86 Registration Of Judgments After October 30, 1979

FORMS

Application for Registration

Submissions

On the Form 17 Charge, Notation or Filing, select Nature of Interest, Judgment, and attach an image of the Certificate of Judgment.

PRACTICE

Transfer of Interest Encumbered by Judgment

When registering a freehold transfer where the transferor’s interest is encumbered by a registered certificate of judgment, the registrar carries forward the judgment to the new title, whether or not the applicant states that they make the application subject to the judgment.

Assignment of Charge Encumbered by Judgment

When registering an assignment of a charge encumbered by a registered certificate of judgment, the registrar adds the notation in the remarks segment that the assignment is subject to the judgment.

Judgment Debtor Is Beneficial Owner of Interest in Land: Section 86(9)

The registrar may accept an application under this subsection, for example, where the debtor is a beneficiary under a will for which a representation grant has been issued as to a specific parcel, or an applicant shows that a debtor holds an unregistered deed of land or a trust agreement. But see Re Hollebone, 1982 CanLII 687 (BC SC), annotated below, where the judgment debtor is a residual legatee in an unadministered estate.

Registration of Judgment against Interest of One Judgment Debtor and Not All Judgment Debtors

Where a judgment creditor has obtained a judgment against A and B and applies to register the judgment against A’s interest in land only, the registrar does not enquire whether B has any interest in the land.

Registration of Judgment against Property of Strata Corporation

In registering a judgment against the property of the owners of a strata plan, the registrar registers the judgment against all the strata lots in the plan and endorses particulars on the common property sheet, whether or not the common property is the only property affected by the judgment.

Registration of Judgment against Notice Filed under Section 99 of the Family Law Act

It is questionable whether the filing of a notice under s. 99 of the Family Law Act, S.B.C. 2011, c. 25 creates an interest in land against which a judgment creditor can register a judgment. However, if a judgment creditor asserts that the notice amounts to a beneficial interest under s. 86(3)(a) of the Court Order Enforcement Act and supports that assertion with affidavit evidence, the registrar may accept the application to register the judgment. See chapter 42 (Family Matters) regarding the filing of a notice under s. 99 of the Family Law Act.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Registration of Judgments in Same Manner as Charge

See s. 210 of the Land Title Act in chapter 15 (Land Title Act Part 14 (ss. 197 to 237)—Charges).

Determining Whether Judgment Debtor Owns Land

See the discussion under “Cross References and Other Sources of Information” under s. 210 of the Land Title Act in chapter 15 (Land Title Act Part 14 (ss. 197 to 237)—Charges).

Applicant for Registration Claims Priority over Registered Judgment

See s. 212 of the Land Title Act in chapter 15 (Land Title Act Part 14 (ss. 197 to 237)—Charges) regarding the registrar’s procedure for registering an instrument where an applicant claims priority over a previously registered judgment.

Transmission on Death of Judgment Creditor

It is not necessary to register a transmission of a registered judgment on the death of a judgment creditor.

Judgments Dropped on Tax Sale

See s. 276(1)(b) of the Land Title Act in chapter 18 (Land Title Act Part 17 (ss. 260 to 280)—Transmission and Fee Simple and Charge).

Conveyance Void as against Registered Judgment

See s. 8 of the Fraudulent Preference Act, R.S.B.C. 1996, c. 164, which provides:

• 8 A disposition which, by the Fraudulent Conveyance Act or this Act or by any Act in force in British Columbia relating to conveyances prejudicial to creditors, is declared to be void, is void as against the lien and charge created by the registration in any land title office of a judgment under the Court Order Enforcement Act.

See also the discussions of the Fraudulent Conveyance Act, R.S.B.C. 1996, c. 163 and the Fraudulent Preference Act at chapter 43 (Fraudulent Conveyance and Fraudulent Preference Acts).

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 2, §16:9, and vol. 3, §21:1, §21:3 to §21:5, §21:16, §21:24, and §21:44.

CASE LAW

Chargeable Interests

A judgment registered under s. 86 charges a judgment debtor’s land only to the extent of their beneficial interest in it (Woollends v. Woollends, 1982 CanLII 677 (BC SC) (S.C.); followed in Redwine v. Hagen, [1986] B.C.J. No. 2726 (QL) (S.C.)).

The definition of “land” in s. 81 appears to be very broad, purporting to cover executory or future interests “whether the object of the gift … be ascertained or not”. However, the examples included in the section are interests enforceable at common law. It is open to argument that the definition of “land” in s. 81 does not create new forms of interest where none existed before. In the absence of clear wording to the contrary contained in s. 81, the legislature did not intend to extend an interest in land to parties whose interests have traditionally been strictly in personam. Because a residual legatee has never had an interest in an unadministered estate at law or in equity, when judgment creditors registered a judgment against the interest of a judgment debtor who was an executor and residual legatee, and there was no evidence the executors had paid the deceased’s debts or ascertained the amount of the residue, there was nothing for the judgment creditors to charge. Section 86(3)(b) was of no assistance to the judgment creditors because the section does not extend to the common law. A residual legatee is a beneficiary who has no interest in an unadministered estate. There was nothing to charge under s. 86(3)(b) (Re Hollebone, 1982 CanLII 687 (BC SC)).

See the annotation for Canadian Imperial Bank of Commerce v. Muntain, 1985 CanLII 716 (BC SC), under s. 82 of this Act regarding joint tenancies.

A judgment debtor was the registered owner of land transferred to him without consideration by his son, who sought to frustrate or defeat a third party’s claim for specific performance in relation to the land through the transfer to his father. The judgment debtor was not a party to his son’s illegal purpose. He held the land in trust for his son and had no beneficial interest in it. The land was therefore not subject to execution by the father’s judgment creditors (Kish Equipment Ltd. v. A.W. Logging Ltd., 1986 CanLII 1034 (BC SC)).

Under s. 86 of the Court Order Enforcement Act, a judgment attaches to the land of a judgment debtor only “to the extent of his or her beneficial interest”. Although s. 23 of the Land Title Act provides that a certificate of title is conclusive evidence that the person named is indefeasibly entitled to an estate in fee simple of the described land, judgment creditors are not able to execute against a judgment debtor’s registered one-third interest in a parcel of land where the evidence shows the judgment debtor has no beneficial interest in that land (Judd v. Tauber, 1992 CanLII 2365 (BC SC)).

Under s. 86(3) of the Act, a judgment forms a lien and charge on the land of the judgment debtor to the extent of the judgment debtor’s beneficial interest in the property. Any beneficial interest that exists during the existence of the registered judgment is sufficient to create the lien. If no beneficial interest exists, no lien is created (Lumley v. Lacasse, 1992 CanLII 2151 (BC SC)).

During the course of divorce proceedings, the husband’s solicitor obtained and registered a judgment against the husband’s undivided one-half interest in the matrimonial property for unpaid legal fees. Following sale of the property and payment of the three mortgages registered in priority to the judgment, the wife disputed the solicitor’s entitlement to payment of the judgment from the remaining funds. The husband, to his solicitor’s knowledge, had assumed sole responsibility for payment of the third mortgage by means of both a consent order and a sworn undertaking. Accordingly, as against the wife, the third mortgage effectively formed a charge on the beneficial interest of the husband remaining after payment of the first two mortgages. The wife was entitled to one-half interest in the equity remaining after satisfaction of the first two mortgages, while the husband’s beneficial interest was subject to all three mortgages. After payment of the third mortgage, the husband had no beneficial interest to which the judgment could attach. Such money as there was remaining from the sale of the property belonged to the wife (Joyal v. Joyal, 1995 CanLII 486 (BC SC)).

The appellant, Fulthorp, entered into a contract to purchase property from its joint owners. The respondent, the Bank of Montreal, registered judgment against the property after execution of the sales contract but before transfer of title from the joint owners to the respondent. Fulthorp’s notary did not search title to the property either before or after the transfer and Fulthorp’s title was registered subject to the judgment. In overturning the decision of the trial judge, the Court of Appeal affirmed common law principles and the clear statutory provisions in s. 86 of the Court Order Enforcement Act that a judgment creditor can only sell an interest owned by a judgment debtor and that that interest is subject to equities in favour of an unregistered instrument granted by the owner to a person who has acquired an interest in the land in good faith and for valuable consideration prior to the registration of the judgment. In this case, the bank was not entitled to enforce its judgment against the appellant and Fulthorp’s appeal was allowed (Bank of Montreal v. Fulthorp, 2006 BCCA 166, overturning 2004 BCSC 1146).

Assignment of Interest

Where a judgment against a mortgagee is registered against mortgaged lands, the registrar may only register an assignment of the mortgage subject to the judgment (In Re Land Registry Act and Mandeville, 1917 CanLII 442 (BC SC)).

Effect of Unregistered Instruments

Conveyances

The registered owner executed and delivered a transfer of land which was not registered. A judgment was then registered against the interest of the transferor. Because an unregistered instrument is operative against the party making it, there was no interest in the land to which the judgment could attach. The debtor (registered owner) had divested himself of his interest before registration of the judgment (Davidson v. Davidson, 1946 CanLII 12 (SCC), affirming 1945 CanLII 501 (BC CA)).

Following the execution of a contract for the sale of land but before its completion, a judgment creditor registered a charge against the judgment debtor’s interest. After completion of the sale, the purchaser’s title was registered with the creditor’s judgment remaining as a first charge. The creditor sought an order under s. 92 that a part of the lands be sold to realize the amount payable under its judgment. The court held that between the time of execution and completion of the contract, the vendor (the judgment debtor) and purchaser stood in a relationship of trustee and beneficiary. The purchaser had a beneficial interest in the land while the vendor retained the legal title but no beneficial interest, save for a lien for the purchase proceeds. Because a judgment creditor can only attach the interest the judgment debtor has and can stand in no better position with respect to the land than the judgment debtor, the judgment creditor’s claim was limited to the judgment debtor’s share of the net proceeds of the sale (Martin Commercial Fueling Inc. v. Virtanen, 1993 CanLII 571 (BC SC)). The creditor’s judgment attached subject to the equities in favour of the purchasers, notwithstanding that their interest was not (and could not be) registered before closing. In addition, the specific exception made by s. 86(3)(c) of the Act for persons in the very position of the purchasers in this case precluded the creditor’s argument (1997 CanLII 3118 (BC CA)).

The plaintiffs obtained an order for specific performance of a contract for the purchase and sale of a residential property. The vendors’ ownership was structured so that the defendant S held an undivided 99% interest and the defendant J held an undivided 1% interest. Prior to the sale, the defendant D registered a judgment, unrelated to the property, against J’s interest in the property. In this action, the plaintiffs sought to have the judgment discharged so that title to the property could be registered in their names. In following the decision of the Court of Appeal in Martin Commercial Fueling Inc. v. Virtanen, 1997 CanLII 3118 (BC CA), the court found that s. 86(3)(a) of the Act clearly provides that the judgment represented a charge against J’s beneficial interest in the property; that D could stand in no better position with respect to the land than J; and that a judgment registered against a property for which a contract of purchase and sale had been entered into attached, subject to the equities in favour of the purchasers, notwithstanding their interest was or could not have been registered prior to closing. In this case, since J was limited to a 1% beneficial interest in the property, he was entitled to 1% of the net sale proceeds and D’s recovery under the judgment was also limited to 1% of the net sale proceeds. D’s position that he was entitled to recover the full amount of the judgment was unsupported in law (Webber v. Singh, 2005 BCSC 224, appeal allowed with respect to special costs only 2006 BCCA 501).

Mortgages

The provisions of the Act confirm the common law that a judgment charges only the beneficial interest of a judgment debtor. Therefore, a mortgage executed by a judgment debtor before registration of a judgment, but not registered until after registration of the judgment, still has priority over the judgment (Gregg v. Palmer, 1932 CanLII 269 (BC CA)).

On an application for an order nisi of foreclosure, a mortgagee claimed priority for the interest payable under the registered mortgage and also for the higher rate of interest payable under an unregistered modification agreement. The modification agreement was the equivalent of an unregistered equitable mortgage and an equitable mortgage has priority over a later registered judgment (Fraser Valley Credit Union v. Carlson, 1984 CanLII 678 (BC SC); followed in Citibank Canada v. Simon, 1991 CanLII 1529 (BC SC) (Chambers)).

Priorities

An individual was indebted to the federal Crown for income taxes. The federal Crown obtained certification of its claim under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) and registered the certificate in the Federal Court where the certificate has the same force and effect as a judgment of that court. The federal Crown then registered its certificate against the individual’s interest in land under s. 86 of the Court Order Enforcement Act. In execution proceedings, the federal Crown claimed, among other things, that it was entitled to payment in priority to other judgment creditors of equal degree by virtue of its prerogative. The general principle is that if there are a number of creditors of equal degree, and the Crown is one of them, then, subject to contrary legislation, the Crown is entitled to be paid in priority. However, the “benefit-burden” exception discussed in Sparling v. Quebec (Caisse de dépôt et de placement du Québec), 1988 CanLII 26 (SCC), applied in this case. The federal Crown invoked the Court Order Enforcement Act and sought to have its certificate treated as a judgment under the Act and so registered. Without the Act, the federal Crown could not have registered its certificate. Having accepted the benefit of registration against land conferred by s. 86 of the Court Order Enforcement Act, in order to attain status as a creditor of equal degree with other judgment creditors, the federal Crown could not now avoid the burden of ratable treatment imposed by ss. 110 and 111 (Hongkong Bank of Canada v. R., 1989 CanLII 2736 (BC CA)).

Property was ordered sold under the Partition of Property Act and one-half of the proceeds were placed in trust pending determination of priorities between various claimants. The court held that the unregistered judgment of the successful plaintiff in the partition action, the registered judgment of a third party, and the solicitor’s lien of defence counsel in the partition action all ranked equally under the Court Order Enforcement Act, s. 86. Accordingly, the Partition of Property Act, R.S.B.C. 1996, c. 347 having no provision regarding the priority of judgment creditors, all three claimants ranked pari passu in their claim against the trust funds (Gill v. Dhaliwal, 1993 CanLII 378 (BC SC)).

Lack of Equity

A judgment debtor’s lack of equity in a property at the time of sale to a third party is not a valid basis for cancelling a judgment. A judgment debtor is compelled by the fact of the registration of the judgment to deal with the judgment creditor if the judgment debtor wishes to dispose of the property. If the judgment debtor fails to do so, and if the purchaser is aware of the status of the title, including judgments, then the purchaser takes the property subject to the judgments. The purchaser may have a remedy against the vendor if they contracted for clear title, but the judgment creditor is not left “dangling in the breeze” as if the judgment creditor had not registered the judgment at all (Bank of Montreal v. Registrar, Vancouver Land Titles Office, 1988 CanLII 3045 (BC SC)).

Marshalling

A mortgagee held first mortgages against two properties, the V property and the N property, both owned by the mortgagor. Another mortgagee held a second mortgage on the N property only. A judgment creditor registered a judgment under s. 86 of the Act against both properties. In the first mortgagee’s foreclosure proceedings, the second mortgagee sought an order that the first mortgagee be required to marshall the proceeds of the sale of the two properties. The N property was sold first, and the amount realized was applied in full against the first mortgage. The V property was sold second and, after payment to the first mortgagee, a small balance remained. The effect of registration of the judgment was that the judgment creditor obtained a specific charge against the mortgagor’s beneficial interest in the N property as well as the V property. As far as distribution of any funds was concerned, the judgment creditor was in the same position as a second mortgagee would be regarding the V property. To apply the doctrine of marshalling so that the first mortgagee would be deemed to have satisfied its mortgage out of the sale proceeds first from the V property and then from the N property would mean the judgment creditor would receive nothing as he ranked behind the second mortgagee on the N property. The doctrine of marshalling did not apply because the rights of the judgment creditor would be prejudiced. Before the enactment of s. 86, a registered judgment attached to whatever beneficial interest a mortgagee might have after deducting all mortgages from the value of all the lands in the name of the mortgagor, and therefore the principles of marshalling could be applied. Section 86, however, gives a charge on specific land (Bank of Nova Scotia v. Adriatic Developments Ltd., 1984 CanLII 416 (BC SC)).

Apportionment

The petitioner obtained an order nisi of foreclosure and an order for the conduct of sale in connection with a first mortgage registered against two properties, one in Langley and one in Vancouver. The Crown in Right of Canada registered a second mortgage, in excess of the property value, on the Langley property. A third party, PAC, registered a third mortgage on that property and a second mortgage on the Vancouver property. The Vancouver property sold first and the petitioner applied for payment in full from the proceeds of that sale. PAC brought this application for an order apportioning the petitioner’s proceeds on the basis of the relative value of the two properties. In granting PAC’s application, the court found that PAC was not seeking an order directing the sale of one property before another. Rather, PAC was seeking what was in substance an accounting remedy, as between creditors of equal degree, deeming the first mortgage to have been satisfied on a rateable basis by reference to the value of the two properties involved (Citibank Canada v. McDonnell, 2003 BCSC 861).