The British Columbia Court of Appeal upheld the striking of a negligence claim against the Province for allegedly failing to warn property purchasers about historical defects in a privately licensed dam. The purchasers argued that provincial regulators knew about structural problems but failed to disclose them before the property was acquired.
In 599253 Alberta Ltd. v. British Columbia, 2026 BCCA 424, the Court held that the Province owed no private-law duty to warn these purchasers under the applicable water legislation. The decision highlights the inspection, maintenance and repair obligations that may accompany ownership of property associated with regulated water infrastructure.
Property Purchasers Faced Dam Repair Obligations
The dispute concerned a private dam constructed in the late 1960s on Cherry Creek near Kamloops. In 2002, 599253 Alberta Ltd. purchased property adjacent to the dam. The company and Larry Penner became responsible for the dam’s licence, which was associated with two properties.
The purchasers alleged that provincial officials had identified deficiencies during the original dam approval process but failed to warn subsequent purchasers.
Years later, regulators issued orders requiring maintenance or repairs. The purchasers failed to comply and pleaded guilty to wilfully contravening the orders under the Water Sustainability Act. They subsequently sought compensation from the Province, including expenses associated with the enforcement proceedings and the costs of complying with the repair orders.
The Supreme Court of British Columbia struck their negligence claim for failing to disclose a reasonable cause of action. The purchasers appealed.
Why the Province Owed No Private Duty of Care
The Court of Appeal relied on its earlier decision in Waterway Houseboats Ltd. v. British Columbia, 2020 BCCA 378, which examined when government regulators may owe private-law duties of care.
The Court found that the applicable water legislation did not impose a duty to warn subsequent property purchasers about alleged historical defects. The legislation established a regulatory framework serving broader public interests while assigning inspection, maintenance and repair responsibilities to licence holders.
The purchasers also failed to plead direct interactions, representations or reliance before acquiring the property that could support the proposed duty. Their later dealings with provincial officials did not establish a duty to warn them before the 2002 purchase.
Although the Water Act governed the property acquisition, the Court found that the relevant provisions of the subsequent Water Sustainability Act did not change the duty-of-care analysis.
The existing appellate precedent resolved the issue without requiring a trial.
Water Licence Holders Remain Responsible for Their Works
Under section 29 of the Water Sustainability Act, authorization holders and other specified persons must properly inspect, maintain and repair works they construct, operate or use. They may also be liable to other landowners for damage resulting from those works.
Section 122 further provides that abandoning, suspending or terminating certain authorization rights does not eliminate specified owners’ and authorization holders’ liability for damage resulting from defects or failures of their works.
The Court emphasized that the statutory scheme places responsibility for licensed works on the licence holder. The purchasers’ proposed negligence claim was inconsistent with that allocation of responsibility.
Due Diligence Before Purchasing Property with Water Infrastructure
For purchasers of rural, agricultural, industrial or development property, the decision demonstrates why government regulation should not be treated as a substitute for independent due diligence.
Before acquiring property associated with a dam or other regulated water works, purchasers should consider:
- Water licences: Identify the licence holder, associated properties and continuing obligations.
- Engineering records: Review available inspection reports, structural assessments and maintenance history.
- Regulatory compliance: Investigate outstanding orders, required repairs and potential decommissioning costs.
- Independent assessment: Retain appropriate engineering professionals to evaluate the infrastructure and potential liabilities.
The central consideration is not only the condition of the infrastructure, but the legal and financial obligations associated with its ownership, operation and licensing.
ATAC LAW advises purchasers, developers and property owners on commercial real estate transactions and related construction and infrastructure disputes, including matters involving technical evidence and regulatory obligations.
