  , standing alone, cannot be relied upon to confer jurisdiction on the board absent an indication, express or by necessary implication, elsewhere in the Act or another enactment that jurisdiction has been given to it to make the particular order sought. The claimants have not identified any such provision.

In my opinion, the same conclusion applies in the present case.

[35]  The District in its notice of motion seeks from the board a "declaration" that it has no jurisdiction under section 19(4) in this matter. From a technical standpoint the motion is deficient since the board does not have declaratory powers. However, the board can make orders, decisions or determinations. In this instance, I consider that the District's motion should not be defeated on a semantic technicality. Accordingly, I grant the motion and determine that the board has no jurisdiction to award compensation to Checkman in this proceeding pursuant to section 19(4) of the Act.

4.3  Jurisdiction Under Section 41 of the Expropriation Act

[36]  As I have previously indicated, the jurisdictional arguments offered by the parties went beyond consideration of section 19(4). In fact, during the teleconference hearing on this matter, counsel for Checkman, Mr. Purdy, suggested that his client's application under section 19(4) might have been incorrectly framed. It should perhaps have been brought instead under section 41 of the Act, headed "Injurious affection if no land taken". The claim, he said, could be amended in this respect if necessary.

[37]  Section 41 provides:

[38]  Mr. Purdy referred to the jurisdiction conferred under section 26(1)(d) of the Act, which provides that the board must determine "compensation payable in respect of applications under section 41(3)". Furthermore, he noted, the board is given jurisdiction to award costs in these circumstances pursuant to section 32(1) and (5) of the Water Regulation which states:

[39]  For its part the District concurred in the notion that there had been no expropriation although for different reasons. It rejected Checkman's argument that section 41 applied. According to counsel for the District, Mr. Fairley, in his written submissions, for injurious affection pursuant to section 41(3) to occur, "there must be an actual interest in land which is expropriated for the purposes of a grant of easement pursuant to a water licence."

[40]  With respect, I find both parties' submissions as to the applicability of section 41 of the Act unhelpful. The parties appear to misapprehend what constitutes injurious affection where no land is taken. Injurious affection as incorporated in section 41 of the Act is not concerned with the situation referred to by Checkman in which the expropriation of an interest in land was begun but not completed. Neither does it depend, as the District seems to suggest, on an expropriation of some sort having occurred.

[41]  An owner's land may be injuriously affected by the construction of works on adjoining land which has not been expropriated from that owner, or indeed, expropriated at all. E.C.E. Todd, The Law of Expropriation and Compensation in Canada, Second Edition (Carswell: Scarborough, Ont., 1992), comments at p. 368:

"[E]ntitlement to compensation in such cases has nothing to do with the law of expropriation. The compensation is substituted for the damages at law to which the landowner would have been entitled had enabling legislation not authorized the construction and use of the particular public work."

[42]  As Professor Todd further points out, the basic criteria for determining the compensability of injurious affection where none of the claimant's land has been expropriated continue to be four rules developed by the English courts in interpreting nineteenth century English legislation. These four rules or conditions are: (a) the damage must result from an act rendered lawful by statutory powers of the person performing the act; (b) the damage must be such as would have been actionable under the common law, but for the statutory powers; (c) the damage must be an injury to the land itself and not a personal injury or an injury to business or trade; and (d) the damage must be occasioned by the construction of the public work, not by its use.

[43]  The board has previously considered the applicability of section 41 in light of these restrictive common law rules in several cases, including Jesperson's Brake & Muffler Ltd. v. Chilliwack (District) (1992), 47 L.C.R. 172, aff'd (1994), 52 L.C.R. 95 (B.C.C.A.); Warlow v. British Columbia (Minister of Transportation and Highways) (1997), 60 L.C.R. 218; and Reti v. Sicamous (District) (1999), 68 L.C.R. 296.

[44]  Checkman did not seek to bring its claim in the alternative under section 41 within the recognized common law rules. Instead, it relied on the judgment of Toy J. (as he then was) in Hidden Bar Ranch. This case concerned compensation for injurious affection in a partial taking (now referred to in expropriation legislation in British Columbia as "reduction in market value of the remaining land"). The principles and presumptions regarding compensation in a partial taking are far different from those governing a claim for injurious affection where no land is taken. The judgment in Hidden Bar Ranch does not assist Checkman in a claim under section 41.

[45]  In these circumstances I am not persuaded that the present case raises a claim for injurious affection where no land has been taken pursuant to section 41 so as to give the board jurisdiction to award compensation for damages or costs.

4.4  Jurisdiction under Section 32 of the Water Regulation

[46]  This leaves for consideration whether the board has jurisdiction to make an award under section 32 of the Water Regulation in respect of the reasonable costs which Checkman incurred as the result of expropriation proceedings begun but eventually discontinued by the District. I have concluded with some reluctance that the requisite jurisdiction does not exist.

[47]  It will assist my analysis at this point to set out fully the regime under section 32 which governs the costs of expropriation proceedings. Section 32 provides:

[48]  The District argued that the board lacks jurisdiction to determine and award costs pursuant to section 32 because, contrary to what section 32(1) requires, the board has not made a determination under section 26(1)(c) or (d) of the Expropriation Act as adopted by section 31 of the Water Regulation. Section 31(1) states inter alia that section 26(1)(c) or (d) applies in respect of a determination of compensation under section 30(a) of the Water Regulation. Although the board in my decision of June 1, 1999 determined the nature and terms of the instrument under section 30(b), it had not determined compensation under section 30(a) at the time the District discontinued expropriation proceedings.

[49]  A plain reading of section 32(1) supports the District's argument, although I have to say that I view the distinction drawn in the foregoing respect as somewhat artificial. It is true that the board made a determination under section 30(b) but not under section 30(a). However, a determination of the nature and terms of the instrument under section 30(b) is a necessary step along the way to the determination of compensation in section 30(a) and could be construed purposively as an integral part of the overall expropriation compensation process.

[50]  Had provision been made in the Water Regulation for advance payment of costs such as can be found in section 48 of the Expropriation Act, there seems little doubt that Checkman could have claimed its reasonable costs during the time the expropriation proceedings were extant and that the board would have been able to review and award such costs. However, section 32 of the Water Regulation exhausts an owner's entitlement to costs in expropriation proceedings under the Water Act.

[51]  Section 32 as a whole is directed to determining costs only at the end of a process in which the compensation payable has been determined, percentage calculations can be applied to the amount of compensation awarded in comparison with the amount offered, and mandatory considerations found in section 45(10) of the Expropriation Act as to the number and complexity of the issues, the degree of success achieved, and the manner in which the case was prepared and conducted can all be taken into account.

[52]  In the present instance, the District discontinued expropriation proceedings before matters had reached the stage where the board became vested with jurisdiction to determine and award costs under section 32.

4.5  Summary Conclusions

[53]  I have concluded that the board has not been deprived of jurisdiction to determine and award compensation for damages and costs by judgments involving the same parties and, broadly speaking, the same subject matter in the Supreme Court of British Columbia. However, the board does not have jurisdiction to make an award under section 19(4) of the Expropriation Act pursuant to the District's discontinuance of expropriation proceedings and Checkman's application for compensation under that section must therefore be dismissed. I am also not persuaded on this application that the board has jurisdiction in this case to make an award for injurious affection where no land has been taken under section 41 of the Expropriation Act or for the costs of expropriation proceedings under section 32 of the Water Regulation.