257 Power Of Court To Order Cancellation

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

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

CASE LAW

Notes on Case Law: Cases on the cancellation of certificates of pending litigation under ss. 256 and 257 of the Act generally consider:

1. whether it is proper for the court to make an order cancelling the certificate of pending litigation in the circumstances, including whether the landowner has proven hardship and inconvenience; and
2. if the court orders cancellation of the certificate, whether or in what amount the landowner must post security for damages (s. 257(1)(a)); or
3. if the court declines to order cancellation of the certificate, whether the holder of the certificate must give an undertaking or post security or both (s. 257(1)(b)).

The cases annotated here are organized under major subject headings based primarily on the order granted by the court. Subheadings are used to distinguish some of the key circumstances involved in the cases. Readers are cautioned that a review of any single subject heading will not provide a comprehensive review of the case law on that subject due to common elements that arise in many cases. Furthermore, while a relatively thorough review has been conducted of the extensive case law dealing with these sections, the case coverage is not exhaustive. The coverage of more recent decisions is most inclusive.

Case annotations on the registration of certificates of pending litigation are included under s. 215 of the Act (Registration of certificate of pending litigation in same manner as charge).

Note: Cases decided before October 1, 1994 refer to “lis pendens” or “certificates of lis pendens”. The annotations of cases decided after this date typically use the language adopted by the court in each case.

Interpretation

The Legislature has clearly provided optional relief in this section because it uses the word “or” at the end of s. 257(1)(a)(ii) and not the word “and” (Cloverlawn-Kobe Developments Ltd. v. Tsogas, 1979 CanLII 427 (BC SC)).

In cancelling a certificate of pending litigation registered against the plaintiff’s property, the trial judge ordered, amongst other things, that the plaintiff pay to the defendant funds from the proceeds of sale. On appeal, the court found nothing in either s. 256 or 257 of the Act which authorizes an order that the person seeking cancellation pay money to the holder of the certificate as a condition of cancellation. Section 257 is limited to securing a claim, not making payment on account of it. In dismissing the appeal, the court held that it is fundamental to our legal system that for one party to obtain relief against another, the party must first obtain a judgment or order of the court fixing that other with liability. In the absence of a judgment or an order fixing liability, the order of the trial court was without legal warrant in statute or rule or precedent (Brown v. Oberle, 1996 CanLII 1661 (BC CA)).

The defendants, B and O, applied to a bank to refinance a development project in order to reduce their interest costs. The bank declined to advance funds while litigation between the plaintiffs and the defendants remained outstanding. In the litigation, the plaintiffs alleged that B and O were involved in transactions tainted by fraud and in facilitating breach of fiduciary duty. In this action, the defendants applied to court to cancel certificates of pending litigation registered against their property. The court found no convincing evidence that registration created hardship or inconvenience for B and O and no particulars demonstrating a causal connection between whatever hardship and inconvenience there might be and the registration of the certificates against B and O’s title. In dismissing their application, the court found that whatever hardship and inconvenience there might be came as a result of the litigation itself and not as a result of the registration of the certificates (Liquor Barn Income Fund v. Mather, 2009 BCSC 1092). In confirming the trial court’s decision, the Court of Appeal held that the plain and ordinary meaning of the words of ss. 256(1) and 257(1) provide that an application to cancel a certificate of pending litigation must include an affidavit that sets out the particulars of the hardship and inconvenience experienced or likely to be experienced by the registration of the certificate to the applicant before the application can be heard. Absent evidence of actual or likely hardship and inconvenience caused by the certificate, there can be no remedy under s. 257(1)(a) or (b) and the application must be dismissed (Liquor Barn Income Fund v. Becker, 2011 BCCA 141).

This was an appeal from an order of a master cancelling a certificate of pending litigation as a term for granting an adjournment. In the appeal proceedings, the parties agreed that the cancellation order was not based on ss. 256 and 257 of the Land Title Act. The court found that there is no basis independent of the Land Title Act for cancelling a CPL. After a finding of hardship and inconvenience has been made, a court may consider the strength of the plaintiff’s claim or the probability of its success, in order to determine the remedy, if any, under ss. 256 and 257. This analysis relates to the assessment of whether the plaintiff’s claim gives rise to an interest in land. If it does not, the CPL is cancelled. If it does give rise to an interest in land, the authority to cancel the CPL operates essentially as a necessary corollary to a litigant’s right to register the CPL. There is no independent or common law authority to cancel a CPL on the basis that the plaintiff’s claim is unlikely to succeed (Bajwa v. Singh, 2016 BCSC 916).

Inherent Jurisdiction of the Court

Notes on Case Law: The following annotations illustrate the significance of bringing an application under s. 256 and discuss the alternative of invoking the inherent jurisdiction of the court. Applications under s. 256 may result in cancellation based on hardship and inconvenience. Applications invoking the inherent jurisdiction of the court may result in cancellation where, for example, the pleadings are not capable of supporting a claim to an interest in land. There used to be authority for the proposition that the test for cancelling a certificate of pending litigation by invoking the inherent jurisdiction of the court was whether the plaintiff had an arguable case or triable issue. However, recent court decisions have clarified the law and procedure; see, for example, the following annotation for NextGen Energy Watervliet TWP, LLC v. Bremner, 2018 BCCA 219.

A certificate of pending litigation may be cancelled in one of three circumstances: under s. 254, or under s. 256, or under the inherent jurisdiction of the court. The test for exercising the court’s inherent jurisdiction to cancel a certificate of pending litigation has been the subject of some uncertainty and has only recently been clarified. There used to be authority for the proposition that the test for cancelling a certificate of pending litigation by invoking the inherent jurisdiction of the court was whether the plaintiff had an arguable case or triable issue. However, the court has now clarified the law and procedure. In Bilin v. Sidhu, 2017 BCCA 429, the court concluded that if the pleadings were capable of supporting a claim to an interest in land, it was not open to a chambers judge to cancel a certificate of pending litigation on the basis that the claim was weak or that there was no triable issue. The proper course is to bring an application for summary dismissal of the part of the claim relating to land; if that application is successful, the certificate of pending litigation then may be cancelled in accordance with s. 254. Accordingly, the appeal of the judgment cancelling the certificates of pending litigation was allowed (NextGen Energy Watervliet TWP, LLC v. Bremner, 2018 BCCA 219).

See also the annotation for Berthin v. Berthin, 2018 BCCA 57 under s. 310 of the Act.

The following general principles regarding the cancellation of a certificate of pending litigation emerge from Berthin v. Berthin, 2018 BCCA 57: (1) Section 215(1) of the Act empowers a person who has commenced a proceeding and who is claiming an interest in land to register a certificate of pending litigation against the land. The court has jurisdiction to immediately cancel a certificate of pending litigation when the proceeding does not meet the threshold requirement of claiming an interest in land. (2) Rule 9-5 empowers the court to strike a pleading for various reasons, including that it discloses no reasonable claim or defence, is unnecessary, scandalous, frivolous, or vexatious, or is otherwise an abuse of the process of the court. If a claim supporting an interest in land is struck under Rule 9-5, the court does not have inherent jurisdiction to immediately cancel a certificate of pending litigation. Rather, the certificate of pending litigation may only be removed in accordance with s. 254 of the Act, which requires a certificate of pending litigation to remain on title until the unsuccessful party exhausts its avenues of appeal. (3) Rule 9-6(4) empowers the court to summarily dismiss a claim to an interest in land where there is no triable issue. If the claim is summarily dismissed, the certificate of pending litigation may only be removed in accordance with s. 254. (4) Rule 9-7 empowers the court to dismiss a claim to an interest in land on the merits after a summary trial. If the claim is dismissed, the certificate of pending litigation may only be removed in accordance with s. 254. (5) As an alternative to the above routes, ss. 256 and 257 empower a person who is the registered owner of an interest in land against which a certificate of pending litigation has been registered to apply for an order cancelling the registration of the certificate of pending litigation on the basis of “hardship and inconvenience”. If successful, the court has the jurisdiction to make an order immediately cancelling the certificate of pending litigation (Nu Stream Realty Inc. v. 1116191 B.C. Ltd., 2018 BCSC 911).

The applicants applied for cancellation of a lis pendens under s. 256 of the Act on the grounds that the plaintiff’s action was frivolous and vexatious and without cause, and that there was no question to be tried. The court held that it should not be asked to try an action on an application under s. 256. The only possible summary route to resolution would be under Rule 18 (now Rule 9-6). Because the applicant did not satisfy the court that the lis pendens should be cancelled on the grounds set out in s. 256, the court refused to grant cancellation, although the plaintiff was ordered to post security (Lay v. Carr-Harris, [1983] B.C.J. No. 1139 (QL) (S.C.), varied [1983] B.C.J. No. 2144 (QL) (C.A.) (Chambers)).

Master’s Jurisdiction

A master ordered that a lis pendens be cancelled and the holder of the lis pendens appealed to the Supreme Court. In considering the master’s jurisdiction to hear the petition for cancellation, the court noted that a master has jurisdiction to hear anything that a judge in chambers can hear except those matters that are limited to the jurisdiction of a section 96 judge and subject to any limitations placed on a master’s jurisdiction by directive of the Chief Justice. The court concluded that the master had the jurisdiction to undertake the hearing and to determine the issue before him (Payne v. Voth, [1990] B.C.J. No. 1300 (QL) (S.C.)).

The defendant was undertaking a mixed-use commercial and residential development where construction had filled the excavation and was well above ground; the plaintiff’s certificate of pending litigation was a serious impediment for the next step in the project, subdivision of an air parcel that was needed for financing. The defendant applied for an order cancelling the CPL or an order for posting of security in the alternative. Citing recent authorities, the master found no jurisdiction in a master, apart from that under ss. 256 and 257, to order cancellation other than on posting of security. The master made an order under those provisions accordingly (Fritz v. 848 Yates Nominee Ltd., 2019 BCSC 1294 (Chambers)); see the annotation for this case under “Amount of Security” in this commentary.

See also the case annotations under “Appeals: Appeal of Master’s Decision” in this commentary.

Proper Proceedings

Endorsed Writ of Summons

Where an applicant has endorsed a claim for a lis pendens on the writ of summons when issuing the writ, a defendant can move to cancel the lis pendens under s. 256 without leave of the court. The court may consider the merits of the action and may also, at its discretion, apply the considerations set out in this section to an action to amend a claim so as to include a lis pendens (Percy Contracting Services Ltd. v. T.L. Trapp Investments Ltd., [1973] B.C.J. No. 310 (QL) (S.C.)). Note that, effective July 1, 2010, most proceedings under the Supreme Court Civil Rules are commenced with a notice of civil claim; writs of summons no longer appear in court proceedings.

Application Made in Wrong Proceedings

Certificates of pending litigation were filed in proceedings under the Family Relations Act (now the Family Law Act). An application to discharge the certificates was brought in proceedings under the Company Act (now the Business Corporations Act) that involved the same land and many of the same parties. The applicants did not invoke s. 256 of the Land Title Act and copies of the certificates of pending litigation were not placed before the trial court, which ordered that the certificates be discharged. The Court of Appeal found that the application had been made in the wrong proceedings and that there had been no material before the trial court to warrant setting aside the certificates. The appeal was allowed without prejudice to the right of the applicants to bring an application properly founded on ss. 256 and 257 of the Land Title Act for the trial court to deal with the certificates (Mahood v. High Country Holdings Inc., 1997 CanLII 3510 (BC CA)).

The plaintiffs commenced an action against the defendants for conspiracy and fraud in 2008, examined one defendant for discovery, and took no further steps except scheduling a trial date for January 2018. The trial court dismissed the plaintiffs’ claim for want of prosecution and cancelled six certificates of pending litigation filed against properties owned by the defendant. The plaintiffs’ appeal was allowed, but only with respect to the order cancelling the certificates of pending litigation. It was not open to the judge to cancel certificates of pending litigation when dismissing a claim for want of prosecution. The certificates of pending litigation must remain on title until the requirements of s. 254 of the Land Title Act are satisfied or an application under s. 256 establishes hardship or inconvenience (Sun Wave Forest Products Ltd. v. Xu, 2018 BCCA 63, leave to appeal refused 2018 CanLII 113697 (SCC)).

In Rawlins Estate v. Rawlins, 2021 BCSC 1629 (Master), a son, as executor of his mother’s estate, argued that it was a hardship to the estate and the beneficiaries of the will that a CPL registered by one of the beneficiaries continued to block the sale of the property forming part of the estate and sought cancellation of the CPL pursuant to s. 256 of the Land Title Act. The court noted that it was not the CPL that was delaying distribution to beneficiaries but rather the failure to bring to conclusion a related will variation claim (made by the beneficiary who had registered the CPL), given that, after a will variation claim has been started, s. 155(2)(b) and (c) of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 prohibits a personal representative from distributing the estate without consent of the court. The respondent to the CPL cancellation application noted that the CPL was filed in his will variation action and not the present action. He alleged his parents had promised to leave him the property, where he had lived with them since his birth and cared for them for many years, and its contents, and he argued this application sought to short-circuit a trial in the will variation claim by obtaining an order to sell the property. The court dismissed the application to cancel the CPL because it was brought in a court file that had no ongoing dispute between the parties and was filed in the wrong action. Holding this was not a dismissal on the merits, the court said the applicant was at liberty to reapply in the appropriate action.

Inadequate Pleadings

An applicant who files an affidavit that does not allege that hardship or inconvenience has been or is likely to be experienced by reason of the lis pendens, or allege the grounds for such statements, has not properly launched an application under s. 256 of the Act. The applicant’s affidavit was inadequate in this case and the application was dismissed accordingly (Custom Mining Services Inc. v. Silvex Resources Corp., [1985] B.C.J. No. 145 (QL) (Co. Ct.) (Chambers); followed in Farm Credit Corp. v. Bagnall, [1988] B.C.J. No. 2139 (QL) (S.C.) (Chambers)).

To make a claim of hardship under s. 256, an applicant must plead the particular grounds for hardship. It is not sufficient to simply state, as in this case, that the applicant “has suffered extreme hardship and inconvenience” and to vaguely allege that the property is required as security in order for the applicant to borrow money. It is always inconvenient to have a lis pendens registered against one’s property; the question is in what particular way does the lis pendens inconvenience the property owner. There must be a degree of oppression so that the inconvenience goes further and creates hardship. Some evidence should also be presented to indicate what an appropriate and fair amount of security would be in order for cancellation to be granted. The court refused the application but granted the applicant liberty to amend his petition in light of the court’s reasons (Thonger v. Palmer, [1988] B.C.J. No. 1474 (QL) (S.C.)).

In an application to cancel a lis pendens, the applicant must plead particular grounds of hardship. Generalizations, unsupported by real proof of hardship and inconvenience, are not sufficient to meet the requirements of s. 256(1)(b). Hardship was demonstrated by the defendant where, as a result of the lis pendens, he was unable to obtain conventional mortgage financing for the construction of an apartment building and was forced to obtain private financing at a higher interest rate. However, the court could not grant the application because, under s. 257(1)(a) of the Land Title Act, the court must be satisfied that an order for security will provide adequate relief and the issue of security was not argued before the court (Kwan v. Kwan, 1992 CanLII 1283 (BC SC)).

An application under s. 256 requires an affidavit stating that hardship and inconvenience are, or are likely to be, experienced. Where the requisite hardship is not immediately apparent from the defendants’ affidavit, the application is denied (Mr. T. International Agencies Ltd. v. Deol, 1993 CanLII 1811 (BC SC)).

Improper Proceedings

Claim for Damages

The plaintiff and the defendants were engaged in a joint venture to develop and sell certain lands. To this end, the plaintiff prepared a number of studies and technical reports which it provided to the defendants. After the defendants decided against the joint venture, they acquired the land in question from a third party. The plaintiff then commenced an action for punitive and general damages alleging the defendants had used the plaintiff’s confidential reports for their own purposes thereby wrongfully appropriating the plaintiff’s property. The day after the plaintiff’s action was commenced, the plaintiff registered certificates of pending litigation against the land in question. Several weeks later, the plaintiff filed an amended statement of claim asserting a claim for an estate or interest in the lands. The defendants brought this application under ss. 256 and 257 of the Act to have the certificates of pending litigation removed. The court granted the application. Section 215(1) of the Act requires, as a pre-condition to the registration of a certificate of pending litigation, that an application either claim an estate or interest in land or have by another enactment a right of action in respect of land. At the time the plaintiff filed its certificates of pending litigation, it was claiming only punitive and general damages. Therefore, the requirements of s. 215(1) were not met and the certificates were discharged (Tymira Holdings Ltd. v. Whittaker, 2004 BCSC 905). With respect to caveats filed in the same action, see the annotation for this decision under s. 293 of the Act.

The plaintiff and the defendants owned half-interests in a residential property. In May 2015, the defendants applied for and obtained an order for partition and sale under s. 6 of the Partition of Property Act. Section 6 requires that an applicant have at least a half-interest in the property. In September 2015, the plaintiff brought an action to recover funds she spent to renovate the house and registered a certificate of pending litigation against title. The defendants brought this action to cancel the CPL so that the court hearing to approve the sale could proceed. The plaintiff offered to remove the CPL if the court ordered that the renovation funds be paid into trust pending resolution of her claim. The court found that the doctrine of issue estoppel precluded the plaintiff from the right to register the CPL. In her pleadings, the plaintiff admitted that the defendants had a 50% beneficial interest in the property. As the order for partition and sale was a final determination of whether the property should be sold, the plaintiff could not now attempt to re-litigate the extent of the defendants’ interest in the property. The court expressed its concern about a party seeking to use a CPL as a bargaining tool to extract prejudgment payment of a financial claim before the claim is established. As the plaintiff was seeking recovery of funds and not seeking to protect an interest in land, the court ordered cancellation of the CPL (Drein v. Puleo, 2016 BCSC 593).

Special Costs Awarded

The defendant, E Inc., was the registered owner of a large parcel of land. Prior to putting the land up for sale, the defendant made an application to subdivide the property into nine residential lots. In 2014, the plaintiff, an immigrant from India, entered into an agreement to purchase a home on one of the proposed lots (“the property”). Possession was to take place six months before closing, with the plaintiff agreeing to pay $2,500 rent per month in the interim. The plaintiff was late in paying the deposit and failed to pay rent after the third month. The plaintiff refused to vacate the premises and continued to live on the property after the completion date, despite having failed to tender the purchase price. The subdivision plan, which was not approved by the completion date, although that was not a condition for completion, was finally approved in June 2018. After subdivision approval, the property was transferred to the defendant MG, a university student who financed the purchase through an $800,000 mortgage loan. The plaintiff applied by way of a summary trial application for an order for specific performance of the purchase contract and an order vesting him with title to the property. The plaintiff also filed a certificate of pending litigation against the property. The defendants applied under ss. 256 and 257 of the Land Title Act to strike the CPL. Held, plaintiff’s application dismissed; defendants’ application allowed. As a preliminary matter, the court ruled the plaintiff’s affidavits in support of his summary trial application were inadmissible, finding the affidavits were prepared in serious breach of the Supreme Court Civil Rules (affidavits were not translated by a certified interpreter but rather by the plaintiff’s lawyer). The plaintiff’s claim for specific performance was undermined by the plaintiff’s failure to tender the purchase price. A plaintiff seeking specific performance must show they complied with their obligations. Here, the plaintiff was legally obligated to pay the purchase price on the completion date. He failed to do so, and the defendants therefore had no enforceable obligation to transfer title. The plaintiff’s claim for specific performance was also defeated by reason of his unreasonable delay in asserting this claim. Given the dismissal of the plaintiff’s claim, it was appropriate that the CPL be cancelled. The court also awarded special costs against the plaintiff, finding there were exceptional circumstances justifying such an award, including: the plaintiff’s reckless, unproven, and potentially seriously prejudicial allegations of fraud against the defendant; various instances of the plaintiff’s misconduct throughout the litigation, including the plaintiff’s dilatory behaviour with respect to scheduling and his multiple breaches of the Supreme Court Civil Rules; and the blatant contradictions between the plaintiff’s testimony and his affidavits (Tut v. Evershine Land Group Inc., 2021 BCSC 453 (Chambers), affirmed 2022 BCCA 63).

Cancellation of Certificates of Pending Litigation—Overview

Notes on Case Law: The standards applicable to the exercise of judicial discretion to cancel a certificate of pending litigation under ss. 256 and 257 are derived from the reasons of Irving J. in Towne v. Brighouse (1898), 6 B.C.R. 225 (S.C.), which state as follows with respect to the statutory provisions in effect at that time:

In my opinion the power conferred by these sections should be exercised with very great caution indeed, when the granting of relief would amount to a hearing of the case on the merits, but with more freedom in any case in which damages would be a complete compensation.

To cancel the registration of the lis pendens would be to turn this application into a motion for judgment, at least to this extent that it would in the result amount to a declaration of refusal of specific performance.

I do not think that a point of that importance should be decided on an interlocutory application if it can be avoided, and then only under peculiar circumstances.

The reasons in Towne v. Brighouse have been applied in many cases, including Mercedes-Benz of Canada Limited v. SAS Properties Ltd. (1975), 10 B.C.L.R. 19 (S.C.), appeal dismissed 1975 CanLII 219 (BC CA), and Cloverlawn-Kobe Developments Ltd. v. Tsogas, 1979 CanLII 427 (BC SC). The cases often turn on whether or not specific performance is being sought by the plaintiff. However, the strict rule requiring “peculiar circumstance” to cancel a certificate of pending litigation where specific performance is sought set out in these cases has been modified, as noted by Lander J. in 309355 B.C. Ltd. v. Cambie Pacific Enterprises Ltd., [1988] B.C.J. No. 1529 (QL) (S.C.):

However, there has been a variation or modification of the strict principle applied by our courts. In recent years it has become appropriate for a preliminary assessment of the merits when considering the determination of an application of this sort. Chief Justice McEachern of this court in Kamil v. Transtide Industries Ltd.[, 1980 CanLII 702 (BC SC)] cancelled the lis pendens because he considered there was little if any merit to the specific performance action.

Lander J. went on to quote the following passage from Park & Tilford Canada Inc. v. Festival Markets Inc., 1986 CanLII 979 (BC SC), as reason for the view that a modification of the strict rule would be appropriate in cases where the claim upon which a certificate of pending litigation is based has little or no merit:

It is also appropriate to recognize the evolution regarding the right to the full panoply of a trial which has occurred in this jurisdiction since Mercedes-Benz was decided, an evolution which is exemplified in R. 18A of the Rules of Court … It would be anachronistic to decline to dispose of a case which could be disposed of on the merits under R. 18A [now Rule 9-7] merely because it is land that is in issue. Although it may only be open to the Court of Appeal to qualify or relax the Mercedes-Benz principle, it would appear to be consistent with the “absence of merit” course followed in Kamil to recognize the evolution earlier referred to and go beyond the “nuisance value” test of Kamil where appropriate.

Both the “absence of merit” and “nuisance value” tests were applied by the court in Park & Tilford. The petitioner in that case had agreed to sell a 6-acre portion of a 30-acre parcel of land to the respondents. The sale, which required the rezoning and subdivision of the parcel, did not close, and the respondents commenced an action for specific performance, filing a lis pendens against the entire unsubdivided parcel of land. The petitioner applied for an order cancelling the lis pendens, alleging that it was causing hardship by jeopardizing the completion of another purchase and sale agreement for the remainder of the parcel, which agreement also required rezoning and subdivision before completion. Neither had been obtained before the lis pendens was filed. The court applied the “absence of merit” test in considering whether to cancel the lis pendens and held that there was no merit in the respondents’ claim for specific performance with relation to those parts of the 30-acre parcel not covered by the respondents’ purchase and sale agreement. The lis pendens was accordingly ordered to be cancelled with respect to those lands. However, with respect to the other 6 acres, the merits of the specific performance claim could not be decided on affidavit evidence. There were no grounds for classifying the specific performance action as a “nuisance value” claim, so the application to cancel the lis pendens had to be refused. The respondents were ordered to provide an undertaking and post security.

Cancellation by Consent

Where parties in an action consent to the discharge of a certificate of lis pendens on certain terms or conditions, the court may impose terms or conditions that go beyond the express powers set out in the provisions of the Land Title Act including the term that one of the parties shall not deal with its property in a certain way. The parties may, by consent, agree that the proceeds of a subsequent sale shall be held in trust by the solicitors for the defendants, shall be disbursed only to bona fide creditors, and subject to further order or agreement, shall not be used to make payments to one of the defendants or to a relative or corporation controlled directly or indirectly by them. An order of this nature does not amount to a stay of execution against creditors of the defendants and they may take such steps as may be available to them at law or in equity to realize upon a judgment obtained by them (De Vries v. Morin, [1991] B.C.J No. 2699 (QL) (S.C.) (Master)).

Cancellation without Security for Damages

Frivolous and Vexatious Claims

The lessee had a five-year lease which conferred on the lessor the right to terminate on six months’ notice. The lessee demolished a good deal of the interior of the leased premises with a view to renovating, but its plans were frustrated when the city refused a building permit. The lessee and lessor then began negotiating a new lease in a new building the lessor planned to build on the site of its existing building. The existing building was demolished and the lessor and lessee apparently did not conclude a binding agreement. The lessee brought an action for breach of lease and possession of the original leased premises, and filed a lis pendens. The lessor was entitled to cancellation of the lis pendens in accordance with s. 257(1)(a)(i). It was next to impossible to reinstate the lessee in the premises as originally leased. In any event, the claim for possession was frivolous and vexatious because the lessee could make no provident use of the premises faced as it was with the threat of a six-month termination (Re Castle Hotel (66) Ltd. and the Land Title Act, [1981] B.C.J. No. 33 (QL) (S.C.)).

Claims with No Significant Prospect of Success

An application under ss. 256 and 257 of the Land Title Act may be beyond a master’s jurisdiction should the fixing of security under s. 257 require determination of the relative merits of a plaintiff’s case in determining whether a lis pendens should be discharged, and if so, any amount that should be fixed as security. In this case, the parties agreed that the matter should proceed on the basis that the lis pendens should not be discharged unless the applicant could demonstrate that the plaintiff had no prospect of sustaining a case giving rise to an interest in the land, with the result that the application was dealt with as a question of law. The master found that the plaintiff’s claim to an interest in land was a claim without any significant prospect of success and accordingly ordered the discharge of the lis pendens (Don Martin Investments Inc. v. Gill, 1994 CanLII 2976 (BC SC)).

Claims Where Other Security Adequate

On mortgage default, the plaintiff registered a certificate of pending litigation against two lots owned by the defendants. The defendants brought an application for an order that the certificate be cancelled. In that application, the court ordered that the certificate remain registered against Lot 1, and that it be cancelled against Lot 2 on the defendants giving the plaintiff security in the amount of $400,000. The court also granted the defendants liberty to apply to reduce the amount of the security by providing evidence satisfactory to the court of the present value of a mall which had been used as the original security for the mortgage. In this action, the defendants exercised their liberty, seeking an order eliminating the requirement that they post the security as a condition of cancellation of the certificate against Lot 2. The court varied its earlier order and eliminated the security requirement. The evidence provided by the defendants satisfied the court that the security the plaintiff had in the mall, together with the certificate of pending litigation on Lot 1, was sufficient. The amount of the security need not equal the plaintiff’s estimated damages. In ordering security, the court must be satisfied that the security is proper in the circumstances, not that it protects the plaintiff against the normal risks inherent in commercial enterprise (Delesalle Holdings Ltd. v. Meakin, 1997 CanLII 1807 (BC SC)).

Certificate to Be Registered, in Part, After Subdivision

The plaintiff and the defendants are adverse parties in a fraudulent conveyance proceeding and a mortgage foreclosure. A large parcel of property, which was the subject of these actions, was owned by a company in which both the plaintiff and the defendants owned shares. The defendants demonstrated to the court’s satisfaction that, at least in relation to the portion of the entire parcel that was the subject of a subdivision application, the defendants’ inability to file the subdivision plan and to market the subdivided lots constituted a hardship or inconvenience. As disclosed by the Act, the underlying rationale for certificates of pending litigation and their cancellation is that they should preserve the position of a claimant to an interest in land, but at the same time they should not be used to provide that person with undue leverage in litigation. In this case, the court ordered that the certificate be cancelled to permit subdivision of the parcel. However, to preserve the claimant’s position, the court also ordered that the certificate be re-registered against specified remaining land and that the court’s order be filed with the subdivision plan (Findlay v. Telegraph Cove (5 August 1999), Vancouver S028606 (S.C.)).

Cancellation with Security for Damages

Hardship and Inconvenience

Subdivision, Rezoning, and Disposition of Developed Lands

The plaintiff applied for an interlocutory injunction to restrain the defendant from completing an arrangement with the Capital Regional District involving the rezoning and partial donation of various parcels of land. The plaintiff claimed to have a continuing option to acquire a purchaser’s interest in an agreement for sale of some of those lands. The defendant was the original purchaser under the agreement for sale and claimed to have validly repudiated the plaintiff’s option and completed the sale. The plaintiff had not attempted to exercise the option at any time before or after completion. After determining that the plaintiff had no serious question to raise as to the continuing existence of the option and denying the plaintiff the remedy it sought, the court considered the defendant’s application for cancellation of the plaintiff’s lis pendens. The court found that the defendant would suffer considerable hardship and inconvenience if it was not allowed to complete its rezoning arrangements because it was likely that none of the lands could be developed except by way of the arrangements and failure to complete them would cause great financial loss. Furthermore, damages would be an adequate remedy for the plaintiff, though the court held that it might have felt constrained to follow authorities like Mercedes-Benz of Canada Limited v. SAS Properties Ltd., requiring the plaintiff’s rights to be determined at trial, if the plaintiff had actually exercised its option. The court concluded that the plaintiff was likely seeking to maximize the nuisance value of his lis pendens, and it was never the intention of the legislature that the nuisance value of a lis pendens should override the legitimate exercise of the rights of land owners. A party claiming a lis pendens must have an arguable case or triable issue. The court ordered the lis pendens cancelled, and the defendant was required to post a relatively small amount of security (Kamil v. Transtide Industries Ltd., 1980 CanLII 702 (BC SC)).

The respondent entered into two agreements with the petitioner, first to negotiate approval of a subdivision with municipal authorities, and second to purchase the approved subdivision lots from the petitioner. After the respondent failed to obtain approval for subdivision, the petitioner retained another party who modified the subdivision plan and obtained approval for the petitioner. The respondent then demanded that the new lots be sold to him, commenced an action for specific performance and filed a lis pendens against title to the petitioner’s land. The petitioner claimed hardship on the grounds that unless it registered the new subdivision plan it would not be able to complete a purchase of land incorporated into the subdivision scheme and the whole scheme would collapse with considerable monetary loss. The court found that the respondent’s case was doubtful and complicated by problems of credibility. Accordingly, the petitioner was entitled to cancellation of the lis pendens upon posting security in an amount sufficient to protect whatever interest the respondent might have (Jumbo Valley Holdings Ltd. v. Turecki, [1981] B.C.J. No. 454 (QL) (S.C.)).

The plaintiffs and defendants were developers who had been involved in joint ventures together. The plaintiffs alleged that the defendants were in breach of some agreements and that, due to the defendants’ unjust enrichment, the plaintiffs were entitled to an equitable mortgage or lien over two development properties. In the alternative, they claimed a constructive trust. The defendants applied for summary judgment or, in the alternative, relief under ss. 256 and 257. The court dismissed the application for summary judgment but weighed the probabilities and the improbabilities of the plaintiffs’ success at trial in considering relief under s. 257 and found that “the probabilities militate in favour of the defendants”. The existence of hardship was not debated, and the court found that damages would be an adequate remedy in light of the fact that all of the parties were developers. The court ordered that the lis pendens be cancelled and the defendants post security (Tub City Developments Ltd. v. Bonanza Distributors Inc., [1988] B.C.J. No. 3095 (QL) (S.C.)).

The plaintiff entered into purchase and sale agreements which were conditional upon the plaintiff obtaining approval for rezoning before the closing dates. When it became apparent that approval would not be received by those dates, the plaintiff attempted to negotiate a six-month extension of the closing dates through the listing agents for the lands, who allegedly falsely represented that an extension had been obtained from the owner. The owner subsequently sold the lands to a group of investors, who rezoned and subdivided the lands into 12 lots. The plaintiff commenced an action seeking, among other things, a declaration that the new owners, as defendants, held the lands in trust for the plaintiff. The owners applied for cancellation of a lis pendens filed by the plaintiff. The court held that the necessary grounds of hardship and inconvenience under s. 256 of the Act were established because the owners had entered into legitimate sales agreements for all of the lots in the subdivision against which the plaintiff’s lis pendens was filed. The owners were incurring interest charges and would be subjected to further financial penalties if the sales were delayed. The matter would not proceed to trial for at least one year. The lis pendens was to be discharged on the posting of security, the amount of which was set with consideration of the fact that the plaintiff’s claim was tenuous at best (Haider Investments Corp. v. Rattan, 1991 CanLII 1798 (BC SC)).

The plaintiff filed a lis pendens against lands that were the subject of an oral joint venture agreement between the parties. The defendants’ application for an order cancelling the lis pendens was allowed because the parties had intended that the lands would be sold after development. If the lis pendens remained, the property and the large investment made to date would be tied up for as long as a year and the intended construction would not go forward. Damages are an appropriate remedy where the venture is intended to earn a profit (Syed v. Randhawa, [1992] B.C.J. No. 3071 (QL) (S.C.)).

In a second application seeking removal of a CPL from lands being developed in a five-phase subdivision in Chilliwack, the defendant developer, 0763636 B.C. Ltd. (“076”), filed affidavits to provide evidence that the court in the previous unsuccessful application said was missing in order to establish the level of actual or likely hardship required by ss. 256 and 257 in accordance with the jurisprudence. The court reviewed principles developed in Liquor Barn Income Fund v. Becker, 2011 BCCA 141; Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd., 2014 BCCA 388; Nu Stream Realty Inc. v. 1116191 B.C. Ltd., 2018 BCSC 911; and De Cotiis v. De Cotiis, 2004 BCSC 1658. It found that 076 had adduced more than “trifling” (Youyi Group) evidence of actual or likely hardship arising from the registration of the CPL sufficient to justify its cancellation; that the hardship arose solely out of the registration of the CPL; and that monetary damages would provide an adequate remedy for the plaintiff’s claim, which consolidated three actions (a builders lien action; a promissory note action; and a purchase price claim). The court decided on the facts that security in the amount of $1.1 million was appropriate, taking into account the apparent strength of the action in respect of which the CPL was filed (Tige Industries Ltd. v. 0763636 B.C. Ltd., 2019 BCSC 1825).

The plaintiffs sued for breach of a trust agreement under which they provided funds for development of certain lands and filed a certificate of pending litigation against the lands, which had gone into foreclosure. The defendant applied under the Land Title Act, s. 256(1), to cancel the CPL on grounds it prevented sale of the property. The court dismissed the application, finding the evidence insufficient in many respects to establish hardship and inconvenience. Insufficiencies included errors in the contract of purchase and sale regarding the property’s address and sale price, failure to provide any reliable evidence as to property’s fair market value, and failure to establish the contract of purchase and sale was bona fide. The court also found the equities did not favour cancellation (Access Mortgage Corp. (2004) Ltd. v. Western Arres Capital Inc., 2020 BCSC 1703 (Chambers), supplementary reasons 2020 BCSC 1892).

In litigation arising from a land development joint venture entered in 1997, the defendants applied to cancel certificates of pending litigation filed by the plaintiff against eight lots to allow sales of the lots to complete. The parties failed to agree on appropriate security; the court found the quantum of the plaintiff’s entitlement to the proceeds was not ascertainable on the cancellation application, while the sale proceeds represented the only asset he would be able to execute against. The court ordered discharge of the CPLs upon appropriate undertakings being arranged between counsel, which would see their discharge in return for the entire proceeds of sale being deposited either with the court or through trust arrangements put in place by either counsel (Challenge House Equities Inc. v. Premier Sunrise Developments Ltd., 2021 BCSC 910 (Master)).

Interference with Dispositions for Other Purposes

New Property as Substitute Security: The plaintiff claimed against his estranged wife for an interest in the matrimonial home. The defendant, the wife’s aunt, purchased another home of comparable value in her own name for the benefit of her niece. In return, the niece transferred the matrimonial home to the defendant, who agreed to sell it to a third party. The plaintiff commenced proceedings and filed a lis pendens against the matrimonial home. The defendant wanted to proceed with the sale of the matrimonial home and offered the new property as substitute security. Considering that the plaintiff’s claim was one that would normally be resolved by a payment of money, the defendant was entitled to cancellation of the lis pendens on the grounds of hardship and inconvenience. The court required the defendant to lodge the certificate of title to the new property with the court registrar on the undertaking that the defendant would not deal with property pending outcome of the action between the plaintiff and his wife, and that the new property stand as security in substitution for the matrimonial home (Grant v. Spurr, [1983] B.C.J. No. 1346 (QL) (S.C.)).

Bankruptcy Proceedings: The plaintiffs alleged that they had an interest in lands held by the defendant, who had made a proposal under the Bankruptcy Act, and that they were entitled to a share of any profits derived from the sale of those lands. The defendant’s trustee in bankruptcy sought to dispose of the lands at a price sufficient to pay the defendant’s creditors but was prevented from doing so by a lis pendens filed by the plaintiff. Accordingly, the trustee applied for cancellation of the lis pendens. The court agreed to cancel the lis pendens. The creditors of the defendant should not be prejudiced by continued delay because the issues between the plaintiffs and the defendant could only affect the profits realized from the sale of the lands. Those profits were to be paid to the court or otherwise held pending determination of the issues between the parties (Walstra v. Stevens, [1983] B.C.J. No. 418 (QL) (S.C.)).

Partnership Assets: The plaintiff claimed that certain properties registered in the names of the defendants were partnership assets and filed lis pendens against the properties. One of the defendants, alleging hardship and inconvenience, applied for cancellation of the lis pendens as against one of the properties, which had been sold under an agreement for sale. The court found that there was a proper case for ordering cancellation of the lis pendens on posting of security as payment under the right to purchase was being delayed because the vendor was not able to give title to the purchaser. The amount owing to the lis pendens holder was known, and various charge holders awaited payment (Re Vancouver Lot 1, Except that Part included in Plans 12713 and 13050, Block 19, District Lot 302, Plan 12150, 1985 CanLII 450 (BC SC)).

A limited partnership was formed to acquire, renovate, and sell or lease 15 strata lots (the “project properties”). Four plaintiff Class B limited partners each invested $500,000. The defendant titleholder made a declaration that it held the project properties in trust for the limited partnership, and that the limited partnership was the beneficial owner. The plaintiffs sued the defendant general partner alleging breaches of the limited partnership agreement and of fiduciary duty. The court granted the defendant’s application under the Land Title Act, s. 256(1), to cancel certificates of pending litigation the plaintiffs had filed against the project properties, finding the pleadings did not disclose a claim for an interest in land based on a constructive trust or for any other interest in land that could support a CPL under the Land Title Act, s. 215. Partnership property is held by the partners themselves, and a limited partnership itself cannot claim an estate or interest in land. The dissolution of a partnership triggers a partner’s entitlement to an equitable lien, but that had not occurred here (1119727 B.C. Ltd. v. Bold and Cypress (Grange) GP, 2020 BCSC 1435).

Tracing: The plaintiffs filed a lis pendens against a number of strata lots owned by one of the defendant companies. The plaintiffs’ claim was for breach of trust involving investment funds that were allegedly misappropriated by another defendant. The plaintiffs sought to trace the funds and alleged that they were ultimately loaned to the owner of the strata lots on the security of mortgages granted over those strata lots. As a result of the lis pendens, large sums of money were being held up and the owner of the lots was unable to sell them to provide the necessary funds to retire the mortgages. This was a prima facie case of hardship and damages would be an adequate remedy for the plaintiffs. The lis pendens was ordered cancelled on the payment of security into court in the amount of the plaintiffs’ claim (Lament v. Constantini, 1985 CanLII 267 (BC SC)).

Proceedings under a Will: The fact that a party has brought an action under the Wills Variation Act does not, standing alone, justify the maintenance of a lis pendens filed against a property owned by the estate which is preventing an executor from carrying out his right to sell the property as granted by the will. The court cancelled the lis pendens and ordered that the net proceeds of the sale be paid into trust pending the determination of the proceedings (Martel v. Biedrava, [1988] B.C.D. Civ. 2203-02 (S.C.)).

Best Interests of Family: The defendants applied to cancel a certificate of pending litigation on the grounds of hardship and inconvenience. They decided that it would be in their best interests to move from Langley to West Vancouver to be closer to their places of employment and family activity. The move could only be done with the cancellation of the certificate and the sale of their Langley property. In making an order for the cancellation and for the posting of security, the court found that the hardship and inconvenience to the defendants went beyond a mere choice of lifestyles, that cancellation would not prejudice the plaintiff, and that the plaintiff had not made out a claim for specific performance (Fraser v. Case, 1999 CanLII 5739 (BC SC) (Chambers)).

Amount of Security

Nominal Security

The respondents commenced an action against the petitioners on account of damages caused by the petitioners’ conduct of pit excavating operations on a neighbouring property. A lis pendens was filed against the petitioners’ property and they applied to have it cancelled under s. 256. The lis pendens was preventing the petitioners from obtaining financing for their operations. The court found that the lis pendens was causing hardship and inconvenience to the petitioner and, in doing so, also considered the fact that the respondents’ pleadings did not disclose a claim for an interest in, or with respect to, land. The court ordered the lis pendens cancelled upon posting of security in the nominal amount of $100 (Zukowski v. Thyer, [1981] B.C.J. No. 69 (QL) (S.C.)).

The petitioners purchased a one-sixth interest in the registered owner’s land. The registered owner executed a transfer but it was not registrable as the portion the owner sold the petitioners was not subdivided. The registered owner’s former wife brought a claim against him claiming he held a portion of the land in trust for her, and filed a lis pendens against the land. The petitioners were entitled to cancellation of the lis pendens as it prevented them from obtaining such certainty of title to the land as the registered owner had transferred to them. Only nominal security for the cancellation was necessary. The wife’s action was against her former husband. She did not assert an interest in priority to the petitioners’ and would not suffer any damage if the lis pendens was cancelled (Craig v. Reeves, [1984] B.C.J. No. 42 (QL) (S.C.) (Chambers)).

Security Based upon Prospect of Certificate Holder’s Success

The applicants and the respondents entered into an agreement to settle all outstanding matters between them with respect to the ownership of various properties. Both were represented by independent legal counsel and the agreement was drafted by counsel for the respondents in accordance with the terms proposed by the respondents. The agreement was carried out in full, including the transfer of titles from the respondents to the applicants and the acceptance by the respondents of a significant payment from the applicants in settlement of all claims. A year later, the respondents commenced an action for rescission of the agreement, alleging duress, and filed a lis pendens against each of the properties. The applicants applied for cancellation of the lis pendens. The court, following Kamil v. Transtide Industries Ltd., ordered that the lis pendens be cancelled and that security be posted in a relatively small amount. The court found that the case for hardship had been made out by the applicants and that the respondents’ case was weak. The parties had been waging a mutually destructive war, but the evidence indicated that the war was being waged primarily by one of the respondents, who was doing everything he could to jeopardize the interests of the applicants (Lam v. Lam, [1987] B.C.J. No. 2134 (QL) (S.C.)).

The removal of a lis pendens does not automatically connote that a claimant’s case is a weak one. In this case, in which the plaintiff sought a declaration that she had a beneficial interest in the property, the parties’ mutual desire to effect an early sale in a falling market satisfied the court that registration of the lis pendens had caused hardship and inconvenience and that the lis pendens should therefore be cancelled. In ordering security, the court noted that the plaintiff’s likelihood of success was slight, but that s. 257 did not allow the court to dispense with security. The potential value of the claim (a 50% interest in property valued at $850,000 in total was claimed), no matter how slight the chances of success, could not be ignored. Accordingly, the court ordered that registration of the lis pendens be cancelled upon the defendant’s undertaking to pay, from the proceeds of sale, the sum of $50,000 to his solicitor, which amount was to be held in trust as security for the plaintiff’s claim in damages (Crick v. Ludwig, 1990 CanLII 525 (BC SC), leave to appeal refused [1990] B.C.J. No. 2232 (QL) (C.A.)).

The defendant applied to cancel a certificate of lis pendens registered by the plaintiffs. The plaintiffs claimed that they had an oral agreement with the defendant for the transfer of certain land to them. In making a determination under s. 257 of the Land Title Act, the court may assess the plaintiffs’ probability of success. Where an agreement for the disposition of land is not in writing, s. 59 of the Law and Equity Act applies. The plaintiffs’ claim in this case was based on an alleged oral agreement, unsupported by evidence that the plaintiffs, in reasonable reliance on the agreement, had so changed their position that an inequitable result could be avoided only by enforcing the contract or disposition.

Under these circumstances, the plaintiffs’ chances of success are remote and the posting of $10 by the defendant, who has met the test of hardship and inconvenience, is adequate security to cancel the lis pendens (Braendle v. Menzel, 1992 CanLII 2260 (BC SC)).

The plaintiff commenced an action for specific performance of an option to purchase the residential property which she currently rented based on an oral contract. The court considered the merits of her claim and found that the prospect of the plaintiff establishing that she had an agreement to buy land at a given price was extremely remote; even taken at its best, the plaintiff’s evidence might establish a claim for damages for misrepresentation. With respect to the test of hardship, the court held that one cannot separate the remoteness of a plaintiff’s chances of success in establishing a claim of specific performance from the issue of hardship and inconvenience. The balance in this case lay heavily in favour of the defendants, who had entered into an agreement to sell the property and were relying on the proceeds of sale to satisfy financial obligations. Similarly, the remoteness of the plaintiff’s chances of success were also relevant to the question of whether damages would provide adequate relief. The court was not required to assume that the plaintiff would succeed in her claim when addressing that question. The court ordered the lis pendens cancelled and security posted by the defendants in the amount of $25,000 (Kavanagh v. Baker, 1993 CanLII 264 (BC SC) (Master)).

Security Based upon Value of Certificate Holder’s Interest

Unusual or unique circumstances that justify the cancellation of a lis pendens on an interlocutory application under s. 257 exist where a purchaser admits to not having the funds to complete the transaction and to being unable to complete the transaction even if every issue between the parties were decided in the purchaser’s favour. The cornerstone of an action for specific performance is that the applicant is ready, willing, and able to complete the transaction. Where there is no basis to the action for specific performance, the lis pendens can be cancelled upon the vendor posting security in an amount equal to the total of the purchaser’s deposits (Pacific Truck and Trailer Ltd. v. Dachner, [1992] B.C.J. No. 956 (QL) (S.C. Master)).

The plaintiff held a judgment against the defendant husband and sued, alleging that the defendant had transferred title of the property to the second defendant with the intention of defeating his creditors. Because the entire conveyancing scheme was suspicious and the defendants’ credibility was in serious question, the lis pendens would only be removed upon payment into court of the amount of the plaintiff’s claims including interest (Boroudjerdi v. Lam, 1993 CanLII 828 (BC SC)).

A bare claim for specific performance should not, in itself, be determinative in requiring an applicant to establish a “peculiar circumstance” of hardship and inconvenience. The court should look beyond the bare plea for specific performance to determine the true nature of the right for which the equitable relief of specific performance is sought. Where it is clear that the property involved is not of special and unique value to the plaintiff, and where other property of equal or better value, or money in an appropriate amount, would suffice as substituted security, then the applicant only needs to establish hardship and inconvenience in the normal meaning of the words rather than meet the higher test of “peculiar circumstances of hardship and inconvenience” established by Towne v. Brighouse. A claim to a property as security for a mortgage normally would not fall within the category of special and unique to a mortgagee where equivalent or better security is provided, especially money sufficient to meet the mortgage debt. In this case, a master was found to have erred in applying the higher test to such circumstances. The Supreme Court on appeal ordered cancellation of the lis pendens and the posting of security (Abby Downs Const. Ltd. v. Millennium Ventures Inc., 1993 CanLII 2710 (BC SC)).

The plaintiffs entered into pre-construction agreements to purchase four strata lots in the defendants’ development. Three years later, as construction was nearing completion, the defendants wrote two letters to the plaintiffs indicating that the defendants were ready, willing, and able to complete the transactions. When the plaintiffs did not reply, the defendants sent a third letter advising the plaintiffs that the plaintiffs were in breach of their obligations under the agreements, that the defendants accepted their repudiation, and that the agreements were at an end. The plaintiffs listed the strata lots for sale and registered certificates of pending litigation against the defendants’ title to them. On application by the defendants to cancel the certificates, the court found that, under s. 215 of the Act, the plaintiffs had established their claim to an interest in land and that, under s. 256(1)(b) of the Act, the defendants had met the test of hardship and inconvenience as a prerequisite for their application to cancel the certificates. On the issue of the plaintiffs’ claims for specific performance, the court observed that prior to the Supreme Court of Canada decision in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), specific performance was considered the presumptive remedy for a seller’s substantial breach of contract for the purchase and sale of real estate. However, following Semelhago, it was now accepted that a purchaser seeking specific performance must prove that a property was unique to the extent that damages would not be capable of properly compensating the loss. As the plaintiffs in this case had purchased the lots for investment purposes and had listed the lots for sale before they took possession, the court found that the lots were in no way unique and that damages would provide adequate relief. In determining the amount of security under s. 257(3), the court considered not whether the plaintiffs could obtain specific performance, but rather whether the plaintiffs could succeed in their claim for damages and what the prospective amount of those damages might be. In cancelling the certificates, the court ordered that the defendants post security in an amount related to their potential damages (Enigma Investments Corp. v. HendersonLand Holdings (Canada) Ltd., 2007 BCSC 1379).

Where the plaintiffs conceded that the defendant would suffer hardship and inconvenience if the plaintiff’s CPL were not removed from title to the defendant’s land, the contest between the parties was with respect to the amount of security, if any, to be posted. Where the CPL is not securing an interest in the defendant’s land but rather a right of action in respect of the land (due to alleged damage to the plaintiff’s building caused by the defendant’s construction project), that right of action in respect of the land may or may not have a particular monetary value. To explore that distinction further would mean delving into an issue and remedy that a master lacks jurisdiction to decide. In the result, the security of $50,000 was chosen to reflect a potential damage award for the cost of repairing the existing damage to the plaintiffs’ building (Fritz v. 848 Yates Nominee Ltd., 2019 BCSC 1294 (Chambers)); see the annotation for this case under “Master’s Jurisdiction” in this commentary.

Cancellation of Certificates of Pending Litigation Refused—Overview

Notes on Case Law: Cases in which the courts refuse to cancel a certificate of pending litigation typically involve claims for specific performance and often rely on the line of authority established by Towne v. Brighouse and Mercedes-Benz, discussed above under “Cancellation of Certificates of Pending Litigation—Overview” in this commentary.

Once a decision is made not to cancel a certificate of pending litigation, the courts consider:

1. whether the certificate holder should be required to grant an undertaking with respect to damages that may be payable to the landowner; and
2. whether the certificate holder should post security for such damages.

These questions were considered in Cloverlawn-Kobe Developments Ltd. v. Tsogas, 1979 CanLII 427 (BC SC), in which Bouck J. established several principles in for the application of ss. 256 and 257 regarding damages and the granting of an undertaking and posting of security where the court declines to cancel a certificate of pending litigation. Bouck J. decided held that “the legislature intended the undertaking and the security as analogous to situations where a court of equity grants an interlocutory injunction” and drew the following conclusions:

1. A wrongful filing of a certificate of lis pendens is an abuse of process.
2. The measure of any damages a land owner might suffer if the lis pendens was improperly registered should be assessed as if the undertaking had been a contract between the charge holder and the owner of the land. The plaintiff who has filed the lis pendens is deemed to have promised the owner of the land the plaintiff would not prevent the owner from dealing with the land during the time the lis pendens remains as a registered charge.
3. Although the imposition of an interlocutory undertaking is discretionary under the statute, it should normally follow as a matter of course where the land owner applies for it under s. 257(1)(b).
4. In determining the amount of security satisfactory to the court, the court may look at the probability of the plaintiff’s success (s. 257(3)). Ordering security is an extraordinary procedure. Where the plaintiff does not have the means to come up with the money, then the lis pendens may be cancelled. This appears to be so even though s. 257(1)(a) suggests the owner must post security before the lis pendens may be removed from the title. For these reasons a substantial deposit should only be decreed in the plainest of cases. [Note that the posting of security, often in substantial amounts, appears to have become standard practice.]
5. Like the practice relating to the inquiry into damages following the dismissal of an action and dissolution of an interlocutory injunction, there should remain a discretion in the court as to whether an inquiry will be ordered for the wrongful filing of a lis pendens in the event the land owner succeeds at trial.

With respect to a landowner’s claim for damages once the claim against the landowner has been dismissed, see the discussion and case annotations below under “Subsequent Claims for Damages Caused by Registration” in this commentary.

Cancellation Refused with Certificate Holder’s Undertaking and Security

Purchaser’s Right to Sue for Specific Performance

Where a party has brought an action for specific performance and filed a lis pendens, and where the effect of cancellation of the lis pendens would be to deny the party’s right to specific performance, a court should not cancel the lis pendens. The right to sue for specific performance should not be denied on an interlocutory application (Towne v. Brighouse (1898), 6 B.C.R. 225 (S.C.); followed in Mercedes-Benz of Canada Limited v. SAS Properties Ltd. (1975), 10 B.C.L.R. 19 (S.C.), appeal dismissed 1975 CanLII 219 (BC CA); Cloverlawn-Kobe Developments Ltd. v. Tsogas, 1979 CanLII 427 (BC SC)).

Although s. 256 provides the means by which a court may grant cancellation of a lis pendens, a court should approach such an order with great caution because a decision to cancel a lis pendens amounts, in effect, to a dismissal of a claim for specific performance. Except in peculiar circumstances where cancellation cannot be avoided, a party should not be denied an opportunity for specific performance of a sales agreement on the basis of an interlocutory application. In this case, the court refused cancellation in an action for specific performance of an interim agreement of purchase and sale. The applicant claimed to have purchased the property at issue in the belief that an interim agreement, which was the subject of the lis pendens, had been abandoned. The applicant seeking cancellation alleged hardship due to its inability to resell the property or to subdivide its neighbouring property. The party who filed the lis pendens was ordered to provide an undertaking an1d security (Masse v. N. Hoolsema & Sons Ltd. and Frostnup Development Ltd. (No. 2), 1977 CanLII 326 (BC SC)).

Where cancellation of a lis pendens against commercial property would deprive a party of the remedy of specific performance, the necessity of a rule that a lis pendens may only be cancelled if an applicant can establish peculiar circumstances of hardship and inconvenience is questionable “in the closing years of the 20th century”. “The rule affords one small class of litigants an advantage in law suits not available to the vast majority.” Nevertheless, the court felt constrained by authority, which established that an order cancelling a lis pendens should be made only in “peculiar circumstances” if the effect of such an order would be to deprive a party of the remedy of specific performance. In this case, the possibility that the applicant for cancellation would lose a beneficial sale of the subject property to a third party or the fact that the applicant might have difficulty keeping current with his financial obligations did not constitute “peculiar circumstances” of hardship and inconvenience. The fact that the respondents were interested in making a profit from the property if they were successful in their action for specific performance did not necessarily preclude them from being granted equitable relief. Accordingly, the application for discharge was refused and the respondents were ordered to enter into an undertaking and to post security (Ho v. Arp, 1988 CanLII 3196 (BC SC)).

The purchaser registered a lis pendens against the property of the vendor and brought an action for specific performance after an agreement for purchase and sale between the two parties failed to complete. The vendor in turn applied under ss. 256 and 257 of the Land Title Act to have the lis pendens removed, or in the alternative to have the purchaser provide an undertaking to abide by any court order with respect to damages caused by the lis pendens and to post security for the undertaking. Removal of the lis pendens was denied because the enforceability of the agreement was at issue and there were no circumstances to justify precluding the opportunity for the court to grant specific performance to the purchaser at trial. However, the purchaser was ordered to provide an undertaking and security. Although the court’s power to make such an order is discretionary, the imposition of an interlocutory undertaking should normally follow as a matter of course where the land owner applies for it. The circumstances and the purchaser’s probability of success were taken into consideration in fixing the amount of security for the undertaking, but a $100,000 non-refundable deposit paid by the purchaser could not be taken into account; the security was ordered over and above the previously paid deposit (341434 B.C. Ltd. v. Oakmont Development Corp., 1994 CanLII 2844 (BC SC)).

Unique Property

The issue of the uniqueness of property to the holder of a lis pendens filed in an action for specific performance is an important, if not decisive, element in the exercise of a court’s discretion to refuse to cancel a lis pendens. If the property is unique, then damages would seem not to be an adequate remedy. Whether a property is unique or not should, in the absence of a clear indication to the contrary, be decided in favour of the person claiming it. Consequently, the court refused to order the cancellation of a lis pendens filed in an action for specific performance of a purchase and sale agreement which the defendant claimed was lawfully repudiated due to the plaintiff’s lack of credit worthiness. The plaintiff was ordered to provide an undertaking with security (Tongley v. Helgason, [1988] B.C.J. No. 1322 (QL) (S.C.)).

The plaintiff entered into an offer to purchase a two-acre corner property located on a major commercial artery and close to a municipal greenbelt. As a long-term family investment, the plaintiff intended to develop the site for commercial and residential purposes. The property was part of a larger parcel. As part of the offer, the defendant agreed to prepare and submit a subdivision plan and to secure a new legal description and PID number for the property by a certain date. After the date passed, the plaintiff filed a civil claim and registered a certificate of pending litigation (CPL) against the defendant’s parcel. The defendant brought this action to cancel the CPL. Following the Supreme Court of Canada’s decision in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), the court accepted the plaintiff’s evidence that the property was unique, that is, the property was uniquely suited to the plaintiff’s investment interest at the time he entered into the offer to purchase. In exercising its discretion to refuse to cancel the CPL, the court also found the defendant had offered no evidence to support his claim of hardship and inconvenience (0771252 B.C. Ltd. v. 0764735 B.C. Ltd., 2012 BCSC 2039).

The city owned a large property that had been the site of a pulp mill. The city acquired the property when a previous owner failed to pay property taxes. The property had an existing deep-water port, rail services, and permits that allowed it to be used as a sea port. The city received no tax revenue from the property and wanted to sell it. The city sold its exclusive due diligence and negotiating rights to the plaintiff. As negotiations for the purchase and sale of the property continued, the plaintiff filed a claim for specific performance and a certificate of pending litigation. The city applied to have the plaintiff’s claim dismissed and the certificate discharged so it could sell the property to another purchaser. The court found that the nature of the agreement between the parties could not be settled on a summary application. The court also found the city was suffering hardship and inconvenience as a result of the certificate. The city was unable to deal freely with the property and it lost another prospective purchaser because of the certificate. In addition, the city was not able to generate any revenue from the property as it was a contaminated site. However, the court accepted the plaintiff’s evidence that the property was unique. The property had the approvals necessary to operate as a port, it had an easement into the harbour and an existing right of way to the ocean, it was accessible by rail, and there was no other property comparable in scope and size anywhere on the west coast of Canada or the United States. In declining to cancel the certificate, the court held that the plaintiff’s claim for specific performance would be eliminated without the plaintiff having the opportunity to have its claim heard as a triable issue. The court also ordered the plaintiff to provide an undertaking to abide by any order of the court regarding damages flowing from the certificate and to post security in an amount equal to the city’s costs from the date the city terminated the alleged exclusivity agreement to the expected trial date (Watson Island Development Corp. v. Prince Rupert (City), 2015 BCSC 1474).

Security Based upon Owner’s Damages

The defendants, owners of five properties against which the plaintiff had registered lis pendens, applied for an order for cancellation under ss. 256 and 257 of the Act, alleging continued registration would constitute a hardship and inconvenience upon them. The defendants bought and sold property from time to time as part of their family business. Because the plaintiff did not seek specific performance, the test for discharge of the lis pendens was not stringent, requiring only simple proof that hardship and inconvenience existed. That test was satisfied for four of the five properties and the lis pendens was to be cancelled with respect to those four properties upon security being provided by the defendants. With respect to the fifth property, any inconvenience and hardship was brought on by the defendants themselves so the lis pendens would remain and the plaintiff was to provide an undertaking and post security for any damages that might be awarded against him (Hayre v. Lalli, 1994 CanLII 3149 (BC SC) (Chambers)).

Security Not Measure of Damages

The respondent commenced an action for specific performance of an alleged agreement with the applicant for a 20-year lease and option to purchase in favour of the respondent. A lis pendens was filed by the respondent and the applicant applied for its cancellation. The applicant had applied for rezoning of the property in order to develop it and claimed that the lis pendens made completion of the process impossible. The court applied Towne v. Brighouse in refusing to order cancellation of the lis pendens and, having done so, found that the position of the respondent was similar to that of a party seeking an interlocutory injunction—namely, that a party who asks the court to give him equitable relief by way of an interlocutory injunction must, as a rule, be prepared to enter into an undertaking to be liable in damages resulting from the grant of the injunction. Accordingly, the respondent was ordered to enter into an undertaking and to post security, which was not to be considered in any way as a measure of damages (Mercedes-Benz of Canada Limited v. SAS Properties Ltd. (1975), 10 B.C.L.R. 19 (S.C.), appeal dismissed 1975 CanLII 219 (BC CA)).

The plaintiff applied to have a lis pendens registered against his property removed or, in the alternative, for an order that the defendant post security. The defendant, who had filed the lis pendens as a result of the plaintiff’s efforts to sell the property, sought a declaration that he had a lease, specific performance, or damages. Since being amended in 1989, s. 256 of the Act no longer requires a two-stage process to obtain a discharge of lis pendens; the plaintiff could seek a discharge without a prior application for an order to show cause. However, because the issue of whether the parties had entered into a lease agreement with definite and enforceable terms was something that would require a trial to determine, the lis pendens was not cancelled. The defendant was ordered to post security, the amount of which was established after the court considered the defendant’s probability of success at trial, the possibility of an award of damages or costs, loss of investment potential considering the value of the property and an existing offer to purchase, interest on the existing mortgage, and the estimated time to get to trial. The security was not considered to be in any way an estimated assessment of potential damages (Radcliffe v. Soucy, 1994 CanLII 3319 (BC SC)).

Amount of Security

A court may cancel a lis pendens where a holder of the lis pendens does not have the means to provide security under s. 257(1)(b). In this case, the respondent had filed a lis pendens after commencing an action for specific performance of an interim agreement for purchase and sale but then refused to complete the purchase until the question of damages caused by the initial delay of the applicant were resolved. The court ordered the lis pendens removed only upon the failure of the respondent to give security for damages which might result from the filing of the lis pendens (Re 140 Developments Ltd. v. Steveston Meat & Frozen Lockers (1973) Ltd., 1975 CanLII 1018 (BC SC)).

In refusing to cancel a lis pendens, the court refused to set security under s. 257(1)(b)(ii) equal to the property’s current value or the price for which the applicants supposedly agreed to sell the property to the holder of the lis pendens. There was little evidence to indicate whether the applicants’ potential damages were substantial. The applicants’ estimation of the property’s current market value was not supported by an appraisal, and much could have depended on market values before trial. Also, there was no evidence of the lis pendens holder’s financial worth and her ability to satisfy an undertaking. The lis pendens holder appeared to have an arguable case and, considering all the circumstances, $50,000 security was appropriate (Pulvers v. Shen (1989), 8 R.P.R. (2d) 225 (B.C.S.C.) (Chambers)).

The rationale for an undertaking as to damages is that, in the absence of a malicious or unlawful purpose in the filing of a lis pendens, an owner of land would have no remedy for damages if successful at the trial of the specific performance action. With respect to security for such damages, a plaintiff is not required in every case to post security equal to the estimated damages; however, that is not to say that the potential for substantial damages is not a factor to be taken into account, with others, in fixing the amount of the security. Another factor is the likelihood of a plaintiff being in a financial position to perform under an undertaking for damages if called upon to do so. Taking all of the relevant factors of this case into account, including the value of the property involved, the potential damages to the landowner, the annual carrying charges, the probable lead time to trial, and the absence of evidence of the financial worth of the plaintiffs, the court ordered that the plaintiff post $300,000 as security for damages in relation to the undertaking ordered (Park & Tilford Canada Inc. v. Festival Markets Inc., 1986 CanLII 979 (BC SC); followed in 309355 B.C. Ltd. v. Cambie Pacific Enterprises Ltd., [1988] B.C.J. No. 1529 (QL) (S.C.)).

The plaintiff offered to purchase a commercial building from the defendant vendor for $2.35 million and to pay a $10,000 deposit within 24 hours of the vendor’s acceptance of the offer. Difficulties arose as to the deposit. The plaintiff registered a lis pendens against the property and the court refused the defendant’s application to cancel. As the plaintiff and the defendant were conducting other business together and as the parties took further steps after the deadline for the payment of the deposit expired, the original offer and acceptance might have survived. However, given the plaintiff’s appearance as a shelf corporation without assets and given the value of the property at issue, the court ordered the plaintiff to enter into an undertaking to abide by any court order for damages and to post security of $100,000 (381229 B.C. Ltd. v. 412615 B.C. Ltd., 1993 CanLII 1861 (BC SC)).

Even though specific performance was not claimed by the party which filed a certificate of pending litigation, the certificate could not be cancelled under s. 257(1)(a) where the court could find no satisfactory basis for determining an appropriate level of security. However, it was appropriate for the court to apply s. 257(1)(b) and require the party that filed the certificate to post security conditioned on fulfilment of an undertaking and compliance with release arrangements designed to reduce potential hardship caused by the certificate (Hongkong Bank of Canada v. Sunny Coast Investments Ltd., 1996 CanLII 1789 (BC SC) (Chambers)).

In Wosnack v. Ficych, 2022 BCCA 139, a dispute between siblings over real property of their deceased stepfather, the court allowed the appeal from an order approving the sale of property on the condition that the net sale proceeds be held in trust pending further order or agreement. The court said that, when read together contextually, ss. 215, 256, and 257 of the Land Title Act indicate that the amount of security that may be ordered when cancelling a CPL should be tied to the claim to the interest in land that grounds the CPL. The judge erred in principle by ordering an amount of security that failed to recognize the limitations of the respondents’ potential interests to the property. The judge also erred by failing to undertake any assessment of the respondents’ probability of success in their claims to the property, and instead required the appellant to establish his probability of entitlement to the proceeds and effectively defaulted against him because the matter was brought too early in the proceedings. The court ordered the appellant to give security in the amount of 50 per cent of the sale proceeds.

Cancellation Refused with Undertaking and No Security

Prospect of Certificate Holder’s Success

The plaintiff commenced an action for specific performance of an “offer to lease” and filed a lis pendens against the property on which the applicant was constructing the leasehold premises. The applicant applied for cancellation, alleging hardship resulting from its inability to enter into other leases and to complete its commitments with respect to another lease and the sale of the property upon substantial completion of construction. The court refused to cancel the lis pendens but ordered the plaintiff to provide an undertaking, which the court held should normally follow as a matter of course where a land owner applies for it. In contrast, the court held that ordering security is an extraordinary procedure and that a substantial deposit should only be decreed in the plainest of cases. In this case, the plaintiff was not required to post security because the evidence indicated that the plaintiff had an arguable case (Cloverlawn-Kobe Developments Ltd. v. Tsogas, 1979 CanLII 427 (BC SC)).

The plaintiff in an action for specific performance alleged that he had exercised an option to purchase the defendant’s lands and registered a lis pendens against the lands. The defendant, who had received offers to purchase the land in excess of the amount payable by the plaintiff under the option, applied for cancellation of the lis pendens. Without considering the question of hardship and inconvenience, the court held that the statutory intent of the cancellation provisions was not to summarily determine the rights of the parties in such circumstances. Whether or not the plaintiff had exercised the option was clearly a triable issue and the matter was set to be resolved by trial only four months later. To grant the defendant’s application for cancellation would deprive the plaintiff of his remedy, and there was no indication that damages would suffice to compensate him. Cancellation, which should be granted only in exceptional circumstances, was refused. The plaintiff was ordered to enter into an undertaking to abide by any order of the court regarding damages arising from his registration of the lis pendens but was not required to post security (Swertz Bros. Construction Ltd. v. McCallum, [1980] B.C.J. No. 807 (QL) (S.C.)).

Unique Property

The discharge of a lis pendens and the posting of security in lieu thereof is not appropriate where a specific property, particularly a dwelling house with a unique configuration and special location, is involved unless the hardship is so great or so unusual, or the circumstances are so exceptional as to demand some disposition of the property. Cancellation of a lis pendens was not appropriate in this case, which involved an action for specific performance of an interim agreement of purchase and sale, where the defendant alleged hardship because the lis pendens was preventing a sale to a subsequent purchaser. However, an undertaking by the plaintiff in respect of damages was appropriate. The real issue was whether security for that undertaking should be ordered. The court concluded that no security would be required so long as the plaintiff provided to the defendant’s solicitors, within 10 days, a statement, verified by affidavit, of his net worth setting out categories of assets and encumbrances. In the event that the plaintiff failed to provide such a statement or in the event that the net worth disclosed in it was less than $100,000, the defendant would be at liberty to apply to have an amount of security fixed (Van Wollen v. Barnard, [1986] B.C.J. No. 1641 (QL) (S.C.)).

Cancellation Refused with No Undertaking or Security

Insufficient Evidence of Owner’s Hardship or Inconvenience

Courts should exercise their jurisdiction under s. 257 of the Act with caution. Where the plaintiff has an arguable case, it is acceptable for the court to make a preliminary assessment of the merits of the action, but the court ought not to adjudicate the merits, except in exceptional circumstances. There were no exceptional circumstances in this case. The plaintiff claimed specific performance of an option to purchase which the defendant argued was null and void for non-fulfilment of conditions precedent. Hardship and inconvenience as a result of the plaintiff’s filing of the lis pendens were not demonstrated where the defendant simply wished to obtain financing by registering a mortgage and the plaintiff had offered to lift the lis pendens so that the registration could occur (Ascot Design Ltd. v. Zaicana Real Estate Ltd., [1991] B.C.J. No. 3741 (QL) (S.C.)).

The defendant sought to cancel the lis pendens registered against his property so that he could obtain a mortgage to pay legal fees, including fees for defending anticipated criminal proceedings, and to provide additional income for his necessary expenses. The plaintiffs in the proceedings at issue sought to trace funds to the defendant’s property and the court found that there was a triable issue in this respect. That a lis pendens would make it difficult to get a mortgage was not sufficient “hardship” to justify cancellation of the lis pendens under s. 256. The defendant had not provided any income and expense or banking statements as proof that he was unable to live on his present income and savings. Criminal proceedings had not yet been commenced against the defendant and the claim to need funds to defend the proceedings at issue were problematic from a policy perspective because one could see a situation where the defendant effectively squanders the entire value of the property and leaves the plaintiffs with a dry judgment (Dyck v. Linton, 1995 CanLII 1999 (BC SC)).

The defendant developers brought an application for an order discharging certificates of pending litigation that the plaintiffs, a time share business, filed against seven strata lots at a resort development. The defendants’ application was brought under both ss. 256 and 257 of the Act and the inherent jurisdiction of the court on the grounds that, first, the plaintiffs could not succeed in their claim for the specific performance of agreements to purchase the strata lots and, second, the registration of the certificates was a hardship on the defendants. On the issue of specific performance, the court stated that it would not exercise its limited jurisdiction to determine the merits of the plaintiffs’ claim as there were arguable issues between the parties and it could not be said that the plaintiffs’ claim had no prospect of success or no merit. On the issue of hardship, the court examined whether in the circumstances the evidence of hardship was sufficiently particularized. The court concluded it was not. The strata lots in question were only seven of about 90 in the development. There was no evidence before the court that there were other purchasers available for the units, that the price had fluctuated up or down, that the financing of the project was in jeopardy, that the units could not be used as rental units pending the sale, or that there was other evidence the defendants were truly experiencing hardship. Accordingly, the defendants’ application to discharge the certificates was dismissed (Aviawest Resorts Inc. v. Memory Lane Developments Inc., 2004 BCSC 999).

In TCC Mortgage Holdings Inc. v. Rohland, 2019 BCSC 190, the defendant Z. applied for an order cancelling a certificate of pending litigation on the basis of hardship and inconvenience, while the plaintiff sought an order for the production of documents from Z. The plaintiff alleged in its notice of civil claim that Z. held her Bowen Island property as a nominee or upon a constructive trust for the defendant R., against whom the plaintiff had a judgment for over $16 million and had been seeking for years to recover it from R. and his associated entities. The court dismissed Z.’s application and allowed the plaintiff’s application. The court found the CPL was not the cause of Z.’s inability to access the next construction draw; the cause was her refusal to agree to a priority agreement that would cost her nothing except perhaps a perceived strategic advantage in the litigation. As for her alleged inability to pay tradespeople, the court was not convinced on the evidence that the debts existed. As for construction delay, even if the CPL were lifted, Z. would be unable to continue construction because there were “stop work” and “do not occupy” orders in place from the municipality. As for Z. being “essentially homeless”, the court found the evidence on the point to be weak at best.

Owner’s Contribution to Hardship

The plaintiffs worked on a condominium project owned by the corporate defendant, which was now bankrupt. They filed certificates of lis pendens which the applicant alleged were an obstacle to sales of the units. The applicant was one of three directors of the corporate defendant and the author or co-author of his present problems. Although the applicant claimed to need the proceeds of the sales to get into other business ventures, this was not sufficient hardship and inconvenience to justify discharge of the lis pendens (Cedarland Forest Products Ltd. v. MCM Developments Ltd., 1993 CanLII 1405 (BC SC)).

The petitioner applied for cancellation of a lis pendens the respondent had secured over their former matrimonial home, which was registered in the petitioner’s name alone. One year earlier, the court had ordered the sale of the home and an equal division of the proceeds, but the home had not yet sold. The petitioner now sought cancellation of the lis pendens so that she could mortgage the property to pay off some debts with unfavourably high interest rates. The court declined to grant the order sought. Any hardship and inconvenience being experienced by the petitioner was in part due to her own insistence on a significantly inflated listing price for the home. Furthermore, the petitioner intended to mortgage the whole interest in the home despite the earlier court order that the respondent had a half interest in it. Finally, the petitioner’s intended course of action would be in violation of an undertaking she had provided to a bank under an outstanding loan agreement (Nordin v. Nordin, 1996 CanLII 1578 (BC SC)).

Trust Property in Joint Venture

The plaintiff and defendant purchased a property that they planned to redevelop as a joint venture. Under the terms of the joint venture agreement, the defendant became the registered owner of the property and agreed expressly to hold an undivided one-half interest in the property in trust for the plaintiff. The plaintiff assumed responsibility for overseeing the redevelopment work while the defendant paid the mortgage and the taxes. Progress was slow and costs escalated. The defendant decided to sell the property and accepted an offer from a third party. The plaintiff then commenced an action seeking a declaration that he was entitled to a one-half interest in the property and seeking damages for breach of the agreement and breach of fiduciary duties. The plaintiff also offered to purchase the property from the defendant for a price higher than the offer the defendant had accepted. The court dismissed the defendant’s application to cancel the plaintiff’s certificate of pending litigation. First, the court held that to release the certificate would effectively extinguish the plaintiff’s cause of action against the defendant as it related to the plaintiff’s interest in the property. Second, the hardship and inconvenience claimed by the defendant was not sufficient to override the plaintiff’s established right to an undivided one-half interest in the property. Third, much of the hardship caused by the defendant’s inability to sell the property to a third party was caused by the defendant’s decision to sell the property without first seeking the plaintiff’s approval. Finally, it was the defendant’s intention to sell not only his interest in the property but also the plaintiff’s, leaving the plaintiff without a remedy in relation to the property and clearly determining the parties’ rights to the property without the benefit of any testing of the evidence by either party. The court found that the defendant had alternatives available to him, including the offer from the plaintiff, if his true intention was to mitigate his losses. Accordingly, the court refused to cancel the certificate and made no order for security (Soo v. Law, 2009 BCSC 1041).

Subsequent Claims for Damages Caused by Registration

Notes on Case Law: In Mark 7 Development Ltd. v. Peace Holdings Ltd., 1991 CanLII 604 (BC SC), Shaw J. provided an outline of the position of landowners whose property has been encumbered by the registration of a lis pendens and of the options available to them in the event that the action against them is dismissed:

If a lis pendens is placed upon a title to land, the owner of the land has a choice. The owner may simply allow the court action and the lis pendens to run their course according to law, or, if there may be hardship and inconvenience as a result of the lis pendens, the owner may move under ss. 235 and 236 [now, ss. 256 and 257] of the Land Title Act to have the lis pendens cancelled or to obtain an order requiring the party that filed the lis pendens give an undertaking as to damages and post security.

Where the landowner does not obtain an undertaking and the court action underlying the lis pendens is later dismissed, an action for abuse of process for wrongful filing of the lis pendens will only succeed if either malice or collateral purpose are proven …

After reviewing the authorities on the matter, Shaw J. concluded that a claim based on an undertaking given under s. 257 of the Act is a distinct cause of action, quite different from abuse of process and more similar in substance to an interlocutory injunction. Noting that there is no wording in the section that expressly or impliedly requires a landowner to prove that the person that filed the lis pendens acted unreasonably or pressed a frivolous claim, he stated as follows:

I conclude that, as a general proposition, where an undertaking has been given under s. 236(1)(b)(i) [now, s. 257(1)(b)(i)] of the Land Title Act, a landowner need only establish that the underlying action was dismissed on the merits in order to be entitled to be recompensed for damages caused by the registration of a lis pendens. It is not a requirement of the action on the undertaking that the landowner prove that the lis pendens holder was unreasonable or pursued a frivolous claim, or acted with malice or an ulterior motive or any similar element of fault. I add that in my view the court may refuse the claim where there are special circumstances to warrant doing so …

An action for the wrongful filing of a lis pendens does not lie unless the party claiming the lis pendens invokes the process for an improper purpose collateral to the ostensible purpose of the proceeding. The party claiming wrongful filing must show malice on the part of the party filing the lis pendens and damages flowing from that filing. In this case, the party claiming wrongful filing established neither element. The party had not applied to have the lis pendens discharged and made no request of the holder for discharge. Under s. 257 of the Act, a court may in proper circumstances refuse to order cancellation of a lis pendens and require the holder to enter into an undertaking to abide by any order that the court may make as to damages, thereby providing a remedy to an owner who has suffered damages as a consequence of the filing. Section 257 does not, however, create a cause of action for wrongful filing in the absence of such an order (Marshall v. Heidi, 1984 CanLII 788 (BC CA)).

There must be a causal connection between the registration of a lis pendens and the damages an applicant claims to have suffered by reason of the lis pendens. The applicant in this case did not establish that link. While the property diminished in value during the 16 months that a lis pendens was registered against it, the applicant occupied the property and there was no evidence he had attempted to sell. In fact, the evidence indicated that he did not wish to sell. He was not entitled to damages (Sagoo v. Reyat, [1984] B.C.J. No. 612 (QL) (S.C.)).

A party seeking damages for wrongful filing of a lis pendens did not succeed because the party filing the lis pendens had asserted a reasonable claim and had not acted maliciously. The court noted, with reference to the Court of Appeal’s decision in Marshall v. Heidi, that an action for wrongful filing of a lis pendens is different from a claim for damages under ss. 256 and 257 of the Land Title Act. The former is based on an abuse of process and thus requires that malice be demonstrated. Under the latter, damages arise from the giving of an undertaking, which the court may properly require without any demonstration of malice or other ingredients which would underlie a cause of action for abuse of process (First Canadian Land Corp. Ltd. v. Rosinante Holdings Ltd., 1985 CanLII 431 (BC CA)).

The respondent brought an application for cancellation of a lis pendens registered against its property which resulted in an undertaking and security being given by the plaintiff under s. 257(1)(b). The plaintiff’s action for specific performance was subsequently dismissed on its merits and the respondents’ counterclaim for damages came before the court. Because of the registration of the lis pendens, a sale of the property had been delayed by about four months. As a result, the respondents suffered damages of over $500,000, consisting mostly of lost interest. The parties disagreed on whether an owner seeking damages under such an undertaking had to establish that the party registering the lis pendens acted unreasonably or in pursuit of a frivolous claim. The court held that in an action based on an undertaking given under s. 257, as opposed to an action for abuse of process, the owner of land against which a lis pendens has been filed need only establish that the claim of the party who filed the lis pendens was dismissed on its merits in order to be entitled to compensation for damages caused by the registration of the lis pendens. Nothing in the legislation suggested that the owner had to prove that the plaintiff acted unreasonably or pressed a frivolous claim. Damages were awarded accordingly (Mark 7 Development Ltd. v. Peace Holdings Ltd., 1991 CanLII 604 (BC SC)).

Appeals

Stay of Proceedings Pending Appeal

A party appealing an order for cancellation of a lis pendens under s. 257 can prevent the other party from dealing with the property only by obtaining an order staying proceedings pending determination of the appeal. In this case, the registrar had allowed the appellant to register a second lis pendens based on the appeal proceedings. The Court of Appeal held that the registrar had no authority to register the second lis pendens because the word “proceeding” in s. 215(1) of the Act refers to the trial level and not the appeal level. The court ordered that the second lis pendens be set aside and cancelled (H.K. Floors Limited v. Canam Western Ventures Ltd., 1984 CanLII 784 (BC CA)).

The appellant applied for a stay pending the appeal of a court’s decision to cancel a lis pendens registered against land owned by an estate but occupied by the appellant. The court granted the stay, requiring in turn that the appellant provide an undertaking to abide by any order respecting damages suffered by the estate and security in the form of a charge against the appellant’s interest in the estate. An expedient prosecution of the appeal was also required, with the appeal to be put on standby for this purpose (Gordon v. Madill, [1985] B.C.J. No. 1839 (QL) (C.A.) (Chambers), further judgment [1985] B.C.J. No. 2346 (QL) (C.A.) (Chambers)).

Appeal of Master’s Decision

As a general principle, all appeals from decisions of masters should not be de novo hearings. However, there are instances where an interlocutory order addresses questions vital to the final issue in the proceeding and, therefore, the court is not prevented from dealing with the matter in part as an application de novo. A de novo hearing was appropriate in this case. There was a triable issue with respect to one of the five lots against which the lis pendens had been registered and damages would not suffice in lieu of specific performance. The appeal was allowed with respect to that one lot and the appellant was ordered to provide an undertaking and security (Payne v. Voth, [1990] B.C.J. No. 1300 (QL) (S.C.)).

Where a master’s ruling decides issues vital to the final issue in the proceedings or is a final order, a re-hearing is an appropriate form of appeal. Where, however, there is an appeal from an interlocutory order, there should be no interference with the order of the master unless they were clearly wrong. In this case, the master found that a lis pendens was causing hardship by preventing the development of properties not involved in the proceedings and that damages would be an adequate remedy because the properties were being purchased for resale. Accordingly, the master ordered the cancellation of the lis pendens on the provision of security in an amount equal to the value of the property at issue. On appeal to the Supreme Court, the court found that the master’s order was interlocutory in nature and that the appeals of both parties should be dismissed because the master was not “clearly wrong”. The order was proper (Shoker v. P.K.S. Investments Ltd., 1991 CanLII 1514 (BC SC)).

A master has jurisdiction to make an order cancelling a lis pendens. However, if the ruling of the master raises questions which are vital to the final issue in the case, the appropriate approach for a judge on appeal is to re-hear the application. In this case, on re-hearing the application for cancellation, the court confirmed that a master or judge may weigh the merits of a claim for specific performance. Where the evidence of the applicant offers only an extremely remote prospect of establishing a claim for specific performance, damages provide adequate relief. The court need not consider the adequacy of damages as relief on the assumption that the plaintiff would succeed in the claim. The court dismissed the appeal from the master’s order for cancellation but increased the amount of security ordered (Kavanagh v. Baker, 1993 CanLII 264 (BC SC) (Master)).

Appeal of Supreme Court Decision

The Court of Appeal will not interfere with a lower court’s refusal to cancel a lis pendens where the judge was clearly of the opinion that a triable issue existed even though the judge may have had a minor misapprehension with respect to a subsidiary aspect of the issue. In this case, the Court of Appeal was of the opinion that the lower court judge correctly disposed of the matter before him, both in refusing to cancel the lis pendens and in refusing to order security to be posted (Derrickson v. Greenwood, [1981] B.C.J. No. 968 (QL) (S.C.), affirmed [1982] B.C.J. No. 2263 (QL) (C.A.)).

An appellate court interferes reluctantly with the exercise of discretion by a lower court judge in fixing security for the cancellation of a lis pendens unless the judge overlooked significant evidence or erred in law (First Canadian Plaza Ltd. v. Toronto-Dominion Bank, [1988] B.C.J. No. 1688 (QL) (C.A.)).

The vendor of a commercial property refused to complete a contract of purchase and sale. The purchaser applied for an order of specific performance and registered a certificate of pending litigation against the property. The chambers judge granted the vendor’s application to cancel the certificate. The purchaser appealed. The Court of Appeal held that, in an interlocutory proceeding where specific performance is being sought and the court is considering an application to order cancellation of a certificate of pending litigation under s. 256 of the Act, it is for the applicant (the vendor) to satisfy the court that it was plain and obvious that the person seeking specific performance would not be successful on that claim at trial. The chambers judge did not decide on the merits whether damages would be adequate—only whether specific performance could be eliminated as having no reasonable chance of success. In this appeal, the court found the chambers judge failed to appreciate that an order under s. 256 of the Act should not be granted if there was a triable issue as to whether the purchaser would be entitled to specific performance at trial. Instead, the trial judge embarked on the task of determining finally whether the property was in fact unique, without the benefit of the purchaser’s evidence, discovery, or cross-examination of witnesses. In allowing the appeal, the court set aside the order of the chambers judge and reinstated the certificate of pending litigation (Youyi Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd., 2014 BCCA 388).

Time to Pay

The Supreme Court denied cancellation of a lis pendens and ordered the party who had filed it to post security in the amount of $50,000, suggesting that counsel draft an appropriate order. The order entered provided for the posting of security within five days. The appellant was unable to post security within five days and appealed to the Court of Appeal for relief. The Court of Appeal found that the lower court’s order would be rendered ineffective if relief was not granted to the appellant. Accordingly it varied the order below and gave specific directions (Lay v. Carr-Harris, [1983] B.C.J. No. 2144 (QL) (C.A.) (Chambers), varying [1983] B.C.J. No. 1139 (QL) (S.C.)).