256 Cancellation Of Certificate Of Pending Litigation On Other Grounds

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

See Di Castri, Registration of Title to Land, vol. 2, para. 669.

CASE LAW

For additional case annotations on proceedings to cancel a certificate of pending litigation, refer to “257 Power of court to order cancellation” in this chapter.

Security Must Be Tied to Claim to Interest in Land

In Wosnack v. Ficych, 2022 BCCA 139, the court set aside the order below and directed that CPLs be cancelled on condition the plaintiff give security in the amount of 50% of the sale proceeds.

The plaintiff had been living with his mother and stepfather since 1994, taking care of them and the family home. After the mother’s death in 2015, the stepfather transferred a 50% interest in the home to the plaintiff as a joint tenant. The stepfather passed away in 2017, and his will named the plaintiff as the executor and directed that his estate be divided equally between the plaintiff and the three defendants, who were his other stepchildren and the plaintiff’s siblings.

The defendants each commenced an action contesting the gift of the property to the plaintiff, claiming the property should form part of the deceased’s estate because the transfer of interest was either intended to be held in trust or was procured as a result of undue influence. Two of the defendants filed CPLs against the property. After accepting an offer to buy the property for $225,000 over the asking price, the plaintiff applied under s. 256 of the Land Title Act to have the CPLs cancelled. The court concluded that the CPLs would impede the sale process and granted the plaintiff’s application, but on condition that the entire proceeds of sale be paid into trust pending the outcome of the defendants’ claims. The plaintiff appealed.

Held, appeal allowed. When cancelling a CPL, the amount of security must be tied to the claim to the interest in land grounding the CPL. Here, the judge’s order secured far more than the defendants could hope to achieve if they were to succeed in their claims to the property and overlooked the limitations of the defendants’ potential interest to the property. The judge also erred by failing to assess the probability of the success of the respondents’ claims, instead requiring the plaintiff to establish the probability of his entitlement to the proceeds.

CPL Cancellation Reversal Based on Errors in Assessing Hardship, Probability of Plaintiff’s Success, and Possible Range of Damages

In Save-A-Lot Holdings Corp. v. Christensen, 2023 BCCA 35, the appellant appealed an order cancelling certificates of pending litigation under s. 256 of the Land Title Act and setting the amount of security to be posted at $20,000. It also appealed orders dismissing applications to adjourn the s. 256 application to permit cross-examination on affidavits or further examinations for discovery.

In suing the defendants in 2018, the plaintiff alleged, inter alia, misappropriation of funds by the defendant TC, its former general manager and director. It filed a CPL (“CPL #1”) against the defendants’ residence in January 2020, which was cancelled in 2021 on the basis that the notice of civil claim did not adequately disclose the plaintiff’s claim for an interest in land founded on a remedial constructive trust. The plaintiff appealed this order, and the defendant cross-appealed. The cancellation order was ordered stayed pending determination of the appeal.

A master in a subsequent hearing granted the plaintiff leave to amend its notice of civil claim to cure the deficiency and ordered the plaintiff to provide particulars, to the extent known, of the claims against TC’s wife and two adult children. In March 2022 the plaintiff filed an amended notice of civil claim and the second CPL (“CPL #2”). The particulars the plaintiff provided of its “knowing receipt” claim set out payments totalling some $48,000. TC had had to refinance his home after the CPLs were placed on his property at 16% interest. TC applied pursuant to s. 256 for an order cancelling the CPLs. Given the “exorbitant” interest rate, the chambers judge ordered cancellation of the CPL on the grounds of hardship, upon the defendant posting security of $20,000, an amount based on the particulars. The plaintiff appealed.

Held, appeal allowed. The chambers judge erred in finding that hardship had been established on the evidence, and in restricting to what was set out in the particulars the amount of the plaintiff’s claim to an interest in the property.

An applicant’s evidence of hardship must include particulars that demonstrate real hardship; general allegations of inconvenience will not suffice. TC’s own evidence did not support the judge’s finding that the “exorbitant” interest rate was “directly linked” to the CPLs. The chambers judge erred in principle by giving no weight to relevant considerations on the question of hardship, which resulted in a palpable and overriding error in his finding that the “exorbitant” interest rate of 16% charged in TC’s refinancing was directly linked to the CPL.

The chambers judge also erred in principle by failing to conduct any assessment of the probability of the plaintiff’s success and the possible range of damages in respect of its claim to the property as pleaded, and relying instead only on the particulars to limit that claim to $20,000. Those particulars did not address, and were not intended to address, the potential amount of damages that could be traced to TC’s property. The plaintiff’s claim was grounded on a remedial constructive trust arising from TC’s alleged misappropriation of funds alleged to amount to more than $1.2 million. The particulars provided were not intended to limit the constructive trust claim against the property.

As the evidence was insufficient to establish hardship, no discretionary assessment was required under s. 257(1), and it was in the interests of justice for the court to dismiss the application to cancel CPL #2.