Trespass By Water, Insurance Duties, And Late Amendments To A Civil Claim

A hose can start a lawsuit—and a precedent can end one. We dive into two fresh BC court decisions that show how civil law balances fairness, timing, and finality. First, we break down a neighbourhood flooding dispute where homeowners sought to amend their notice of civil claim to add trespass by water and psychological injury tied to both the intrusion and an insurance denial. We explain why “trespass by water” is a real, narrow pathway—requiring a direct projection of water—and how it differs from nuisance or negligence. We also unpack the duty of good faith in insurance, when mental distress damages become possible, and how judges weigh late amendments against limitation periods, prejudice, and trial readiness.

Then we shift to a West Kelowna resort where restrictive covenants forced unit owners into a single rental pool. Years after the Court of Appeal found those covenants unenforceable for uncertainty, a new group of owners sought the same relief—only to face “new” evidence and a different ruling in chambers. The Court of Appeal stepped in, calling that relitigation an abuse of process and reaffirming stare decisis. We outline why finality matters, how judicial economy protects everyone, and what this win means for owners who want the freedom to rent privately or choose different management.

If you care about property rights, insurance law, and the nuts and bolts of civil procedure, this one offers practical takeaways: plead early and clearly, disclose injuries promptly, and do not expect a second bite at a settled apple. Subscribe, share with a friend who loves legal insight, and leave us a quick review to tell us where you stand on late amendments and legal do-overs.

Follow this link for a transcript of the show and links to the cases discussed.

Transcript

Trespass By Water Explained

Adam Stirling 0:13

Am I reading this correctly? Psychological injury.

Michael Mulligan 0:21

Is that type of well so probably and could have been inserted in there, but those are both the interesting concepts here. This concept of trespass by water and the possibility that it might cause psychological injury. And so the background of this case that uh just came out, um, it involves a uh claim up in Campbell River. And uh the uh claim uh involves a couple of single-family uh homes, um, and the uh claim amounts to uh damage, it sounds like to one of the homes resulting by water that's alleged to have come over onto the property from the adjacent lot, right? That sounds sort of straightforward. Uh now there are a few elements to it. First of all, uh this uh decision involves the how uh what's called the notice of civil claim works. And so what a notice of civil claim is is that if you want to sue somebody for uh civilly, right, for some damages, you would set out why you want to do that on the basis upon which you're claiming they owe you money in exactly that, a notice of civil claim. And you would serve it on the other side, and then the other side would have a chance to reply to the notice of civil claim. And those documents sort of frame, you know, what is this all about, right, for the trial to go ahead. Um, and in this case, the the homeowners that I guess were the water recipients that were suing, uh, were suing both the neighbors who they allege caused the water to come onto their property, uh, and an insurance company, I think their insurance company, claiming that they wrongfully failed to pay their claim. Now, I'll pause here for a moment just so listeners know, it's not uncommon for uh like home insurance policies to exclude things like flooding. And the reason flooding is often excluded is that of course everyone at the bottom of the valley wants all the flood insurance they can get. And everyone at the top of the valley wants, of course, none, which makes it not really insurance, and so uh it it uh is not something usually included. Uh and that sort of like flooding from outside would be distinguished from like a pipe burst bursting inside a home, which can happen to anyone. So that that may be what's going on with the insurance company. But in any case, uh this claim was filed, and it has to do with uh allegations that go back

Insurance Limits And Flood Exclusions

Michael Mulligan 2:35

just a couple or three, maybe three years or so. Uh but then uh there was an application to change uh the or amend that notice of civil claim. And what the plaintiffs were looking to do were were really two things. One, they wanted to add this uh uh tort of trespass by water, which I'm sure many people have not heard about, and they also wanted to add a claim for various psychiatric uh uh damages of their claiming, including alleged anxiety, depression, uh substance use disorder, and an aggravation of PTSD on the basis that the uh that those things were caused either by the water getting into their house or by the insurance company not paying. Uh and so they brought this, they asked to change their um notice of civil claim to add those things. And when the other side doesn't agree to that, there then has to be a hearing for a judge to decide, can they change what they're asking for, you know, kind of after the fact. And the reason the after the fact is significant is that most claims, including these ones, have a limitation period. Like you can't just wait around for 15 years and then just decide to sue your neighbor over the alleged water on the property. Uh and so while the claim was started within the two-year period, right, of when you would sort of have the basis to start that, it was now outside of the two-year period when they're asking to add these things. And so the judge had to wrestle with the issue of but you know, should this be allowed? Should they be able to add these things? And there are a bunch of considerations that a judge has when they're deciding that, and it's sort of this non-exhaustive list of things, like is the change necessary to determine the real issues? What's the reason for the delay? Is there some prejudice cause? That kind of thing. And so when doing that, the the judge had to sort of explore some of those things like, for example, can could this be trespass by water, that concept, which is a real thing. Um, and that comes from the fact that trespassing can occur in a number of ways, like in a civil context when you're suing for uh money. Trespassing itself, by the way, is not a crime, but it can be the basis of

Amending Claims After Limitation

Michael Mulligan 4:45

a civil claim, and there's some provincial legislation about it, but it's not a criminal code thing. Um and so trespassing from a civil in a civil law context can include when somebody like enters upon other property, that's kind of obvious, right? That's what most people would think is trespassing. But it can also include remaining on somebody's property. Hey, I'm setting up here, I've I don't know, constructed a building on your land or something. Um, but it can also include uh the concept of projecting an object onto other land. So, like if your let's say your neighbor is constantly throwing garbage into your yard, right? Um, well, that could be a civil claim, right? It has to be some basis to prevent that sort of conduct. And objects could include water, but water has to come directly onto the land. It can't be some indirect mechanism, like you know, let's say you had a pipe burst in your house and the water seeped into the ground and kind of made it under the ground and it came up in your neighbor's yard causing some damage. Well, that might be something, but it wouldn't be trespass, right? But on the other hand, I don't know, let's say your neighbor decides to get their garden hose out and just start spraying it at you or spraying it on into your yard constantly, right? Or spraying it onto your house, uh something like that. That could amount to a trespass upon your land by projecting that water onto your property. And so the judge said, Well, look, you know, that that's arguable whether that occurred here or not, but from the point of view of a pleading, what has to be what's looked at when you're looking at like is this an acceptable thing to have in your notice a civil claim? You can only say no that can't be in there if it's referred to as like bound to fail. Like if you're making some claim that's just that's just hopeless, right? You know, the water's bubbling up through your basement or something, how could that be directly put onto your property? But here the judge dealing with this said, well, it's sort of arguable, right? And you know, it may be that the judge decides that the you know, the other way this was already framed was like nuisance or you know, claims of that sort. And that may be more appropriate, but here the judge said, no, it's not bound to fail, and it doesn't cause any real prejudice, because everyone is well aware of what this is all about, and so adding that element isn't really prejudicial. Now, the next thing the judge had to analyze in terms of this proposed change was the plaintiff wanting to add the psychiatric or psychological injuries, wanting to sue the um neighbors, I guess, for the claiming that the depression or anxiety or increased substance use disorder was caused by this water coming onto their property. And then they were also looking to sue their insurance company by adding the a claim that their uh decision to deny insurance coverage amounted to what's referred to as a breach of the duty of good faith. And that concept comes up a lot in like insurance claims, uh, because an insurance company has a duty to act in good faith towards a person they've insured. And the flip side is true. Like when you're an insured person, you have an obligation to like help out your insurance company and tell them about what actually happened and so on. And so they were claiming that look, because they allegedly, the insurance company allegedly breached that, that that may have caused this substance use disorder or depression. I don't know if the person was drinking or using more drugs or whatever it was, uh, but that's what they were claiming. And so the judge had to go through sort of a weighing of, look, is there some prejudice to adding this like at a late stage? Uh and ultimately the judge weighed it up, and interestingly in that regard, both the plaintiffs, like the the family that or the person whose home got the water into it, was claiming that they hadn't realized they should have told their lawyer about the psychological problems uh until close to an original trial date. Uh on the other hand, the lawyer also seemed to take some responsibility, saying that it was his fault uh for not uh more carefully interviewing his client to find out whether these things might have existed. So they were both saying, well, maybe it's my fault. Uh but ultimately the judge concluded that there wasn't really any prejudice because the trial had already been adjourned for other reasons and isn't until

What Counts As Direct Water Trespass

Michael Mulligan 8:46

2027 where it's expected to take some 15 days already, which boy, that's a lot of time and expense. But the judge concluded, well, look, there's lots of time to look into the psychological injury thing. It won't cause the trial to be adjourned anymore, it won't take any more time. Uh, and so there isn't any real prejudice uh in terms of adding that. And so the judge allowed that to be added as well, or that amendment to be made as well. However, the judge said, look, you know, this should have been uh ferreted out earlier, either in the form of the uh plaintiff telling the lawyer about it, or the lawyer more carefully exam, you know, interviewing their client to find out about it. And so the judge did say, well, they're gonna allow both these things to get added, the trespass by water and the psychological injury claim. The uh plaintiff is going to have to pay the costs for this uh hearing, regardless of what the outcome is. So whether they win or lose, they're gonna be on the hook for paying the uh legal costs uh incurred by having to have this argument about whether the trespass by water uh and the psychological injury claim could be added uh kind of late in the process. So that's the outcome, and I thought it was uh worth uh knowing about, both in terms of how those um notices of civil claim work, that concept of trespass by water, and the sort of things that a judge would need to think about when deciding whether they were going to allow somebody to add something uh kind of after they started.

Adam Stirling 10:06

So that's the latest from the uh BC Supreme Court. In fact, it's always why Michael Mulligan Barrister with Mulligan defense lawyers, Michael, it's a reactive covenant, a resort hotel, and error defective. What happened?

Michael Mulligan 10:26

So this is a decision just out of the BC Court of Appeal, uh, and it has to do with a covenant registered against uh a whole bunch of properties, uh like uh condo units, effectively, um, in a uh West Kelowna uh resort, which was uh essentially one of these things where they sold off each of these hundred and fifty units to individual owners. And then the concept was that it would operate as a hotel, and there would be a management company, I think, associated with the original uh developer. Uh, and uh then uh the if you wished to rent out your unit, it had to be in this uh rental pool. Now, the way that was set up here, it involved a uh covenant being put on all of these properties to restrict the uh uh owners of them from doing things, including renting out the units on their own. They had to, according to this covenant, uh only if they were to rent them to anyone, uh, rent them through this management uh company. Now, uh covenants are kind of like uh contract, but it kind of runs it runs with the land, right? And so traditional uses of that might include things like, I don't know, a developer might put covenants on a uh, let's say, uh residential development saying, you know, no uh modifications to any of these properties shall be over a certain height or shouldn't get uh any closer to the neighbors, things like that, right? With the idea that uh if it was just a contract with the buyer, it wouldn't uh be uh enforceable if they sold it and somebody else bought it. But a covenant that's registered on title kind of runs with the land. That's kind of the idea there. Now, this particular resort has been the subject of it looks like a fair bit of past litigation, which is what uh arose here as a set uh issue in this case. There was previously a challenge brought to these uh covenants uh by uh a few of the

Adding Psychological Injury Allegations

Michael Mulligan 12:18

owners back about uh five or six years ago in a case called uh Anderson. Uh that case was decided actually a bit more than that, 2015. The decision came out from the Court of Appeal. And back then, the Court of Appeal found that these restrictive covenants, which said that you could only rent out your units if you signed on to this rental agreement with the particular company and were prohibited from doing that any other way, found them to be uh uh uh unenforceable uh on the basis that they were it was uh unclear what exactly was required uh by that. Uh and so the Court of Appeal uh back then found that uh because it let those covenants lacked the required degree of certainty, because they didn't say in the covenant what had to be done, it just said you could only do it through this uh rental pool pursuant to a management agreement which wasn't listed there. And then what happened is after the people bought these units, uh the management company wound up losing a whole bunch of money because right, of course, they'd be on the hook for things like you know paying for the hotel staff and cleaning and the you know reception desk and all those kinds of things. And the original agreement when this thing started out uh involved a 60-40 split, so the management company would get to keep 40 and the owner of the unit would get to keep 60. But because they were losing money, they just decided to change the uh terms of the agreement so they would get half of the money that was being collected. And then they took the position that look, if you don't sign the new agreement with us, you're we're the only thing you can uh use to rent out your unit, you're just out of luck, so sign it or no rental at all. And so that got challenged back in 2015, and the owners that brought the claim at that point, they won. Uh and then uh after they won, several other owners, I think it was a total of maybe just over a dozen of them, went to the management company and said, Well, we want these conditions removed from our units. And they initially started doing that, but then refused to continue with. So there were more than a hundred units left which still had these conditions, and they were trying to stop the owners from being able to rent them out. And so, as one might expect, uh the uh affected uh owners that were now paying this higher fee and were prohibited from uh being able to rent the units out on their own, no private rentals, you couldn't use any other system, you had to use this uh setup where the management company took half the money, uh they went to court and they said, Look, uh, we'd like to just have the same thing happen. This was already decided by the BC Court of Appeal in 2015. Well, maybe surprisingly, the uh chambers judge, like the Supreme Court judge uh hearing that most recent application, said no. Uh and the judge's reason for doing that was interesting. The judge said, Well, I've got some different uh uh evidence here before me than what existed back when this was uh decided by the Court of Appeal in 2015. For example, the management company included uh a copy of a draft covenant and a draft rental pool agreement uh that some of the people might have been given when the units were originally sold. And so the judge hearing it thought, well, this seems like a different evidentiary basis. I'm I don't feel that I'm bound by what the uh Court of Appeal decided in exactly the same complex with exactly the same covenant back in 2015. And so the uh uh counsel or counsel for the uh uh people that were trying to get rid of the covenant now argued that first of all, stereodisus decisus, the idea that, you know, once the thing's decided, and particularly by a higher court, right, it's kind of it's a hierarchy, right? They were saying, look, this has already been decided, you've got to do the same thing for us. And moreover, argued that the effort by the management company to now bring different uh evidence like the uh uh draft agreement and sort of the draft uh conditions and so on, they argue that that amounted to an abuse of process uh and amounted to an effort

Good Faith Duties In Insurance

Michael Mulligan 16:20

by the management company to relitigate the issue, which had been thoroughly litigated, went all the way to the court of appeal, and they lost in 2015. Now, that didn't hold water at the uh original uh hearing in the in chambers by the BC Supreme Court judge. The BC Supreme Court judge said, Well, I'm aware of this previous case, I know it has to do with the same covenant at the same property, uh, but I've got some different evidence here and I think I can make a different decision. And so they did. And that issue, that decision was just went up again to the Court of Appeal. Well, the BC Court of Appeal, I guess no other way to put this, would have none of it. Uh they looked at the fact that that this uh judge had found a way to uh come to a different decision, saying, well, look, yes, they had different evidence uh before them, for example, uh, but found that that effort by the uh management company to put different evidence in front of the judge to kind of re-argue that decision that issue, which had been decided back in 2015, did amount to an abuse of process. And that concept of that sort of abuse of process um is part of the inherent jurisdiction of the court to try to avoid sort of the court's process being uh sort of undermined. And the uh it also has its its roots in things like the concept of uh judicial economy. And the idea there is that once you've thoroughly litigated something uh and you've had a reasoned decision on it, you shouldn't be allowed to just come back and just try again. Uh because that would lead to not only potentially inconsistent results, but it it's also kind of a waste of resources. It's sort of like look, you uh have your case, you argue it, you have a decision, you shouldn't get back get to come back and try again. And the Court of Appeal pointed out that yes, it's true uh that the management company decided to put some different evidence before the judge on this occasion, uh, but found that look, that was just a strategic decision on their part. That same evidence would have existed back in the case that was decided in 2015. Uh they may have made a strategic decision about whether it made sense to put in the show the judge the draft agreement or uh things of that sort, uh, and so found that uh a decision now to kind of try again by putting different evidence in really what amounted to the same fact patterns, the same entities, they're just different units in the same big building, uh, did breach that those concepts of things like uh judicial economy, not like wasting time doing something twice. Uh other principles like there should be consistency and finality, um, and through the concept of the integrity of the administration of justice, all bound up uh in that concept of an abusive process uh to prevent kind of the misuse of the court's process by doing things over and over to see if you might get a different result, uh, or those same kind of things could occur,

Costs And Consequences Of Delay

Michael Mulligan 19:15

like let's say somebody uh was trying to litigate uh things in two different cases with the same fact pattern in front of like different judges to see if you could come up with a more favorable decision from one than the other. Uh that might also be captured by that concept. And like in that case, you might have a judicial decision saying, look, these things are gonna be heard together. We're not gonna have two people, uh two judges hearing the same fact pattern in two different cases, like two different rental units or two different uh condo units saying, look, we're not gonna hear two different trials on two different fact sets of evidence to see whether uh one or the other might come out differently. And so uh as a result of that, found that yes, this was an abusive process. That concept of stere decisis uh did apply, right? You've got a uh, you know, future decisions have to be consistent with previous ones. That's kind of the cornerstone of the common law uh system, right? So we can all live in an orderly world, right? That's kind of what underlies all of that, right? You should live in a

Resort Covenants And Rental Pools

Michael Mulligan 20:14

world where it's possible to look at a previous decision on the same fact pattern, decided by particularly like the Court of Appeal, and you should be able to order your life accordingly, right? You should be able to say, hey, this has been decided, right? Uh it shouldn't be that every single, you know, condo unit owner has to go and relitigate the thing uh with the management company to see what kind of random different decision might come out of the process on slightly different versions of the evidence being put before the uh trial judge. Uh and so the uh Court of Appeal found that the uh judge that heard this uh made an error in not applying that uh core principle that this did amount to an abusive process, uh, and that uh despite uh an effort to put uh slightly different evidence before the judge, uh, that uh was uh not uh a basis upon which the judge had discretion to do something else, the judge was bound to follow the previous decision from the Court of Appeal. And so the net result is that the uh all of the other uh owners that were suing here are going to have these restrictive covenants removed uh from their title, uh, and they will be completely they'll be free to rent them out privately or use a different management company or whatever it might be. Uh they're not uh bound uh by uh the requirement to either go with them or not do it at all. So that's the latest in the BC Court of Appeal on starry decisis uh and uh abuse of process and how we should uh have a bit more of a legal, uh legal predictive world than uh might result if those principles didn't apply.

Adam Stirling 21:45

Michael Ball again, thank you so much. Pleasure as always. Thanks so much. Always great to be here. All right, legally speaking during the second half of our second hour every Thursday. Quick break, news next.