VANCOUVER — Colin Beach has been called many things over the course of his 20-year legal battle with the B.C. government and former premier William Vander Zalm. A lawyer for the province once complained in court that the 66-year-old West Vancouver resident is “just stubborn.” A B.C. Supreme Court judge overruled him.
Beach isn’t stubborn, said Justice Peter Leask, he’s “persistent.”
Persistent enough to have spent two decades pursuing a civil claim he filed against the province, Vander Zalm, several former B.C. cabinet ministers and bureaucrats, and an erstwhile business rival, a mysterious Vancouver woman named Margaret Annett.
Beach claimed that Annett and her now-defunct company, Western Canada Water Enterprises Inc. (WCW), were given preferential treatment by Vander Zalm and his Social Credit government, when the grinning gardener and theme-park impresario was B.C. premier in the late 1980s and early 1990s.
Despite the fact he has no formal legal training, Beach spent years building his case before hiring lawyers to represent him in court. He worked with private investigators, filed access to information requests, searched through boxes filled with musty documents and interviewed potential witnesses. He even put Vander Zalm through an intense interrogation process known as a discovery.
Beach says his efforts were slowed by procedural delays and the late disclosure of relevant materials. He refused to let things rest. “I just kept putting bricks in the wall,” he says.
Nor did he mind working alone through much of the process. “I’m a self-starter. Rarely have I enjoyed working with other people.”
His persistence appear to have paid off. Last month, after two decades of on-again, off-again proceedings, Justice Leask ruled in his favour, finding that the province, Vander Zalm and several other co-defendants intentionally — and unlawfully — assisted Annett’s company, by making exclusive arrangements with it and conducting dubious lobbying efforts on its behalf, mainly in the U.S.
Justice Leask found the provincial government and Vander Zalm guilty of misfeasance in public office. Misfeasance is defined to include the deliberate disregard of official duty, coupled with knowledge that the misconduct is likely to injure.
Misfeasance in public office is an exceedingly rare finding, and the first against a premier or former premier since 1959, when Quebec strongman Maurice Duplessis was found to have overstepped his authority in cancelling a provincial liquor licence.
At issue in the Beach case was fresh B.C. water, prized around the world for its purity and abundance. In the mid-1980s, several local entrepreneurs, including Beach and Annett, hatched plans to capture millions of gallons of surface water — from lakes, streams and waterfalls — then ship the commodity in bulk to the United States and other countries.
What the entrepreneurs needed were licences and agreements from the province. Under suspicious circumstances, Beach eventually struck out. Annett and WCW did not.
Vander Zalm and his government’s “strange” and “unlawful” actions were against the public interest and were made at the expense of WCW’s competitors, including a company owned by Beach, Justice Leask wrote in his judgment.
Remarkably, neither Vander Zalm nor his fellow defendants were called by the province’s lawyers to testify at trial, a “failure” from which the judge says he drew “an adverse inference.”
Margaret Annett did not testify either; however, her son William Annett did. While Justice Leask said he found him “self-contradictory,” “untruthful” and not credible, Annett insists he was open and completely honest with the court. (The National Post was unable to find Margaret Annett for comment. Her son refused to say whether or not she is still living).
Vander Zalm, now 82, professes bewilderment at the judge’s findings. Reached at his home outside Vancouver, he says he has only “glanced” at the lengthy judgment, adding that he “doesn’t know a whole lot about it.”
Why did he, his cabinet colleagues and provincial bureaucrats go out of their way to unlawfully assist WCW, a fledgling, Vancouver-based penny stock outfit, in its efforts to secure and then sell a public commodity outside Canada?
While last month’s judgment doesn’t wade into that, Vander Zalm says he merely lent some “public relations” muscle to WCW, as any premier would have done for a local company asking for help.
But case documents filed in B.C. Supreme Court suggest that other factors may have been at work, including alleged scenarios involving Vander Zalm, his former environment minister, John Reynolds, political considerations and money.
Margaret Annett had a certain style, recalls her former communications and marketing consultant, Gerard Lenoski. A diminutive woman who favoured Chanel suits, she “could be quite charming, but she definitely exhibited a good dose of ruthlessness,” he says.
Annett founded WCW with her son William in 1985. William was designated its chief executive officer, and his mother the president. But she seemed to run the show, says Lenoski, while the soft-spoken William stayed in the background.
The Annetts managed to list their company on the Vancouver Stock Exchange, and later on the Toronto Stock Exchange and the NASDAQ in New York. Investors included political strategist and pollster Alan Gregg, members of the Black family that once controlled a national chain of camera and photography supply stores, and a few London, England-based investment firms.
According to various press accounts, the company raised about $25 million. Lenoski says the Annetts spent lavishly. They threw celebrity studded parties to promote the water company, including a $400,000 extravaganza at a famous Manhattan restaurant. Canadian-born TV actor Alan Thicke was flown in from Los Angeles to host the event, Lenoski recalls. Chefs from Annett’s favourite restaurant outside Vancouver were also flown to the party, to prepare meals for hundreds of guests.
Another of Annett’s grand affairs — the opening of a water-bottling plant near Vancouver — was attended by then-premier Vander Zalm himself. He delivered a speech praising WCW and its efforts to sell fresh B.C. water abroad.
According to Justice Leask, the B.C. government was working behind the scenes to give WCW favourable treatment over its competitors, including Colin Beach.
Beach was a young man when he first approached the province with a plan to export fresh B.C. water in bulk. That was in 1983, two years before WCW was incorporated. He had found what seemed like an endless supply of fresh water, from a source just north of Vancouver. On behalf of a company he formed, Coast Mountain Aquasource Ltd., he applied for provincial licences that would allow him to export the commodity.
In 1984, Beach was given conditional approval to develop the foreshore at his selected site, an important first phase in his water export plan. Meanwhile, negotiations continued over the price he would pay the province for pulling water from the source.
There is evidence of other acts by provincial authorities favouring WCW
WCW entered the scene and managed to quickly secure an attractive and lucrative supply of fresh water from a lake further up the coast. The source was a former Crown asset, which the province dealt to WCW with “no proper public process providing for expressions of public interest,” according to Justice Leask.
WCW was not required to apply for a provincial water licence, nor was it asked to meet other requirements imposed on Beach and other hopeful water magnates, men and women who wanted to compete in the bulk water export business.
“Aside from the favourable terms in the agreements between the province and WCW, there is evidence of other acts by provincial authorities favouring WCW,” Justice Leask wrote in his judgment. These included, he noted, assistance in 1991 from Vander Zalm, in letters of support he wrote on behalf of WCW to public officials in California.
At the time, the company was, attempting to arrange bulk water sales to California, which was experiencing a drought. Beach’s company and another company were also trying to land contracts there.
B.C.’s then-environment minister, John Reynolds, a career politician who would later become a Reform party and Canadian Alliance party MP, also wrote letters of support for WCW. According to the judgment, while he was environment minister, Reynolds wrote 10 letters to officials in Santa Barbara, Calif.
The letters “were drafted for the minister’s signature by Mrs. Annett,” Justice Leask found. At the bottom of her draft copy was a note in her handwriting. “John, thanks for going to bat for us again …”
WCW also encouraged Vander Zalm to write letters of support on its behalf, and he obliged, the court found. A water resources official in one drought-stricken California district testified that she received a letter from the then-premier, promoting WCW. At the time, the district was negotiating with several potential suppliers of water, including Beach.
The California official told the court that the lobbying effort made her feel “very uneasy … I did not find it appropriate for Premier Vander Zalm to insert himself in the process.”
The district decided to go with a local water company, which had supply contracts with Beach’s company, Aquasource, and another Canadian outfit called Snowcap. This did not sit well with Margaret Annett. She wrote to Vander Zalm again, complaining that Aquasource and Snowcap “are, in effect, ‘fronts’ for a purely American operation put in place to avoid British Columbia’s restriction on transferring water licences to non-Canadians.”
Almost immediately, the B.C. government declared a moratorium on new bulk water export permits. The moratorium did not apply to WCW, which already had an agreement with the province to export water, but it effectively killed Beach’s dream of shipping the commodity to thirsty ports around the world.
Former WCW consultant Lenoski claims in a sworn affidavit filed in court that an official in the Vander Zalm government told him the water export moratorium “had been drafted intentionally so as to stop new licences from being issued to potential competitors of WCW, while not restricting WCW’s rights to ship (water).”
Last month’s court decision does not refer to Lenoski’s affidavit or his allegations. But Justice Leask did find the government had imposed the moratorium with an intention of assisting WCW.
Lenoski also claimed in his affidavit that Vander Zalm and his Social Credit government showed “recurrent and blatant favouritism to WCW,” explained in part “by Annett’s self-professed cultivation of familiar relationships with both Vander Zalm and Reynolds, and her financial and other political support of their Social Credit party.”
In another sworn affidavit filed in B.C. Supreme Court for this case, a former assistant to Margaret Annett claims that Reynolds used to telephone her boss “every couple of weeks” and that he occasionally visited Annett in her downtown Vancouver office after regular business hours.
Dianne McBride, now deceased, also claimed in her affidavit that more than once, “Margaret Annett handed an envelope to me, which she asked me to courier to John Reynolds at his office on the north shore of Vancouver … The envelope contained cheques. I knew there were cheques inside the envelope because they (sic) were not sealed.”
McBride added that she “did not know if the cheques were made payable to John Reynolds or to the Social Credit party.” In his judgment, Justice Leask makes no reference to the McBride allegations.
Reynolds was not a defendant in Beach’s lawsuit and was not called as a witness at trial. He is not accused of any wrongdoing.
He is now special strategic adviser for McMillan LLP, a Canadian law firm. Reached at his office in Vancouver this week, he denied acting inappropriately. He said that writing letters of support for local constituents and businesses “isn’t unusual at all,” and he said he never personally received any cheques from Annett or WCW.
His party could have received cheques from Annett and WCW, he added, but he can’t recall if that ever happened.
“My staff looked after that stuff,” Reynolds said, adding that he’s aware of last month’s court decision, and that he’s happy for Colin Beach. “When someone has something taken away from them, they deserve restitution.”
Beach says it’s “very good of Mr. Reynolds to take that position.” But he’s still looking forward to a court assessment of damages for his lost income, which could be in the tens of millions of dollars.
The assessment may be some time coming; Beach’s lonely legal odyssey isn’t over yet. Last week, the B.C. government, Vander Zalm and a former senior government bureaucrat served notice they will appeal the guilty verdict.
Email: bhutchinson@nationalpost.com |
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Province appeals damning water export case, Vancouver Sun
VICTORIA — When a damning court judgment against the provincial government arrived in my email inbox recently, my first thought was that it had been transmitted from the other side of a time warp.
VICTORIA — When a damning court judgment against the provincial government arrived in my email inbox recently, my first thought was that it had been transmitted from the other side of a time warp.
The list of defendants on the first page — other than “Her Majesty the Queen in right of the province of British Columbia” — were all names from the distant political past.
There was Cliff Serwa, the former Kelowna MLA and cabinet minister who was the last person to hold a seat in the B.C. legislature (and perhaps anywhere else) under the Social Credit party label.
Plus you had ex-Socred cabinet ministers Dave Parker, sent into retirement by the electorate in his Skeena riding some 25 years ago, and Elwood Veitch, the ex-MLA for Burnaby who died in 1993.
Another of those named, Bill Vander Zalm, qualifies as current, leastways in the bad dreams of those B.C. Liberals who remember his role in slaying the harmonized sales tax. But his role in the case was confined to the last couple of years of his term as premier, which ended in 1991.
Still, the date on the judgment was present day — May 12, 2016 — and so was the prospect that provincial taxpayers will be stuck with the bill for the wrongdoing on display within its pages.
The case is as complicated as it is backdated. In essence, the Vander Zalm government was found guilty of abuse of power in dealings with Rain Coast Water, a B.C. company seeking to export water in bulk quantities from an inlet near Powell River to California.
The Socreds eventually slapped a last-minute moratorium on bulk water exports. But before doing so, they froze out Rain Coast in favour of rival Western Canada Water, which was also angling to ship water to California from a site further up the coast.
Court heard how Vander Zalm himself intervened on behalf of Western Canada Water with one of the would-be buyers, the Goleta water district serving the city of Santa Barbara.
The deal never came off. But Goleta’s president, Katherine Crawford testified in court about how she felt “very uneasy” about the letter of endorsement that Vander Zalm wrote to her directly.
“This was a commercial transaction between us, in California, and whichever entity we chose to provide us with water. I did not find it appropriate for Premier Vander Zalm to insert himself into the process.”
The most telling passages in the 60-page judgment from Justice Peter Leask of the B.C. Supreme Court address matters of credibility.
Here he is on Rain Coast owner Colin Beach and his decades-long fight for vindication: “I found him to be a credible witness. His recollection of events which occurred between 20 and 30 years before he gave evidence was impressive. I am satisfied that he did his best to tell a long complicated story in a truthful manner.”
Less flattering was the judge’s take on William Annett of rival Western Canada Water: “I did not find Mr. Annett to be a credible witness. His answer to many specific questions put to him on relevant topics was ‘I don’t recall.’”
The judge paid particular attention to what Annett said about dealings between his mother (also a principal of Western Canada Water), and Vander Zalm and his ministers.
“Essentially, he denied high level political contact with the government and claimed to have no knowledge of his mother’s contacts with premier Vander Zalm and other cabinet members. Considering that he and his mother were the two principals of WCW from its inception and throughout the relevant period, this evidence was frankly incredible.”
Despite all the concerns raised in court about the actions of Vander Zalm, his ministers and senior public servants in the Social Credit government,the province did not call them as witnesses for the defence.
”Such failure amounts to an implied admission that the evidence of the absent witness would be contrary to the party’s case, or at least would not support it,” wrote the judge. “I have also drawn an adverse inference against the province for the failure of the ex-premier to testify or call other witnesses to testify.”
When the judgment was published a month ago, Vander Zalm was mystified. “I don’t know why I get to wear it, “he told reporter Dan Fumano of the Province. “Not having read the material, not having been (in court), I don’t know exactly what the judge ruled on or why he ruled as he did.”
Evidence that reflected badly on an ex-premier who is no friend of the B.C. Liberals. Fault-finding against a political party that is reduced to the status of a relic in the provincial museum. An issue, bulk water exports, that has been a non-starter politically for almost as long as the Socreds existed.
Perhaps the current government’s heart was not really in the case. But if that were so, the Liberals might have taken the judge’s invitation to make submissions on damages, since he dropped no hints on either score in his judgment. After all, taxpayers would already be on the hook for the legal costs for both sides.
Instead, the province last week decided to run up the legal tab, by filing an appeal. The case is headed back to court this fall, just in time for the 35th anniversary of Beach filing his initial application for an export licence.
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B.C. government guilty of misfeasance in long-running water dispute
May 13; Updated:
A legal dispute over bulk water exports from a B.C. ghost town to drought-stricken California has finally ended – 30 years after it began.
BC Supreme Court Justice Lesak ruled this week that former premier Bill Vander Zalm and the Social Credit government of the day were guilty of misfeasance in public office in giving a company named Western Canada Water (WCW) “preferential treatment in an unlawful manner.”
Damages will be decided at a later date. The current government hasn’t said whether it will appeal.
In the mid 1980s, the provincial government allowed private companies to sell bulk water to the United States from the area around Ocean Falls.
The stated aims of the government were twofold: to create a new source of revenue and to revitalize Ocean Falls, at one point the largest city on the Central Coast, which had been decaying ever since the pulp and paper mill shut down.
WATCH: The quest to sell water from Ocean Falls began 30 years ago. John Daly reported live from Ocean Falls on March 28, 1986.
The government made several agreements with WCW in the late 1980s and early 90s. But Justice Lesak ruled the government gave an unfair advantage over other companies, including Rain Coast Water Corp., whose owner initiated the lawsuit.
“The initial selection of WCW was a clear example of giving favorable treatment to one competitor at the expense of others, including the plaintiff, and against the public interest,” wrote Lesak.
“I am prepared to find the Provincial Government to be guilty of Category B misfeasance in public office as well as the then Premier, Bill Vander Zalm.”
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Premier Bill Vander Zalm and the Water War Crimes
If the Water War Crimes started under Premier Bill Bennett, they were taken to a higher level of duplicity by Premier Bill Vander Zalm who became Premier of British Columbia in 1986.
On September 25, 1989, the Government of British Columbia, again, acting illegally and operating outside the authority of the Water Act, signed a new and hugely more beneficial agreement with W.C.W. Western Canada Water Enterprises Ltd.
Four days later, the Canadian law firms of Clark Wilson, McMillan Binch and McCarthy Tetrault closed a financial transaction that saw $4.2 million dollars invested in W.C.W. in exchange for 4 million shares. Approximately, one half, or 50 %, of those shares went to offshore accounts that the RCMP also refused to investigate. Although W.C.W. was a public company, the material terms of the contract were a closely guarded secret and never disclosed to the market.
This was insider trading at its finest, facilitated by the Government of British Columbia under the leadership Premier Bill Vander Zalm and three of Canada’s top law firms
In addition, eighteen months later, on March 15, 1991, four days after Sun Belt Water Inc. were selected by the Goleta Water District to supply fresh water from British Columbia because the price was $50 million less that the W.C.W. price [over seven years], Premier Vander Zalm and his Minister of the Environment, Cliff Serwa, destroyed all competition to W.C.W., by a Cabinet Order that gave W.C.W. an exclusive bulk water export monopoly through the creation of an illegal moratorium on the issuance of new permits to acquire water for export purposes.
The Order was ratified by David Lam, the Lieutenant Governor, the Queen’s Representative, on March 18, 1991.
With the secret contract and the moratorium by Order In Council, Premier Bill Vander Zalm, his cabinet and the Queen’s Representative, violated the Water Act, the Canada US Free Trade Agreement, the General Agreement on Trade and Tariffs and enacted measures that were intended to restrict or lessen competition and have the practical effect of creating a monopoly, in the USA, all of which amounted to contravention of American legislation aimed monopolistic trade practices.
A few weeks later, Premier Vander Zalm resigned as premier when a provincial conflict of interest report found he had mixed private business with his public office in the sale of the gardens. He was charged with criminal breach of trust, but found not guilty in B.C. Supreme Court in 1992
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Ian Mulgrew: Vander Zalm government finally cleared of abuse of power claims
Opinion: B.C. Court of Appeal has overturned a 2016 ruling that Bill Vander Zalm and his administration gave favourable treatment to one competitor at the expense of others
“In my view, Rain Coast’s action must be dismissed in its entirety,” concluded Justice Gail Dickson, supported by bench-mates Gregory Fitch and Barbara Fisher.
“A thorough review of the pleadings, the law and the record reveals no evidence capable of supporting Rain Coast’s allegations of targeted malice or deliberate unlawfulness in the execution of their public duties against the Crown defendants. It would be unjust to vex them any further with Rain Coast’s complaints.”
The case, which languished for 20 years, was as complicated as it was backdated — involving separate actions and a handful of decisions.
Following a 26-day trial in 2012 and 2013, Leask’s was the last and most important ruling in the litigation.
In essence, the panel said he wrongly concluded the Vander Zalm government was guilty of abuse of power in dealings with Rain Coast.
“In my view, this was a serious error that infused and informed most of the judge’s key factual findings, including many of his findings on the acts and intentions of the Crown defendants and Crown employees.”
“There was a substantial gap between the established facts and the inferences that the judge drew concerning the acts and intentions of Premier Vander Zalm and cabinet. In addition, there was a large body of highly relevant evidence that the judge failed to consider.”
Beach remained unconvinced.
“We are just reviewing the decision,” he added. “We may apply for leave to the Supreme Court of Canada.”
The court ordered Rain Coast to pay for both the trial and the appeal.