June 1, 1999, E.C.B. No. 02/97/170 (67 L.C.R. 106)

REASONS FOR DECISION

1. APPLICATION

This is an application under the Water Act, R.S.B.C. 1996, c. 483 (the "Water Act"), and the Water Act Regulation, B.C. Reg. 204/88 (the "Water Regulation"). The claimant, Spur Valley Improvement District (the "District"), holds two water licences authorizing the diversion and use of water to service its domestic needs. It claims entitlement to an easement and rights of way over a portion of adjacent lands owned by the respondent, Checkman Holdings (Calgary) Ltd. ("Checkman").

Applications under the Water Act have thus far rarely come before the board and a description of their peculiar nature is therefore in order. Section 27 of the Water Act provides that a licensee has the right to expropriate any land reasonably required for the construction, maintenance, improvement or operation of works authorized under its licence. For the purposes of the Water Act, "land" includes an estate or interest in or easement over the land. The section further provides that the owner of the land expropriated must be compensated for it by the licensee. The procedure to be followed in expropriating land and the method of determining compensation is prescribed in the Water Regulation.

Where the licensee and the owner of the affected land are unable to reach agreement on what land is reasonably required, the amount of compensation, or the terms of the instrument required to vest in the licensee the title to or right over the land, section 26 of the Water Regulation provides that the licensee may commence expropriation proceedings. This is accomplished by filing with the comptroller of water rights and the registrar of the land title office, and by serving on each owner of the affected land, a notice of intent to acquire the land, a plan showing the area the licensee wishes to acquire, a draft of the instrument, and a statement of the amount of compensation offered.

If, within 30 days after service of the above-noted documents, the owner has not notified the expropriating licensee and the comptroller whether or not that owner will accept the compensation offered and execute the instrument, either party may apply to the board under section 30 of the Water Regulation for a determination of the following matters:

Although the governing enactments do not expressly say so, proceedings before the board logically require a two-stage hearing. In the first stage the board determines the nature and terms of the instrument, including the legal nature of the interest taken, the precise area of the taking, the character of the works to be constructed and maintained, and the governing terms and conditions. Once those matters have been decided, and the parties are then able to marshall appraisal and other evidence based upon them, the board in the second stage determines the amount of compensation to be paid.

In the present instance, the District filed with the board an application for determination of the terms of the instrument and of compensation on January 3, 1997. Attached to that application, among other things, was an amended notice with respect to the easement and rights of way it claims to require, an amended statement of compensation, a draft form of easement, and two plans of statutory rights of way through Checkman's lands.

The initial hearing took place in Cranbrook, B.C. The witnesses called on behalf of the District were Keith W. Ekman, a British Columbia Land Surveyor, who undertook a survey, prepared the statutory right of way plans, and provided a written report, and Alex C. McKay, the chairman of the board of trustees of the District. The sole witness called on behalf of Checkman was Ronald E. Csokonay, one of its directors and officers. I heard the matter alone in my capacity as chair of the board and in exercising the powers and jurisdiction of the board under section 26 of the Expropriation Act, R.S.B.C. 1996, c. 125. This decision concerns the nature and terms of the instrument and does not address the issue of compensation which is anticipated to be the subject of a subsequent hearing.

2. BACKGROUND

There is a long and somewhat convoluted history leading up to the present application. Although I propose to confine myself to findings of relevant fact based on evidence actually before me at the hearing, I should observe that the evidence which was before McEwan J. of the Supreme Court of British Columbia in Spur Valley Improvement District v. Ronald Csokonay, Checkman Holdings (Calgary) Ltd., and Luxor Creek Utilities Ltd., unreported, Golden Registry No. 1445, June 11, 1998, enabled a much fuller description of the development of the subject lands, the nature of the water system, and the relationship subsisting between, among others, the District and Checkman each of whom asserted an interest in that system.

2.1 The Parties

The District comprises an 86-lot subdivision located on highway 95 near Radium, British Columbia. Approximately 59 of these lots are developed with residences, most of which, according to the evidence of Mr. McKay, are seasonal but six of which are permanently occupied. The District was incorporated by letters patent on April 5, 1984 under the Municipal Act, R.S.B.C. 1979, c. 290, now R.S.B.C. 1996, c. 323. Its express objects are "the acquisition, maintenance and operation of works for domestic waterworks purposes and all matters incidental thereto." Its management is vested in an elected board of trustees.

Checkman is a company incorporated in Alberta in 1956 and extra-provincially registered in British Columbia in 1984. The principals of Checkman are members of the Csokonay family whose property interests in the immediate area evidently date from at least the 1960s. In 1984 Checkman purchased a parcel of land in fee simple adjacent to the District which is legally known as Parcel Identifier: 010-502-777, District Lot 5117, Kootenay District, except part included in Plan 7637 (the "Checkman property"). From the Checkman property the respondent company operates a campground and resort. Ronald Csokonay resides on the Checkman property with his family and operates the resort. He testified that it comprises about 100 campsites which have approximately a 60% occupancy rate during the summer months and several motel rooms or cabins which are 95% occupied during that same period, so that in season as many as 300 guests are on site.

2.2 The Water Licences

Both the District and Checkman hold water licences for their own purposes. The District holds conditional water licence no. 62656, having a priority date of February 11, 1971, which authorizes the diversion and use of a maximum of 18,250,000 gallons per year from Luxor Creek to service the domestic needs of the subdivision lots comprising the District. The works authorized under this licence are described as "diversion structure, pump, pipe and tank", the approximate location of which are identified on an attached plan. Significantly, Luxor Creek runs through the Checkman property and is the primary source of water for both the District and the campground and resort as well as the private Csokonay residence located on the Checkman property. Additionally, most of the works authorized under the licence as well as the pumphouse are situated on the Checkman property.

The District also holds conditional water licence no. 109234, having a priority date of January 24, 1995, which authorizes the diversion and use of a maximum of 9,125,000 gallons per year from Csokonay Creek. Because Csokonay Creek lies within Crown land, the District has also been issued a permit of occupation to construct, maintain and operate the works authorized under its licence on Crown land, notably a diversion structure, division tank and pipeline.

Although supporting documentation was not provided at this hearing, it is common ground between the parties that Checkman also holds conditional water licences entitling it to draw water from Luxor Creek and Csokonay Creek for its own purposes. Evidently, the licence held by Checkman on Csokonay Creek ranks in priority to that of the District. The easement which the District seeks for a water pipeline from Csokonay Creek is located along the path occupied by Checkman's own water line from the creek.

2.3 Legal Disputes and the Expropriation

Initial co-operation between the parties in operating and maintaining the water system on the Checkman property during the 1980s gave way to rancour and mistrust in the years leading up to and following the expropriation. Disputes arose over the ownership of certain components of the water system, with respect to its use and maintenance, and over access to the system. The disagreements are evidenced in correspondence between counsel for the parties, in interlocutory orders and decisions of the Supreme Court of British Columbia and in the testimony of witnesses at the hearing.

On February 18, 1995, the District's board of trustees unanimously approved a motion which, among other things, instructed its solicitors to "do whatever is necessary to solve the outstanding problems" existing between the parties,

including action necessary to obtain right-of-way and easements, assurance of quantity and quality of water to the Improvement District and taking legal action to determine ownership of the water system . . . .

On February 21, 1995, the District commenced proceedings in the Supreme Court of British Columbia claiming ownership of all works comprising the water system which serves it, including the pumphouse. It also sought and obtained an interlocutory order, which was varied from time to time thereafter, regulating access to the water system and providing for its maintenance. As I understand it, although judgment was rendered on the main issue in the case on June 11, 1998, the parties at present continue to be bound by an interlocutory order of Mr. Justice Melnick made December 19, 1996. Under that order the District bears primary responsibility for maintaining the water system and controls the pumphouse and water works located on the Checkman property, subject to a limited and monitored right of entry to Ronald Csokonay on behalf of Checkman.

On November 20, 1995, the District began expropriation proceedings under section 26 of the Water Regulation. A notice of expropriation with accompanying plans and other documents was served on the Comptroller of Water Rights under cover of a letter of that date and was filed in the Nelson Land Title Office on December 13, 1995. There was some argument between the parties during the hearing as to whether Checkman itself had been properly served with the expropriation documents, but I am satisfied on review of the surrounding circumstances that the respondent company was properly notified of the proceedings through service on its solicitors on or about November 20, 1995. The District passed bylaws authorizing the expropriation on February 23, 1996, and these were subsequently challenged by Checkman in the Supreme Court.

The notice of expropriation provided that the District required an easement and right of way over a portion of the Checkman property "for the construction, maintenance, repair, servicing and operation of waterworks" authorized pursuant to conditional water licence no. 62656 and that, failing agreement on the terms of the easement and the proposed compensation, the District would apply to the board for the required determinations. On October 23, 1996, the District amended its expropriation documents to incorporate provision for conditional water licence no. 109234 and to alter the amount of the proposed compensation.

2.4 Relevant Court Decisions

Two judgments of the Supreme Court of British Columbia which concern the rights and entitlements of the District with respect to the water system have a bearing on the proceedings before the board.

The first is the chambers judgment of Vickers J., pronounced on November 26, 1996, and subsequently reported in Checkman Holdings (Calgary) Ltd. v. Spur Valley Improvement District (1996), 60 L.C.R. 266. Checkman had applied to quash the District's expropriation bylaws on the grounds that it was not entitled to expropriate an easement and right of way over the Checkman property which lay outside the District's boundaries. However, Mr. Justice Vickers upheld the validity of the expropriation, finding that as a licensee under the Water Act, the District had the right "to expropriate any land reasonably required" for the works authorized under its licence, including the expropriation of an easement and right of way outside its boundaries.

Following upon this decision the District proceeded to file with the board, on January 3, 1997, an application for determination of the terms of the instrument and of compensation. At the initial hearing of this application, I was advised by Mr. Purdy, Checkman's counsel, that his client had appealed from the judgment of Vickers J. to the British Columbia Court of Appeal and that the appeal was scheduled to be heard in February of 1998. However, I have not since been advised further as to the status of this appeal.

The second decision is that of McEwan J., cited earlier, which primarily addressed the issue of ownership of the water system. After reviewing at length the available historical evidence and the relevant law, Mr. Justice McEwan found in favour of the District's entitlement in all material respects. Notably, all right, title and interest in the assets comprising the water system servicing the District, except the pumphouse and any other portions of the system affixed to the Checkman property which pre-dated the early 1970s, were vested in the District. The pumphouse and those other earlier portions of the system referred to were found to have been incorporated into the water system and were subject to such right, by way of licence, easement, right of way, deed or other means, as was reasonably required to protect and effect the purposes of the District. In turn, the District was entitled to such right of entry onto the Checkman property (again, by way of licence, easement, right of way, deed or other means) as was reasonably required.

On the one hand, the judgment assists the board in the sense that it clearly puts to rest any question as to the District's right to make use of and access all components of the existing water system. McEwan J. left for further submissions the question of the precise nature of the interest reasonably required to protect and effect the District's purposes. It is, of course, the nature and terms of the instrument reasonably required to give effect to the District's rights which the board has been asked, in the first instance, to determine.

On the other hand, there is language at page 26 of the reasons for judgment which by implication could raise a question as to the board's jurisdiction to proceed in this respect. The board's statutory authority flows from an expropriation under the Water Act. If there has been no expropriation, the board is without jurisdiction to become involved. At page 26 Mr. Justice McEwan noted that Mr. Justice Vickers had found that the District was empowered under the Water Act to expropriate land reasonably required for the works authorized under its licence. However, from his review of the history of the water system, Mr. Justice McEwan went on to express the view that the District in this instance enjoyed "proprietary rights" as the successor to the rights of earlier incorporated entities, including the right to whatever was reasonably necessary by way of licence, easement, or transfer on the Checkman property to allow the District to properly carry out its undertaking. His Lordship added:

This right I have found to exist differs from the right of expropriation in that it requires no assessment of compensation . . .

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

3. ISSUES

From the evidence adduced and submissions made at the hearing, two principal issues arise concerning the nature and terms of the instrument required to give effect to the District's expropriation rights:

4. FIRST ISSUE: LOCATION OF THE STATUTORY RIGHTS OF WAY

There appears to be no issue between the parties that, to the extent the District requires a legal interest in a portion of the Checkman property to operate and maintain its water system, the appropriate legal interest is by way of statutory rights of way pursuant to what is now section 218 of the Land Title Act, R.S.B.C. 1996, c. 250, creating easement areas rather than, for example, by way of mere licence or fee simple transfer. The parties strongly disagree, however, as to the need for and locations of those rights of way.

4.1 The District's Case

The District refers to the plans attached to its conditional water licences which identify the points of diversion and the pipe for its water system. On conditional licence no. 62656, it says the point of diversion is shown to be on the Checkman property at the location of the pumphouse on Luxor Creek, with the pipeline running due north from that point to lot 15 of the subdivision. On conditional licence no. 109234, the District says the point of diversion is shown to be on Csokonay Creek located on Crown lands, with the water pipeline running west from that point and across the eastern portion of the Checkman property until it intersects the pumphouse on Luxor Creek.

The District says that the board, in determining the nature of the instrument, has no authority to amend the terms of the conditional water licences so as to vary either the points of diversion or the location of the water pipelines. Whether the plans of statutory right of way are in locations actually authorized under the terms of the licences, it says, is a determination which can only be made by the Water Management Branch of the Ministry of Environment, Lands and Parks which issues those licences.

As authority for that proposition, Mr. Fairley, counsel for the District, referred me to the judgment of the Supreme Court of British Columbia in Hidden Bar Ranch Ltd. et al. v. Wilson et al. (1986), 36 L.C.R. 318. On the cross-appeal from an arbitrator's decision, it was argued that the arbitrator was charged with the responsibility under the Water Act to determine the "nature of the instrument to be executed . . . by the owner" and should, therefore, have considered and prescribed an alternate route for the licensees' water pipeline system. However, Toy J. (as he then was) dismissed the cross-appeal, and said in part as follows at p. 322:

It seems to me for an arbitrator to determine a different location than that authorized by the licence would be granting the licensees an easement over property where they do not have a licence or the comptroller's approval to construct, maintain and use their pipeline system.

I am, therefore, of the view that in the absence of an amended licence, or one issued in substitution for the licence granted in 1955, that the arbitrator had no jurisdiction to consider or prescribe an alternate route.

The District relies on the plans of statutory right of way and the accompanying report of Keith Ekman, B.C.L.S. Mr. Ekman was qualified at the hearing as an expert in the surveying of water lines and of easements in respect of them, but not in the actual construction of those water lines. Accordingly, some opinions contained within his report dealing with the possible impact of the water lines on the Checkman property were held to be inadmissible.

Mr. Ekman described the process by which he surveyed and came to include particular portions of the Checkman property in his plan preparations. Two plans of statutory right of way were created.

The first plan, identified in his report as drawing 94-82-1 and filed in the land title office under plan NEP 22742, is intended to correspond with the works authorized under conditional water licence no. 62656. It includes those lands said to be required for the underground water lines, pumphouse and intake structure for the existing system on Luxor Creek as well as for access to and maintenance of the system. Using an electronic line tracer, Mr. Ekman identified and endeavoured to follow in his plan the existing water line running from the pumphouse north across Luxor Creek to the subdivision. Because of the steep slope existing between Luxor Creek and the subdivision, he decided to create a water line right of way width of 10 metres, rather than the normal six metres which he said would apply in level terrain, to allow more working space for excavation, repair and replacement. Mr. Ekman included an irregular shaped easement area on the south side of Luxor Creek to enclose the existing pumphouse and intake and to provide, he said, sufficient space to park a maintenance vehicle. For the purpose of accessing the water system, Mr. Ekman surveyed a long corridor off Spur Valley Ranch Road, a public road. The corridor follows the existing loop access road off Spur Valley Ranch Road and through the campground and resort on the Checkman property to the pumphouse. In this instance the width of the right of way was fixed at only four metres — two metres less than what Mr. Ekman said were normal highway and municipal requirements — except at the easterly end where it was widened to six metres as the result of a sharp bend in the road leading to the pumphouse.

The second plan, identified in Mr. Ekman's report as drawing 94-82-2 and filed in the land title office under plan NEP 22743, deals only with that portion of the works authorized under conditional water licence no. 109234 pertaining to Csokonay Creek which actually crosses the Checkman property. It provides a statutory right of way, six metres in width, for a water pipeline yet to be constructed from the eastern boundary of the Checkman property to the pumphouse area south of Luxor Creek. The terrain, according to Mr. Ekman, is mainly flat with a slow rise and includes a number of large trees. The location surveyed is evidently along the northerly limit of several existing campsites.

Mr. Ekman testified that he was well aware of the acrimony existing between Checkman and the District and that he had therefore taken pains, when locating his rights of way, to avoid excessive width and minimize disruption. With respect to plan NEP 22742, he had, for example, as much as possible reduced to four metres the width of the right of way providing an access corridor to the pumphouse and water works along the same road which services the campground and resort. He said he had also taken care to ensure that the right of way did not include any portions of buildings that were adjacent to the access road. With respect to plan NEP 22743, Mr. Ekman gave evidence that he had looked for a practical route that avoided interference with the large trees in the area and, so far as he could determine, with any existing small water lines which service the campsites.

In the District's submission, the plans prepared by Mr. Ekman accord with the requirements of its conditional water licences and represent what is reasonably required to access, construct, operate and maintain its water system with a minimum of disruption to Checkman.

4.2 Checkman's Case

Checkman asserts, to the contrary, that the locations of the rights of way as proposed in favour of the District interfere substantially and unreasonably with Checkman's operations. Those operations include not only the campground and resort as presently configured but, according to the evidence of Ronald Csokonay, in the near future will come to embrace an extensive further development comprising recreational vehicle sites, motel units, an aquatic centre, and horse trails and stables on the Checkman property. Some of these future improvements, Mr. Csokonay testified, are envisioned to be within the easement area identified in the statutory right of way plans.

The thrust of Checkman's argument is that the burden rests on the District under section 27 of the Water Act to show the reasonableness of its requirements by initially exploring various alternatives, but that in this instance the burden has not been met because Mr. Ekman simply surveyed rights of way in the particular locations where he was instructed.

An example of this approach, says Checkman, is Mr. Ekman's location of the easement area intended for the pumphouse and intake structure in plan NEP 22742, and of the right of way through the Checkman property leading to that easement area in plan NEP 22743, all to the south of Luxor Creek. Under cross-examination Mr. Ekman acknowledged that the sketch plan attached to the District's conditional water licence no. 62656 identifies only very generally the location of the point of diversion, within perhaps a 10-metre radius, so that that point could be on either the north or south side of Luxor Creek. In turn, Checkman suggests, it is not possible to say with certainty that the existing pumphouse is at the authorized point of diversion. According to Checkman, a new pumphouse to service the District's water system could instead be constructed in an area of relatively flat terrain immediately north of Luxor Creek and the right of way shown in plan NEP 22743 could also be located on the north side of the creek. The effect, says Checkman, would be to ensure that the parties have separate water intake and pumping facilities adequate to their needs and to eliminate interference with the campsites located to the south of the creek.

In fact, Checkman argues, there is no need to expropriate a right of way over the Checkman property at all for the purpose of constructing and maintaining works from Csokonay Creek authorized under conditional water licence no. 109234, since the subdivision could be serviced directly and entirely across Crown land.

Another example of the failure to explore reasonable alternatives, Checkman argues, is the surveyor's location of the right of way for access to the water system along the existing loop road serving the campground and resort. Checkman maintains that it would be possible for the District to build an access road on relatively level land north of Luxor Creek which would be proximate to the authorized point of diversion, particularly if that point was to the north of the creek. Again, it says, the effect would be to minimize interference with Checkman's operations.

Checkman also questions whether some of the widths used by the surveyor in his right of way plans are reasonable. At the hearing Mr. Ekman was found to have experience in recommending as to the widths of rights of way based on such considerations as type of terrain, depth of excavation and road alignment. However, Mr. Csokonay testified that in his experience there had never been a need to use the sort of heavy equipment that might justify the need for a 10-metre wide water line right of way on the steeper terrain north of Luxor Creek as indicated by the surveyor. Mr. Purdy, in cross-examining the surveyor, also suggested to him that a right of way three rather than four metres in width along the loop road would adequately accommodate the passage of vehicles without possibly impinging on trees and shrubs bordering the road.

Beyond all of these considerations, Checkman raises a doubt about the suitability of using the existing water system to service the subdivision. Mr. McKay, chairman of the board of trustees of the District, identified under cross-examination two engineering reports dated in 1987 and 1996 respectively. The first, a report prepared by Reid Crowther & Partners Limited for the District, evaluates the need and probable cost of upgrading the existing water system and outlines various alternatives to redevelopment of existing sources. The second, a report prepared by GPEC Consulting (B.C.) Ltd. for the Regional District of East Kootenay, highlights deficiencies in the existing system serving the District and considers water supply alternatives and the cost of their development. Checkman suggests that none of the options considered recommends utilizing the existing system in its present location.

4.3 The Board's Determination

In considering what the District reasonably requires by way of rights of way and easement over the Checkman property pursuant to its conditional water licences, it is appropriate, in my view, to confine myself to those requirements as they are known today and as they presently appear likely to impact on Checkman.

That being the case, it is unnecessary to take into account those alternative options explored in the engineering reports prepared in 1987 and 1996 as somehow affecting the District's reasonable requirements for the rights of way it proposes. According to Mr. McKay, those alternative options, however attractive, are all highly expensive and the District lacks the money to pursue them. Even though acknowledging that the present water system serving the District is not ideal, Mr. McKay indicated that it does the job. As he put it, "You turn on the tap, you get water."

Similarly, I am not prepared to base my assessment of what is reasonably required on what I heard in evidence from Mr. Csokonay about Checkman's future development plans. No supporting documentation in the form of conceptual drawings or layouts, applications, approvals or permits was offered during the hearing, and there has evidently been no application by Checkman to have any of its own licences or those of the District amended in light of such development plans.

Checkman's contention that alternative right of way routes are available to the District and should have been explored does not accord with either the evidence or the law as I understand it. I accept that, in determining what the District as a water licensee reasonably requires, I am bound by the decision in Hidden Bar Ranch Ltd. In that respect, it seems to me that Checkman's suggestion that no right of way is required across its land for a water pipeline leading from Csokonay Creek because the water line could run to the subdivision entirely across Crown land is completely contrary to what is authorized in the plan attached to conditional water licence no. 109234. Notwithstanding what counsel for Checkman argued at the hearing, I accept that that plan attaches to the licence and not merely to the permit authorizing the occupation of Crown land, and that the plan clearly discloses the pipeline running across an eastern portion of the Checkman property south of Luxor Creek to the pumphouse.

As to Checkman's proposition that the District could construct an access road on the north side of Luxor Creek which would be proximate to the point of diversion, no survey or engineering evidence was introduced by Checkman to support the viability of such an option nor was there any evidence to demonstrate that it would be less intrusive to create a new road on the Checkman property than to utilize the existing one, as the surveyor has done.

I turn finally to the plans of statutory right of way which Mr. Ekman prepared. It is true that the sketch plans attached to the District's conditional water licences are on a scale that, at best, identifies only very approximately the location of the points of diversion and the pathways for the water pipelines. As Mr. Ekman testified, it would not normally be the practice for a surveyor to try to determine precise locations from the sketch plans. A surveyor is expected, in preparing right of way plans that accord with the licence, to use his or her own best judgment and discretion in the matter based, in part, on personal knowledge of the area and of the surrounding circumstances.

In this instance I am satisfied that the surveyor did exercise his discretion prudently and with sensitivity to try to create plans in favour of the District that accord with the licences and that minimize disruption to Checkman. His decision to locate the point of diversion and to create an easement area south of Luxor Creek that makes use of the existing pumphouse is reasonable, particularly so in light of the judgment of Mr. Justice McEwan. The widths of the rights of way — 10 metres for the water pipeline running through very steep terrain north of Luxor Creek, six metres for the proposed water line from Csokonay Creek and, for the most part, four metres for the roadway access — appear to be consistent with what the evidence before me suggests are normal standards. I am not convinced that any of them is excessive and therefore not prepared to require any variation.

Accordingly, I have determined that the locations reasonably required for the statutory rights of way expropriated by the District through the Checkman property are those as set out in the plans of statutory right of way prepared by Mr. Ekman, identified as drawings 94-82-1 and 94-82-2 in his report, and filed in the Nelson Land Title Office under plan NEP 22742 and NEP 22743, respectively.

5. SECOND ISSUE: TERMS OF THE EASEMENT AGREEMENT

At the hearing the District entered in evidence a copy of the draft form of easement which it had earlier served on Checkman. The instrument is in prescribed form for registration in the land title office. Part 2 contains the terms of instrument, in which Checkman is referred to as the "grantor" and the Checkman property as the "servient tenement". For ease of reference, I have reproduced as follows that part of the terms of instrument which actually sets out the governing terms and conditions of the proposed easement.

Although some of the proposed terms and conditions of the easement agreement appear not to be in issue, the parties are at odds with respect to several others.

5.1 The District's Case

The District points out that under section 27 of the Water Act, it has the right to expropriate any land reasonably required for "the construction, maintenance, improvement or operation of works" authorized under its licence. Accordingly, it says, the easement agreement which is put in place must be capable of meeting all those purposes. Despite the strained climate, counsel for the District submits that the terms and conditions within the easement document as drafted offer more than the usual protections accorded a grantor and, in Mr. Fairley's words, "bend over backwards" to meet the needs and interests of Checkman. Mr. McKay testified that the District's board of trustees approved the draft easement and are prepared to meet their obligations under it.

At the hearing the District tendered as exhibits several easement documents, all of which pertain to water systems in the East Kootenay region of British Columbia and all of which were registered since 1995 in the Nelson Land Title Office. The District sought to admit these documents without formal proof in order to be able to argue on a comparative basis that the terms of the easement agreement which it proposes are reasonable. Checkman strenuously objected to the admission of these documents as hearsay and as amounting, in effect, to opinion evidence without meeting any of the formal requirements. Mr. Purdy argued that the acceptance for registration of the easement documents in the land title office is no indication of their reasonableness. I agreed with his submission in that respect. However, although I expressed the view that the selection of a few easement documents from among the many which must be registered raised a serious question as to how truly representative they are, I was also of the opinion that a comparison of their terms with those of the proposed easement in this matter might have some value. Accordingly, I decided to admit the four registered easement documents, subject to weight.

5.2 Checkman's Case

Checkman's objections to the terms of instrument in the draft easement can best be dealt with on a paragraph by paragraph basis, having reference to the numbered paragraphs recited above.

Para. 1. Checkman says there are really three components to the easement — an access right of way to the pumphouse, an easement for the pumphouse itself together with a right of way for the water pipeline running north to the subdivision, and a right of way for a water pipeline from Csokonay Creek. In Checkman's submission, there is a lack of specificity in this paragraph about the uses to be made of each of these three components. For example, says Checkman, the language is broad enough to seem to permit the District to construct a water pipeline within the access road right of way. Checkman argues that the paragraph should be modified accordingly to provide more precise descriptions of the easement areas and what use the District is, or is not, permitted to make of each.

Para. 2. Checkman's main objection is that the District is given access at any time of the day or night across the Checkman property without having to provide notice. The expressed concern is that the access is across private land on which Checkman operates a commercial campground and resort with the corresponding need to protect the quiet enjoyment and valuables of its guests. According to Mr. Csokonay, there is a normal expectation that visitors and guests "check in" at the entrance to the Checkman property. Checkman proposes that this paragraph be modified to provide for "reasonable notice as may be practicable except in emergency circumstances".

Para. 3. In order for the District to do as little visible injury as possible to the Checkman property in constructing its water pipelines, Checkman asks that a provision be inserted requiring the District to bury the pipes.

Para. 4. This paragraph, which concerns repair and maintenance, is offensive to Checkman to the extent that it seems to limit the District's responsibility for road repair to any damage the District may cause in the course of its work. Checkman takes the position that it should not be expected to bear any part of the cost of maintaining a road which the District, pursuant to expropriation, uses to access the District's water system. Accordingly, says Checkman, the paragraph should be amended to provide that the District bears the entire cost of repairing and maintaining the area of its access right of way.

Para. 6. Checkman construes this paragraph as, in effect, preventing it from making use of or improving the works authorized under its own water licences. At the least, Checkman says, there should be an express exception for Checkman to utilize the present or any future pumphouse and works within the easement area pertaining to its own water system.

Para. 7. This paragraph, says Checkman, begs the question of ownership of the pumphouse and other components of the water system by deeming them all to be chattels and to be the property of the District. Checkman's position at the hearing was that the pumphouse is a fixture and that Checkman owns it.

Para. 12. Checkman notes that the easement is effectively a "covenant running with the land" and that, as drafted, it is perpetual. However, because there are alternative water sources to service the District, and the District may eventually abandon its existing system in favour of another, Checkman submits that the easement agreement should reasonably contain a "lapse" or "sunset" clause. Such a clause would provide that the easement lapses and can be released from title to the Checkman property in the event that the District utilizes alternative water sources and no longer reasonably requires the easement area.

5.3 The Board's Determination

In a matter such as this, involving the non-consensual taking of an interest in land, I am of the view that particular care should be taken to avoid giving an expansive interpretation of what the taking authority "reasonably requires" in the terms of instrument. The District's draft easement document, on the whole, appears to me to achieve the objective of reasonableness from that perspective. I note that its terms are largely consistent with those that appear in the four registered easements which were provided to me for comparison purposes, each of which also governs the operation of a water system on or across the lands of the grantor. There are, however, some paragraphs requiring amendment, and I therefore propose to deal with each of Checkman's objections to the terms of instrument in turn.

Para. 1. I am not persuaded that there is a need for greater specificity setting out the uses which are or, are not, permitted within the various areas comprising the easement. It is, of course, the conditional water licences that authorize the particular works to be constructed or maintained and which identify their authorized locations. Checkman's only concrete objection to the comprehensive wording of this paragraph, as I understand it, has to do with the possibility of the District at some future time running water pipelines under the access road. However, both parties expressed the view, and I agree, that such a step would be illegal in the sense that it would comprise works which were not authorized under conditional water licence no. 62656. In my opinion, the easement document as drafted could not somehow legitimate such a step.

Para. 2. The question of the District's right of access across the Checkman property has been fraught with difficulty for some time. According to Mr. Csokonay, the need for a clause regulating access by requiring "reasonable notice" is underlined by what he described as the District's "total disregard to private property" in the manner in which it has accessed its system across the Checkman property in the recent past. On the other hand, there was evidence of the difficulties the District has encountered in gaining access in the past, at least one instance where a representative of the District was denied access and another where the road was physically blocked. It has required interlocutory court orders to ensure access to the District and, as Mr. Fairley pointed out, those orders make no provision for notice.

What I have been able to discern from all of the evidence that I heard on this point does not support Mr. Csokonay's indictment of the District, which I conclude has utilized its right of access sparingly and in a reasonable manner. Mr. Csokonay under cross-examination also acknowledged that there was no gate to the Checkman property which controlled access and that it was not the practice to require guests or visitors to "check in" on every occasion when they accessed the property. To my knowledge, a provision requiring notice before making use of a right of access is not commonly found in easement agreements. Accordingly, I am of the view that it is unnecessary in this instance to amend the paragraph to require notice.

Para. 3. In the course of the hearing the District agreed to bury its water pipelines crossing the Checkman property and to insert a provision to that effect in the easement agreement. The District referred to such a clause appearing in one of the registered agreements in evidence. Modified to meet the circumstances here, the clause might read as follows: "The Improvement District (insofar as it is practicable so to do) shall bury and maintain all pipes and installations so as not to interfere unreasonably with the use of the Easement Area by the Grantor for other purposes."

Para. 4. In my opinion the District's reasonable obligation to repair, including repair of the access road, is adequately covered by this paragraph. Notwithstanding that the District has expropriated a right of way for access along Checkman's loop road through the campground and resort, it is clear from the evidence that the District's use of the road for that purpose will be far less intensive than Checkman's use for its own commercial operations. Accordingly, in my view it would be unreasonable to expect the District to bear the sole cost of maintenance of the road.

Para. 6. Unlike counsel for Checkman, I do not construe this paragraph as somehow ousting Checkman from being able to utilize its own water system pursuant to the water licences which it holds. In my opinion, what Checkman must do pursuant to this paragraph is simply to avoid interference with the rights granted to the District. I consider this a reasonable provision and would not amend it.

This paragraph and perhaps some others sit rather uneasily, in my view, with para. 10., which suggests that the rights granted to the District will not interfere with Checkman's own full enjoyment of the easement area. It strikes me that ambiguity might be avoided by the insertion in paragraph 10 of a limiting clause along the lines of "except as specifically provided herein".

I should also add that a potential difficulty for Checkman in this regard may arise from the judgment of McEwan J. who, after finding in favour of the District's proprietary entitlement to the water system, says this at p. 25:

Checkman was never a proprietor of the system. Whether Checkman's long term use of the system creates an enforceable interest in its favour against its actual proprietors is not presently before me.

Para. 7. The judgment of McEwan J. clearly makes necessary some amendments to the language and thrust of this provision since the decision establishes the scope of the District's ownership of or interest in the various components of the water system. For example, whereas the paragraph as drafted makes reference to the pumphouse as being and remaining a "chattel", Mr. Justice McEwan writes, at p. 25:

I do not think the law or the evidence supports the fiction that such part or parts of the works may somehow be characterized as chattels.

In discussing the judgment earlier in my reasons, I set out the findings as to the District's entitlement. In my view, the language of this paragraph should now be amended to conform with those findings.

Para. 12. Although there was evidence of alternative sources of water to service the subdivision comprising the District, there was no real evidence to suggest that the District is able or likely to actively pursue any of those alternatives and abandon its present water system in the foreseeable future, thereby rendering the rights of way and easement obsolete. Two of the four registered easements which were entered in evidence for comparison did contain lapse clauses to the effect that, if the easement was not used for a period of one or two years, the easement lapsed and the agreement could be released from title to the servient tenement. In this instance, however, I am not convinced that it is reasonable to require such a provision in the easement agreement. I agree with counsel for the District that, if there is a change in circumstances in the future, Checkman or its successor in title would be able to apply to the Supreme Court under section 35 of the Property Law Act, R.S.B.C. 1996, c. 377, for an order to modify or cancel the charge.

In summary with respect to the draft terms of instrument, I have determined that paragraphs 3, 7 and perhaps 10 should be amended as indicated but that the remaining paragraphs, including paragraphs 1, 2, 4, 6 and 12 to which Checkman objected, are reasonable for inclusion in the form proposed by the District.