



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Harrison Hydro Project Inc. v. British Columbia
  (Environmental Appeal Board),









2018 BCCA 44




Date: 20180202

Docket: CA44323

Between:


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

Appellants

(Petitioners)

And:

Environmental Appeal Board and Deputy
Comptroller
of Water Rights for the Province of British Columbia

Respondents

(Respondents)






Before:



The Honourable Mr. Justice Tysoe

The Honourable Mr. Justice Willcock

The Honourable Mr. Justice Hunter




On appeal from:  An
order of the Supreme Court of British Columbia dated
February 27, 2017 (
Harrison Hydro Project Inc. v. Environmental
Appeal Board
, 2017 BCSC 320, Vancouver Docket S160831)




Counsel for the Appellants:



D.G. Cowper, Q.C.,
and N.R. Hughes





Counsel for the Respondent, Environmental Appeal
  Board:





M.G. Underhill





Counsel for the Respondent, Deputy Comptroller of
  Water Rights for the Province of British Columbia:







D.G. Cowie





Place and Date of Hearing:



Vancouver, British
  Columbia

November 28, 2017





Place and Date of Judgment:



Vancouver, British
  Columbia

February 2, 2018









Written Reasons by:





The Honourable Mr. Justice Tysoe





Concurred in by:





The Honourable Mr. Justice Willcock





Dissenting Reasons by:
(P. 27, para. 76)





The Honourable Mr. Justice Hunter






Summary:

Appeal from an order of a
chambers judge dismissing the appellants petition for judicial review of a
decision of the Environmental Appeal Board. In its decision, the Board
dismissed an appeal from an order that the power produced at five separate
power plants should be combined as if they were one power plant for the
purposes of calculating water rentals payable. The five water licences had been
in the names of five limited partnerships, each of which had the same general
partner, but they were put in the name of the general partner by the Ministry
of Forest, Lands and Natural Resource Operations when it learned that the Crown
leases for the lands appurtenant to the licences were registered in the name of
the general partner.  The Board held that the licences were properly in the
name of the general partner.  Held: Appeal dismissed, Hunter J.A.
dissenting.  Majority (per Tysoe J.A. and Willcock J.A.): The Board performed
reasonable statutory interpretation, its decision was reasonable in light of
the legal principles surrounding limited partnerships and its decision did not
contain contradictory reasoning.  There was nothing unreasonable in the Boards
decision-making process, and the decision fell within a range of possible,
acceptable outcomes.  Dissent (per Hunter J.A.): The dissenting judge would
have allowed the appeal on the basis that the Boards conclusion that limited
partnerships could not hold water licences in their names was based on an
unreasonable interpretation of the governing statute.

Reasons for Judgment of the Honourable
Mr. Justice Tysoe:

Introduction

[1]

This is an appeal from an order of a chambers judge dismissing the
appellants petition for judicial review of a decision of the Environmental
Appeal Board (the Board) dated December 8, 2015 and indexed under numbers
2014-WAT-002(a) to 2014-WAT-007(a) (the Boards Decision).

[2]

The Board dismissed an appeal by the appellants from an order dated
December 17, 2013 made by the Comptroller of Water Rights, Ministry of Forest,
Lands and Natural Resource Operations (the Ministry) that the power produced
at five separate power plants should be combined as if they were one power
plant for the purpose of calculating water rentals payable to the Province of
British Columbia.  This results in water rental rates that are 4.7 times higher
than if the power plants were treated as separate projects, and we are advised
that this extra rental rate amounts to approximately $1.5 million a year.

[3]

The chambers judge found it was not established the Boards Decision was
unreasonable.  The appellants appeal the dismissal of their petition, saying
the Boards Decision was manifestly unreasonable in its analytical approach and
in its result.

[4]

For the reasons that follow, I would dismiss the appeal.

Background

[5]

The five power projects are located on separate streams in the Ministrys
South Coast Region.  As they are all located on Crown land, their operation
requires Crown land tenures under the
Land Act
, R.S.B.C. 1996, c. 245,
and water licences issued by the Crown under the
Water Act
, R.S.B.C.
1996, c. 483 (now called the
Water Users Communities Act
by virtue
of s. 197 of the
Water Sustainability Act
, S.B.C. 2014, c. 15,
effective February 29, 2016).

[6]

The former owners of the five projects, including a company called
Cloudworks Energy Inc., initially developed the projects and applied, between
2004 and 2006, for water licences.  Land tenures were issued in the form of
licences of occupation that permitted non-exclusive use and occupancy of the
Crown land for site exploration and preparation.  Ultimately, title was raised
in the Land Title Office with the Crown as the registered owner and long-term
leases, granted by the Crown, registered against the respective titles.

[7]

As of February 28, 2007, each of five limited partnerships, having been formed
in accordance with the
Partnership Act
, R.S.B.C. 1996, c. 348 (individually
a Limited Partnership and collectively the Limited Partnerships), entered
into an agreement with Harrison Hydro Inc., the named general partner of each of
the Limited Partnerships (the General Partner).  The Limited Partnerships and
the General Partner are named as the appellants in this appeal.

[8]

The agreements contained a provision that no limited partner was
entitled to take part in the management or control of the Limited Partnerships
business, and set out the nature of the businesses of the Limited Partnerships
to be the development, construction, ownership and operation of a run-of-the-river
hydroelectric project on the respective streams, and the sale of the power to British
Columbia Hydro.  Each of the agreements set out the powers of the General
Partner, including the power to carry on the business of the Limited
Partnership and the power to acquire and hold property for the benefit of the
Limited Partnership, with legal title to be held by the General Partner or
other persons as nominees, agents and bare trustees for the Limited
Partnership.

[9]

The General Partner also entered into a trust agreement in respect of
each Limited Partnership.  It provided that the General Partner held title to
the Limited Partnerships property as bare trustee for the sole use, benefit
and advantage of the Limited Partnership, had no beneficial interest in the
Limited Partnerships property and would be only acting as agent for the
Limited Partnership in dealing with the Limited Partnerships property.

[10]

Following the creation of the Limited Partnerships, the water licences
and environmental approvals were transferred from Cloudworks Energy Inc. into
the names of the Limited Partnerships.  After title to the land was raised,
long-term leases were granted by the Crown in 2008 and 2009 to the General
Partner and the leases were registered in the Land Title Office.

[11]

Up until 2013, the Ministry invoiced each Limited Partnership separately
for the water rental charges of its respective project.  The output of the five
projects was not combined for the purpose of calculating the charges.  During
this time, it appears the Ministry was under the impression the Crown land
tenures were held by the Limited Partnerships  in a letter dated October 7,
2009 to three of the Limited Partnerships advising them that the water licences
had been updated to show them (rather than Cloudworks Energy Inc.) as the
holders of the licences, the representative of the Ministry stated that the
information received by the Ministry indicated that the Crown land tenures for
each of the powerhouses were in the names of the respective Limited Partnerships.

[12]

Commencing in 2012 and continuing into 2013, a technician with the
Ministry undertook a review of water licences to ensure that clauses of water
licences describing land appurtenant to a particular licence matched the land
tenures on which the beneficial use of water diverted under that licence was
occurring.  When she found inconsistencies in respect of land tenures recorded
in the land title system, she checked Land Title Office records.  This review
disclosed that while the water licences for the five projects were in the names
of the Limited Partnerships, the leases registered in the Land Title Office
were all in the name of the General Partner.

[13]

As a result of this review, the Ministry adjusted its records to name
the General Partner as the licensee under each of the five licences.  In the
spring and summer of 2013, the Ministry notified the Limited Partnerships of
the amendments to the water licences and began billing for the water rentals on
an aggregate basis (beginning with two of the projects and eventually including
all five projects in the aggregate billing).

[14]

In March 2013, the Senior Vice President, Western Region, of Innergex
Renewable Energy Inc., which indirectly owned 50.0024% of each of the Limited
Partnerships, wrote to the Ministry on behalf of two of the Limited
Partnerships advising that the invoices would be paid under protest.  In a
further letter in August 2013, he stated that the leases were registered in the
name of the General Partner in trust for the benefit of the respective
Limited Partnership solely because the BC land title system does not permit
the registration of an interest in land in the name of a limited partnership.

[15]

In the fall of 2013, legal counsel for the General Partner and the
Limited Partnerships made written submissions to the Comptroller of Water
Rights that the five water licences should be in the names of the respective
Limited Partnerships.  On December 17, 2013, the Comptroller issued an order
concurring with the decision of the Ministry to transfer the water licences
into the name of the General Partner based on the recorded land tenures and
concluding that the billing of the General Partner as a single licensee for the
five projects was in accordance with the
Water Act
and the
Water
Regulation
, B.C. Reg. 204/88 (repealed by B.C. Reg. 36/2016 effective
February 29, 2016).  The appellants appealed the order to the Board.

The
Water Act

[16]

The Boards Decision set out numerous provisions of the
Water Act
and the
Water Regulation
, but I will only reproduce the ones relevant to
this appeal.

[17]

Regulation 16(4) authorized the rental charges for each calendar year
based on, among other things, the total of the output from all power
developments owned or operated by a single licensee during the preceding
calendar year.

[18]

Section 7 of the
Act
provided that a water licence could be
issued to, among others, an owner of land or a mine.  Section 1 contained
the following definitions:

owner means a person entitled
to possession of any land, mine or undertaking in British Columbia, and
includes a person who has a substantial interest in the land, mine or
undertaking;

* *
*

person includes a firm,
association or syndicate;

[19]

Section 16(1) provided that a licence that was made appurtenant to land
passed with a conveyance or other disposition of the land.  Section 16(2)
required a person conveying or otherwise disposing of such land to give written
notice of the conveyance or other disposition to the comptroller or regional
water manager.

[20]

Section 5(c) provided that a licence entitled its holder to construct,
maintain and operate the works authorized under the licence for the diversion,
storage, distribution and use of the water or the power produced from it. 
Section 21(1) required a licensee to exercise reasonable care to avoid damaging
land, trees and other property and to make full compensation to the owners for
damage or loss resulting from the works.  Subject to that limitation, s. 21(2) authorized
a licensee to remove trees, rocks and other things that endangered the licensees
works.

[21]

Section 25 provided that the abandonment or cancellation of a licence
did not relieve the owner of the land to which the licence was appurtenant of
liability for damage resulting from the works.

The Boards Decision

[22]

The Board addressed four issues in its decision.  Only one of the Boards
four conclusions is challenged on this appeal; namely, the second issue of
whether the water licences for the five projects should be in the name of the
General Partner.  However, the Boards reasoning on the first issue is relevant
because the appellants say the Boards conclusion on the second issue is
inconsistent with its reasoning on the first issue.

[23]

The first issue was whether the concurrence of the Comptroller of Water
Rights with the transfer of the water licences from the names of the Limited
Partnerships to the name of the General Partner was an order that needed to
have been appealed within the 30-day appeal period set out in s. 92 of the
Water Act
.  The Board found that a conveyance or disposition of the
lands appurtenant to the water licences occurred when the Crown raised title to
the lands and replaced the licences of occupation with Crown leases in the name
of the General Partner.  As a result, s. 16(1) of the
Water Act
operated to have the licences pass to the General Partner with this conveyance
or other disposition, and the regional office was merely correcting the
Ministrys records to reflect the operation of s. 16(1).

[24]

The Board therefore concluded that the Comptrollers concurrence with
the licences being in the name of the General Partner was not an appealable
order.  This made it unnecessary for the Board to consider the second issue but
it did out of an abundance of caution and for greater certainty.  The reason
this conclusion is not directly at issue on the appeal is because it was
conceded by the Comptroller before the judicial review judge that the
conclusion was unreasonable.  As a result, the Boards decision on the second
issue became the important one.

[25]

The Board began its analysis on the second issue by noting that a key
issue was whether each Limited Partnership fell within the definition of owner
in the
Water Act
so that it could be issued a licence under s. 7 of
the
Act
.  The Board looked at dictionary definitions of the words entitle
and firm, and found that a limited partnership is not barred from acquiring a
water licence if it can qualify as a licensee under the
Act
by being an
owner entitled to possession of the appurtenant land.

[26]

The Board next considered the phrase and includes a person who has a
substantial interest in the land in the definition of owner in s. 1 of
the
Act
.  The Board concluded that, as a result of the words and
includes at the beginning of the phrase, the substantial interest had to be
one that entitled the person to possession of the appurtenant land.

[27]

The Board referred to ss. 5(c), 21(1) and 21(2) of the
Act
, and
found that the rights and obligations under these sections could only be carried
out by a person entitled to physical possession, occupancy and control of the
appurtenant land.

[28]

The Board reviewed the provisions of the limited partnership agreements
and concluded that only the General Partner could exercise the rights of a
licensee and undertake the obligations of a licensee.  It found that the
limited liability of the limited partners pointed to the General Partner being
the licensee for the purposes of ss. 21 and 25 of the
Act
.

[29]

The Board found the Limited Partnerships beneficial interest in the
appurtenant land was insufficient to constitute a substantial interest within
the meaning of the definition of owner because only the General Partner had
possession, occupancy and control of the lands.

[30]

The Board summarized its findings as follows:

[159]    The Panel finds that
Harrison, as the general partner, qualifies as an owner within the meaning of
the
Water Act
, as it holds legal title of the Crown lease, and Harrison
is the only person with a substantial interest in land for the purposes of the
Water
Act
. Harrison is the holder of the leases to the Crown land where the
powerhouses are located, and the arrangements in the Limited Partnership
Agreement provide only Harrison with the ability to exercise possession and
control of the appurtenant lands, and the ability to exercise the rights and
undertake the responsibilities of a licensee under the
Water Act
.
Therefore, the Panel finds that Harrison is the owner of the appurtenant land
for the purposes of the
Water Act
, and is the proper licensee of the
subject water licences.

[31]

The appellants petitioned to the Supreme Court of British Columbia for
judicial review of the Boards Decision.

The Chambers Judges Decision

[32]

In his reasons for judgment (indexed as 2017 BCSC 320), the chambers judge
who heard the judicial review petition canvassed the facts and then addressed
the appropriate standard of review.  As the
Administrative Tribunals Act
,
S.B.C. 2004, c. 45, was not applicable, he looked to the common law
jurisprudence developed in
Dunsmuir v. New Brunswick
, 2008 SCC 9, and
subsequent decisions, and he concluded the appropriate standard of review was
the reasonableness standard.

[33]

In discussing the positions of the parties, the judge referred to the
argument of the appellants that the Boards flawed reasoning was demonstrated
by the fact that another limited partnership (Douglas Creek Limited
Partnership) continues to hold a water licence in its name, with the only
difference being that the land appurtenant to its licence is located on the
Douglas Indian Reserve No. 8, and the Indian Lands Registry was prepared to
register a lease in favour of the limited partnership.  The judge stated that
he did not find this to be a relevant consideration.

[34]

In applying the reasonableness standard, the judge found the appellants
interpretation of whether they have a substantial interest in the land or are
entitled to possession of the land to be a reasonable interpretation. 
However, he held that the appellants had to meet the high hurdle of showing
that the Boards interpretation was not reasonable.  He concluded he was unable
to find the Boards Decision to be unreasonable.  Accordingly, he dismissed the
petition.

Discussion

a)
Standard of Review

[35]

On appeal, the appellants do not challenge the chambers judges
conclusion that the appropriate standard of review to be applied to the Boards
Decision is one of reasonableness.  I will briefly refer to some of the leading
authorities discussing the content of this standard.

[36]

The seminal decision in this area is
Dunsmuir
, which decided that
the two previous reasonableness standards of review (reasonableness
simpliciter
and patent unreasonableness) should be combined into one reasonableness
standard.  Justices Bastarache and LeBel set out the meaning of the revised
reasonableness standard:

[47]
Reasonableness is a deferential standard animated by the principle that
underlies the development of the two previous standards of reasonableness:
certain questions that come before administrative tribunals do not lend
themselves to one specific, particular result.  Instead, they may give
rise to a number of possible, reasonable conclusions.  Tribunals have a
margin of appreciation within the range of acceptable and rational
solutions.  A court conducting a review for reasonableness inquires into
the qualities that make a decision reasonable, referring both to the process of
articulating the reasons and to outcomes.  In judicial review,
reasonableness is concerned mostly with the existence of justification, transparency
and intelligibility within the decision-making process.  But it is also
concerned with whether the decision falls within a range of possible,
acceptable outcomes which are defensible in respect of the facts and law.

Thus, there are components to the
reasonableness standard.  First, the tribunals decision-making process must be
reasonable in terms of justification, transparency and intelligibility. 
Second, the outcome of the decision must fall within a range of possible,
acceptable outcomes which are defensible in respect of the facts and the law.

[37]

Justices Bastarache and LeBel went on to discuss the meaning of
deference:

[48]
What does deference mean in this
context?   deference imports respect for the decision-making process of
adjudicative bodies with regard to both the facts and the law.  We agree
with David Dyzenhaus where he states that the concept of deference as respect
requires of the courts not submission but a respectful attention to the
reasons offered or which could be offered in support of a decision: The
Politics of Deference: Judicial Review and Democracy, in M. Taggart, ed.,
The
Province of Administrative Law
(1997), 279, at p. 286 (quoted with
approval in
Baker
[
Baker v. Canada (Minister of Citizenship and
Immigration
, [1999] 2 S.C.R. 817], at para. 65,
per
LHeureux-Dubé
J.;
Ryan
[
Law Society of New Brunswick v. Ryan
, 2003 SCC 20], at para. 49).

See also
Newfoundland and Labrador
Nurses Union v. Newfoundland and Labrador (Treasury Board)
, 2011 SCC 62 at paras. 12 to 16.


[38]

The decision in
McLean v. British Columbia (Securities Commission)
,
2013 SCC 67, is informative with respect to the interpretation by
administrative tribunals of their home statutes.  Mr. Justice Moldaver
addressed the situation of legislation that is susceptible to multiple
reasonable interpretations and posed the question of who is better positioned
to decide among the competing reasonable interpretations:

[33]      The answer, as this Court has repeatedly indicated since
Dunsmuir
,
is that the resolution of unclear language in an administrative decision makers
home statute is usually best left to the decision maker.  That is so
because the choice between multiple reasonable interpretations will often
involve policy considerations that we presume the legislature desired
the
administrative decision maker
 not the courts  to make.  Indeed, the
exercise of that interpretative discretion is part of an administrative
decision makers expertise.

[Emphasis in original.]

[39]

Mr. Justice Moldaver went on to caution that there will not always
be multiple reasonable interpretations:

[38]      It will
not always be the case that a particular provision permits multiple reasonable
interpretations.  Where the ordinary tools of statutory interpretation
lead to a single reasonable interpretation and the administrative decision
maker adopts a different interpretation, its interpretation will necessarily be
unreasonable  no degree of deference can justify its acceptance; see, e.g.,
Dunsmuir
,
at para. 75;
Mowat
[
Canada (Canadian Human Rights Commission) v.
Canada (Attorney General)
, 2011 SCC 53], at para. 34.  In those
cases, the range of reasonable outcomes (
Canada (Citizenship and
Immigration) v. Khosa
, 2009 SCC 12, [2009] 1 S.C.R. 339, at para. 4)
will necessarily be limited to a single reasonable interpretation  and the
administrative decision maker must adopt it.

[40]

The appellants say that where the ordinary tools of statutory
interpretation preclude a particular interpretation of the
Water Act
,
the acceptance of such an interpretation is unreasonable because it will be
outside the range of possible, defensible outcomes.

b)
Limited Partnerships

[41]

Although the literature suggests that limited partnerships may have
existed at common law hundreds of years ago, they are now creatures of statute
in Canada.  The concept of limited partnerships is discussed in Alison R.
Manzer,
A Practical Guide to Canadian Partnership Law
, loose-leaf
(updated to December 2014) (Aurora, Ont.: Canada Law Book, 1994) at pp. 9-10
and 9-11:

The limited partnership is a
relatively modern concept, evolving essentially during the 20th century.  The
limited partnership combines the limited liability, shareholder-type
contribution, in the relationship of a limited partner to the remaining
partners, with many of the concepts of a general partnership.  The purpose
behind the development of the limited partnership assists in understanding the
evolution of the statutory entity.  The limited partnership was designed to
facilitate the raising of capital, while maintaining the partnership structure
required for many enterprises, resulting in a combination of legal concepts.  A
limited partnership, like a corporation, can only be formed by statutory
compliance, taking its existence from the filing of a statutory declaration and
from the powers stated in the statute.  It is often confusing that the limited
partnership is similar to the corporation, which also takes its powers from
statutory authority, because limited partnerships legislation encompasses the
concept of general partnership powers for the undertaking of business.

Limited partnerships became popular in Canada in the
1970s and 1980s because losses could be flowed through to the limited partners
and offset against their income from other sources for tax purposes (Lyle R. Hepburn
& William J. Strain,
Limited Partnerships
, loose-leaf (updated to
May 2016) (Toronto: Carswell, 1983) at p. 1-1).

[42]

The British Columbia legislation dealing with limited partnerships is
found in Part 3 of the
Partnership Act
.  A limited partnership must
consist of one or more general partners and one or more limited partners
(s. 50).  A limited partnership is formed by filing with the registrar of
companies a certificate containing prescribed information (s. 51).  A
limited partner may contribute money and other property to the limited
partnership, but not services (s. 55(1)).  A limited partners interest in
the limited partnership is personal property (s. 55(2)).

[43]

A general partner has the same rights and powers and is subject to the
same liabilities as a partner in a general partnership but does not have the authority
to do certain specified things, including possessing limited partnership
property for other than a partnership purpose (s. 56(c)).  A limited
partner is only liable for the amount of property he or she contributes or
agrees to contribute to the limited partnership (s. 57) but is liable as a
general partner if he or she takes part in the management of the business (s. 64). 
The Supreme Court is given the authority to charge the interest of a limited
partner with payment of a monetary judgment but property of the limited
partnership may not be disposed of in order to obtain the release of the charge
(s. 76).  It is not necessary to name any of the limited partners in a
legal proceeding against a limited partnership (s. 77).

[44]

Part 3 of the
Partnership Act
is similar to the Ontario
legislation, the
Limited Partnerships Act
, R.S.O. 1990, c. L.16. 
There are three Ontario decisions which are useful in understanding limited
partnerships.  The first is
Lehndorff General Partner Ltd.
,
Re
(1993), 9 B.L.R. (2d) 275, 17 C.B.R. (3d) 24 (Ont. Gen. Div.), which considered
whether a stay pursuant to the inherent jurisdiction of the court should be
granted in respect of limited partnerships at the same time as a stay under the
Companies Creditors Arrangement Act
, R.S.C. 1985, c. C-36, was
granted in respect of the property of related corporations.  In the course of
his decision, Mr. Justice Farley made the following general comments about
limited partnerships at 3840 (C.B.R.):

A limited partnership is a creation
of statute, consisting of one or more general partners and one or more limited
partners. The limited partnership is an investment vehicle for passive
investment by limited partners. It in essence combines the flow through concept
of tax depreciation or credits available to ordinary partners under general
partnership law with limited liability available to shareholders under
corporate law.  A general partner has all the rights and powers and is subject
to all the restrictions and liabilities of a partner in a partnership. In
particular a general partner is fully liable to each creditor of the business
of the limited partnership. The general partner has sole control over the
property and business of the limited partnership: see Ontario LPA ss. 8
and 13. Limited partners have no liability to the creditors of the limited
partnerships business; the limited partners financial exposure is limited to
their contribution. The limited partners do not have any independent
ownership rights in the property of the limited partnership. The entitlement of
the limited partners is limited to their contribution plus any profits thereon,
after satisfaction of claims of the creditors. ...

* * *

It appears that the preponderance of
case law supports the contention that contention [
sic
] that a
partnership including a limited partnership is not a separate legal entity. See
Lindley on Partnership, 15th ed. (1984), at p. 33-5;
Seven Mile Dam
Contractors v. R. in Right of British Columbia
(1979), 13 B.C.L.R. 137
(S.C.) affirmed (1980) 25 B.C.L.R. 183 (C.A.) and Extra-Provincial Liability
of the Limited Partner, Brad E. Milne, (1985) 23 Alta. Law Rev. 345, at
p. 350-1.

It appears to
me that the operations of a limited partnership in the ordinary course are that
the limited partners take a completely passive role (they must or they will
otherwise lose their limited liability protection which would have been their
sole reason for choosing a limited partnership vehicle as opposed to an ordinary
partnership vehicle).  The limited partners leave the running of the business
to the general partner and in that respect the care, custody and the
maintenance of the property, assets and undertaking of the limited partnership
in which the limited partners and the general partner hold an interest. The
ownership of this limited partnership property, assets and undertaking is an
undivided interest which cannot be segregated for the purpose of legal process.
...

These comments were quoted with approval in the other
two Ontario cases to which I will be referring.

[45]

The second decision is
Kucor Construction & Developments &
Associates v. Canada Life Assurance Co.
(1998), 41 O.R. (3d) 577, 167
D.L.R. (4th) 272 (C.A.).  In my opinion, this is an important case because it
dealt with the ability of a limited partnership to hold property.  At issue was
whether a mortgage granted by a limited partnership could be prepaid pursuant
to a statutory provision entitling mortgagors other than corporations to prepay
long-term mortgages after the expiration of five years.  The Ontario Court of
Appeal agreed with the application judge that the mortgage could not be prepaid
because the limited partnership was not a legal entity capable of holding title
to real property or granting a mortgage, and the mortgage must be taken to have
been granted by the general partner, a corporation which was not entitled to
take advantage of the statutory provision.

[46]

Mr. Justice Borins first concluded that the application judge was
correct in holding that a limited partnership is not a legal entity.  In that
regard, he relied, in part, on the statement in R.C.P. Banks,
Lindley &
Banks on Partnership
, 17th ed., (Sweet & Maxwell, 1995) at 864 that [a]
limited partnership is not a legal entity like a limited company but a form of
partnership with a number of special characteristics introduced by the
Limited
Partnerships Act
1907.  He also made the point that, if the Legislature
had intended to make a limited partnership a legal entity, it would have
included a provision similar to the one found in corporate statutes declaring
that a corporation has the capacity and powers of a natural person.

[47]

After quoting most of the above passage from
Lehndorff
, Borins
J.A. pointed out distinctions between general partnerships and limited
partnerships:

[31]       The first
distinction is that in a general partnership all of the partners are liable for
the obligations of the partnership, whereas in a limited partnership the
general partner is fully liable for partnership obligations, with the financial
exposure of limited partners being limited to their contributions to the
partnership. The second distinction is that in a general partnership any
partner can conduct the usual business of the partnership, whereas in a limited
partnership the limited partners are passive and the general partner manages
and controls the business of the partnership.

[48]

He continued with the following conclusion:

[33]      It follows, therefore,
from the statutory characteristics of a limited partnership that if its
management and control are the exclusive responsibility of the general partner,
who derives its powers from the
Limited Partnerships Act
, it is through
the general partner that a limited partnership acquires and conveys title to
real property.

[49]

He concluded that although the mortgage on its face had been granted by
the limited partnership, it was in law granted by the general partner which,
being a corporation, was not entitled to rely on the statutory provision
permitting prepayment of a long-term mortgage after five years.

[50]

Before turning to the third Ontario decision, I wish to address two
decisions relied upon by the appellants on issues decided by
Kucor
. 
First, they point to the following passage from
Backman v. Canada
, 2001
SCC 10, which was dealing with a general partnership, for the proposition that a
partnership may be viewed as an independent entity depending on the context:

[37]
A
partnership can be viewed as either an independent entity or a relationship
between individuals depending on the context in which it is observed.  That a
partnership may be considered an entity for some purposes is clear from
s. 5 of the Ontario
Partnerships Act
, R.S.O. 1980, c. 370,
where it is prescribed that for the sake of convenience a partnership may be
referred to as a firm and the name under which it carries on business is
called the firm name.  Likewise, for income tax purposes, the income from
the partnership business is calculated at the firm level.  And typically,
rules of civil procedure provide for actions against a partnership to be
commenced and defended using the partnership name, and any order made against a
partnership may be enforced against the property of the partnership, as well as
the property of the partners:  J. A. VanDuzer,
The Law of Partnerships
and Corporations
(1997), at p. 26.

[51]

With respect, I do not take this passage to stand for the proposition
that partnerships are legal entities for general purposes.  The fact that a
partnership may use a firm name does not make it a legal entity.  The B.C.
Partnership
Act
defines firm as the collective term for persons who have entered
into partnership with one another.  Section 8 of that Act provides that any
act done in the firm name is binding on the firm and all the partners.  I do
not quarrel with the assertion that if a statute, like the
Income Tax Act
,
R.S.C. 1985, c. 1 (5th Supp.) in
Backman
, treats a partnership as
if were a legal entity, then it will be regarded as a legal entity for the
purposes of that legislation.  In the present case, while the definition of person
in the
Water Act
includes a firm, that does not, in my view, mean that
it is treating partnerships as legal entities.  It simply means that when the
word person is used in the
Water Act
, it includes a collective of
persons who are members of a partnership.

[52]

Secondly, the appellants cite
Kornfeld v. Intrawest Corp.
, 2005
BCSC 162, for the proposition that partnership law does not recognize a
distinction between the rights and actions of a partner and the partnership
itself with respect to partnership property.  One of the submissions made in
that case was that an exemption clause in a building scheme could not be
exercised by a limited partnership because it was not an owner of the property
in question.  Madam Justice Boyd rejected the submission for the following
reasons:

[25]       WMRLP is the
owner-developer of Kadenwood.  WMRLPs general partner is Intrawest
Corporation.  Legal title to the Kadenwood land is held by WMRLPs general
partner Intrawest as nominee, agent and bare trustee for and on behalf of
WMRLP.  Under partnership law, there is no distinction to be drawn between
the rights and actions of a partner and the partnership itself with respect to
the partnership property.  Thus the fact that WMRLP is the Administrator
under the Building Scheme and that title is held by its general partner
Intrawest, in trust and as agent for WMRLP, is irrelevant.  WMRLP and
Intrawest are partners.  WMRLP can act only through Intrawest.  Just
as only Intrawest can hold title to the lands, only Intrawest can exercise
WMRLPs rights under the Building Scheme.

I agree with Boyd J.s statement that there is no
distinction between the rights of a partner and the partnership in the context
of a general partnership.  It seems to me, however, that the statement may be
questionable in the context of a limited partnership in view of s. 55(2)
of the
Partnership Act
, which provides that a limited partners interest
in the limited partnership is personal property.  More importantly, I agree
with the statement that a limited partnership can act only through its general
partner, which is consistent with the conclusion in
Kucor
.

[53]

The third Ontario case is
Hudsons Bay Company v. OMERS Realty
Corporation
, 2016 ONCA 113.  The issue was whether the consent of the
landlord was required to an assignment of leases which contained provisions
that no consent was required for an assignment to an affiliate of the existing
tenant.  The proposed assignment was to be from Hudsons Bay Company to itself
as general partner of a limited partnership.  The Ontario Court of Appeal
upheld the decision of the application judge that there was no need to look
beyond the fact that the proposed assignments were to the general partner and
that no consent was therefore required because the transaction fell within the
affiliate exception.

[54]

The Court adopted the reasoning of the application judge.  In
particular, it agreed that a limited partnership is not a legal entity, and it
agreed with the following two conclusions of the judge:

[19]      First, any property in which a limited partnership
has an interest can be held only by the general partner. In the case of a
lease, there can be no assignment of the lease to the limited partnership  it
must be assigned to the general partner.

[20]      Second, it is not
simply a matter of the general partner acquiring legal title to the property.
The general partner has control over the property and is solely responsible for
the operations of the limited partnership. The limited partner, as a passive
investor, is restricted from taking part in the control or management of the
business. To do otherwise would jeopardise its limited partner status.

[55]

Several propositions come from these authorities.  First, a limited
partnership is not a legal entity.  Second, a limited partnership acts through
its general partner (subject to the hypothetical possibility that a limited
partner could act contrary to the typical provisions of a limited partnership
agreement and become involved in the management of the limited partnership, in
which case he or she would lose the protection of limited liability and become
the equivalent of a general partner).  Third, a general partner has exclusive
control of the management of the business of the limited partnership and its
property.  Fourth, the property of the limited partnership can be held only by
the general partner.

c)
Was the Boards Decision Unreasonable
?

[56]

The appellants say the Boards Decision was unreasonable for several
reasons.  First, they submit the Board did not conduct a reasonable analysis of
the manner in which the
Water Act
should be applied to limited
partnerships.  They maintain the definitions of licensee, owner and person
in the
Act
should be given a broad or permissive reading to permit a
wide array of persons to hold water licences, and the Board acted unreasonably
in interpreting the definitions as limiting or exclusionary.  They assert the
Board acted illogically by accepting that the word firm included limited
partnerships but then failed to give effect to it, and the Board misinterpreted
the definition of owner.  The appellants argue the Board failed to adequately
consider the agency and trust relationships between the General Partner and each
of the Limited Partnerships and failed to focus on the powers and capacity of
the Limited Partnerships.

[57]

In my opinion, none of these submissions establishes that the Board
conducted an unreasonable analysis.  The Board reasonably interpreted the
definitions within the context of the
Water Act
, and did not give them
such a narrow interpretation so as to amount to an unreasonable
interpretation.  The Board accepted that the definition of firm included a
limited partnership and that a limited partnership fell within the definition
of person.  However, that did not end the analysis.  As a result of the
definition of owner, it was necessary to determine whether each Limited
Partnership was a person entitled to possession of any land, mine or
undertaking in British Columbia.  The Board concluded that it was only the
General Partner which was entitled to physical possession, occupancy and
control of the appurtenant land.  There is nothing illogical or unreasonable
about this analysis.

[58]

The appellants criticize the Board for using the word physical to
modify the word possession and say the Board imposed a requirement of
physicality that does not exist in the statute.  The Board used the word
because it concluded that only a person entitled to physical possession,
occupancy and control of the appurtenant land could carry out the rights and
obligations of a licensee under ss. 5(c), 21(1) and 21(2) of the
Water
Act
.  Hence, the Board interpreted the word possession as meaning
physical possession (as opposed to constructive possession) when determining
its meaning within the context of the entire
Water Act
and considering
the scheme and object of the
Water Act
.  In my opinion, the Board did
not impose a requirement not found in the
Act
, but simply interpreted
the word possession in accordance with accepted principles of statutory
interpretation (see
Rizzo & Rizzo Shoes Ltd. (Re)
, [1998] 1 S.C.R.
27 at para. 21).

[59]

The appellants also criticize the Boards interpretation of the phrase includes
a person who has a substantial interest in the land, mine or undertaking in
the definition of owner.  The Board held this phrase was subject to the
preceding phrase requiring the person to be entitled to possession of any land,
mine or undertaking.  The appellants say this interpretation is unreasonable
because the Board departed from the ordinary tools of statutory interpretation,
which dictate that the word includes occurring subsequent to the word means
in a statutory definition is intended to enlarge rather than limit the meaning
of the preceding words.

[60]

I do not dispute that the use of the word includes in such a
definition may, in a particular case, be intended to enlarge the meaning of the
preceding words, but I do not accept it to be an inviolable principle that
applies in all circumstances irrespective of the context and the scheme of the
statute.  It can also be used as a drafting method of clarifying the definition
or listing illustrations.  For example, in
Entertainment Software Association
v. Society of Composers, Authors and Music Publishers of Canada,
2012 SCC
34, the definition of the word copyright in s. 3(1) of the
Copyright Act
,
R.S.C. 1985, c. C-42, was defined to mean the sole right to do certain things
but also to include the sole right to do nine specified things.  Writing for
the minority, Mr. Justice Rothstein held that the context required the words
after includes to enlarge the rights given in the definition preceding
includes (para. 91).  On the other hand, Madam Justice Abella and Mr. Justice
Moldaver, for the majority, held that the term means confined the scope of
the definition and that the enumerated rights after the word includes were
intended to be illustrative (para. 42).

[61]

In the present case, the first phrase of the definition of owner
speaks in terms of possession and the second phrase speaks in terms of an
interest which is less than an ownership interest.  One reasonable
interpretation is that the words after includes were intended to expand the
meaning of owner.  Another reasonable interpretation is that the words were
intended to clarify that the person entitled to possession of the land need not
be its owner as that word is commonly understood.  As mandated by
McLean
at para. 33, it should be the Board, and not the courts, which is to choose
between two reasonable interpretations of wording in the Boards home statute. 
For this Court to choose between the two reasonable interpretations would be to
apply a standard of correctness, not reasonableness.

[62]

While it is true that the Board did not consider the law of limited
partnerships in depth, it did look to the provisions of the limited partnership
agreements in reaching its conclusions.  However, more importantly, the
conclusion of the Board is not inconsistent with the principles relating to
limited partnerships set out above.  Based on
Kucor
, the trust
agreements executed by the General Partner in respect of the property of each
of the Limited Partnerships must be taken to be nothing more than a statement
that the General Partner was holding the property for the benefit of the
Limited Partnership.  The trust agreements cannot be effective to vest the
beneficial interest in each property in the respective Limited Partnership
because the Limited Partnership is not a legal entity.  Both
Kucor
and
Hudsons
Bay
are consistent with the conclusion that the powers and capacity of the
Limited Partnership are exercised by the General Partner.  The Boards Decision
cannot be said to be unreasonable in light of these principles.

[63]

Next, the appellants say the outcome of the Boards Decision is
unreasonable because it contradicts the Boards earlier conclusion that limited
partnerships can be licence holders under the
Water Act.
In my view, the
Board did not conclude earlier in its reasons that limited partnerships can be
licence holders.  Rather, it concluded that limited partnerships fall within
the definitions of firm and person but, in order to qualify as an owner
capable of holding a licence, a limited partnership was required to be entitled
to possession of land, a mine or an undertaking.  The Board held the Limited
Partnerships were not entitled to possession of the appurtenant land, and this
conclusion does not contradict any earlier conclusion reached by the Board.

[64]

The appellants go on to argue it was not reasonable for the Board to
prohibit limited partnerships from obtaining water licences because it is
contrary to the clear intent of the Legislature to allow them to hold water
licences as evidenced by the inclusion of the word firm in the definition of person
in the
Water Act.
The appellants say the Boards Decision fails to give
meaning to the word firm.  I have three comments on these submissions.

[65]

First, even if the Board did hold that limited partnerships generally
(as opposed to these Limited Partnerships) are prohibited from obtaining water
licences or if it is an inevitable result of the Boards Decision, I do not
regard it as an unreasonable outcome in view of the decisions in
Kucor
and
Hudsons Bay
.  Under those decisions, particularly
Kucor
, a
limited partnership does not own any assets but, instead, the general partner
owns the assets for the benefit of the limited partnership.  Even interpreting
the Boards Decision in the manner suggested by the appellants, it does not
mean a limited partnership may never have the benefit of a water licence; it
just means the licence must be held by the general partner.

[66]

My second comment is that the inclusion of the word firm in the definition
of person does not evince a clear intention of the Legislature to allow
limited partnerships to hold water licences.  The word firm is not included
in the definition of owner to whom licences can be issued under s. 7 of
the
Water Act
, but is contained in the definition of person.  One does
not become entitled to hold a licence simply because he or she falls within the
definition of person.  Rather, a licence holder must qualify as an owner,
which has the added requirement of being entitled to possession of land, a mine
or an undertaking.  If a limited partnership is not entitled to possession of
land, a mine or an undertaking, then it was not the intention of the Legislature
for it to hold a water licence.

[67]

My third comment is that the use of the word firm in the definition of
person is not rendered meaningless if limited partnerships cannot become
licensees.  It is open to general partnerships to become licensees if they can satisfy
the definition of owner.  Without deciding the point because it should
be left to the Board to decide in the appropriate case, it seems to me that,
unlike limited partners, partners in a general partnership can be entitled to
possession of land, a mine or an undertaking.

[68]

It is true that, consistent with its practice in respect of limited
partnerships, the Land Title Office may well not register title to land or
register a lease in the name of a general partnership because it is not a legal
entity.  Although this matter came before the Board as a result of the audit which
discovered inconsistencies between the holders of water licences and the
holders of the appurtenant land tenure on the records of the Land Title Office,
I do not read the Boards Decision as holding that it is a requirement of the
Water
Act
that the holder of the licence must be the registered holder of the
appurtenant land tenure.  My reading of the Boards Decision is that it turned
on the definition of the word owner, which together with s. 7 and other
provisions of the
Act
relied upon by the Board,

requires the licensee
to be entitled to possession of the land.

[69]

In addition, even if no type of partnership can hold a water licence, it
does not follow that the use of the word firm in the
Water Act
definitions
is rendered meaningless.  There were several uses of the word person in the
Water
Act
to signify those other than holders of licences.  For example, s. 18(1)
provided for notice to be given to all persons whose rights would be
injuriously affected by certain specified types of amendments to licences. 
Section 27 authorized a licensee to expropriate land reasonably required for
its works and subsection (6) prohibited any person from interfering with the
works while the licensee was diligently prosecuting expropriation proceedings. 
The persons referred to in these sections could be firms.

[70]

The appellants also say the outcome of the Boards Decision is
contradictory to its reasoning on the first issue, holding the Comptrollers
decision was not an appealable order on the basis the Comptroller was simply
concurring with the correction of the Ministrys records to reflect the
operation of s. 16(1) of the
Water Act
(which the Comptroller
conceded before the judicial review judge was an unreasonable decision).  The
appellants submit the Boards decision on the first issue was premised on the
assumption that the Limited Partnerships were the proper holders of the water
licences prior to the issuance of the Crown leases in the name of the General
Partner, and this contradicts the Boards decision on the second issue that the
Limited Partnerships could never have been the proper holders of the licences.

[71]

In my view, the Board did not accept that the Limited Partnerships were
the proper holders of the licences when it considered the first issue.  It only
accepted that the water licences were recorded in the names of the Limited
Partnerships, and it held the licences should be in the name of the General
Partner by operation of s. 16(1) as a result of the leases of the
appurtenant lands being granted to the General Partner.  The Board never
analyzed whether the licences were properly recorded in the names of the
Limited Partnerships when the tenure of the appurtenant lands was in the form
of licences of occupation in the names of the Limited Partnerships.  The
reasoning of the Board on the two issues was not contradictory because, even in
the words of the appellants, it was an assumption on the first issue which
did not involve any analysis.

[72]

The final point made by the appellants is that the outcome of the Boards
Decision is unreasonable because it results in an unequal application of the
law.  The appellants point to the fact that the water licence for the Douglas
Creek Limited Partnership project remains in the name of the limited partnership. 
Douglas Creek Limited Partnership has the same general partner as these Limited
Partnerships, and the only difference is that the Indian Lands Registry
permitted the registration of the Crown lease in the name of the Douglas Creek
Limited Partnership and did not require it to be in the name of its general
partner.  The appellants assert the judicial review judge erred in declining to
deal with the issue on the basis that it was not relevant.

[73]

In my opinion, the Boards Decision cannot be regarded as being
unreasonable on the basis that another water licence continued to be recorded
in the name of a limited partnership.  The issue of the water licence in the
name of Douglas Creek Limited Partnership was not before the Board.  The Board
mentioned the Douglas Creek project once in passing and stated that it did not
form part of the proceedings before it.  It is not known what the Board may
decide with respect to the licence in the name of Douglas Creek Limited
Partnership, and the fact that the Board has not made a decision in respect of
that licence cannot make the Boards Decision unreasonable.  As the licence in
the name of Douglas Creek Limited Partnership is not part of these judicial
review proceedings, it would be inappropriate for us to comment further on it.

[74]

I therefore conclude there was nothing unreasonable in the Boards
decision-making process, and the result of the Boards Decision falls within a
range of possible, acceptable outcomes which are defensible in law and in
fact.  The appellants have not established the Boards Decision to be
unreasonable.

Conclusion

[75]

It is for these reasons that I would dismiss the appeal.

The Honourable Mr. Justice Tysoe

I agree:

The Honourable Mr. Justice
Willcock

Reasons for Judgment of the Honourable
Mr. Justice Hunter:

[76]

I have had the privilege of
reading the draft reasons for judgment of Justice Tysoe in which he concludes
that the decision of the Environmental Appeal Board under appeal was a
reasonable interpretation of the provisions of the
Water Act
at issue. Respectfully,
I am unable to agree. In my opinion, the Boards analysis has taken it to a
conclusion that cannot reasonably be sustained by the legislation. For the
reasons that follow, I would allow the appeal.

[77]

The sole issue in this appeal is
whether a limited partnership has the capacity to be a licensee under the
Water
Act
. This is a pure question of law. The parties have agreed that the
standard of review of this decision is one of reasonableness.

Background

[78]

Justice Tysoe has set out the
background of this dispute at paragraphs five to 34 of his judgment. I will not
repeat the matters he has covered, but I do wish to clarify the circumstances
by which the water licences at issue came to be held and then lost by the five
Limited Partnerships that are appellants in this appeal.

[79]

The five Limited Partnerships
initially acquired their interests in their respective projects by an
assignment agreement dated May 29, 2007. Six agreements termed
Assignment/Assumption were entered into in identical form. In each case, the
parties were Cloudworks Energy Inc. as Assignor, one of the Limited
Partnerships as Assignee, and Her Majesty the Queen in right of the Province of
British Columbia, represented by the Minister responsible for the
Land Act
as a party of the third part.

[80]

There were six agreements signed with the reference date May 29, 2007
because in addition to the five Limited Partnerships, the Douglas Creek Project
Limited Partnership executed an identical agreement.

[81]

In each case, the effect of the
agreement was to assign to the Limited Partnership the tenure documents related
to the project in question. The Province expressly consented to the assignment.
In each case the agreement was signed on behalf of the Limited Partnership
by its general partner Harrison Hydro Project Inc.

[82]

At the time these agreements were
entered into, the tenure documents (at least for the Limited Partnerships)
consisted of licences of occupation for the specific project.

[83]

The Ministry then transferred each
of the water licences appurtenant to the land that was the subject of each of
the licences of occupation to the particular Limited Partnership that had
acquired the specific project.

[84]

Subsequently, the Limited
Partnerships and
Douglas Creek Project Limited Partnership
sought leases on the appurtenant land and the Crown
raised title and issued leases.

[85]

In the case of the
Douglas
Creek Project Limited Partnership
, the
appurtenant land was on an Indian Reserve. The
Douglas Creek Project Limited
Partnership
took a sublease on the land. The
sublease was executed in the name of
Douglas Creek Project Limited
Partnership
by its general partner Harrison
Hydro Project Inc. The sublease was then registered in the name of
Douglas
Creek Project Limited Partnership
in the Indian
Lands Register.

[86]

In the case of the five Limited
Partnerships, the appurtenant land was on Crown land. The Land Title Office has
a policy not to permit limited partnerships to register their interests in land
in their own name, and accordingly their Crown leases were registered in the
name of Harrison Hydro Project Inc., which is the General Partner for each of
the Limited Partnerships.

[87]

From 2007 to 2013, the Province
treated the Limited Partnerships and
Douglas Creek Project Limited
Partnership
as holders of licences under the
Water
Act
. They were billed annual fees which they paid. There is no evidence
that the fact that the licences were being held by limited partnerships and not
corporations had any tangible effect on the operation of the projects, and
there is evidence in the record that other water licences have been issued to limited
partnerships.

[88]

In 2013, however, Ministry staff
noticed that in the case of each of the five Limited Partnerships, the
registered owner of the appurtenant land (Harrison Hydro Project Inc.) did not
match the name of the water licensee (the Limited Partnership), and
unilaterally changed the name of the licensee in each case to Harrison Hydro
Project Inc. The effect of this change was to increase the licence fees by
approximately five times.

[89]

No change was made in the
identification of the licence held by the Douglas Creek Project Limited
Partnership.

Statutory
Framework

[90]

The statutory provisions of the
Water
Act
that lie at the heart of this dispute are as follows:

[7]        A licence  may be
issued by the comptroller or the regional water manager to any of the
following:

(a)        an
owner
of land or a mine

[1]        In this Act

licensee and holder of a
licence mean an
owner
of any land, mine or undertaking with respect to
which a licence is issued under this or a former Act;


owner
 means a
person
entitled to possession of any land, mine or undertaking in British Columbia,
and includes a person who has a substantial interest in the land, mine or
undertaking; [and]


person
 includes a
firm, association or syndicate.

[Emphasis
added.]

[91]

The Board stated the issue
succinctly in this way:

[139]    A key issue in these
appeals is whether the Limited Partnerships fall within the definition of owner
in the
Water Act
, such that they meet the definition of licensee and holder
of a licence in section 1 of the
Water Act
, and may, therefore, hold a
water licence in accordance with section 7 of the
Water Act
.

[92]

It is the Boards analysis of this
question that is the subject of this appeal.

[93]

In my view the crux of the issue turns on the meaning and significance
in the legislative scheme to be given to the definition of person as
including a firm, association or syndicate. It either has an expansive
meaning permitting licences to be issued to entities that are not legal
entities  firms, associations and syndicates to be specific  or it has some
other, less consequential significance. It seems to me the Board took both sides
of that issue, and the result is an analysis that cannot stand up to the
scrutiny appropriate to the importance of the issue to the Limited Partnerships.

The
Boards Decision

[94]

The Board, sitting as a
single-member panel, considered this issue in paragraphs 139 to 159 of its
decision, indexed at 2014-WAT-002(a) to 2014-WAT-007(a), and concluded that
only the General Partner of a Limited Partnership could hold a water licence. A
judicial review application to the Supreme Court of British Columbia was dismissed
in reasons indexed at 2017 BCSC 320.

[95]

I propose to review the Boards decision
in some detail because it is the logic and rationality of the analysis that is
challenged by the appellants. This is consistent with the role of this Court as
described in
Unifor Local 2301 v.
Rio Tinto Alcan Inc.
,
2017 BCCA
300 at para. 28:


this Court owes
no deference to the views of the chambers judge on this appeal. Rather, the
Court is to look directly at the Environmental Appeal Boards decision and
determine whether or not it is reasonable

[96]

The Boards analysis can
conveniently be divided into two parts. In the first part, the Board considered
whether a limited partnership is a person that could be an owner for purposes
of the
Water Act
, notwithstanding that it could not be an owner for
purposes of the
Land Title Act
, R.S.B.C. 1996, c. 250. In the
second part, the Board considered whether a limited partnership can be an owner
having in mind its structure. In my view, on a proper interpretation of the
Water
Act
these are essentially the same questions, worded differently. The Board,
however, came to a different conclusion on each question. The issue on appeal
is whether this analysis is reasonable.

The Boards Decision Part 1  A limited partnership can be a licensee

[97]

The first step taken by the Board was
to address an argument that the definition of owner in the
Water

Act
was broader than the definition of owner in the
Land Title Act
. This
was important because it was clear that the Limited Partnerships were not and
could not be owners for purposes of the
Land Title Act
, which defines owner
as a person registered as an owner. The Land Title Office does not as a matter
of policy permit limited partnerships to register their interests.

[98]

The Board agreed that the
Land
Title Act
definition was not relevant to the issue to be decided:

[140]     The Panel finds
that the definition of owner in section 1 of the
Water Act
, which is broader
than the definition of owner in the
Land Title Act
, clearly applies
for the purposes of interpreting and applying the
Water Act
.

[99]

The Board then embarked upon a
close examination of the definition of owner in the
Water Act
. The Board
stated that an owner must be a person who is entitled to possession of land,
but concluded at para. 142 that a person may have a right to possess land
even if they do not have title to the land.

[100]

The Board then focused on what I consider to be the
key question for the analysis, namely the meaning and significance of the
definition of person in the
Water Act
. The Board considered the
meaning of firm by reference to dictionary definitions and concluded at para. 146
that these dictionary definitions of firm clearly include a partnership,
including a limited partnership.

[101]

The Board then came to the following conclusion:

[147]    For these reasons,
the Panel finds that a limited partnership is not barred from acquiring 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. The question of
whether the Limited Partnerships may hold the water licences, based on the
facts in this case, is further examined below. Based on all of these
considerations, the key question at this stage of the analysis is whether a
limited partnership is capable of being entitled to possession of the lands
appurtenant to a water licence.

[102]

Thus, the Board appears to have come to the conclusion
that a limited partnership is not ineligible from holding a licence. If person
in the definition of owner is to be given the same meaning as person as
defined in s. 1 of the
Water Act
, this conclusion seems to me
inescapable.

The Question of Legal Status

[103]

The Boards decision that a limited partnership is not
barred from acquiring a water licence, provided that it has the requisite
connection with the appurtenant land, is based primarily on the expansive
definition of person in the
Water Act
. This seems to me both
reasonable and correct. The Board does not make reference to the legal status
of a limited partnership. Indeed, the Board never refers to the argument that a
limited partner cannot hold a licence because it is not a legal entity,
although the argument was made before it. Again, I agree with this part of the
analysis.

[104]

The Respondent Deputy Comptroller of Water Rights has
argued that because a limited partnership is not regarded as a legal entity,
only its General Partner can hold property in which the partnership has an
interest.

[105]

In my opinion, the status of a limited partnership is
highly contextual. That has been explained by the Supreme Court of Canada in
Backman
v. Canada
, 2001 SCC 10.

[106]

Justice Tysoe has set out the excerpt from
Backman
that is relevant to this issue, but I would like to do so with particular
emphasis, as I view the effect of the judgment differently. The passage reads
as follows, with my emphasis:

[37]
A
partnership can be viewed as either an independent entity or a relationship
between individuals depending on the context in which it is observed
. That
a partnership may be considered an entity for some purposes is clear from
s. 5 of the Ontario
Partnerships Act
, R.S.O. 1980, c. 370,
where it is prescribed that for the sake of convenience
a partnership may be
referred to as a firm
and the name under which it carries on business is
called the firm name. Likewise, for income tax purposes, the income from the
partnership business is calculated at the firm level. And typically, rules of
civil procedure provide for
actions against a partnership to be commenced
and defended using the partnership name
, and any order made against a
partnership may be enforced against the
property of the partnership
, as
well as the property of the partners:  J. A. VanDuzer,
The Law of
Partnerships and Corporations
(1997), at p. 26.

[107]

My colleague has commented that this passage does not
stand for the proposition that partnerships are legal entities for general
purposes and I take no issue with that observation. But it seems to me that the
question before us is not whether limited partnerships are legal entities for
general purposes, but whether they are to be treated as independent entities
for the limited purpose of holding water licences under the
Water Act
.
That, in my view, depends primarily on the legislative scheme of the
Water
Act
.

[108]

One
illustration of how a limited partnership may be treated as an independent
entity for specific purposes can be found in the principle that the rule in
Foss
v. Harbottle
(1943), 2 Hare 461, 67 E.R. 189 (Ch.) applies in respect of
limited partnerships as well as corporations:
Watson v.
Imperial Financial Services Ltd.

(1994), 88
B.C.L.R. (2d) 88 at paras. 24-28 (C.A.);
Everest Canadian
Properties Ltd. v. CIBC World Markets Inc.
, 2008 BCCA 276
at
paras. 19-20.

[109]

The rule in
Foss v. Harbottle
provides that
a shareholder of a corporation does not have a
personal cause of action for a wrong done to the corporation; only the
corporation may sue. In
Watson
, the rule was applied to limited
partnerships. The relevant portions of the judgment in
Watson
were cited
by Justice Newbury in
Everest
as follows:

[19]      More importantly, I note this courts
decision in
Watson v. Imperial Financial Services Ltd.

(1994),
88 B.C.L.R. (2d) 88
(C.A.)
,
[1994]
5 W.W.R. 197
, in which the defendant successfully argued that a wrong
done to the [limited] partnership is one for which redress can be sought by the
partnership only.  (Para. 23.)  Speaking for the Court, Hollinrake
J.A. reasoned as follows:

I think the rule in
Foss
v. Harbottle
is applicable here even if it can be successfully asserted
that because a partnership is not a legal entity as is a company, the
respondent bank owed the duty I have referred to above to the individual
partners.
The basis of the application of the rule in
Foss v. Harbottle
is that the harm or damage is done to the partnership itself and whatever loss
or damage the individual members of it suffer is as a consequence of and
incidental to the fact that they are members of the partnership
. The
position of the respondent bank is that it matters not whether the bank
participated in a breach of Galcors fiduciary duty to the partnership and its
individual partners but whether any such breach gives rise to a loss other than
one to the partnership.
The respondent bank says the true substance of the
claim is damage to the partnership and the partnership only
.

This raises the issue
of whether
Foss v. Harbottle
applies to limited partnerships inasmuch as
they do not have a separate legal identity as such as is the case of a company.
Lee v. Block Estates Ltd
.
(1984),
50 B.C.L.R. 289
gives the answer to this question,
says the respondent bank. I should say here that I would not decide this issue
in favour of the respondent bank because there was a Supreme Court of British
Columbia precedent governing it unless I was satisfied that precedent
accurately set out the law to the point that the conclusion reached in it was
not only correct but further that it was plain and obvious an attack on it
could not succeed.



Even if it could
be said that each of the 845 partners was owed a transmitted or transferred
fiduciary duty by the respondent bank I do not think it would be open to those
partners to individually commence actions against the bank.
That would expose the bank to any number of law suits within the
limitation period. I do not think that can be right. In my opinion any such
claim by the partners would have to be in the firm name as permitted by the
Rules
of Court
or in some form such that all the partners were before the court
in one action such as a representative action. In my opinion this emphasizes
the point made by the respondent bank that
this claim, in substance, is one
of the partnership and not the individual partners. This, in my opinion, is no
less so just because the partnership itself is not a legal entity. The fact is
that partnerships can sue and be sued as long as the proper procedure is
followed
.

In my opinion the
general principle that comes from
Foss v. Harbottle
applies to the
claims of the 845 partners against the respondent bank. It is a claim of the
partnership. I am satisfied that this is plain and obvious and that a claim by
the individual partners other than in a form that shows it to be a claim of the
partnership or a representative action where all the partners are before the
court cannot succeed.

Having concluded that
Lee v. Block Estates
correctly decided that the rule in
Foss v.
Harbottle
applies to partnerships I turn now to the claims as they are
pleaded as derivative and the issue of whether the appellants can succeed on
those claims in the face of the rule in
Foss v. Harbottle
. [At paras. 24-5
and 27-9; emphasis added.]

[20]
Foss v. Harbottle
has been
held to apply, then, to associations that are not legal persons at law and in
which the members hold beneficial interests in the assets, or net assets, of
the association.

[Emphasis of
Newbury J.A.]

[110]

The treatment of limited partnerships as
entities to which the rule in
Foss v. Harbottle
applies is consistent with
the proposition in
Backman
that whether a limited partnership is to be
treated as an independent entity or simply a relationship depends on the
context.

[111]

In a similar vein, this Court has held that
where an interest in land is held by a partner in a general partnership on
behalf of that partnership, a commitment to sell the land by the partnership is
enforceable because the partner on title will be bound by the partnerships
commitment:
Coal Harbour Properties Partnership v. Liu
, 2004 BCCA
283.

[112]

In the case of the
Water Act
, the Legislature
must be taken to have intended to treat partnerships, including limited
partnerships, as entities capable of holding licences for the reason given by
the Board  the expansive definition of person as a defined term. The
difficulty with the conclusion that a limited partnership cannot be a person
capable of holding a water licence is that it requires person in the
definition of owner to have a meaning different from the expansive definition
given to person in s. 1 of the
Water Act
. My colleague has
pointed to other uses of the term person in the
Water Act
that could
be interpreted by reference to the defined term in s. 1, but that leads to
the conclusion that person means different things in different parts of the
Water
Act
.

[113]

For a defined term to have different meanings in the same statute is not
impossible, but it runs contrary to what has been described as a basic
principle of statutory interpretation that words should be given the same
meaning throughout a statute, unless the contrary is clearly indicated by the
context:
R. v. Zeolkowski
, [1989] 1 S.C.R. 1378 at 1387 per Sopinka J.;
Thomson
v. Canada (Deputy Minister of Agriculture)
, [1992] 1 S.C.R. 385 per Cory J.
This presumption of consistent expression is also set out in s. 12 of
the
Interpretation Act,
R.S.B.C. 1996, c. 238, which requires that:

Definitions or interpretation
provisions in an enactment, unless the contrary intention appears in the
enactment, apply to the whole enactment including the section containing a
definition or interpretation provision.

[114]

The
conclusion of my colleague seems inconsistent with the conclusion of the Board
on this point, and in my view the conclusion of the Board as to the meaning of
person in the definition of owner is correct. It is where the Board goes
with the second part of its analysis that raises the issue for appeal.

The Boards Decision Part 2  A limited partnership cannot be a licensee

[115]

Returning to the Boards decision, having concluded
that a limited partnership is a person within the meaning of the definition of
owner, the Board then turned to the question of whether a limited partnership
is capable of having the requisite connection with the land to qualify as an
owner.

[116]

That
degree of connection is described in the definition of owner as being entitled
to possession of any land, mine or undertaking in British Columbia, and
includes a person who has a substantial interest in the land, mine or
undertaking. The Board interpreted this phrase as meaning that a substantial
interest in the land is an interest that entitles the person to possession of
the land (at para. 148). In other words, the Board gave no meaning to the
term substantial interest in the land independent of the entitlement to
possession of land requirement.

[117]

The Board accepted that the Limited Partnerships had a beneficial
interest in the lands covered by the leases, but expressed uncertainty as to
whether that beneficial interest was sufficient to meet the connection test:

[151]    Based on the dictionary
definitions of the word substantial, it is unclear whether the Limited
Partnerships beneficial interest in the land covered by the Crown leases
qualifies as a substantial interest in the land. However, as discussed above,
an entitlement to possession of the land in question is a key requirement of
the
Water Act
s definition of owner. The substantial interest
referred to in the definition of owner must be a substantial interest in land
to which the person is entitled to possession.

[118]

The Board then
stated that because the
Water Act
required certain activities on the
land, possession of any land must mean physical possession, occupancy and
control of the appurtenant land (at para. 152). Since a Limited
Partnership could act only through its General Partner, the Board concluded
that 
only
the general partner is entitled to physical possession,
occupancy and control of the appurtenant land (at para. 154) and
therefore 
only
the general partner (i.e., Harrison) has a substantial
interest  in the lands to which the water licences are appurtenant (at
para. 158; emphasis added). As a consequence, Harrison is the owner of
the appurtenant land for the purposes of the
Water Act
, and is the
proper licensee of the subject water licences (at para. 159).

[119]

The
appellants point out that this analysis is not fact-dependent and will apply to
any limited partnership. Thus, the effect of this reasoning is that a limited
partnership is included as a person eligible to be a licensee through the
expanded definition of person notwithstanding that a limited partnership is
not a legal entity and must act through its general partner, but is excluded
from being eligible to be a licensee because it can act only through its
general partner.

[120]

It is also
noteworthy that while the Board accepted that the definition of owner in the
Water
Act
was broader than the definition of owner in the
Land Title Act
,
the result of the Boards analysis is essentially the same. The attributes of a
limited partnership that preclude registration of its interest in the
appurtenant land under the
Land Title Act
are the very attributes that
are found to preclude its status as owner under the
Water Act
.

[121]

It is
difficult to avoid the conclusion that if the Limited Partnerships names
appeared as title holders in the Land Title Offices registry system, as the Douglas
Creek Project Limited Partnership does in the Indian Lands Registry System, the
Ministry staff would not have taken it upon themselves to unilaterally change
the names of the licence holders to the name of the General Partner. Although
the Board has correctly stated that it is the definition of owner in the
Water
Act
that governs, not the definition of owner in the
Land Title Act
,
the effect of the Boards decision is that the narrower definition requiring
the interests to be registrable interests has taken precedence over the
expansive definition contained in the
Water Act
.

[122]

The
interpretation by the Board essentially gives with one hand and takes away with
the other. The question is whether this is a reasonable interpretation of the
definition of owner in the
Water

Act
.

Can a limited partnership have a substantial interest in land?

[123]

The central
conclusion of the Board was that while the Limited Partnerships had a
beneficial interest in the lands that were being held on their behalf by the
General Partner, that interest was not a substantial interest in the land
because under the
Water Act
, a substantial interest in the land is an
interest that entitles a person to physical possession, occupancy and control
of the land, and a Limited Partnership could act only through its General
Partner.

[124]

Leaving aside the question why possession of any land has expanded to
physical possession, occupancy and control of the land, an interpretation of
the
Water Act
that gives no independent meaning to substantial interest
in the land cannot be a reasonable one. The definition of owner in the
Water
Act
uses a conventional means/includes format that is disjunctive in its
meaning. This is explained by Ruth Sullivan,
Sullivan on the Construction of
Statutes
, 6th ed. (Markham:  LexisNexis Canada, 2014) at 74:

§4.40  a definition that first uses means to stipulate a
definition that displaces ordinary meaning and then uses includes to enlarge,
clarify or illustrate the stipulated definition makes sense and is a
conventional drafting technique. In such a case, anything that comes within the
stipulated definition is within the meaning of the defined term regardless of
whether it also comes within that list that follows includes;
similarly,
anything that comes within that list is within the meaning of the defined term
regardless of whether it comes within the stipulated definition
.

[Emphasis added.]

[125]

Thus, an
owner can be a person (which includes limited partnerships) who has a
substantial interest in the land, regardless of whether that person is entitled
to possession of the land.

[126]

This means of construing a means/includes clause is not in my view
subject to multiple interpretative techniques. It supports appellate review
even on a standard of reasonableness for the reason given by Justice Moldaver
in
McLean v. British Columbia (Securities Commission)
, 2013 SCC 67:

[38]      It will
not always be the case that a particular provision permits multiple reasonable
interpretations. Where the ordinary tools of statutory interpretation lead to a
single reasonable interpretation and the administrative decision maker adopts a
different interpretation, its interpretation will necessarily be unreasonable 
no degree of deference can justify its acceptance

[127]

Here the
ordinary tools of statutory interpretation lead to a single conclusion that the
requirement of substantial interest in the land is within the meaning of the
defined term owner regardless of whether it comes within the stipulated
definition of entitlement to possession of the land.

[128]

Thus, the
question devolves to determining whether a limited partnership has, for
purposes of the
Water Act
, a substantial interest in land held on its
behalf by its general partner.

[129]

The term
substantial interest in the land is not defined in the
Water Act
and is
not a term of art. The term is used in the
Water Sustainability Act
,
S.B.C. 2014, c. 15, in a somewhat more obviously disjunctive sense, but
without further clarification as to its meaning. It presumably does not mean a
registrable interest in the land, because that would equate to the definition
in the
Land Title Act
, which, as the Board pointed out, is narrower than
the definition in the
Water Act
.

[130]

The Board
attempted to discern a meaning of substantial interest in the land by
reference to dictionary definitions. While this is a useful first step, the
modern method of statutory interpretation gives greater priority to the context
of words and phrases in the particular statute in which they are found. As
Sullivan puts it (at para. 3.17), a dictionary definition is the meaning
that a word can bear in many possible contexts, whereas the meaning of a word
or phrase in a statute depends on the context in which it appears in the
statute.

[131]

In my view
the term substantial interest in the land must take its meaning from the
context in which it appears in the
Water

Act
. As the Board points
out, the
Water Act
confers both rights and obligations on a licensee,
including the right to construct, maintain, and operate the works authorized
under the licence and the obligation to exercise reasonable care to avoid
damaging land, works, trees or other property. The owners interest in the land
must be sufficiently substantial to ensure that the licensee can meet the
obligations of the licence relating to the appurtenant land. At the same time,
meaning must be given to the expansive definition of person which includes
entities that do not have registrable interests in land.

[132]

A
contextual analysis indicates that ownership of licences was to be available
broadly, provided that the owner had a sufficient connection with the
appurtenant land that it could ensure that the obligations of the licence were
fulfilled. A highly technical analysis of the incidents of partnership is not
consistent with the legislative intent disclosed in the statutory definitions, any
more than a close examination of the legal meaning of a syndicate is required
to determine whether parties can hold a licence through that mechanism.

[133]

In my
view, the Board made the same error as was made by the Board in
Unifor Local
2301
. As noted at para. 32 of
Unifor
, by artificially
narrowing the interpretation of the statutory provision, the Board failed to
heed a basic principle of statutory interpretation to give the statute such
fair, large and liberal construction and interpretation as best ensures the
attainment of its objects as required by s. 8 of the
Interpretation
Act
.

Conclusion

[134]

In my
opinion, the conclusion of the Board that only the general partner of a limited
partnership could hold a water licence under the
Water Act
does not meet
the test of reasonableness. The Boards view that a limited partnership was a
person within the meaning of the definition of owner because of the expansive
definition of person in the
Water Act
was both reasonable and
inescapable. However, the error made by the Board in the interpretation of the means/includes
provision precludes deference on the question whether the limited partnership
had the requisite connection to the appurtenant land to be characterized as a
substantial interest in the land.

[135]

The
expansive definition of person combined with the practical realities
recognized in this Courts decision in
Coal Harbour
lead, in my view, to
the conclusion that the Legislature intended a broad entitlement to water
licences as long as the licensee was capable of ensuring that any licence
obligations relating to the appurtenant land were met.

[136]

I would allow the appeal.

The Honourable Mr. Justice Hunter


