In the Supreme Court of British Columbia’s decision in Bali v. 1292795 B.C. Ltd., 2025 BCSC 1316, Justice Douglas ordered the discharge of a Certificate of Pending Litigation (CPL) after finding that the petitioners had failed to properly plead the existence of an equitable mortgage.
The petitioners claimed they were entitled to register a CPL against a property in Surrey, British Columbia, based on an agreement tied to a previous loan. However, the court held that the pleadings did not establish a sufficient legal foundation to support a claim to an interest in land.
Background of the Loan Dispute
The dispute involved a $500,000 loan made by the petitioners to 1292795 B.C. Ltd. (referred to as “129”). This loan was secured by a mortgage on a property located on 76th Avenue in Surrey.
The petitioners alleged that the loan agreement also included a provision for further security in the form of an equitable mortgage on a second property located on 16th Avenue, which is owned by 1196012 B.C. Ltd. (referred to as “119”).
When the loan was not repaid, the petitioners registered a CPL on the 16th Avenue property, asserting that an equitable mortgage had come into effect.
Central Legal Issues
The court addressed several key issues in its decision:
- Whether the petition disclosed a valid legal basis for an equitable mortgage, which would justify the CPL under Rule 9-5(1)(a) of the Supreme Court Civil Rules.
- Whether the pleadings were frivolous, vexatious, or an abuse of process, under Rules 9-5(1)(b) and (d).
- Whether the CPL should be cancelled due to lack of a valid interest in land, as required by section 215 of the Land Title Act.
- Whether the petitioners should be permitted to amend their pleadings.
Failure to Plead Key Elements of an Equitable Mortgage
Justice Douglas concluded that the petition did not adequately allege the necessary elements to support an equitable mortgage. Specifically, the petition failed to plead that 119 was a party to the loan agreement or that it had authorized the agreement in any way. It also did not establish a shared intention between the parties to use the 16th Avenue property as security.
The agreement lacked clear terms and introduced inconsistencies regarding repayment obligations, further weakening the petitioners’ position.
Because the CPL was based entirely on the alleged equitable mortgage, and that claim was insufficiently pleaded, the court found there was no legal basis to keep the CPL in place.
Vexatious Conduct Not Proven
Although the respondents argued that the petition was an abuse of process and intended only to block a property sale, the court declined to make that finding.
The affidavit evidence from both sides contained factual conflicts that could not be resolved at this stage.
The judge noted that mere contradictions in affidavits are not enough to establish that a claim is vexatious or abusive.
Petitioners Allowed to Amend
Despite striking parts of the petition and cancelling the CPL, the court did not rule out the possibility that the petitioners could plead a viable claim if given the opportunity.
As a result, the petitioners were granted leave to amend their petition within 30 days. The court emphasized that amendments should only be denied where the claim is clearly bound to fail or amounts to an abuse of the court’s process, which was not established here.
Practical Takeaways
This ruling demonstrates that a CPL must be based on a properly pleaded legal claim to an interest in land. Courts will scrutinize whether a party has provided sufficient factual allegations to support such a claim. Simply referencing an agreement or suggesting that security was intended is not enough.
The parties must clearly identify the agreement, show that the alleged debtor participated, and explain how the property in question was intended to serve as collateral.
While the court enforces these pleading standards strictly, it also allows room for correction if there is still a possibility that the claim could be valid. Lawyers should take care to plead all essential facts in detail, particularly when seeking powerful remedies like a CPL that can significantly impact property rights.
Importance of Hiring a Real Estate Litigation Lawyer
Real estate disputes in British Columbia can be legally complex, procedurally demanding, and financially significant. As demonstrated in the case of Bali v. 1292795 B.C. Ltd., a claim may be dismissed not because it lacks merit, but because it was not properly framed or supported in the pleadings.
For individuals or businesses trying to protect property rights or respond to a certificate of pending litigation (CPL) or mortgage dispute, skilled legal representation is essential.
A knowledgeable real estate litigation lawyer can help ensure that your position is clearly and effectively presented to the court. They can assist with preparing proper pleadings, gathering and presenting supporting evidence, and developing a sound legal strategy.
Without professional guidance, even a legitimate claim may fail due to procedural errors or omissions.
If you are facing a property-related dispute, Legalbird offers trusted legal support backed by experience in British Columbia real estate law. Contact us today to schedule a free 30-minute case evaluation and find out how we can help protect your interests.
