Decision Date: December 8, 2015

Panel: James Mattison

Keywords: Water Act – definitions of “licensee”, “owner”, “person”, ss. 7(a), 13(c), 16, 18(1)(e), 19(1); Water Regulation – s. 16; order; water rental; licensee; owner of land; conveyance; disposition of land

Harrison Hydro Project Inc., Fire Creek Project Limited Partnership, Lamont Creek Project Limited Partnership, Stokke Creek Project Limited Partnership, Tipella Creek Project Limited Partnership, and Upper Stave Project Limited Partnership (collectively, the “Appellants”) appealed an order issued by the Comptroller of Water Rights (the “Comptroller”), Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”).

In the order, the Comptroller concluded that naming Harrison Hydro Project Inc. (“Harrison”) as the holder of five licences authorizing water use on five streams for hydro power projects, and billing water rentals for the licences collectively to Harrison, was in accordance with the Water Act and the Water Regulation. The Appellants had asked the Comptroller to name one of five limited partnerships (the Fire Creek Project Limited Partnership, Lamont Creek Project Limited Partnership, Stokke Creek Project Limited Partnership, Tipella Creek Project Limited Partnership, and Upper Stave Project Limited Partnership) (collectively, the “Limited Partnerships”) as the respective licensee in each water licence, and to bill each Limited Partnership separately for water rental. If the Limited Partnerships were billed separately as individual licensees, the Ministry would charge a lower rate for water rental compared to the rate charged if Harrison held all five licences.

The powerhouse and works for each hydro power project are situated on Crown land. The water licences were issued in 2005 through 2006 to a corporate predecessor that had received licences of occupation over the Crown land for each power project. In 2007, the Limited Partnerships were created, with Harrison as the general partner for each Limited Partnership. Subsequently, the licence of occupation for each project was assigned to the respective Limited Partnership. Between 2008 and 2009, the licences of occupation were replaced by leases over the same Crown land. All of the leases were issued to Harrison under the Land Act, and Harrison was named in the Land Title Office registry as the lease holder in each case. Each water licence is appurtenant to the Crown land covered by the respective lease. However, according to the Appellants, each Limited Partnership owns their respective hydro power project, and Harrison holds the leases for the benefit of the Limited Partnerships.

Until 2013, the Ministry had billed each Limited Partnership separately for the water rentals for each water licence. However, during 2012, the Ministry’s regional office conducted a review of its records to ensure consistency in the information related to water licences and the information related to Crown land tenures. This review identified that Harrison held the Crown land leases on which the powerhouses for the five projects are located, but the water licences were held by the respective Limited Partnership. As a result, in 2013, the Ministry’s regional office amended its records for the water licences to show the licensee as the entity that held the Crown lease; namely, Harrison. As a result, the Ministry adjusted the water rentals charged for the five projects. According to the Appellants, the water rental rates based on aggregated water use for the five projects were approximately 4.7 times higher than the rates that would apply if each project was billed separately. In 2013, the Appellants objected to the Comptroller.

In December 2013, the Comptroller issued the order, in which he concluded that billing Harrison as a single licensee for water rentals for the five hydro power projects was in accordance with the Water Act and the Water Regulation. In addition, the Comptroller’s order stated: “I concur with the decision from the South Coast Regional Office to transfer the water licences for these projects to [Harrison] based on the land tenures as recorded.”

The Appellants appealed the order to the Board. The Appellants submitted that the Comptroller erred by interpreting the words “owner” and “licensee” in the Water Act based on the definition of “owner” under the Land Title Act, and by determining the water rental rates in a manner that was inconsistent with the Water Regulation.

In deciding the appeals, the Board considered four issues:

1. Was the Comptroller’s concurrence with the regional office’s “transfer” of the water licences to Harrison an appealable “order”, and if so, was the order appealed within the 30-day appeal period required by the Water Act?
2. If so, based on the relevant provisions in the Water Act and the facts in this case, should the water licences for the five hydroelectric projects be in the name of Harrison?
3. Was the Comptroller’s conclusion regarding water rental billing an appealable “order”, and if so, was the order appealed within the 30-day appeal period required by the Water Act?
4. If so, did the Comptroller properly apply the Water Act and the Water Regulation to determine the rental rates for the projects?

On the first issue, the Board found that the Comptroller’s concurrence with the regional office’s “transfer” of the licences to Harrison was not an appealable “order” under the Water Act. The Comptroller’s statement in the order “… that waterpower rental being billed to [Harrison] as a single licensee for the five hydropower projects in question is in accordance with the [legislation]” simply indicated that he concurred with the regional office’s correction of the Ministry’s records to reflect the operation of section 16(1) of the Water Act. Section 16(1) states that a water licence that is appurtenant to land will “pass with a conveyance or other disposition of the land….” The Board found that section 16(1) implies that the Ministry simply records a change of licensee in the Ministry’s records upon receipt of written notification from the licensee, which the licensee is obligated to provide under section 16(2) of the Water Act. No order or action by a Ministry decision-maker is required for a licence to “pass with a conveyance or other disposition of the land….” The Board held that, in the present case, the inconsistency between the licensee as recorded in the Ministry’s records (i.e., the respective Limited Partnership) and the holder of the lease over the appurtenant Crown land (i.e., Harrison) stemmed from the licensee’s failure to provide notice, as required by section 16(2), of a conveyance or disposition of the appurtenant land. A conveyance or disposition of the appurtenant lands, from the Limited Partnerships to Harrison, occurred when the Crown land leases were issued in replacement for the licences of occupation.

Specifically, the Board applied the definition of “disposition” in the Land Act for the purpose of interpreting and applying section 16 of the Water Act, given that the appurtenant lands in this case are Crown lands subject to the Land Act. Applying that definition to the facts, the Board held that there was a conveyance or disposition of the appurtenant lands as contemplated in section 16 of the Water Act when the licences of occupation held by the Limited Partnerships were replaced by Crown land leases registered in the name of Harrison. Given these findings, the Board did not need to address the second issue, but the Board addressed it for greater certainty.

On the second issue, the Board considered whether the Limited Partnerships fell within the definition of “owner” in the Water Act, such that they met the definition of “licensee” in the Water Act and could, therefore, hold a water licence in accordance with section 7 of the Water Act. Section 7 lists the categories of persons and entities that may hold a water licence. In particular, section 7(a) states that a licence may be issued to “an owner of land….” The Water Act defines an “owner” as “a person entitled to possession of any land … in British Columbia, and includes a person who has a substantial interest in the land….” The Board found that the key word in the definition of “owner” is “possession”, and a person may have a right to possess land even if they do not hold registered title to the land. Moreover, section 1 of the Water Act defines “person” as including a “firm, association or syndicate”. The dictionary definition of “firm” includes a partnership, and the BC Partnership Act defines “firm” as “a collective term for persons who have entered in partnership with one another”. Consequently, the Board concluded that a limited partnership may acquire a water licence if, on the facts, it can qualify as a licensee under the Water Act by being an owner entitled to possession of the appurtenant land.

Turning to the facts, the Board considered the language in the Limited Partnership Agreements. Those Agreements state that “No Partner except the General Partner” (i.e., Harrison) will “be or purport to be entitled to take part in the management or control of the Business of the Partnership”. Based on the definition of “Business of the Partnership” in the Limited Partnership Agreements, the Board found that only the general partner (i.e., Harrison) was entitled to physical possession, occupancy and control of the appurtenant land, and was capable of carrying out the rights and obligations of a licensee as described in the Water Act. In addition, the Limited Partnership Agreements clearly indicated that the general partner (i.e., Harrison) held the liability for each partnership, which also pointed to Harrison being the licensee for the purposes of the Water Act. Therefore, the Board concluded that Harrison was the “owner” of the appurtenant land for the purposes of the Water Act, and was the proper licensee of the water licences.

On the third issue, the Board found that, in the order, the Comptroller had determined the water rentals to be paid by the licensee, pursuant to sections 100(3) and 100(4.2) of the Water Act together with section 16(2) of the Water Regulation. The Board also found that his determination of water rentals constituted an “order” under the Water Act that was appealable to the Board, and the appeals were filed within the 30-day appeal period specified in the Water Act. Therefore, the Board had jurisdiction to hear the appeals in regard to the determination of rentals.

On the fourth issue, the Board found that section 16(4)(c) of the Regulation requires that water rental rates be based on the total output from all projects that are owned or operated by a single licensee. Having already found that Harrison is the proper licensee of the five water licences, the Board concluded that the power produced at the plants located on the appurtenant lands should be aggregated when calculating water rentals. For these reasons, the Board concluded that the Comptroller properly applied section 16(4)(c) of the Water Regulation in determining the water rentals for the five licences.

Accordingly, the appeals were dismissed.