June 3, 2005, E.C.B. No. 13/04/260, 07/05/260

REASONS FOR DECISION

1.  INTRODUCTION

[1]  This is an application under the Water Act, R.S.B.C. 1996, c. 483 and Part 5 of the Water Regulation, B.C. Reg. 204/88. The claimant, Jenne Betty Greger, owns residential property (Lot 4) near Galena on the east side of Arrow Lake and also holds conditional water licences authorizing the diversion and use of water from MacKenzie Creek for her own domestic and power (residential) purposes. She has the right as a licensee under section 27 of the Water Act "to expropriate any land reasonably required for the construction, maintenance, improvement or operation of works authorized under [her] licence[s]".

[2]  Ms. Greger is seeking to expropriate an easement over a specified portion of adjacent property to the north owned by the respondents, Mary Lou Riddle and Lois Holden Hawthorne (Lot 1) and another property to the east of Lot 1 owned by Jonn Lillace (Lot 6). Pursuant to the statutory regime the board is asked to determine the compensation to be paid as well as the nature and terms of the interest to be taken.

[3]  The claimant has been the registered owner of Lot 4 since 1988 and has resided on it with her husband, Harold Greger, since 1989. She and her husband are retired. She purchased the property from a Walter Nelson who had obtained a water license in January 1972 (with precedence from June 1969) to draw water from MacKenzie Creek for domestic water purposes. Mr. Nelson had constructed a buried pipeline that had a diversion or intake structure in MacKenzie Creek on Lot 6 and then crossed the south east corner of Lot 1 before entering the claimant’s property on Lot 4. This pipeline was in place when Ms. Greger purchased Lot 4. In September 1989 Ms. Greger applied for a second water license to draw water for power purposes. This application referred to the existing water license and stated that the hydro intake and pipe were to be on the same course. Some notice of this application was sent to the then owners of Lot 1 and Lot 6 and eventually the second conditional water license was granted in February 1995. The new diversion structure and pipeline were constructed on Lot 6 and Lot 1 in the same area as the original water system. The new system first produced power in 1996. However, the Gregers did not obtain express permission for this work from the owners of Lot 6 and Lot 1, nor did they expropriate any interest in land.

[4]  The respondents became aware of the new diversion structure and pipeline (and the road leading to the diversion structure) on Lots 1 and 6 in 2002 and 2003. They objected to the presence of these works on their property which led to this application by the claimant to expropriate an easement on both Lot 1 and Lot 6. The respondents oppose the application. They rely on an earlier decision of this board, Denault v. Barclay (2002), 78 L.C.R. 288 (B.C.E.C.B.), as authority that the right to expropriate under section 27 of the Water Act is not an absolute or unfettered right. Further, they say, there has not been compliance with the statutory procedures. The relevant legislation contemplates any expropriation occurring before construction of the works is actually undertaken and thus this application to expropriate is too late. In addition, the notice that was given before the second water license was granted was incomplete and amounted to no notice. The water license did not authorize certain works and there cannot now be an expropriation to accommodate works for which there was no authorization. These defects are fatal to the application. And finally, the works for the power purposes are not reasonably required under the second water license as there is an alternative source of power available from BC Hydro.

[5]  Notices of Intent to Acquire an Interest in Land with respect to both Lot 1 and Lot 6 together with a survey plan and a draft of proposed easements have been filed in the Land Title Office in 2004 pursuant to section 26 of the Water Regulation. These Notices and other documentation were also served on the respondents and the Comptroller of Water Rights.

[6]  The hearing was held in Salmon Arm on March 22, 2005, with written argument filed with the board on April 15 and 20, 2005. I heard this matter alone in my capacity as vice chair of the board under section 26(5) of the Expropriation Act, R.S.B.C. 1996, c. 125. This matter had been scheduled to be heard prior to March 18, 2005 and is thus an "in-progress board proceeding" as defined in the Expropriation Compensation Board Transitional Regulation, B.C. Reg. 97/2005. Pursuant to this Transitional Regulation the Board has jurisdiction to take any steps it considers necessary to conclude the proceeding (with some specified exceptions).

[7]  Mr. and Mrs. Greger testified on behalf of the claimants. The witnesses for the respondents included the respondents, Jonn Lillace and Mary Lou Riddle, as well as Roy Teto, a civil engineer technician who had surveyed Lot 6 and Lot 1, and Gordon Holyk who had assisted him. There were two appraisal reports prepared by John D. Harper A.A.C.I., although Mr. Harper was not called to give evidence.

2.  BACKGROUND

2.1  Property Descriptions

[8]  As indicated above Ms. Greger has been the registered owner since 1988 of lands and premises legally known and described as:

PID 011-926-45
Lot 4,
District Lot 2110,
Kootenay District,
Plan 1523, Except Part included in Plan 11374 (" Lot 4")

The respondents, Mary Lou Riddle and Lois Holden Hawthorne, have been the registered owners since 1985 of lands and premises legally known and described as:

PID 013-172-239
Lot 1,
District Lot 2110,
Kootenay District,
Plan 1523 (" Lot 1").

Since 1994 the respondent, John Lillace, has been the registered owner of lands and premises known and described as:

PID 015-778-100
Lot 6,
District Lot 2110,
Kootenay District,
Plan 1523 (" Lot 6")

[9]  Both Ms. Greger’s property, Lot 4, and the Riddle and Hawthorne property, Lot 1, were at one time owned by Walter S. Nelson. Mr. Nelson’s residence was on Lot 4 and the Gregers now live there. Mary Lou Riddle testified that Lot 1 was purchased from Mr. Nelson in the 1970s by Lois Holden Hawthorne. The registration of title for Lot 1 filed in the Land Title Office in March 1985 lists both Mary Lou Riddle and Lois Holden Hawthorne as owners. Lot 1 lies to the north of Lot 4.

[10]  Lot 1 is approximately 46 acres and is forested with no dwelling structures on it. According to the appraisal report by John Harper A.A.C.I, there is no legal road access and there are no registered easements for access. There is panhandle access from Lot 1 to Arrow Lake. MacKenzie Creek flows across the southern portion of Lot 1 heading to Arrow Lake to the west. There are some old roads on the property on the north side of MacKenzie Creek and near the western boundary of Lot 1 an old bridge that crosses MacKenzie Creek. This bridge appears to have been built by Mr. Nelson as a footbridge and is now unsafe.

[11]  Ms. Riddle is a zoologist and resides in Florida. Ms. Hawthorne is described on the registration of title in 1985 as a teacher residing in California. Ms. Riddle stated that she has visited the area six or seven times since the 1970’s and camped nearby, visiting Lot 1 during the day sometimes bringing her boat to launch on Arrow Lake. She has never camped on Lot 1 itself. She said that she finds the property very beautiful and hopes to build a cabin on the property to use in her retirement. She had been friends with Mr. Nelson and she evidently accessed her property through his property, Lot 4. An undated letter from Mr. Nelson to Ms. Riddle was put into evidence which referred to the Gregers now living on Lot 4. Mr. Nelson went on to discuss possible new footpaths and bridges for Lot 1 leading from what was an old decommissioned road that apparently crossed Lot 4. He says the stream bed for MacKenzie Creek at the south west corner of Lot 1 is about twenty-five feet wide during spring run off and much less in late summer.

[12]  Ms. Riddle last visited Lot 1 in the summer of 2002. This was the first time that she had met the Gregers. She says that she was met with some hostility from the Gregers on her second trip to the property during this visit. After that she approached Lot 1 a different way. She said that she never realized until the day of the hearing in March 2005 that Lot 1 was landlocked with no legal access but by water and the panhandle. During the visit in 2002 she was surprised by the presence of the road leading to the dam along the proposed easement area. As a result she arranged to have the property surveyed in the summer of 2003.

[13]  Since 1994 the respondent Jonn Lillace has been the registered owner of Lot 6. He is a retired contractor and business consultant and resides in Salmon Arm. Mr. Lillace said that he and a business partner, Roland Sattler, originally bought Lot 6 together in 1990 but title was held in Roland Sattler’s name. Mr. Lillace bought out his partner in 1994 and title to Lot 6 was transferred to Mr. Lillace.

[14]  Lot 6 is about 10 acres and borders Lot 1 on the east. There are no dwelling improvements on the property. Lot 6 is an elongated property running north south with no developed road access. There is however a registered easement through the property to the east of Lot 6 to provide access for Lot 6. MacKenzie Creek runs from east to west through the southern portion of Lot 6. There are no bridges across the creek. Mr. Lillace also owns another larger property adjoining Lot 6 to the north. He testified that he intends to build a health centre on the two properties but does not have the money to do so at the present time. In connection with this project he stated that he intended to apply for his own water license to withdraw water to create power. Mr. Lillace entered into a lease contract for the logging of Lot 6 in 1996 which was cancelled. He entered into a second lease contract for logging of the property in 1997-1998 and Lot 6 has now been logged.

[15]  It appears that the respondent, Jonn Lillace, became aware about the works on his property Lot 6 in 2003 after Ms. Riddle had obtained a survey of Lot 1. The survey showed that the dam and intake structure were located across the eastern boundary of her property and on Lot 6. As a result of this information Mr. Lillace made enquiries and wrote the Gregers objecting to the works on his property.

2.2  Initial Water License for Domestic Water Use

[16]  The first water license 37881 was obtained by Walter S. Nelson in January 1972 with precedence from June 10, 1969. It permitted water to be drawn from MacKenzie Creek for domestic purposes at a maximum level of 1,000 gallons a day. This license authorized construction of a diversion structure and pipe. The attached sketch showed the water being diverted from Mackenzie Creek in Lot 6 and the pipeline passing some 600 feet through the south east corner of Lot 1 and then through Lot 4.

[17]  Both Ms. Riddle and Mr. Lillace said that they knew that Mr. Nelson obtained water from MacKenzie Creek. Ms. Riddle knew that the water pipeline crossed her property. Mr. Lillace said that he did not know the intake structure was on his property until after the survey of Ms. Riddle’s property in 2003.

[18]  The engineer’s report on Mr. Nelson’s application dated June 1971 stated inter alia that "Mrs. Smith’s objection to the water license should be dismissed because the objection is based on the construction of works on private lands and not on the availability of water. Mr. Nelson was advised that he would have to make his own easement arrangements with Mrs. Smith." While the location of Mrs. Smith’s property is not provided, it would appear that Mr. Nelson never obtained any easements for his water system.

[19]  Mr. Greger testified that prior to his wife’s purchase of Lot 4, they had lived near by and at Mr. Nelson’s request he had assisted Mr. Nelson in rebuilding the rock berm in the stream bed on Lot 6 that was part of the intake structure. Mr. Nelson was physically disabled and was not able to enter the stream bed. The rock berm had been created downstream of the intake pipe to raise the water in MacKenzie Creek so that the intake pipe was under water. This rock berm would sometimes become disturbed especially during spring run off and the rocks would need replacing. If the berm had fallen apart then the water level in the stream would fall and the supply of water in the pipeline would cease. In addition gravel would build up behind the rock berm and from time to time the rock berm had to be raised so that the water level (on top of the accumulated gravel) was high enough that the intake pipe remained under water. Mr. Greger said that he helped Mr. Nelson replace the rocks in the rock berm on several occasions before his wife purchased the property.

[20]  The intake pipe for the water system was a six foot long pipe in the stream bed with holes that were screened to prevent debris entering the pipe. The pipeline was a two inch diameter pipeline that was buried in a ditch. The intake pipe was at a high point in the system and the pipeline was located so that water would flow by gravity to the residence on Lot 4. The intake pipe was close to the boundary between Lot 6 and Lot 1, so that the length of buried pipeline on Lot 6 was relatively short. As indicated above some 600 feet of buried pipeline crossed the south east corner of Lot 1 before entering the Gregers’ property, Lot 4. This pipeline on Lot 1 was located on the south side of MacKenzie Creek; most of Lot 1 lay to the north of MacKenzie Creek.

[21]  There were different accounts as to the status of the road prior to construction of any works associated with the second water license. Mr. Greger stated that in 1988, before he did any work on the system, there was a rough track or road over top of the ditch with the water pipe leading from the rock berm across Lot 1 to Lot 4. Since Mr. Nelson was disabled he needed to drive along this track or road in some sort of motorized vehicle to the intake structure on Lot 6 when he checked the rock berm. Ms. Riddle described the road prior to 1988 as a mere deer track. Mr. Lillace had walked on the property in the 1990’s. He described the road as a trail but said that he had never seen the rock berm. Mr. Teto, the engineer technician, said that when he first did some surveys on Lot 6 in the early 1990s he saw no road. Mr. Holyk who assisted Mr. Teto said that he did not see a road either.

2.3  Application for Second Water License for Power

[22]  Ms. Greger applied for a second water license in September 1989 to permit water to be drawn for power. In the initial application the proposed works are described as a pipe and under additional information it says that the applicant already is the holder of a domestic water license and the hydro intake and pipe are to be the same course. In November 1989 a further form was completed by the Gregers. It stated that the anticipated power demands were 10 kw in the winter and 3 to 4 kw in the summer. The proposed works were a concrete dam with a maximum height of 3 feet and a length of 12 feet. The holding pond was 20 feet. The intake was specified to be a concrete tank and the plastic pipe as 1,300 feet with a 10 inch diameter (the initial entry said 8 inches but this had been crossed out) with a pressure rating of 63 psi. The elevation of the pipe was 1,520 feet at its highest decreasing to 1450 feet at the lower end. The pump turbine was specified to have a rating of 18 hp, 1200 rpm, with an elevation of 1450 feet and discharge into Arrow Lake. The generator was specified to be synchronous and to have a rating of 10 kw.

[23]  As required under the legislation, Ms. Greger sent a Notice of Application for a Water License to Mary Lou Riddle and Lois Hawthorne. This Notice was on a form provided by the Water Branch with various spaces to be filled in. Mr. Greger testified that he filled in the form in his wife’s name. The first spaces on the form require the applicant to provide their name and address. The form says that the applicant has applied "for a [water] license to (divert, use, store) water out of a [specified] stream which flows [in a specified direction] and discharges into [a specified body of water]". The next box which Mr. Greger has ticked says that "I hereby give notice that my proposed works will affect your property being …" and Mr. Greger has inserted the legal description for Lot 1. The next space to be completed says that "The proposed works will consist of …" and a line some two inches in length is provided on the form for the description of the proposed works. Mr. Greger described the proposed works as a "6 inch plastic pipe". The form goes on to provide that the works "shall be located approximately as shown in the attached sketch" but Mr. Greger has crossed out this phrase and inserted instead "in same ditch as our 2 inch line runs now". The next box which Mr. Greger has ticked says "I hereby give notice that I propose to connect on to an existing licensed pipeline that already crosses your property being …" and Mr. Greger has inserted the legal description for Lot 1. The form goes on to provide "I do not anticipate any disturbance to your property". Mr. Greger has then crossed out the final box which says "I hereby give notice that my proposed works will be connected to your licensed works as shown on the attached sketch". The final words on the form say "Objections to this application may be filed with the Regional Water manager at [specified address]  within 30 days of the serving of this notice". The registered mail forms showed that this notice was sent to Ms. Riddle and Ms. Hawthorne in November 1989.

[24]  A Notice of Application was not provided to the owner of Lot 6 in 1989 because the Gregers stated that they did not know that any of the existing domestic water system was located on Lot 6. In February 1993 this was brought to their attention by the Water Branch and a Notice of Application was sent to Mr. Sattler the registered owner of Lot 6 at that time by registered mail. The printed form was essentially the same as had been sent to Ms. Riddle and Ms. Hawthorne in 1989 except the line on the form for the description of the proposed works is now four inches long instead of two. Mr. Greger describes the proposed works in this form as an intake and buried plastic pipe. He does not specifically refer to the existing pipeline though he again ticks the box that says that the applicant proposes to connect onto an existing licensed pipeline that already crosses your property.

[25]  Mr. Greger testified that he was working with a Robert Matthews in Chase, British Columbia who designs small water systems. Various technical details including the size of the pipeline were determined by the designer of the system as to what was necessary and were not finalized for some time. In the summer of 1994 Mr. Greger did some hydraulic work on the stream bed removing gravel that had built up behind the rock berm. In 1995 after the second water license had been issued Mr. Greger replaced the rock berm with a concrete dam structure. Around this time he states that he graded and levelled the road. Recent photographs of the road show it to be level and winding across a forested slope. On one side there is a steep bank rising upward and on the other the bank falls away. In 1996 he completed work on other aspects of the power system so that their residence could begin to obtain electricity from the water powered system. In 2002 he installed a moveable gate in the dam structure (instead of planks) that made it easier to allow gravel and water through during spring run off. Mr. Greger testified that the concrete dam was more stable than the rock berm and there were no longer interruptions in the water supply. There were also no interruptions in the power supply. The concrete dam required less maintenance than the rock berm and fewer trips by the claimant along the road to the point of diversion. The installation of the gate in 2002 made maintenance and the clearing of accumulated gravel and debris easier.

[26]  The second water license was granted on February 14, 1995 under Number 100350 with precedence from September 1989. It was stated to be to divert and use water from MacKenzie Creek for residential power with the maximum quantity of water to be diverted to be 3 cubic feet per second. It authorized construction of a diversion structure, penstock, power house, tailrace and transmission line.

[27]  The cover letter from Ministry of Environment, Lands and Parks enclosing the water license stated that water licenses do not authorize entry on privately owned land for the construction of works. Permission of the landowner must be obtained or an easement expropriated. For your protection, permission should be in writing and should be registered with the appropriate land title office.

3. ISSUE

[28]  The main issue in this application is whether Ms. Greger is entitled to the expropriation of the specified easement from the lands owned by the respondents in the circumstances of the present case.

4.  ANALYSIS

4.1  Procedural Requirements under the Legislative Framework

[29]  The relevant legislation is set out in the attached Appendix.

4.1.1  Adequate Notice

[30]  The respondents say that each of the Notices of Application for a Water License that were sent to Ms. Riddle / Ms. Hawthorne and to Mr. Lillace were defective in several respects. Both Notices fail to mention that the purpose for the proposed works is for power; both say that the proposed works would tie in to the existing line when that is not what happened; both Notices say that no disturbance to your property is anticipated when in fact there was significant disturbance including the cutting of trees, building a road and constructing a dam. The earlier Notice to Ms. Riddle / Ms. Hawthorne said that it was for a 6 inch pipe when in fact an 8 inch pipe was installed. The later Notice to Mr. Lillace failed to mention any dimension for a pipe or that a dam was to be constructed.

[31]  The respondents point to the letter from the Ministry of Environment sent to the claimant on October 6, 1989 which specified that "notice of the application, type of works, and effect on land must be given to any private property owners affected (emphasis added)." They say that the Notices to the respondents did not comply with this direction. The claimant’s excuses as to misunderstanding the form are not credible.

[32]  Further, this lack of notice amounts to virtually no notice and the respondents were not able to make an informed decision as to whether to object to the granting of the water license. They submit that these defects are fatal and cite an earlier decision of this board, Denault v. Barclay, as authority for the board’s jurisdiction to modify or reject an expropriation sought under the Water Act in certain circumstances.

[33]  The claimant says that the notice to both respondents was provided on forms provided by the Water Branch and was in compliance with the statutory requirements set out in section 8 of the Water Act, R.S.B.C. 1979. c. 429 (now section 10 of the Water Act, R.S.B.C. 1996, c. 483). Under the legislative scheme an owner may register objections to the granting of a license until the license has been granted. It is the Comptroller of Water Rights who decides whether the water license will be granted.

[34]  The claimant goes on to say that the jurisdiction of this board is limited to the two items set out in section 30 of the Water Regulation, namely:

[35]  First I agree that under the statutory scheme set out under the Water Act and the Expropriation Act and the relevant regulations, it is the Water Branch and the Comptroller of Water Rights that issue water licenses to property owners, entitling the license holder to divert and use water in the manner set out in the license. The water license authorizes specific works that are to be constructed to effect the diversion and use of the water. This board’s role is limited under section 30 of the Water Regulation set out above to determine compensation and the terms of the conveyance required to give effect to the expropriating licensee’s right under section 27 of the Act to expropriate any land reasonably required for the construction, maintenance, improvement or operation of works authorized under a licence.

[36]  There are several cases that are of assistance with respect to the allegations of procedural defects. In Denault v. Barclay there also was an issue as to whether all the procedural requirements had been met. At para 38 the former chair stated:

The real issue, as I see it, is not that the board has a duty to enforce compliance with all procedural requirements under the relevant enactments. Rather, the board must be satisfied that it has the jurisdiction to proceed with an application when those procedural requirements have not been, or may not have been, fully met.

[37]  The case of Seaside Acres Ltd. v. Pacific Coast Energy Corp. (1994), 52 L.C.R. 106 (B.C.C.A.) also involved alleged procedural defects. The Minister as the approving authority had approved the expropriation before the date of deemed service of the notice of expropriation, contrary to the procedural steps set out in the Expropriation Act. The claimant had brought a petition seeking judicial review to set aside the expropriation. The Supreme Court dismissed the petition and the Court of Appeal dismissed the appeal. Goldie J.A. speaking for the court stated that when the expropriation was for a linear development (and as a result the Minister’s approval was automatic), the statutory sequence of steps did not apply.

[38]  In Haughton v. Heffley Creek (Waterworks District) (1997), 61 L.C.R. 265 (B.C.C.A.) the respondent District passed a bylaw authorizing an expropriation and filed an expropriation notice together with an explanatory plan in the Land Title Office pursuant to the statutory procedures set out in the Expropriation Act. However, at the time that this was done, the land that the District sought to expropriate was not located within the Heffley Creek Waterworks District. An application for judicial review by another person in identical circumstances at this stage resulted in the expropriating bylaw and the expropriation notice being set aside. See Don-Bar Holdings Ltd. v. Heffley Creek (Waterworks District) (1995), 55 L.C.R. 89 (B.C.S.C.). But in Haughton, the District was eventually successful in having the subject land included within its boundaries and following this step the District passed a second bylaw that authorized the expropriation. Haughton brought a petition after the second bylaw seeking an order that the expropriation notice and the explanatory plan that were filed in the Land Title Office before there was any valid expropriation bylaw in place were a nullity. Blair J. dismissed the petition and the Court of Appeal dismissed the appeal. Relying on Erickson v. Kamloops (City) (1993), 50 L.C.R. 81 (B.C.S.C.), Blair J. held that the passing of a bylaw is not a condition precedent to the District invoking the Expropriation Act. The District can take the various steps in any order provided all of the required steps are taken before the expropriation is completed. The expropriation notice and the explanatory plan were not a nullity even though they were filed at a time when the District did not include the land that was to be expropriated. The Court of Appeal agreed with the trial judge’s reasons.

[39]  Finally, the facts in Home Oil Company v. Schulte (2003), 80 L.C.R. 123 (B.C.E.C.B.) have some similarities to those in this case. Home Oil was seeking to expropriate an easement for an existing gas pipeline. The gas pipeline had been installed some 25 years earlier pursuant to procedures set out in the Pipeline Act. However, the appropriate easement had never been filed in the Land Title Office. The respondent property owner had not known the gas pipeline was already on his property when he purchased it and he opposed Home Oil’s application to expropriate an easement pursuant to procedures in the Railway Act. Various procedural defects were raised. Relying on Haughton v. Heffley Creek (Waterworks District) (1997), 61 L.C.R. 265 (B.C.C.A.) this board found that the wrong name of the corporate claimant in the required statutory Notice was not fatal to the application.

[40]  In this case the claimant was following an application system for a water license within the Water Branch with legislative procedures set out in sections 10 to 12 of the Water Act and sections 2 and 3 of the Water Regulation. (See Appendix.) The claimant does not appear to be in breach of any procedures for notice set out in the legislation. The principle to be derived from the cases cited above is that even where there have been breaches in statutory procedure, these breaches are not necessarily fatal.

[41]  I note that the claimant was using Notice forms provided by the Branch. These forms provided an option of three boxes that could be ticked or not and a few short spaces to fill in information. Mr. Greger conceded that he had misunderstood the form when he ticked the box indicating that he was going to connect onto an existing pipeline. In fact, the new pipeline ran alongside the existing pipeline. He had written the wrong pipeline size on one Notice and forgotten to include the size of the new pipeline on the other Notice. The size of the pipeline was determined by the engineer who was assisting him and it varied between 6 inches and 10 inches at various times until it was finally constructed with 8 inch pipe. Mr. Greger explained that since the pipeline was buried he did not think that the exact size was so important in any event. He also explained that he had left the sentence on the form "I do not anticipate any disturbance to your property" because he did not think a new buried pipeline would create a disturbance. The new dam was in the same place as the rock berm and was in the stream bed which is owned by the Crown.

[42]  I note that even where no Notice of an Application has been given to an owner, section 3(5) of the Water Regulation provides that objections can only be made until the time that the water license has been issued.

[43]  In any event, this Notice and any objections that the respondents might have made to the application for a power license are under the jurisdiction of the Comptroller of Water Rights. There does not appear to be any breach of any legislative requirements for Notice. Relying on Denault v. Barclay, I find that none of the alleged defects in the Notice affect my jurisdiction under section 30 of the Water Regulation to proceed with the application for expropriation.

4.1.2  Timely application

[44]  The respondents submit that the legislation contemplates an expropriation occurring prior to the construction of any works. They submit that the legislative scheme when viewed as a whole contemplates full and complete disclosure by an applicant for a water license whereby the Water Branch and the other property owners are making informed decisions based on all relevant information. By trying to invoke expropriation procedures after the fact the claimant is attempting to circumvent the procedural safeguards provided in the legislation. There is nothing in the legislation that authorizes construction of the works in the circumstances of this case. The claimant failed to apply at the proper time and the board now lacks jurisdiction to grant an order for expropriation.

[45]  The respondents point to section 27 of the Water Act and emphasize the following provisions:

Section 30 of the Water Act allows entry to begin construction in urgent cases with specific authorization which was not sought in this case. In such cases the applicant "must promptly take steps to expropriate land and must comply with the regulations relating to expropriation". They refer me to a few other provisions which use the word proposed or a future tense in connection with works, although the reference to section 14 of the Expropriation Act is inapplicable.

[46]  The claimant says that the legislative provisions are not limited to situations where the works are not yet built, but in fact provide for works that have already been constructed. She points to section 27(2) and (4):

And section 29 says:

[47]  I find the case of Home Oil Company v. Schulte of assistance. In this case the expropriating licensee, Ms. Greger, like Home Oil, made a mistake in not obtaining an easement before she constructed the works. Mr. Greger said that he had misunderstood their legal rights with respect to permission or expropriation because he thought they had acquired prescriptive rights over the existing road. While this view was incorrect, the fact that there was already an existing water system in the same location is relevant. I note that Mr. Nelson, the original licensee for the domestic water system, had not obtained an easement for that part of the water system on Lot 6, nor had he reserved an easement over Lot 1 when he sold it to Ms. Hawthorne and Ms. Riddle. Any actions by the Gregers to maintain, improve and operate this initial domestic water system from time to time may very well have triggered objections from the respondents to the work and to the claimant’s trespassing on their land to do the work. Such objections would have led the claimant to make a similar application to expropriate, even without the second water license and the mistake by the claimant in constructing the second water system before expropriating an easement.

[48]  Reading the relevant sections of the Water Act, the Water Regulation and the Expropriation Act as a whole, I am unable to find a requirement for jurisdiction that the expropriating licensee has not yet constructed any works. While in most cases the expropriation of an easement would precede the construction of the works, as in Haughton v. Heffley Creek (Waterworks District), I do not find the fact that the procedural steps were done in a different order than what was usual to be fatal to the claimant’s application. As a result I conclude that it is not too late for the claimant to bring this application to expropriate an easement.

4.1.3  Lack of Authority to Install a Dam, an 8 Inch Pipe and a Road

[49]  The respondents say that the second water license granted in February 1995 did not authorize the installation of a dam, an eight inch pipe or a road. A letter written by the husband of the claimant, Harold Greger, to Mr. Lillace on October 30, 2003 refers to the "original dam, pipeline and road" and then discusses "improvements to the dam and road". The respondents say that this description is misleading as there was no dam before 1995; what was there was a rock berm. There also was no road before the Greger’s works but only a trail. And the original pipeline for the domestic water system was only a two inch pipe, not the eight inch pipe that the Greger’s installed.

[50]  The 1995 water license provides that "the works authorized to be constructed are diversion structure, penstock [pipeline], powerhouse, tailrace and transmission line". The respondents submit that "diversion structure" does not include a dam and refer to the definition of divert in the Water Act. The License makes no reference to a road nor does it specify the diameter of the pipe. Since no dam or road was authorized in the Water License there can be no expropriation to accommodate these works.

[51]  The claimant says that the dam is in fact a diversion structure. Further the dam is in the stream bed owned by the Crown and is not on Mr. Lillace’s land. The authorization for a pipeline does not specify any diameter as that had to be determined by the engineer as part of the power calculations. The claimants say that the respondents are mistaken about the nature of the road before 1995. The original licensee, Walter Nelson, used a motorized vehicle to access the rock berm and intake area several times each year. Ms. Riddle said that she had not noticed the road before 2002 but she had only visited the property six or seven times in 35 years and appears not to have visited the property for a number of years before 2002. She appeared to be mistaken as to where the road was located: this track or road over the pipeline did not intersect with any of the old roads crossing Lot 4 that she appeared to use to access her property when Mr. Nelson owned Lot 4. Mr. Lillace, and the witnesses, Mr. Teto who surveyed the boundaries for Mr. Lillace in 1992 or 1993, and Mr. Holyk who assisted Mr. Teto, say that they do not recall the road. However, there was evidence that they crossed MacKenzie Creek at a point that the claimant says was to the east of the dam and the road and therefore their path would not have intersected with the road. In any event, the claimant submits that works is defined in the Water Act to include access roads.

[52]  Neither dam nor diversion structure is defined in the Water Act. The following definitions in section 1 of the Water Act are relevant:

[53]  A Water Management Branch form entitled Information Required in Respect of an Application for Power Purpose was completed by the claimant and is stamped received by the Ministry of Environment November 7, 1989. Under proposed works and the heading dam the claimant has filled in that the dimensions will be 3 feet (height) and 12 feet (length) and be made of concrete with a spill way. The holding pond will be 20 feet in diameter. The pipeline will be 1300 feet long with a diameter of 10 inches (although it was originally filled in as 8 inches but that has been crossed out). It will be made of plastic.

[54]  A Report on a Water Application dated November 8, 1993 by a Water Allocation Technician with the Ministry of Environment says under Comments regarding application "works for power will consist of a small dam, penstock approx 1300 feet of 10 inch plastic pipe, a pump turbine, a synchronous generator with a rating of 10 kw and the tailrace back to MacKenzie Creek". Elsewhere in the same report it states under Works not constructed are: (license description) "diversion structure, penstock, power house, tail race and transmission line".

[55]  I am satisfied from the definitions in the Water Act and the documents created by the Ministry of the Environment that a diversion structure includes a dam. The term "divert" includes making a change in or about the channel that permits water to leave the channel and "changes in and about a stream" includes any activity or construction within the stream channel that has or may have an impact on a stream . The dam in this case performs the same function as the rock berm that existed prior to 1995: both are diversion structures within the stream bed that cause water to collect behind them so that the intake pipe(s) remain under water. I note that in a letter from Ian Johnston, Section Head, Land and Water British Columbia Inc, to Jonn Lillace dated April 21, 2004, the writer agrees with this interpretation.

[56]  The word "penstock" in the License is the term for the pipeline. The diameter is not specified and as a result I find that there is authority for an eight inch pipeline. Again I note that Mr. Johnston’s letter dated April 21, 2004, says that since pipeline diameter is not specified in the license, any change in the pipeline size is not a material change.

[57]  I only have photographs of the road in its present condition. The nature of the road before 1995 is not clear. The respondents had not visited their properties frequently and I am uncertain as to whether they in fact visited the precise location of this road before 2002 and 2003. In any event I interpret the definition of works in the Water Act to include access roads to any of the particular works that might be specifically authorized. Clearly an access road of some sort is necessary in this case to construct, maintain and improve the concrete diversion structure, the intake box and the pipeline authorized in the second water license. Further, an access road of some sort is required to maintain and improve the original domestic water system authorized in the initial water license.

[58]  I find Re Van Oyen and Kelowna Nurseries Ltd. (1979), 101 D.L.R. (3d) 255 (B.C.S.C.); aff’d (1980), 120 D.L.R. (3d) 767 (B.C.C.A.) of assistance. In that case the water license failed to mention the construction of a power line, whereas the notice of expropriation did. Mr. Justice MacFarlane (as he then was) found that the notice to expropriate was not defective. Section [27] of the Water Act authorized the licensee to expropriate land reasonably required for the construction, maintenance, and operation of the works authorized by the license and the works so authorized required the construction of a power line in order to be operative.

[59]  I conclude that the claimant had authority under the Water License to install the dam, the 8 inch pipe and the access road. As a result the claimant is entitled under section 27(2) of the Water Act to expropriate land reasonably required for the construction, maintenance, improvement or operation of these and other authorized works.

4.2  Are the Proposed Easements Reasonably Required?

[60]  The respondents have no issue with the size or location of the proposed easement set out in the survey by Russell N. Shortt. Rather they oppose any easement being granted. They say that none of the works constructed under the second water license are reasonably required because an alternate source for power is available by way of BC Hydro. If the board denied the expropriation the claimant would be able to access power through BC Hydro. The respondent relies on Denault v. Barclay for the proposition that the board has some discretion in considering applications to expropriate under the Water Act and may "approve, modify or reject [a]  proposed expropriation". If there was only the initial domestic water system the works would be in different form and have less impact on the respondents’ lands.

[61]  The claimant says that the board’s jurisdiction is limited to determining compensation and the nature and terms of the conveyance under section 30 of the Water Regulation. Whether or not the claimant has alternative sources of power is irrelevant.

[62]  In Denault v. Barclay the former chair of this board, Robert Shorthouse, stated at para 65 that the power of the board to determine what the expropriating licensee "reasonably requires" (under section 27(2)) includes the power on proper grounds to approve, modify or reject the proposed expropriation. He went on to say in para 66 that the determination of what land is "reasonably required" imports, among other things, the notion of weighing the balance of convenience between the expropriating licensee and the owner whose land is sought to be expropriated.

[63]  I agree that the right to expropriate under section 27 of the Water Act is not absolute. However, the circumstances in Denault v. Barclay can be distinguished from those in the present case. Mr. Denault, the licensee, already had an easement which he was seeking to extend with a further expropriation. The main issue in Denault was that the new proposed easement was unnecessary, that it would lead to various engineering and environmental difficulties and that it was possibly being pursued for an improper purpose. Mr. Denault, the claimant licensee, already had a legal easement in order to construct, maintain, improve or operate the existing water system. In the present case there was no evidence as to engineering or other practical difficulties nor was there any evidence of alternative routes; rather the respondents really were challenging the claimant’s right to have a power license and to have works on Lot 1 and Lot 6 in relation to that water license.

[64]  I agree with the claimant on this issue. It is the Comptroller of Water Rights who decides whether a property owner is to be granted a license for power. I am not able to go behind the water license issued by the Comptroller. See Hidden Bar Ranch Ltd. V. Arbitrator (Water Act, B.C.) (1986), 31 D.L.R. (4 th) 696 (B.C.S.C.). Under section 30 of the Water Regulation the board’s jurisdiction is limited to the nature and terms of the conveyance to give effect to the expropriating licensee’s rights under section 27 of the Act to expropriate the land reasonably required in relation to the license[s] and then determining the compensation (emphasis added).

[65]  In any event, even if there had been no water license for power, Ms. Greger would need to expropriate a right of way for the initial domestic water system since Mr. Nelson had never obtained any easements. The claimant and her successors need to be able to cross Lot 1 and enter on Lot 6 to maintain, operate and improve this water system including the diversion structure. The respondents attempt to say that the initial domestic water system would have had less impact and if that is all that had been involved they would not have had such strong objections. However, ongoing maintenance, operation and improvement of the initial water system would have required the Gregers to cross Lot 1 and Lot 6 from time to time and legal easements for this purpose would have been necessary. The proposed easement covers the initial domestic water system.

[66]  As a result I find the proposed easement over the two properties to be "reasonably required" for the claimant to construct, maintain, improve or operate the works authorized under the two water licenses.

5.  NATURE OF THE INSTRUMENT

[67]  The proposed easement is set out in a survey document dated April 5, 2004 prepared by British Columbia land surveyor, Russell N. Shortt. There was no discussion of the location or dimensions or any other aspect of the proposed easement during the hearing.

[68]  On Lot 1 the proposed easement covers an area with an old skid road containing the two buried pipelines that runs some 600 feet across the south west corner. The appraiser Mr. Harper describes the proposed easement area as at the bottom of a steep slope and as a result he says that this area is not suitable for residential use. The main part of Lot 1 is located to the north of MacKenzie Creek and it is the north side of Lot 1 that has the only legal access by the panhandle to Arrow Lake. The creek acts as a natural boundary and the proposed easement is on the south side of the creek which is physically separated from most of Lot 1. There is no bridge on Lot 1 that can be used by vehicles to cross to the south side from the north.

[69]  On Lot 6 the easement area is on both sides of MacKenzie Creek. The dam itself is in the creek bed which is owned by the Crown and is thus not part of the easement. Mr. Harper describes the creek as being in a deep ravine and therefore the proposed easement area is unsuitable for residential use. The larger portion of the easement on the south side of the creek is part of the old skid road with buried pipelines that cross the boundary into Lot 1. Again MacKenzie Creek is a natural barrier with the south side being cut off from the main part of Lot 6 on the north. There are no bridges crossing the creek on Lot 6. Mr. Harper says the south side has no prospects for any type of use.

[70]  The terms of the proposed easement document attached to the Form As and the Notices of Intent to Acquire Land provide various covenants. These include the respondent land owners not constructing any building or structure on the right of way, or from planting any vegetation that might interfere with access to any part of the right of way. The respondents also covenant not to diminish the soil cover over the works and in particular not to create drains or ditches along or across the easement area. The respondents covenant not to interfere with the works. The claimant covenants to ensure that the works are maintained in a good condition and that any necessary maintenance is carried out in a proper manner so as to interfere as little as possible with the use and enjoyment of the respondents. The claimant is also to indemnify the respondents for any loss or damage as a result of the claimant’s use of the easement. If the claimant or her successors permanently lose their rights under the Licenses, then the easement will cease to exist. There was no discussion of any of the terms of the statutory right of way during the hearing.

[71]  I find that the proposed easement area and the proposed easement documents attached to the Notices of Intent to Acquire Land filed in the Land Title Office under No. KW093305 and No. KW044075 to be reasonable.

6.  COMPENSATION

[72]  There was no evidence other than the two reports by Mr. Harper as to market value. Mr. Harper did not attend the hearing and his opinion as to market value of the two properties was not challenged. He estimated the market value of Lot 1 (Riddle / Hawthorne property) at $2,798.70 an acre and of Lot 6 (Lillace property) at $3,500 an acre. Both of these valuations were as of March 31, 2004. He concluded that neither easement would negatively impact Lot 1 or Lot 6. However, section 40(3) of the Expropriation Act provides:

Although Mr. Harper was valuing an easement across two properties, he did not make any reduction in the fee simple value. He determined the value of the easement on Lot 1 as 0.287 acres x $2,798.70 or $803.22. The value of the easement on Lot 6 was 0.09143 acres x $3,500 or $320.

[73]  E.C.E. Todd in The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell, Toronto, 1992) discusses the determination of compensation for a right of way for a pipeline. At p. 431 Professor Todd states that there are three elements to be considered: the value of the land impressed with the right of way, the residual rights to the owner and injurious affection to the remaining land. He comments further that pipelines buried under agricultural land generally allow farming to continue with little if any disruption and that as a result the residual value to the farmer had to be taken into account. The Ontario Court of Appeal in Re International Pipe Line Co., [1955] O.W.N. 301 suggested consideration of the following factors in determining residual value: future maintenance of the pipeline, pipeline inspections, possible construction of additional lines, restrictions against building structures such as roadways or fences, liability of the owner to pay property taxes with respect to the land included in the right of way and the effect upon servicing the remaining land.

[74]  This board has awarded between 50 and 100% of fee simple value for various rights of way. In two related cases Cokato Dairy & Stock Farms Ltd. v. Fernie (City) (1994), 54 L.C.R. 199 (B.C.E.C.B.) and Jones v. Fernie (City) (1994), 54 L.C.R. 285 (B.C.E.C.B.), the board compensated the two agricultural owners for a sewer right-of-way at 50% of the fee simple value. In both of these cases, the board noted that the surface could still be used as it had been before the taking (horse pasturing in one case and hay growing in the other). The board also observed that given the minimum effect on the owner’s use of the land, a smaller percentage than 50% might have been appropriate compensation if the respondent, Fernie, had not conceded 50% of the fee simple valuation. In 286684 B.C. Ltd. v. Colwood (City) (1999), 66 L.C.R. 148 (B.C.E.C.B.), the board awarded 75% of the fee simple value for an underground sewer pipe right of way that cut across the middle of a 2.66 hectare development property and curtailed development potential of the parcel. In Mayfair Resources Corp. v. Greater Vancouver Water District (1997), 61 L.C.R. 183 (B.C.E.C.B.) this board awarded 100% of the fee simple value for a right of way for an underground water pipe on the grounds that the development potential of the property had been quite significantly diminished.

[75]  In the circumstances of the easement in this case I might have awarded less than fee simple value if the claimant had not conceded 100% market value already. As a result I concur with the valuations set out by Mr. Harper: namely, $803.22 to the respondents Ms. Riddle and Ms. Hawthorne for the easement on Lot 1 and $320 to the respondent Mr. Lillace for the easement on Lot 6.

7.  COSTS

[76]  Section 32 of the Water Regulation provides as follows:

[77]  I have awarded the respondents 100% of the compensation offered. The claimant submits that a multiple of this appraised value was offered to avoid these proceedings. The respondents submit that the most significant issue at the hearing arose out of the claimant’s failure to fully disclose what was intended in the Notice of Application for a Water License.

[78]  Under section 32(4) I have the discretion to award costs to one or both of the respondents or to the claimant licensee, Ms. Greger. In the circumstances I make no award for costs.

THEREFORE IT IS ORDERED THAT:

EXPROPRIATION COMPENSATION BOARD

______________________________________

Sharon I. Walls

Vice Chair

APPENDIX

Relevant sections of the Water Act are

Relevant provisions of the Water Regulation, B.C. Reg. 204/88 are:

Relevant provisions of the Dam Safety Regulation, B.C. Reg 44/2000 are: