Certificates of Pending Litigation (“CPLs”) are among the most powerful interim remedies available in British Columbia litigation. Once registered against the title, a CPL can effectively freeze land, disrupt financing, delay sales, and dramatically alter bargaining power between litigants. For that reason, courts have repeatedly emphasized that CPLs are an extraordinary pre-trial remedy that must strictly comply with the requirements of the Land Title Act.
In 1046056 B.C. Ltd. v. Liang, the Supreme Court of British Columbia addressed a recurring and increasingly sophisticated question in commercial litigation: can a CPL be registered against land that is not directly owned by a judgment debtor, but instead held through closely-controlled corporate entities, where the plaintiff alleges a fraudulent conveyance?
Dispute Arose From Failed Real Estate Development Funding
The plaintiffs were judgment creditors arising from a failed real estate development financing. They had advanced approximately $12 million to entities involved in a Vancouver development project. The loan was secured by a second mortgage and supported by personal guarantees, including from one of the central defendants, Mr. Liang.
When the development collapsed and the senior mortgagee foreclosed, the plaintiffs were left unsecured. They ultimately obtained a personal judgment exceeding $14 million against the borrowers and guarantors.
Like many post-judgment creditors, the plaintiffs then turned to asset tracing and enforcement strategies to locate value against which the judgment could be satisfied.
Alleged Asset Transfers and the Fraudulent Conveyance Claim
The plaintiffs alleged that, while insolvent and anticipating enforcement, Mr. Liang caused assets associated with another Vancouver real estate project (the “Park Station” development) to be restructured and transferred in a manner designed to put them beyond the reach of creditors.
Importantly, Mr. Liang did not personally hold legal or beneficial title to the Park Station land. Instead, the property was held through a layered corporate and partnership structure involving multiple corporations and a limited partnership. Mr. Liang’s interest was indirect, flowing through shareholdings in a closely held company.
The plaintiffs alleged that a corporate reorganization stripped Mr. Liang of his effective interest in the project and transferred it to his spouse through newly incorporated entities. They characterized this restructuring as a fraudulent conveyance under the Fraudulent Conveyance Act.
Certificates of Pending Litigation Registered
Based on those allegations, the plaintiffs registered CPLs against several unsold strata units in the Park Station project and against the family home shared by Mr. Liang and his spouse.
The defendants applied to discharge the CPLs, arguing that the plaintiffs had no claim to an estate or interest in land and that the pleadings did not support registration under section 215 of the Land Title Act.
The Legal Framework for CPLs in British Columbia
Section 215(1) of the Land Title Act permits a CPL to be registered in two distinct circumstances:
- Where the plaintiff claims an estate or interest in land (s. 215(1)(a)); or
- Where the plaintiff is given by another enactment a right of action in respect of land (s. 215(1)(b)).
Historically, many CPL disputes have focused almost exclusively on subsection (a). This case, however, turned on the proper interpretation of subsection (b).
The Court emphasized that the analysis under section 215 “begins and ends with the pleadings”. The court does not weigh evidence, assess merits, or speculate about what facts may later emerge in discovery.
Fraudulent Conveyance Claims Can Support Certificates of Pending Litigation in BC
A key issue was whether a plaintiff must always claim a proprietary interest in land to support a CPL. The Court held that this is not required under section 215(1)(b).
Where another statute (such as the Fraudulent Conveyance Act) grants a right of action “in respect of land,” a CPL may be registered even if the plaintiff does not assert a direct interest in title.
The Court confirmed that fraudulent conveyance claims directed at land fall squarely within this category, because the relief may ultimately involve voiding transfers and permitting execution against property.
Limits of Pleading Beneficial Ownership: Bald Assertions Are Not Enough
While the Court accepted that fraudulent conveyance actions may support CPLs under section 215(1)(b), it drew a sharp line when assessing the plaintiffs’ alternative argument: that Mr. Liang personally held a beneficial interest in the Park Station land.
The notice of civil claim contained general, conclusory assertions that Mr. Liang was a beneficial owner of the land, without pleading material facts explaining how such an interest arose. There were no allegations of trust arrangements, agreements, or factual mechanisms connecting Mr. Liang personally to the land beyond his role as a shareholder.
The Court held that bare assertions of beneficial ownership, unsupported by material facts, are insufficient to justify a CPL. Section 215 cannot be used as a placeholder while a plaintiff conducts discovery in hopes of uncovering a viable property interest.
Corporate Share Transactions Can Still Be “In Respect of Land”
Despite rejecting the plaintiffs’ claim of direct beneficial ownership, the Court nevertheless upheld the CPLs over the Park Station units on a different basis.
The Court found that the impugned transactions, although technically share transfers, were in substance connected to land ownership. The corporations existed solely to hold real estate, and the alleged reorganization stripped the judgment debtor of the value of his shares by removing the land from the corporate structure.
The phrase “in respect of land” was interpreted broadly, consistent with the Supreme Court of Canada’s authority. The Court concluded that a fraudulent conveyance claim targeting a restructuring that removes land value from a judgment debtor’s corporate vehicle is sufficiently connected to land to support a CPL. This reasoning is particularly important in modern real estate litigation, where land is frequently held through layers of corporate entities.
The Family Home and Trust Proceeds
The plaintiffs also registered a CPL against the family home, alleging that Mr. Liang had once owned 100% of the property and later transferred a beneficial interest to his spouse.
The Court described the pleading as cryptic and barely sufficient, but ultimately accepted that a representation of full ownership provided some factual basis for alleging a later fraudulent transfer.
Although the CPL over the home had already been discharged by consent to permit sale, the Court declined to order the release of the proceeds held in trust, finding that the pleadings narrowly met the statutory threshold.
Hardship and Inconvenience Arguments Rejected: High Threshold for Discharging CPLs
The defendants also sought cancellation of the CPLs on the basis of hardship and inconvenience under sections 256 and 257 of the Land Title Act.
The Court reiterated that hardship must be real, specific, and causally connected to the CPL. General allegations of carrying costs, reduced profitability, or inconvenience were insufficient.
There was no evidence of failed sales, lost financing, or concrete financial distress attributable to the CPLs. As a result, the hardship application failed.
Meridian Law Group: Top-Tier Vancouver Property & Real Estate Litigation Lawyers
1046056 B.C. Ltd. v. Liang is a significant decision for British Columbia litigation involving judgment enforcement, real estate, and corporate structuring. It strikes a careful balance between protecting creditors from asset-stripping schemes and preventing misuse of CPLs based on speculative pleadings. The Court reaffirmed that CPLs are powerful but tightly regulated tools. When properly grounded in statutory rights and well-pleaded facts, they can attach even to complex corporate real estate arrangements. When not, they remain vulnerable to cancellation.
If you are involved in a commercial real estate dispute, judgment enforcement proceeding, or real estate litigation in British Columbia, the strategic use (or defence) of Certificates of Pending Litigation can be outcome-determinative. The real estate and property litigation team at Meridian Law Group advises creditors, developers, shareholders, and property owners on fraudulent conveyance claims, CPL disputes, and complex enforcement strategies. Contact us online or call (604) 687-2277 to discuss how to protect your interests and navigate high-stakes real estate litigation.
