217 Effect Of Certificate Of Pending Litigation If Prior Application Is Pending

PRACTICE

Application of Section 217

Section 217 only applies in the Rudland v. Romilly, 1958 CanLII 577 (BC SC) situation where a certificate of pending litigation is received while a prior application to register an indefeasible title or charge is pending.

Prior Applicant Is a Party to the Proceeding: Section 217(2)(a)

If the prior applicant is a party to the litigation, the registrar registers the prior title or charge “subject to” the certificate of pending litigation. The registrar registers the prior title or charge in spite of the certificate of pending litigation and makes no entry in the register to indicate that the prior title or charge may be subject to the outcome of the litigation.

Prior Applicant Is not a Party to the Proceeding: Section 217(2)(b)

If the prior applicant is not a party to the litigation, the registrar registers the prior title or charge, cancels the certificate of pending litigation, and gives notice of the cancellation to the person who applied for registration of the certificate of pending litigation. If the certificate of pending litigation is already registered, the registrar enters a memorandum of cancellation in the register and gives notice of the cancellation to the person who applied for the registration.

If the certificate of pending litigation is still pending, the registrar refuses to register the certificate of pending litigation on the grounds that the prior title or charge was acquired before the commencement of the litigation.

Notice is given to the person who applied for registration of the certificate of pending litigation under s. 308 of the Act.

Cancellation under Section 217(2)(b) Where Prior Application Is for Registration of a Charge

Cancellation of a certificate of pending litigation is appropriate where the prior applicant is not a party to the proceeding and that applicant has applied for the registration of an indefeasible title.

However, the application of s. 217(2)(b) creates an anomaly where the prior application is for the registration of a charge. In these circumstances, the certificate of pending litigation would be registrable if it was received after registration of the prior application. A direction to cancel the certificate of pending litigation would cause unnecessary cost and inconvenience to the litigant who, on cancellation of the certificate of pending litigation, would be required to reapply for registration of the same certificate of pending litigation following the registration of the prior charge.

As a consequence, where:

1. the prior application is for the registration of a charge and
2. the prior applicant is not a party to the litigation,

the registrar considers whether or not to exercise discretion to complete the registration of the prior application under s. 217(1) of the Act.

Certificate of Pending Litigation Not Cancelled

If the registrar completes the registration of the prior application for the registration of a charge, the registrar does not cancel the certificate of pending litigation, notwithstanding s. 217(2)(b) includes charges.

Certificate of Pending Litigation Cancelled

If the registrar completes the registration of the prior application for the registration of an indefeasible title, the registrar cancels the certificate of pending litigation. The registrar sends notice of the cancellation to the litigant.

Exceptions to Section 217(2)(b)

Section 217(2)(c) provides that, regardless of whether or not the prior applicant is a party to the proceeding, the registrar registers the title or charge claimed by the prior applicant subject to the certificate of pending litigation if the proceeding:

1. relates to a proceeding in respect of a charge or to enforce, foreclose, or cancel a registered charge;
2. relates to the division of property under the Family Law Act; or
3. is commenced under the Wills, Estates and Succession Act.

The registrar makes no entry in the register to indicate that the prior title or charge may be subject to the outcome of the litigation.

Practice Matrix under Section 217

The matrix below sets out six examples of circumstances that may arise under s. 217. The “Time 1” and “Time 2” columns serve to illustrate the order in which applications are received. In each example, the application to register an indefeasible title or charge is received before the application to register a certificate of pending litigation. All of the examples assume that the subsequent application for registration of the certificate of pending litigation is registered while the prior title or charge application is still pending.

In the “Time 2” column, the term “Charge CPL” is descriptive of litigation in respect of a charge, or to enforce, foreclose, or cancel a registered charge. The term “Transfer CPL” is descriptive of litigation asserting a registrable interest against the owner of the interest.

The “Registrar’s Action” column is descriptive of what the registrar does in applying s. 217 in each example.

* Note: All applications under Example 6 are referred to the registrar. For further information, see the practice note under the heading “Cancellation under Section 217(2)(b) Where Prior Application Is for Registration of a Charge” in this chapter.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

See ss. 30 and 31 of the Act regarding the priority of certificates of pending litigation.