R. v. Speed and Anglemont Utilities Ltd. Date:, 2010 BCPC 484

Citation: R. v. Speed and Anglemont Utilities Ltd. Date: 20100504 2010 BCPC 484 File No: 86116-1 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA REGINA v. TERRY SPEED and ANGLEMONT UTILITIES LTD. (BC0088416) REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE MR. JUSTICE DLEY (sitting as a Provincial Court Judge) Counsel for the Crown: Mr. J. Gold Counsel for the Defendant: Mr. G. Verdurmen Place of Hearing: Kamloops , B.C. Date of Judgment: May 4, 2010

[ 1 ] THE COURT: Terry Speed and Anglemont Utilities Ltd. have pled guilty to three charges under the Drinking Water Protection Act . The defendants have admitted liability for their misconduct between September 15th, 2006, and September 15th, 2008. The offences are failing to provide potable water; failing to comply with all terms and conditions of their operating permit; and failing to immediately notify the drinking water officer of a threat that was likely to result in the water supplied not being potable. [ 2 ] The Crown seeks a global fine of $15,000 against Mr.

Speed and $25,000 against Anglemont Utilities. The defence does not dispute that fines should be paid, but submits that the appropriate amount should be $10,000 to be levied against each defendant. [ 3 ] Anglemont Utilities owns and operates the water supply system which services the community of Anglemont. The system supplies 385 connections which include a golf course and several commercial businesses. Anglemont is an attractive tourist destination and during peak season, water consumers would number close to a thousand. [ 4 ] The water distribution system is large and complex.

It has several pressure zones, lift stations and reservoirs. There are approximately 29 kilometres of distribution pipe. [ 5 ] Two creeks provide surface water as the source. Surface water is more susceptible to biological contamination than groundwater which results in the natural soils acting as filters and barriers. Surface water contains various bacteria, viruses and disease causing microorganisms. Unless treated, these can cause serious illnesses or death.

Chlorine is the most common method of treating surface water as a disinfectant. [ 6 ] As a result of concerns relating to the water supply, Anglemont has been under a boil advisory for the past five years. [ 7 ] Since September 2005, the drinking water officer has been in regular communication with Mr. Speed. The regulator has been patient, offered assistance and emphasized the requirements for compliance with the terms and conditions of the operating permit. [ 8 ] Since December 2002, Anglemont Utilities was required, as a condition of its operating permit, to maintain chlorine in the system.

Directions were provided on how to ensure that chlorine residual was monitored. [ 9 ] In 2006, there were nine days when there was no chlorine in the water system and 29 days when the chlorine concentration was recorded at less than the minimum requirement of .2 parts per million. That low level was repeated for 11 days in 2007. Anglemont Utilities did not inform Interior Health drinking water officers of these breaches of its operating permit. [ 10 ] Mr. Speed advised the regulator that Anglemont Utilities depleted its supply of chlorine before any further purchases were made.

The result would be that the system might be without chlorine for several days before his assistant operator alerted him to that danger. Mr. Speed might then forget the issue for a few days and then only to appreciate that he had no chlorine in stock. He would then arrange for the purchase of chlorine, only to find that at times the distributor was also out of stock. [ 11 ] On February 16th, 2006, a condition of the permit required that chlorine analyzing equipment be installed by April 21, 2006.

Although the equipment was installed, the recommendations of the engineering report for monitoring chlorine throughout the system had not been followed. [ 12 ] The regulator has concluded that the overall monitoring, record keeping, analyzing and submitting logs and test result summaries has been poor.

Simply put, Anglemont Utilities has failed miserably in its obligations to provide potable water, to comply with the terms and conditions of the operating permit and in appreciating that notification was required regarding the threat of water not being potable. [ 13 ] The Crown acknowledges that the defendants have made some progress in attempting to comply, but the steps have been slow. Fortunately, and in spite of the inherent dangers caused by the defendants' misconduct, no illnesses have been documented. [ 14 ] The defendants readily acknowledge their obligation and need to supply clean drinking water.

Anglemont Utilities took over the system from developers in 1993. It is a private utility, and there is no option for Anglemont water consumers other than this system. [ 15 ] Mr. Speed indicates that he enjoys working the utility. He has not generated a profit from the business. In fact, the financial statements disclose a money losing proposition. Mr. Speed acknowledges that the rates are inadequate to cover the expenses. In order to request a rate increase, the utility will need supporting data which will include engineering reports.

A lack of funding has prevented the business from moving forward with those kinds of studies. The lack of capital has been the cause for the noncompliance. [ 16 ] Mr. Speed is of the view that in order to be compliant, upgrades to the system may cost close to half a million dollars. In order to generate an income level which will result in compliance, the defendants estimate that each user may be required to pay $92 per month, regardless of whether it is or is not seasonal use. [ 17 ] Mr. Speed indicates that he continues to work with the regulator and has taken some positive steps.

He has sufficient chlorine inventory on hand to ensure that he is able to exceed the minimum requirement of .2 parts per million. [ 18 ] As part of the sentencing conditions the defendants have agreed to the following six orders. Two of the order required steps to be taken by April 30th, 2010. I am advised that neither of those steps have been completed.

Those two steps required that by April 30th, 2010, the defendants were to ensure that the continuous chlorine and turbidity monitor would transfer data to a digital data logger and be wired to an alarm output that would signal the operator if free chlorine concentration was not present than preset values; and secondly, that by April 30th, 2010, the defendants would complete and submit updated emergency response plans to Interior Health. The plan would have to be to the satisfaction of the drinking water officer. [ 19 ] The other four orders that the defendants had agreed to were as follows:

1. To submit a financial plan and application for rate increase that would demonstrate how and the timeline Anglemont Utilities Ltd. would provide potable water meeting 43210 and of sufficient quantity to the controller of water rights by May 31, 2010. 2. To complete the year 2006 recommendations of the Focus Engineering assessment plan by June 30th, 2010. 3. By June 30th, 2010, to replace the chlorine injection pump with one that will allow signal inputs from continuous chlorine monitors, thereby establishing a continuous control function. 4.

By June 30th, 2010, to complete, submit and make public the 2009 annual report, including all information as directed in the DWPA and DWPR. [ 20 ] The implementation of these six orders will satisfy the rehabilitative aspects of sentencing. [ 21 ] In a case like this, emphasis must be placed on denunciation and deterrence. [ 22 ] The owner of a water supply system has an overriding obligation to ensure that it conforms with the statutory requirements.

The importance of compliance is illustrated by the magnitude of the sanctions available. [ 23 ] The Drinking Water Protection Act allows for a fine up to $200,000 or imprisonment for up to 12 months for a non-continuing offence. In the case of a continuing offence, a fine may be levied of up to $200,000 for each day the offence is committed, or imprisonment for up to 12 months. In both instances, a fine and jail can be combined. [ 24 ] Consumers are entitled to rely upon the assumption that their supply of water is safe.

The protection offered to the public is set out in s. 6 of the Act which states that: ...a water supplier must provide, to the users served by its water supply system, drinking water from the water supply system that (

a) is potable water, and (

b) meets any additional requirements established by the regulations or by its operating permit. [ 25 ] The statute is detailed in its requirements, all of which were designed to ensure that potable water is supplied, that operating permits are adhered to and that any potential threats are reported. [ 26 ] Failing to comply with the statutory requirements has the potential to result in users falling ill or, in some instances, death. [ 27 ] As a result of the responsibilities undertaken by the supplier and the mandatory obligations set out by the statute, the offences committed by the defendants must necessarily result in fines that denounce the misconduct and provide deterrence, both specific and general. [ 28 ] The cases cited by the Crown from the Ontario courts would suggest that one of the factors that result in higher fines is the number of users exposed to risk.

The cases also would indicate that a mitigating factor would be a nonprofit oriented supplier. [ 29 ] Denunciation and deterrence must be dealt with on each case which may have its own peculiar or unique circumstances. What may be a large fine to a small supplier may have little consequence to a well-funded utility. [ 30 ] I have taken the following factors into consideration: 1. The number of users exposed to the risk of the supplier failing to abide by statutory requirements. The higher the number of users, the higher the penalty. 2. The nature of any harm occurring as a result of the breaches.

The more the harm, the higher the penalty. 3. The reason for noncompliance. If the reason was deliberate and motivated by greed or profit, the penalty will be greater. If the breach was caused by oversight or incompetence, that will be a mitigating circumstance. 4. The attitude of the defendant in addressing the shortcomings. A refusal to take active steps for remediation will result in a higher penalty. [ 31 ] In this case, the fines as suggested by the Crown would likely put the defendants out of business.

If there were no steps being taken by the defendants to remedy the deficiencies, then bankrupting the enterprise might be the only practical solution.

However, the orders which the defendants have agreed to comply with and the ongoing involvement with the regulator would indicate that there is still hope for the preservation of this utility. [ 32 ] It is apparent that the defendants will need to actually comply rather than pay lip service to permit requirements. [ 33 ] In the event that the defendants are unable to comply, undoubtedly the regulator will make the necessary decisions to protect the consumers. [ 34 ] Any fine levied against the defendants will be significant.

However, I am not prepared to impose sanctions that, at this point, would effectively put the utility out of business. If, indeed, that is to be the final result, it should be as a result of noncompliance going forward and a decision best left to the regulator. [ 35 ] The defendants have made significant attempts to comply. Their failures have been as a result of incompetence rather than a deliberate avoidance of obligations in order to generate a profit for themselves. There has been no self-benefit arising out of the

infractions. They have complied with the obligations set out in the agreed to sentencing orders. [ 36 ] Accordingly, this penalty will be at the lower end of the sentencing scale for charges of this nature. [ 37 ] In order to ensure that the principles of sentencing are properly met, a fit and just sanction will be a fine of $5,000 on each count for each defendant. Accordingly, Mr. Speed is fined $15,000 and Anglemont Utilities Ltd. is fined $15,000. [ 38 ] How much time do your clients require to pay, Mr. Verdurmen? [ 39 ] MR. VERDURMEN: He's asking for a year, My Lord. [ 40 ] THE COURT: Mr. Gold? [ 41 ] MR.

GOLD: No objection. [ 42 ] THE COURT: All right. A year to pay the fine. The fine is to be paid by May 31, 2011. [ 43 ] MR. GOLD: My Lord, I take it the orders that you related you have made under s. 45(3) of the Drinking Water Protection Act ? [ 44 ] THE COURT: I have made those orders. The four orders that go forward will remain in place, but I need some direction now on the two dates that have already come and gone, that is the April 30th dates, and that is why I had asked the question to begin with. [ 45 ] MR. VERDURMEN: Yes.

As I've stated, I just received an update this morning and he tells me that this one portion about -- looking at what the trust -- anyway, I don't understand the entire aspect of the replacement reserve trust fund, but that is one of the steps towards this ultimate goal of getting a rate increase. So I don't know if we could look sort of to the -- replacing the initial dates with the - - [ 46 ] THE COURT: If all the dates went to June the 30th, would that make some sense? [ 47 ] MR. GOLD: The Crown has no difficulty with that. It may be simpler if it's all one date, in any event. [ 48 ] MR.

VERDURMEN: Yes, if it's all one date of June 30th, that will -- [ 49 ] THE COURT: All right. On all of those six items then that were agreed to in the sentencing order, the April 30th dates will then become June 30th dates, and the May 31st date will also then be changed to June 30th. [ 50 ] MR. VERDURMEN: All right. And is it required, My Lord, that those orders -- are those ones that he'll have to sign? [ 51 ] MR.

GOLD: Perhaps what the Crown -- what the Crown would like to do is to draft an order with the fine amounts, the pay dates, as well as the creative sentencing orders all together, run it by my friend and have your -- [ 52 ] MR. VERDURMEN: That makes good sense. So there's no -- is there any need for Mr. Speed to sign an order at the registry today of time to pay or anything like that? [ 53 ] MR. GOLD: I don't think so. Not for the Crown. [ 54 ] THE COURT: No. I don't think that will be necessary. There will be a fine order, but the other six orders will be then encapsulated within the order that Mr.

Gold will prepare. [ 55 ] MR. VERDURMEN: I'm just wondering if Mr. Gold is also -- [ 56 ] MR. GOLD: Well, I think we -- I think -- [ 57 ] MR. VERDURMEN: -- putting the fine in there. [ 58 ] MR. GOLD: Yes. I think we'd like to have the registry not prepare the fine order and -- on these regulatory matters we regularly do it that way, for example, under the Wildlife Act , and that way we don't have any confusion about whether we have a complete order or not. [ 59 ] THE CLERK: We have to prepare the order, that's how it gets entered into our accounting system, so -- [ 60 ] MR.

GOLD: Well, we'll just duplicate it, that's fine. [ 61 ] THE COURT: Sure. [ 62 ] MR. GOLD: It's only one order so there's no problem. [ 63 ] THE COURT: That is fine. [ 64 ] MR. VERDURMEN: It's the same order, I guess. [ 65 ] THE COURT: It is the same -- it will be the same order but it will be two separate -- one order will just have the fine in it and then your order can duplicate the fine -- [ 66 ] MR. GOLD: Yes.

[ 67 ] THE COURT: -- plus the six elements of the actions to be taken by the defendants. [ 68 ] MR. GOLD: Yes. [ 69 ] MR. VERDURMEN: And the fine will be under the same Act, I imagine. [ 70 ] THE COURT: Same Act. [ 71 ] MR. VERDURMEN: And what -- when can Mr. Speed attend the registry to sign the order? [ 72 ] THE CLERK: About an hour. [ 73 ] MR. VERDURMEN: In an hour? Thank you. [ 74 ] THE COURT: All right. [ 75 ] MR. GOLD: Thank you, My Lord. [ 76 ] MR. VERDURMEN: Thank you, My Lord. [ 77 ] MR. GOLD: I don't know if I've -- I'm directing a stay on all the remaining counts. Thank you. (REASONS FOR SENTENCE CONCLUDED)