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In This Volume

  • 249 (1) If, in a proceeding pending in the Supreme Court,
  • (a) a question is raised
    • (i) as to the validity of a registered charge, or
    • (ii) as to money owing on or rights respecting a registered charge, and
  • (b) in the opinion of the court, the question raised is sufficiently material for the application of this section,
  • on affidavit or other proof of the good faith of the question raised, the court may, on terms as to security and otherwise it considers proper, order that the registration of the charge be cancelled on payment into court of a specified amount of money by the person claiming relief.
  • (2) Except under special circumstances to be established to the satisfaction of the court, an order must not be made under this section for the cancellation of the registration of a mortgage, except on payment into court of the full amount which the mortgagee, or the mortgagee’s successor in title, has stated on affidavit to be due.

1979-219-228.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

See Di Castri, Registration of Title to Land, vol. 2, para. 543.

CASE LAW

Rights of First Refusal

A lease gave tenants a right of first refusal only if they duly and regularly paid rent and performed the covenants of the lease, which they failed to do. The tenants also frustrated a proposed sale by purporting to exercise the right of first refusal and then failing to complete the transaction. It was not an unfair inference to draw that more problems would occur which could well include the frustration of further sales. The landlord obtained a court order under s. 246(1) removing and cancelling registration of the right of first refusal (Laakmann v. C.C.W.C. 1982116 Holdings Ltd. (1984), 34 R.P.R. 36 (B.C.S.C.) (Chambers)).

Note: The reference in the text of this case to s. 225(1) of the Act (now s. 246(1)) appears to be an erroneous reference to s. 228(1) (now s. 249(1)).

A right of first refusal clause must, at a minimum, set out the procedure by which the price will be determined and a mechanism by which an offer can be made and a time within which it can be accepted. Where these minimum requirements are not present, the clause is unenforceable and the court will order the registrar to discharge the right from the title to the land (Baykey v. North West Office Furniture, 1992 CanLII 568 (BC SC)).

Orders for Security

Where the Supreme Court has made a declaration under s. 249(1)(a) of the Land Title Act, the court does not have jurisdiction to subsequently allow the lodging of a substitute security mortgage. The section contemplates an application for substituted security before the court’s declaration as to either the validity of such a charge or the amount owing under such a charge (Armadoris Holdings v. C-1300 Holdings Ltd., [1992] B.C.D. Civ 2768-01, [1992] B.C.W.L.D. 721 (S.C.), leave to appeal refused 1993 CanLII 2763 (BC CA)).

Special Circumstances for Payment of Mortgage Proceeds into Court

In a foreclosure proceeding, the court approved the sale of a property and ordered cancellation of the registered charges on payment into court of an amount sufficient to secure payment of a second vendor take back mortgage in favour of the defendant. The value of this mortgage had been subject to negotiation between the parties. An initial amount, based on an appraisal value, had been increased by a further amount based on the defendant’s assessment of rental value. Apparently, the plaintiffs accepted this at the time. The plaintiffs claimed that the defendant had misrepresented both himself and the condition of the property and therefore that they had exercised their right of rescission and had ceased making payments under the mortgage. They claimed that they should be required to pay into court only the original principal of the second mortgage plus interest and not an additional amount they were induced to add to the second mortgage by the defendant. The plaintiffs said that they would suffer financial hardship should they be required to pay the full amount into court and that, in the circumstances of their claim against the defendant, this amounted to “special circumstances” under s. 249(2) of the Act. The court disagreed. It found that s. 249(2) does not empower the court to consider the merits of a mortgagee’s claim and does not make the mortgagor’s hardship or inconvenience a ground for cancellation. While there was clearly a dispute about the validity of the mortgages and the amount owing, the court found that s. 249(2) makes it clear that the existence of a dispute does not, in itself, justify payment into court of anything less than the full amount claimed (Froese v. Sharif, 2017 BCSC 635).

Matrimonial Proceedings

Notes on Case Law: The following cases were decided under the Family Relations Act, R.S.B.C. 1996, c. 128 (repealed March 18, 2013 by B.C. Reg. 131/2012). See the transitional provisions in s. 252 of the Family Law Act at chapter 41 (Family Matters) of volume 2 of this Manual to determine whether the Family Relations Act or the Family Law Act applies in specific circumstances.

Although the court can order that encumbrances on family assets be discharged out of the assets of the spouses, it cannot order that a holder of a registered charge divest itself of its interest. Consequently, a judgment for legal fees registered against the one-half interest of the applicant’s spouse in the matrimonial home before a consent order transferring the spouse’s interest to the applicant could not be cancelled upon application to the court under s. 249 of the Land Title Act. A lis pendens had not been filed before the registration of the judgment, but a lis pendens would not have had any significance given that the spouse’s interest was being transferred rather than reapportioned under s. 65 of the Family Relations Act. Furthermore, a mutual restraining order which restrained and enjoined the parties from further encumbering the property did not invalidate the subsequent registration of the judgment because the order only applied to the parties, not the judgment debtor (Domirti v. Domirti, 1996 CanLII 1619 (BC SC)).

Section 249 Cannot Be Used to Cancel a CPL, Which Is Not a Charge

A certificate of pending litigation is not a charge. Section 249 cannot be used to cancel certificates of pending litigation (1141536 B.C. Ltd. v. Main Acquisitions, 2019 BCSC 1689 (Chambers) at paras. 8 to 9).