4 Escheat Of Land On Dissolution Of Corporation

PRACTICE

Escheat of Land Owned by a Corporation

When a corporation is dissolved, for any reason, and it holds title to land, the land escheats to the Crown. An escheat does not necessarily take place when an extraprovincial company is removed from the register of companies in British Columbia, because the corporation may not have been dissolved in its original jurisdiction. To establish a company’s current existence in another jurisdiction, the registrar requires a statutory declaration to that effect from the company’s lawyer in that jurisdiction.

Circumstances in Which Escheat Act Does Not Apply

The Escheat Act does not apply:

1. if a corporation transfers land, by unregistered instrument, before being struck, because the corporation has no beneficial interest in the land;
2. if a corporation is paid out as a mortgagee on a mortgage before being struck, because the corporation has no equitable interest in the land. In this case, s. 244 of the Land Title Act would allow the owner of the land to apply for a discharge of the mortgage; and
3. if a corporation is paid out as a vendor under an agreement for sale before being struck, because the corporation has no equitable interest in the land. In this case, s. 245 of the Land Title Act would apply to the vesting of title to the land in the name of the purchaser.

Local Government Exception under Section 4

Section 4 of the Escheat Act does not apply to land in British Columbia transferred on dissolution of a municipality, development district, water users’ community, improvement district, or regional district. See s. 5 of the Schedule to the Local Government Act at chapter 52 (Local Government Legislation).

Vesting of Land in Crown: Section 4(1)

The Crown may apply for registration of land escheated to it under s. 4(1) in Form 17 under the Land Title Act. The Crown must also provide a certificate of vesting signed by the Attorney General under s. 262 of the Land Title Act. No fees are payable and the registrar does not require the return of any outstanding duplicate certificate of title. The registrar registers the indefeasible title or interest in the name of “The Crown in Right of British Columbia”, care of the Ministry of Attorney General.

Vesting of Land in Corporation Restored within Two Years: Section 4(4)

If a corporation is revived under an enactment by order of the court within two years from the date of its dissolution, the effect of that court order is as if the corporation’s land had not escheated. A corporation does not have to apply to the Ministry of Attorney General for a ministerial order for a grant of the land, or to the land title office for re-registration of the land in the name of the corporation. The registrar would only be aware of the vesting of the corporation’s land if, for example, the corporation applied to register a transaction involving the land. In that case, the registrar’s company search would show that the corporation had been restored to the register of companies within two years of being dissolved.

Vesting of Land in Corporation Restored after Two Years: Section 4(5)

Vesting Requires Court Order

If a corporation is not revived within two years of dissolution, its land escheats absolutely to the Crown and the escheated land will not automatically revest if the corporation is later restored to the register. However, if a corporation is revived under an enactment after the expiry of two years, on its application for revival or in a subsequent court application the corporation may, under s. 4(5) of the Act, obtain an order of the court vesting the land in the corporation. The vesting has effect at the time and in the manner set out in the order, which must be filed in the land title office.

Requirements for Restoration

The following requirements must be satisfied by a corporation that has been struck from the register for more than two years where the corporation applies for restoration under the Business Corporations Act, S.B.C. 2002, c. 57 and relief under the Escheat Act. Note that a corporation dissolved before the enactment of the Business Corporations Act may not be restored by court order under that Act more than 10 years after the date of dissolution.

1. The applicant must obtain a name search and reservation from the Companies Branch.
2. The applicant must serve a requisition, petition, supporting affidavits and draft order on the Escheat Office, Ministry of Attorney General, Legal Services Branch, 1001 Douglas Street, Victoria, BC, V8W 9J7. The documents must:
   1. set out the legal description of the land;
   2. describe the estate or interest in the land;
   3. specify the name of the corporation in which the land is to be vested after restoration; and
   4. apply for the return of the escheated interest in the land.

   The Escheat Office will provide the applicant with a letter of acknowledgment of service of documents, and will advise the applicant whether or not any expenses were incurred with respect to the lands. The Escheat Office requires the reimbursement of any expenses incurred as a condition of consent to the restoration.

3. Under s. 356 of the Business Corporations Act, the applicant must provide the required notices and submit the required documents for restoration of the corporation to the Registrar of Companies. The applicant must also obtain a letter of consent from the Registrar of Companies for either limited or full restoration.
4. No court order of restoration will be granted until:
   1. one week after a notice of the application has been published in one issue of the Gazette; and
   2. proof is provided to the court that a notice of the application has been forwarded to the last known registered office of the company.
5. The applicant must file a certified copy of the court order with the Companies Branch together with the restoration fee prescribed under the Business Corporations Act. The applicant must also fulfill any other requirements of the Registrar of Companies to bring the corporation’s records up-to-date, including the filing of any outstanding annual reports, with filing fees. See s. 362 of the Business Corporations Act.

Registration of Court Order

Submissions

To register the court order made under s. 4(5) in the land title office, on the Form 17 Fee Simple or the Form 17 Charge, Notation or Filing, where applicable, select Nature of Interest, Escheat, and attach an image of the following:

1. a court certified copy of the court order;
2. if His Majesty the King as represented by the Attorney General of British Columbia is not shown as a party on the court order, then a copy of a letter of acknowledgement of service from the Escheat Office as evidence of service on the Crown. The letter of acknowledgment is in the class of supporting documents designated by the director for electronic filing;
3. if an order was made for reimbursement under s. 4(7), proof to the registrar of payment (for example, in a letter of acknowledgment or receipt signed by the Escheat Office). The letter of acknowledgment or receipt signed by the Escheat Office is in the class of supporting documents designated by the director for electronic filing; and
4. a completed electronic Property Transfer Tax form.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Restoration and Reinstatement under the Business Corporations Act

See Part 10, Division 11 of the Business Corporations Act regarding the restoration and reinstatement of corporations.

Escheat under the Business Corporations Act

See s. 368(5) and (6) of the Business Corporations Act, which provides:

• 368 (5) Subject to subsection (6), title to, or any interest in, land that has escheated to the government under section 4 of the Escheat Act is not, except as provided in section 4 of that Act, affected by a restoration of a company.
• (6) Title to, or any interest in, water system property that

• (a) has escheated to the government under section 4 of the Escheat Act, or
• (b) has vested in the government under this Act

• is not, except as provided in section 4.1 of the Escheat Act, affected by a restoration of a company.

Escheat under the Cooperative Association Act

See s. 197.8 of the Cooperative Association Act, S.B.C. 1999, c. 28, which provides:

• 197.8 Despite the provisions of this Act, title to, or any interest in, land that has escheated or that is deemed to have escheated to the government under section 4 of the Escheat Act is not affected in any way by an order made under section 197.4 of this Act, except as provided in section 4 of the Escheat Act.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 1, §5:11 and §8:26.

CASE LAW

Notes on Case Law: Section 5 of the Attorney General Statutes Amendment Act (No. 2), 1992, S.B.C. 1992, c. 32, effective November 27, 1992 (B.C. Reg. 439/92), changed the period in s. 4 of the Act for restoration and for the prohibition against disposition of escheated land by the Crown from one year to two years.

Dissolution of Extraprovincial Companies

If, by the law of the state which created a company, it is not dissolved for all purposes and survives for the purpose of distributing its assets, then there is no escheat of its assets to the Crown. It is the law of the state which created a company to which one must look to determine when, and if, it was dissolved and whether the dissolution, if any, was for all purposes (Lloyd v. Canada Permanent Trust Co., 1965 CanLII 374 (SK QB)).

Disposition of Escheated Land by the Crown

A sale of escheated lands may not be ordered during the one-year period set out in s. 4 of the Act (Roberts v. Trianon Holdings Ltd., 1991 CanLII 2324 (BC SC)).