Ward v., 2023 BCPC 256

Citation: Ward v. 0861537 B.C. Ltd. 2023 BCPC 256 Date: 20231211 File No: 42876 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims Court) BETWEEN: JOSEPH WARD, ELAINE WARD, HOPE ROGERS, KENNETH RICHARDSON, JANET HUNTLEY, GENE PARK, JOANNE BRAITHWAITE, a.k.a POVERTY FLATS WATER USERS CLAIMANTS AND: 0861537 B.C. LTD., GUYLAIN MERCIER, KAMALJIT KHUNKHUN DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE A. TAM Appearing for the Claimants: H. Hyslop Appearing for the Defendants: J. Drayton, and F. Dante (Articling Student) Place of Hearing: Kamloops , B.C. Dates of Hearing: July 26, 27, 28, October 11, 2023 Date of Judgment: December 11, 2023

INTRODUCTION [ 1 ] The claimants and defendants are neighbouring ranch owners near Campbell Creek in an area known as Poverty Flats. Some of them grow alfalfa, some of them grow potatoes and some of them grow flowers, but each requires water for one agricultural reason or another. This water comes from Campbell Creek and each ranch owner holds a licence under the Water Sustainability Act , [ SBC 2014]

CHAPTER 15 (“ WSA ” ), which permits them to use this water. Because of where their properties are situated, water is pumped from Campbell Creek and brought to their respective properties by a system of pipes. There is, of course, a cost to maintain this infrastructure: pumps need replacing; pipes need upgrading; and there is general maintenance throughout the year to make sure the system works. [ 2 ] Akin to a strata council that oversees a condominium building, a group was formed known as the Poverty Flats Water Users (the “Users”). However, unlike a strata council, this group is not a legal entity.

There is no bylaw or charter. The terms by which the group is governed is by way of a verbal agreement which was not reduced to writing. This action is about whether the Defendants are contractually bound to pay a percentage of the expenses of the Users. If they are, then what is that percentage? Although there are historical and ongoing disagreement on these issues, the only years with which this lawsuit is concerned are 2019, 2020, and 2021. BACKGROUND FACTS [ 3 ] There are seven members of the Users. The claimants consist of four members.

Where two individuals are a couple, the Users consider them to be one member. The four members who bring on this lawsuit as “Claimants” are as follows: 1. Joseph Ward and Elaine Ward; 2. Hope Rogers; 3. Kenneth Richardson and Janet Huntley; 4. Gene Park and Joanne Braithwaite. [ 4 ] The “Defendants” consist of two members of the group. Mr. Guylain Mercier and Ms. Kamaljit Khunkhun reside together and are considered one member (the “personal defendants”). The other member is the “corporate defendant”, which is a company owned solely by Mr. Mercier. [ 5 ] There is one last member of the Users, Mr. and Ms. Swanson.

The Claimants do not say that the Swansons owe them any money, nor do the Swansons wish to participate in this lawsuit. Accordingly, they are neither a claimant nor a defendant, although the Defendants did call Mr. Swanson as a witness. ISSUES TO BE DETERMINED [ 6 ] There is no dispute that the Claimants rendered invoices to the Defendants during the years in question for costs associated to the Defendants’ use of the water in accordance with what the Claimants say is the applicable formula. Equally, the Defendants do not deny that they did not pay the entirety of those invoices.

The question to be decided is whether there was a binding verbal agreement by virtue of which the Defendants are obligated to pay those invoices, in whole or in part. POSITION OF THE CLAIMANTS [ 7 ] The Claimants say that there was a verbal agreement between the land owners, past and present. This agreement had been in place since 1971, although it had been amended from time to time. For example, when a property was subdivided and sold to multiple owners, there was a reapportionment of how many people would share in the total expenses.

At one point, a former member of the Users decided that he was going to withdraw from this group. This also meant that the remaining users needed to pay a higher percentage of the total cost to make up for this withdrawal. The current members of the Users are not the original landowners who initially entered into this agreement in 1971. [ 8 ] According to the terms of the arrangement, there are four sections that make up an invoice which would be sent out periodically. They are explained below.

Capital Costs [ 9 ] This heading captures equipment upgrades and includes the purchase of a new pump and the cost of a new aluminium pipe. This figure was initially divided evenly among the seven members. At one point during the litigation process, however, Ms. Rogers agreed to pay for two shares because she owns two plots of land, whereas all of the other members only own one. This fraction was reconfigured so that each member would pay 1/8 of all capital costs, with Ms. Rogers paying 2/8, or 1/4. Operating Costs [ 10 ] This heading would include primarily the BC Hydro bill.

This cost was originally divided in accordance with the percentages that the then owners agreed upon. In 1981, Ms. Elaine Ward, as incoming bookkeeper for the Users, inherited a piece of paper from her predecessor that set out the division. These percentages were then updated from time to time to reflect the changes in ownership and water use. Using the present-day members’ names, those percentages, updated as of 2019, were broken down as follows: Mr. and Ms. Ward 47% 0861537 BC Ltd. 29%

Ms. Rogers 6% Ms. Huntley and Mr. Richardson 6% Ms. Braithwaite and Mr. Park 6% Mr. and Ms. Swanson 3% Mr. Mercier and Ms. Khunkhun 3% [ 11 ] In March 23, 2021, the Users agreed to reduce the numbered company’s percentage from 29% to 14%. This reflects the fact that the numbered company draws water primarily from another system, unrelated to the Poverty Flats system. As such, the members re- apportioned the percentages based on the number of acres that were permitted to be watered as stipulated by their respective licences. Starting in 2021, the percentages were changed to the following: Mr. and Ms.

Ward 57% 0861537 BC Ltd. 14% Ms. Rogers 6% Ms. Braithwaite and Mr. Park 5% Ms. Huntley and Mr. Richardson 8% Mr. and Ms. Swanson 5% Mr. Mercier and Ms. Khunkhun 5% Wages [ 12 ] Throughout the year, the pump needs to be maintained. From time to time, the intake needs to be cleared of debris. There is also work to be done in order to get the pump ready in the beginning of the watering season in the spring, and then ready for winter in the fall. Mr. Joseph Ward has traditionally taken on this role as the primary caretaker of the system. For all this work, Mr.

Ward is paid $850 per year by the Users, of which he and his wife are responsible for $200. His wage is distributed as follows, pursuant to the Users’ agreement: Mr. and Ms. Ward $200 0861537 BC Ltd. $150 Ms. Rogers $100 Ms. Braithwaite and Mr. Park $100 Ms. Huntley and Mr. Richardson $100 Mr. and Ms. Swanson $100 Mr. Mercier and Ms. Khunkhun $100 Maintenance Fund [ 13 ] Lastly, the Users keep a maintenance fund for contingencies. Each member pays $100 per year into this account to meet expenses as they arise.

For example, during the time the Defendants were alleged to be delinquent in their account, the Claimants used this maintenance fund to pay the Defendants’ share. AMOUNT OWING [ 14 ] Based on the above formulae, the Users issued invoices to the Defendants which were only partially paid. For the three watering years of 2019, 2020, and 2021, the personal defendants are in arrears $3,787.59; the corporate defendant is in arrears $5,872.35. The Claimants sue to collect on these amounts. POSITION OF THE DEFENDANTS [ 15 ] The Defendants’ primary position is that the Claimants have no standing to sue.

This is because the waterworks in British Columbia are governed by the Water Users’ Communities Act [RSBC 1996]

CHAPTER 483 (“ WUCA ”). The Claimants and the Defendants form a subset of the members of the Campbell Creek Water Users Community (“CCWUC”), which is a public corporate body as defined and created by the legislation. The Defendants rely on s. 52 of the WUCA which gives the CCWUC exclusive control over waterworks, including the levy of assessments and enforcing payment.

Accordingly, none of the Defendants are liable since the Claimants, in their personal capacities, have no right to bring on this action. [ 16 ] In the alternative, and additionally, the personal defendants say that they have already made a substantial payment on the debt that the Claimants say is owing. On May 19, 2021, Ms. Khunkhun forwarded the sum of $3,500 to her counsel, Mr. Drayton, for the purpose of settling the debt attributable to the personal defendants. However, this was not specifically communicated to the Claimants.

Mr. Drayton wrote a letter to the Claimants enclosing the cheque, saying the following: You may consider this to be a payment on account by my clients, Guy Mercier, Kam Khuhkhun, and 0861537 BC Ltd. The parties can decide later how this payment is to be applied. Hopefully this will keep the water on until the rest of the issues are resolved. [ 17 ] The Claimants then credited this $3,500 toward the account of the corporate defendant. At this trial, the Defendants asked the court to attribute this $3,500 back to the credit of the personal defendants.

If that were so, then the remaining amount owing is only $287.59. [ 18 ] Furthermore, the personal defendants say that the formulae the Claimants use to arrive at the invoices are unfair. They are inconsistent as between the various headings under the invoice. Specifically, the Defendants pay a certain percentage for capital costs, another for hydro expenses, another for Mr. Ward’s wage, and yet another for the maintenance fund. The personal defendants ended up paying more than their fair share on a global analysis.

As such, they say that the balance of $287.59 should simply be cancelled when one looks at the overall fairness of the arrangement. [ 19 ] With respect to the corporate defendant, they say that they did not enter into any agreement at all. The numbered company acquired its property in 2017 from the former owner Mr. Stan Leggett. At that time, Mr. Mercier, as the sole owner of the company, agreed to accept any existing obligation associated to the property up to and including 2017. The company did not agree to oblige itself to anything beyond 2017.

Consequently, the corporate defendant should not be liable for anything. STANDING [ 20 ] On behalf of the Defendants, Mr. Drayton says that the Claimants have no standing to sue in their personal capacities. He relies on ss. 51 and 52 of the WUCA : Incorporation of water users' communities 51 The comptroller may at any time issue to a group of 6 or more licensees a certificate of incorporation incorporating them into a water users' community with the name the comptroller considers advisable. Power of water users' community 52

(1) A water users' community is a public corporate body and may (

a) acquire, hold and control property and licences, (

b) acquire, construct, hold, maintain, improve, replace and operate works, and (

c) levy assessments on its members and enforce payment of those assessments by suit in a court of competent jurisdiction.

(2) A water users' community has the exclusive control and operation of the works constructed or used under the licences mentioned in its certificate of incorporation, and may refuse the use or benefit of those works to a member who is in default in paying an assessment or complying with a rule of the manager. [ 21 ] In the case at bar, the Claimants and Defendants are part of the Campbell Creek Water Users Community, which has been incorporated as a public corporate body under the WUCA . In total, there are approximately 110 members in this community.

By virtue of s. 52(2), the Defendants say that it is the CCWUC who has exclusive control and operation of the works constructed, and so it is only the CCWUC that may sue or enforce payment. [ 22 ] With respect, I do not read these sections the same way. While s. 52(1)(

c) gives the CCWUC power to levy assessments and enforce payment, I do not read that as an impediment to a subset of water users entering into agreements amongst themselves . While subsection (2) gives the CCWUC exclusive control over the works under the licences, in the sense that it has the final say as to how those licences may be exercised, I do not take that to mean the CCWUC would then be involved in managing or even micromanaging every aspect of how water will be delivered.

With the approval of the CCWUC, licensees appear to be at liberty to install pumps and pipes to give effect to their licences. [ 23 ] In my view, there are three related difficulties with the Defendants’ position on the standing issue. Firstly, this action is based in contract and it is a fundamental principle in contract law that only a party who is privy to the contract is entitled to its benefits, and subject to the obligations under it. It is equally fundamental that a person who is not party to a contract cannot sue or be sued (see Price Security Holdings Inc. v.

Klompas & Rothwell , 2019 BCCA 36 , at para. 32 , e.g.). In this case, the CCWUC had nothing to do with this agreement on which the Claimants rely. If the CCWUC started an action, surely the Defendants would then be saying that the CCWUC had no standing to commence the claim. [ 24 ] Secondly, the Claimants are part of the CCWUC, but they are not themselves the CCWUC. Rather, the community acts through a manager who has been chosen by all of the members in accordance with the legislative regime. As best as I can tell, there is no mechanism by which the Claimants can compel the manager, Mr.

Blackwell, to commence this action. Mr. Blackwell testified and said that in the 25 years he has served as manager, he has never started a lawsuit on behalf of a member against another member, nor does he see a reason why he would ever do that. In other words, if it must be the CCWUC who commences an action, the Claimants may be effectively deprived of a remedy since there is no realistic mechanism for them to force Mr. Blackwell to file a claim. [ 25 ] Thirdly, in this hypothetical action between the CCWUC and the Defendants, one may ask rhetorically, what could possibly be the claimant’s damages?

The CCWUC did not pay for the pump. It did not install the pipes. It did not pay Joseph Ward to clean out the debris. It did not pay the hydro bills. The damages at this hypothetical trial would necessarily be zero.

[26] A good number of authorities have been placed before me, which include a number of cases where a “water users’ community”is a party. However, none of these cases involves private disputes between members within that community. They involve, for example,assessments levied by the public corporate body (Peterson Creek Water Users’ Community v. British Columbia (Ministry ofEnvironment, Lands and Parks), [2000] B.C.E.A. No. 62), or the decision of the Assistant Regional Water Manager to issue conditionalwater licences (Campbell Creek Water Users’ Community Association v.

British Columbia (Ministry of Environment), [2011] B.C.E.A.No. 6). For the above reasons, I reject the Defendants’ position that it should have been the CCWUC to bring on this action. Since it wasthe Claimants who were party to the agreement in question, they were the proper people to file the lawsuit. THE CONTRACTUAL ANALYSIS [27] As a starting point, it is important to note that any contractual obligation would not “run with the land”. In other words, Mr.Mercier and Ms. Khunkhun were not contractually bound by the agreement simply by virtue of acquiring their property. In HeritageCapital Corp. v.

Equitable Trust Co., 2016 SCC 19, the Supreme Court of Canada affirmed the following, at para. 25: 25 The idea of a payment obligation running with land is by its nature unusual. In fact, it is undisputed that at common law, positivecovenants cannot run with the land (Austerberry v. Corporation of Oldham (1885), 29 Ch. D. 750). This rule is founded on the principlethat at common law, a person cannot be made liable upon a contract unless he or she was party to it (Rhone v. Stephens, [1994] 2 A.C.310 (H.L.)).

The rule against positive covenants running with the land applies even if an agreement contains an express intention to thecontrary (Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), (ON CA), 58 O.R. (3d) 481(C.A.)). As a result, the common law rule is that “[n]o personal or affirmative covenant, requiring the expenditure of money or the doingof some act, can, apart from statute, be made to run with the land” (V. Di Castri, Registration of Title to Land (loose-leaf), vol. 1, at p.10-4 (emphasis added), quoted in Westbank Holdings Ltd. v.

Westgate Shopping Centre Ltd., 2001 BCCA 268, 155 B.C.A.C. 1, atpara. 16). The issue in the instant case is whether and to what extent s. 29 of the HRA displaces the common law rule by permittingpositive covenants to run with the land. [Emphasis in original.] [28] But obviously, if the new owner and the other party wish to carry on with any pre-existing arrangement associated to theproperty, they are free to do so. In that case, the court must look objectively at the conduct of the parties to determine whether anagreement was in fact entered into. In Owners, Strata Plan LMS 3905 v.

Crystal Square Parking Corp., 2020 SCC 29, the SupremeCourt of Canada looked into whether an agreement between a developer and a strata plan is binding on the strata after it is incorporated.At para. 33, Côté J. said this: [33] In sum, an “outward manifestation of assent by each party such as to induce a reasonable expectation in the other” is required inorder to find that a binding post-incorporation contract exists: Waddams, at §25. The test is objective. It requires an examination of howeach party’s conduct would appear to a reasonable person in the position of the other party: P.

Benson, Justice in Transactions: A Theoryof Contract Law (2019), at pp. 112-13. Thus, a court should determine whether a reasonable person in the position of one party wouldconsider that the other party’s conduct constituted an offer: Grant v. Province of New Brunswick (1973), (NB CA), 6N.B.R. (2d) 95 (S.C. (App. Div.)), at para. 12. And, conversely, whether a reasonable person in the position of the latter would considerthat the former’s conduct constituted an acceptance: Saint-John Tug Boat, at pp. 621-22.

The pre-incorporation contract is merely oneaspect of the objective circumstances that can be used to interpret the parties’ conduct and from which the terms of a post-incorporationcontract may be inferred. [29] And then at para. 37: [37] To conclude, the applicable test for finding that a post-incorporation contract exists is the same as the one for finding that anyother agreement exists at common law.

The test is objective, and the offer, acceptance, consideration and terms may be inferred from theparties’ conduct and from the surrounding circumstances. [30] Accordingly, this Court must look at the conduct of the parties objectively to determine what, if any, were their mutualcontractual obligations. WERE THE PERSONAL DEFENDANTS CONTRACTUALLY BOUND? [31] Mr. Mercier and Ms. Khunkhun acquired their property in 2011. At the time, they were responsible for 3% of the operating costs.Up to and including 2019, Mr. Mercier and Ms.

Khunkhun paid their invoices without issue, which invoices would have presumablyincluded the $100 maintenance fund per year and their share of Mr. Ward’s wage at $100 per year. [32] It is not controversial that a binding agreement can be based on a party’s conduct. In Timberwolf Log Trading Co. Ltd. v.Columbia National Investments Ltd., 2011 BCSC 864, the court there wrote at para. 68: [68] It is well established that acceptance can be implied by conduct. In Greenhill Properties

(1977) Ltd. v. Sandcastle RecreationCentre Ltd. (1998), (BC SC), 39 C.L.R. (2d) 205 (S.C.), Burnyeat J. cited the test for proof of a contract asestablished in Smith v.

Hughes (1871), L.R. 6 Q.B. 597 at 607: If whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the termsproposed by the other party and that the other party upon that belief enters into a contract with him, the man thus conducting himselfwould be equally bound as if he had intended to agree to the other party's terms. [69] The leading case in Canada on whether an agreement can be implied by conduct is St. John's Tug Boat.

The Supreme Court ofCanada held that the test of whether conduct, unaccompanied by any verbal or written undertaking, can constitute an acceptance of anoffer so as to bind the acceptor is an objective and not a subjective one. The intention which the law will attribute to a man is always thatwhich his conduct bears when reasonably construed, and not that which was present in his own mind.

[33] In this case, Mr. Mercier and Ms. Khunkhun had simply gone with the flow and paid the Users’ invoices without any issue fornine years. Moreover, the Claimants’ expectation that the personal defendants contribute to these expenses was reasonable. The personaldefendants benefitted from the irrigation system and they used it to water their property. While there could have been other ways to splitthe pie, the arrangement was nevertheless one way to do it. [34] Furthermore, in May of 2021, Ms. Khunkhun instructed her counsel to forward a cheque in the amount of $3,500 to theClaimants on behalf of herself and Mr.

Mercier. A miscommunication ensued which resulted in the Claimants applying this paymenttoward the amount owing by the corporate defendant. Nevertheless, the very gesture of sending this $3,500 confirms an acknowledgmentof their legal obligations under the arrangement. By their conduct, Mr. Mercier and Ms. Khunkhun have, in essence, opted into thisagreement. APPROPRIATION OF THE $3,500 [35] Ms. Khunkhun and Mr. Mercier ask the court to now attribute the $3,500 that the Claimants credited the corporate defendant,back to their personal account.

This issue requires a reference to the law of payment appropriation in British Columbia. In Scott & Pedenv. Elliott, (BC CA), [1926] 2 D.L.R. 504 (BCCA), MacDonald C.J.A. said this at para 3: [3] . . . It is conceded that by the law of England the debtor has the first right to appropriate a payment made by him to any debt he mayowe to the creditor, and in default of such appropriation the creditor has the right to appropriate it as he may see fit. But there weredifferences of opinion amongst the judges as to whether subsequently the creditor might make an express appropriation of it.

It seemsnow to be well settled that where debits and credits are entered in one continuous account and neither party has made an expressappropriation and there is nothing else to shew a contrary intention, the law presumes that the parties intended that the payments shouldbe appropriated to the older debts, but that this presumption may be rebutted and that where the entries in the book are not communicatedto the defendant by a statement of account or otherwise the plaintiff, according to the decision in Simson v.

Ingham (1823), 2 B. & C. 65at page 73, is not prevented from making an express appropriation at any time. . . . [36] As it applies to the case at bar then, in my view, the wording in Mr. Drayton’s letter could not be objectively understood to meanthat the Defendants were waiving their right to appropriate the payment to a particular account. On the contrary, “the parties can decidelater how this payment is to be applied” specifically suggests that the Defendants reserve the right to do so.

Moreover, it is not clear ifand when the Claimants communicated to the Defendants the fact that they were crediting the $3,500 to the corporate defendant. Ifanything, in the Claimants’ bank statement, the note entered beside the deposit of this $3,500 says “Mercier/Khunkhun”. For thesereasons, I find that the personal defendants are now entitled to appropriate the $3,500 payment, leaving the amount in issue to be$287.59.

BALANCE OWING [37] As mentioned above, the personal defendants say that they should not be liable for this $287.59 because the formula theClaimants used was unfair, and that the personal defendants paid more than their proportionate share of the total expenses. Yet here, therole of the court is to decide whether an agreement existed, not to assess the fairness of the agreement or even to impose another one.Short of some extreme circumstances, it is not for this Court to second-guess the terms of the agreement the parties had in place. [38] The personal defendants have been members of the Users since 2011.

They have received past invoices generated using theClaimants’ formulae and paid them without issue. They have been using, and continue to use, the watering system. Under thecircumstances, I do not see anything so unfair as to warrant absolving them of their contractual obligation, this being the $287.59. [39] To be sure, there may be other equally fair formulae by which to share the costs. Perhaps the member who uses more watershould pay more. Perhaps the property furthest from the water source should pay more. Perhaps the costs should be sharedproportionally to the size of the property.

Looked at globally, however, I cannot say that the Claimants’ formulae, of which the personaldefendants were aware, were grossly unfair. Accordingly, I cannot accede to this aspect of the personal defendants’ argument. [40] For the above reasons, I find Mr. Mercier and Ms. Khunkhun jointly and severally liable to the Claimants in the amount of$287.59. WAS THE CORPORATE DEFENDANT CONTRACTUALLY BOUND? [41] In 2017, Mr. Mercier’s numbered company acquired its property from its previous owner, Mr. Leggett. Earlier in that same year,Mr.

Leggett decided that he no longer wished to be part of the Poverty Flats system because he had another licence that permitted him toget water through a different system. In the result, Ms. Elaine Ward raised this issue with the other members, suggesting that there mayneed to be a reapportionment of their respective percentages of the operating cost to absorb Mr. Leggett’s share. On August 30, 2017,Ms. Ward wrote to all the Users: We have a bit of a problem. This spring, Mr. Leggatt [sic], told us that he was no longer interested in belonging to the [Poverty Flats]system.

At that time, he moved his pivot to his front system and discontinued using our system. In the mean time, he has sold hisproperty to Guy Mercier, who would like to use our system once again. I inadvertently sent Mr. Leggatt an invoice, knowing full wellthat he was not liable to pay as he had already told us that he was off our system. This would mean an increase for all of us. I need toknow what the majority of users feel about this. If need, we can have a meeting later this evening at our home if necessary. Pleaserespond asap. [42] Mr.

Mercier then responded a few hours later: Hi Elaine and Joe: Thanks for your email. Bit surprised to receive this email regarding the increase so late in the season (Aug 30) since you and Joe wereinformed this in early spring 2017.

Effective September 1, 2017, all rights and obligations associated with the property will be my responsibility. The Leggett’s are no longer members of the group; however the new purchaser is now replacing them. The invoice that you are referring to will be paid by the new owner (me); including the past due invoice for 2016 and the invoice(

s) for the 2017 irrigation season even if the system was/is not used by Stan [Leggett] or I to irrigate the land in 2017. Therefore; there will not be an increase to the members and it doesn’t appear to be a problem for the membership of the Poverty Flats Group. I do not see the need for a meeting. I trust this clarifies the matter. Thanks [ 43 ] Mr. Drayton says that the corporate defendant was not contractually bound by any agreement beyond 2017. By specifically mentioning the invoices of 2016 and 2017, the company intended to honour those commitments only. Mr.

Mercier testified and explained that, at the time, he was concerned about the transaction not completing. He was worried that residual obligations associated to the property would impede his company’s acquisition of the land. It was in that context that he gave the commitment for 2016 and 2017, which commitment he honoured. [ 44 ] With respect, I cannot accept the corporate defendant’s argument. I come to this conclusion for several reasons. Firstly, Mr.

Mercier said that “effective September 1, 2017, all rights and obligations associated to the property will be my responsibility.” Remarkably, he does not say that he is assuming these obligations only for 2016 and 2017. The Claimants’ understanding was that the numbered company would simply carry on in the place of Mr. Leggett. This understanding was reinforced when Mr. Mercier said that “the invoice that you are referring to will be paid by the new owner (me); including the past due invoice for 2016 and the invoice(

s) for 2017 irrigation season.” In the context of the email, the word “including” can, and was, understood to convey Mr. Mercier being responsible for the Poverty Flats obligations beyond 2017. Recall that the reason Ms. Ward sent this email was to canvass with the group the necessity of a meeting to discuss a potential increase in each of their share of the expenses. To this, Mr. Mercier said: Therefore; there will not be an increase to the members and it doesn’t appear to be a problem for the membership of the Poverty Flats Group. I do not see the need for a meeting.

I trust this clarifies the matter. [ 45 ] If Mr. Mercier had meant the email to convey that the numbered company was signing on only for 2016 and 2017, then a meeting would have remained necessary in order to discuss their mutual responsibilities for 2018. After all, this email was sent at the end of the irrigation season in 2017. By saying that there was no need for a meeting, and that there “will not be an increase to the members”, he led the Claimants into believing that the corporate defendant was stepping into Mr. Leggett’s shoes and replacing him as a member.

This belief, in my view, was eminently reasonable. [ 46 ] It is also significant that by 2019, the numbered company would have paid, or at least received, previous invoices in which Mr. Leggett/the corporate defendant was assessed 29% of the total operating costs. As a personal member of the Users, Mr. Mercier would have been aware of past invoices and what they look like. Most importantly, the company continued to use the water from the system. Remember that whether an agreement exists is determined by the conduct of the parties viewed objectively (see Owners, Strata Plan LMS 3905 , supra ).

On the totality of the circumstances, the Claimants’ expectation that the corporate defendant would continue to pay those invoices was reasonable. As explained above, it is not for this Court to re-assess now the fairness of the agreement. Overall, I cannot see why the corporate defendant should be absolved from their liability. In 2021, the parties mutually came to an agreement that the numbered company should pay only 14% of the operating costs.

Be that as it may, I do not see why that should affect their obligation in 2019 and 2020 at 29%. [ 47 ] The amount sought by the Claimants as against the numbered company was $5,872.35. In light of the $3,500 now being appropriated to the debt of the personal defendants, there should be a corresponding increase to this quantum. Consequently, I find the corporate defendant liable to the Claimants in the amount of $9,372.35. [ 48 ] One could have arrived at a similar result as against all Defendants on an analysis of unjust enrichment.

Unjust enrichment happens when the defendant is enriched, the claimant suffered a corresponding deprivation, and there is an absence of juristic reason for the enrichment. See Garland v. Consumers’ Gas Co. , 2004 SCC 25 . Here, the Claimants paid those expenses, the Defendants benefited from that expenditure, and there was no juristic reason for this enrichment. To be fair, unjust enrichment was specifically not pled, and the Defendants were not put on notice to defend against it. As such, the court’s decision does not rely on such an analysis.

Nevertheless, it strikes the Court that a similar conclusion, on the face of the evidence here, could have been reached had such an analysis been undertaken. MOVING FORWARD [ 49 ] Although the ultimate disposition is in favour of the Claimants, the court finds that the Defendants do have legitimate concerns and fair criticisms of the current arrangement. Unlike a strata council in a condominium building, there are no safeguards in place to ensure the process is democratic and that information is transparent. There is no equivalent of a water users community manager chosen by the members, although Mr.

Ward acts as the de facto manager. The bank account is in the name of the Poverty Flats Water Users, but the Defendants have no signing authority. Their access to the books is at the whim of the majority. Most significantly, there does not appear to be a principled reason for the variation in the formulae for sharing costs. The personal defendants pay 5% of the operating costs, 12.5% of any capital expenditure, 11.7% of Mr. Ward’s wage, and 14.2% into the maintenance fund. The only offered explanation for the variation was that it has always been this way.

Although the difference appears modest, it is exactly this modest difference that landed the parties before the court today. They have also spent an inordinate amount of time, money and energy before the trial in an attempt to resolve it.

[ 50 ] It is also not the first time this variation in the formulae has been a source of friction. In 2008, Mr. and Ms. Ward sued a former member of the Users, Mr. Bifford and Ms. Sproule, for their failure to pay their share of expenses. The defendants in that case took the position that the replacement of the main water pipe was a repair and not a capital expenditure. Therefore, the defendants said they were liable to contribute using the “operating expense” formula, and not the “capital expenditure” one. See Ward v. Bifford , 2008 BCPC Kamloops No. 36970. [ 51 ] In 2017, Mr.

Leggett wanted to leave the system entirely because he disagreed with the percentage for which he was responsible seeing that he was drawing water primarily from a different system. Although Mr. and Ms. Swanson have fully paid their invoices, they did so under protest and it is clear that residual resentment exists. Emblematic of the degree to which relationships have deteriorated, Mr. Swanson wrote on December 18, 2020: Please find attached is our Cheque No: 167 in the amount of $139.56 which sum represents the amount invoiced on December 5, 2020 less $5.67 covering the cost of the gaskets for mainline.

The money for gaskets will be held in trust until such time as all accounts have been reconciled. [ 52 ] Given the state of affairs, it is unlikely that the present judgment will resolve the issues between the parties on an ongoing basis. This concern exists not only for the present members of the Users, but one can easily imagine future members who may be equally unhappy with the arrangement. One key factor in the court coming to the conclusion that the Defendants were contractually bound is their continuing use of the water. Viewed objectively, that amounts to an acceptance of the terms the Claimants offered.

From this point forward, one may well be tempted to say to the Defendants that they can accept those terms, or they can leave the system. However, as time passes, that ultimatum becomes more problematic. If they have not already, after this judgment, the Defendants will have contributed to the capital equipment of the Poverty Flats system. Notionally, they will have some interest in that infrastructure, so it will be difficult to untangle the Defendants from their interests, especially after some time has passed and the equipment has aged.

Nor does it seem intuitively fair to require the Defendants to simply walk away from those expenditures entirely. Moreover, installing a new watering system is expensive and it requires a new diversion licence under the Water Sustainability Act , which process can take in excess of 19 months. One can also imagine there being deleterious ecological impact of creating a parallel redundant network. [ 53 ] On the other hand, the Claimants are not at liberty to simply shut off the Defendants’ valves. This is because interfering with a licensee’s rights under the Water Sustainability Act may amount to an offence.

A regrettable incident occurred where Mr. Ward and Mr. Richardson attempted to shut off the Defendants’ access to the water, which incident required police attendance to keep the peace. [ 54 ] In light of all of this history, the court strongly encourages the parties to reach an agreement that would work for everyone. In my respectful view, there does not seem to be any principled reason for there being four different formulae. These are in place for no other reason than that is what the Users have been doing for the last 40 or so years.

Moreover, since the personal defendants pay 14.5% of the maintenance fund, any use of this fund to pay for operating expenses, for example, will result in the personal defendants paying more than the 5% they would have been required to under the operating expense formula. If the Users decided, by majority, to increase the amount of the maintenance fund in the future, are the Defendants and the Swansons nevertheless bound to follow that formula, lest they face another lawsuit? Could any member simply choose not to participate in the fund?

These were some of the legitimate concerns the Defendants raised during pre-trial discussions as well as oral argument. [ 55 ] In coming to a sensible arrangement, one could look once again to the WUCA . Had the Poverty Flats Water Users been an incorporated body, then there would have been a presumptive formula defining the interests of each member.

Section 54 says as follows: Interests of members defined 54

(1) The respective interests of the members of a water users' community, unless altered under subsection (2), are proportionate to the respective maximum quantities of water the members would be entitled to divert and use under the licences referred to in the certificate of incorporation if each member were making the greatest possible use of the rights granted under those licences.

(2) The members of a water users' community at any time at a general meeting, on the vote of a majority in interest as shown by the last confirmed assessment roll of the water users' community, or if no assessment roll has been confirmed, then as ascertained on the basis set out in subsection (1), may determine that, after the determination, the interest of each member is in proportion to one or both of the following: (

a) the area of the member's land irrigated by means of the works operated by the water users' community; (

b) the amount of water delivered to the member's land for domestic or waterworks purposes. [ 56 ] The advantage to the presumptive formula in subsection (1) is that it is easily ascertainable and leaves no room for disagreement. It does not require one to measure the size of the property, nor does it require ongoing monitoring of water use. Further, this formula harmonizes all of the expenses, regardless of whether it is an operating expense, capital expenditure, or someone’s wage. Section 59(1) stipulates that: Liability for assessments 59

(1) A member of a water users' community is liable for that part of the debts of the water users' community that is proportionate to the member's interest in the water users' community. [ 57 ] This will avoid any dispute as to whether installing a new

section of pipe is a capital expenditure or a repair since it will not matter. It has the further advantage of providing a more satisfactory explanation to current and future members as to where these numbers come from. As I understand the legislative history, the WUCA did not exist when the original landowners entered into their agreement in the 70’s. [ 58 ]

Section 36 of the WSA reads as follows:

Joint construction or use of works may be ordered 36 If satisfied that the joint use of works by 2 or more authorization holders would conserve water or avoid duplication of works, the comptroller or a water manager may order the joint construction or use by specified authorization holders of specified works and set the terms and conditions for the joint construction or use, including, without limitation, providing for construction, operation, maintenance, removal, replacement, deactivation or decommissioning of the works or compensation as among the users. [ 59 ] In other words, both the comptroller and Mr.

Blackwell, in his capacity of the CCWUC manager, have the authority to impose an order, setting out how much each member would have to contribute toward the joint works. In this case, the deputy comptroller has declined to impose such an order despite a request from the Defendants. It is unclear whether Mr. Blackwell has been asked to do the same, but he clearly has not done so. [ 60 ] Obviously, this Court is NOT conferred with the power of the comptroller or the manager, but if the court did have such a power, the presumptive formula found in s. 54(1) of the WUCA seems most compelling, logical and fair.

It brings the relationship between the members up to date, consistent with the modern regime under the WUCA , and it gives one easily ascertainable formula through which to share costs. [ 61 ] It goes without saying that the preceding paragraphs are nothing more than obiter dicta and form no part of the core decision. Rather, it is merely the court’s sincere hope that these comments help the parties avoid further litigation and conflict, rather than create more of them.

SUMMARY AND CONCLUSION [ 62 ] Through their conduct, including their continued use of the water, I find that the personal defendants have demonstrated an objective acceptance of the Claimants’ proposed agreement, which arrangement had been in place for some 40 years. Accordingly, I find them contractually bound to pay the invoices issued to them. Allowing an appropriation of the $3,500 to the personal defendants’ account, I find the personal defendants jointly and severally liable for $287.59.

Likewise, the corporate defendant specifically told the Claimants that it would assume the responsibilities of its predecessor. Consequently, the corporate defendant is responsible for $9,372.35. [ 63 ] Ms. Hyslop has submitted a disbursement invoice for $738.21 and asks the court to allow those expenses pursuant to Rule 20(2) of the Small Claims Rules . In this case, although the court ultimately found in favour of the Claimants as expressed above, the Defendants had a legitimate point to press with respect to the current formulae.

In the end, the court is recommending an arrangement which is along the lines of what the Defendants had proposed in a previous settlement offer. Under these circumstances, I decline to order any expenses under Rule 20(2) and each party will simply bear its own costs. _____________________________ The Honourable Judge A. Tam Provincial Court of British Columbia