Grant v. Sandhu, 2019 BCSC 2236

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Grant v. Sandhu, 2019 BCSC 2236 Date: 20191227 Docket: S43398 Registry: Penticton Between: Joanna Grant Plaintiff And Balwinder Singh Sandhu and Douglas Earl Grant Defendant Before: The Honourable Madam Justice Norell Reasons for Judgment Counsel for the Plaintiff: E. Lund Counsel for the Defendant, B.S. Sandhu: J. Jacoe Place and Dates of Hearing: Penticton, B.C. November 27, 2019 Place and Date of Judgment: Penticton, B.C. December 27, 2019 [ 1 ] The defendant Mr.

Sandhu applies for an order cancelling a certificate of pending litigation (“CPL”) on his property, either because it is a nullity, or on the basis of hardship and inconvenience. The CPL was filed by the plaintiff Ms. Grant, one of two joint owners of adjoining property. The CPL arises out of a dispute over an easement granted over Ms. Grant’s land in favour of Mr. Sandhu’s land. The defendant Mr. Grant, who is the father of Ms. Grant, did not file a response to the application and did not appear on the application. [ 2 ] The issues that arise for determination are:

a) whether Ms. Grant has a claim for an “interest in land” within the meaning of s. 215 of the Land Title Act , R.S.B.C. 1996 c. 250 ; and

b) if the above is answered in the affirmative, whether Mr. Sandhu has established that the CPL should be cancelled because of hardship and inconvenience within the meaning of s. 256 of the Land Title Act . Interest in land [ 3 ] Section 215(1) of the Land Title Act provides: 215

(1) A person who has commenced or is a party to a proceeding, and who is (

a) claiming an estate or interest in land, or (

b) given by another enactment a right of action in respect of land, may register a certificate of pending litigation against the land in the same manner as a charge is registered, … [ 4 ] Either of the criteria in s. 215 is a threshold to filing a CPL: Bilin v. Sidhu , 2017 BCCA 429 at para. 55 ; and Berthin v. Berthin , 2018 BCCA 57 at para. 40 . If not met, the court has jurisdiction to cancel the CPL. [ 5 ] In Xiao v.

Fan , 2018 BCCA 143 , the court discussed the proper approach to an application to cancel a CPL under s. 215 : [27] Accordingly, the correct test to be applied in an application to cancel a CPL that is alleged to be non-compliant with s. 215 of the Land Title Act is simply whether the pleadings disclose a claim for an interest in land. In such an application, no evidence is to be considered. If the merits of the claim for an interest in land are challenged, a defendant should apply for a

summary dismissal of that part of the claim under Rule 9-6(4), where evidence may be considered, and the test to be applied is whether there is a bona fide triable issue of fact or law. If that part of the claim is dismissed, a defendant may then apply to have the CPL cancelled under s. 254.

[ 6 ] In this case, the parties dispute whether Ms. Grant’s claim is for an interest in land within s. 215(1) (a). Neither party argued whether Ms. Grant’s claim comes within s. 215(1) (b). This is not an application under Rule 9-6(4). I must consider only the pleadings for this portion of the application. [ 7 ] In the notice of civil claim, Ms. Grant pleads that prior to the events at issue in this action, Mr. Grant was the owner of two adjacent properties in Summerland, B.C., which for convenience are called the East Lot and the West Lot. [ 8 ] In July 2010 Ms.

Grant and another person purchased the East Lot from her father. Ms. Grant alleges that at the time of the purchase, she and her father entered into a collateral agreement that would permit her father to place an easement over the East Lot in favour of the West Lot and that it “would continue so long as [the West Lot] remains within the Grant family and will dissolve if [Mr. Grant] chooses to sell [the West Lot] outside of the family”. [ 9 ] Mr. Grant subsequently executed and registered an easement over the East Lot for the benefit of the West Lot.

The easement generally grants the West Lot, as dominant tenement, the right to pass over the East Lot, as servient tenement, for the purpose of ingress and egress to the West Lot. [ 10 ] In October 2017, Mr. Sandhu purchased the West Lot from Mr. Grant. [ 11 ] In her notice of civil claim, Ms. Grant alleges: 16. In breach of his contract with the Plaintiff, the Defendant Grant failed and neglected to discharge the Easement prior to conveying the West Lot to the Defendant Sandhu. 17.

At all material times and prior to the sale, the Defendant Sandhu was aware of the requirement for the defendant Grant to discharge the Easement under the terms of his agreement with the Plaintiff. [ 12 ] Disputes have since arisen between Ms. Grant and Mr. Sandhu as to the scope and use of the easement and Ms. Grant alleges that Mr. Sandhu has created a nuisance and unreasonably interferes with the use of her land. [ 13 ] In her notice of civil claim, Ms.

Grant seeks an order cancelling the easement pursuant to s. 35 of the Property Law Act , R.S.B.C. 1996, c. 377 ; in the alternative, that the easement be modified; in the further alternative, a declaration as to the reasonable scope and use of the easement; damages against Mr. Grant for breach of the agreement to discharge the easement prior to the sale to Mr. Sandhu; and damages against Mr. Sandhu for nuisance and trespass. Shortly after Ms. Grant filed her action, she also registered a CPL against Mr. Sandhu’s property. It is this CPL which is now in dispute. [ 14 ] Ms.

Grant does not argue that her claim for damages for nuisance and trespass constitutes an interest in land. She argues that her claim that the easement should be cancelled is a claim for an interest in Mr. Sandhu’s land. The easement is noted in the Legal Notations

section on the state of title certificate for Mr. Sandhu’s land. The easement takes some of the rights over her own land, and attaches them to Mr. Sandhu’s land. She wants those rights returned to her land. The only reason Mr. Sandhu has the easement is through operation of the Land Title Act . The easement is not a personal covenant. It is a right attached to land. She claims that Mr.

Sandhu was aware of the agreement that the easement would only exist until the property was sold to a non-family member. [ 15 ] She argues that the CPL is necessary to let innocent third parties – such as mortgagees and potential purchasers of Mr. Sandhu’s property – know that she is making a claim that Mr. Sandhu’s property is not entitled to the easement over her property.

She refers to s. 182(2) of the Land Title Act , which provides that a transfer of land covered by an indefeasible title on which an endorsement of an easement has been made transfers, without express mention, the benefit of the easement. [ 16 ] Mr. Sandhu accepts that an easement is an interest in land, but says it does not create an interest in “his land”. He says the only interest in land created by the easement is the interest Mr. Sandhu, as owner of the West Lot, has in Ms. Grant’s land. The easement is only a “legal notation” on Mr. Sandhu’s land and does not create an interest in Mr.

Sandhu’s land. [ 17 ] The issue is whether the owner of a servient tenement has an interest in the land of a dominant tenement. Neither counsel were able to locate any case authority where the servient tenement was claiming a CPL filed against the dominant tenement. [ 18 ] For the following reasons, I have concluded that Ms. Grant’s claim as the owner of a servient tenement is a claim for an interest in the land of the dominant tenement, and that she meets the criterion in s. 215(1) (

a) of the Land Title Act . [ 19 ] First, the easement is a bundle of rights over Ms. Grant’s land that is annexed to Mr. Sandhu’s land. Ms. Grant claims an interest in that annexed bundle of rights and says it should not be there. In my view, that is a claim for an interest in Mr. Sandhu’s land. [ 20 ] In 1832732 Ontario Corp. v. Regina Properties Ltd., 2018 ONSC 7643 , the court stated at para. 41 that: An easement is an incorporeal hereditament, being an inheritable, non-possessory ownership interest in land.

It is a right of usage over a property, which is described as the servient tenement that is annexed to a parcel of land, which is described as the dominant tenement. [ 21 ] The easement is noted in the Legal Notations

section of the state of title certificate of Mr. Sandhu’s land. The notation refers to the easement being “annexed” to that lot. Further, s. 182 of the Land Title Act requires that easements and other incorporeal rights that are created for the purpose of being annexed to other land must be endorsed on the indefeasible title of the dominant tenement.

Section 182 states: 182

(1) If a restrictive covenant, an easement , a party wall agreement as defined in

section 223.1, or other incorporeal right is entered into or created for the purpose of being annexed to other land, hereinafter referred to as the dominant tenement, for which an indefeasible title has been registered, the registrar must make an endorsement of the covenant, easement or right, and of the instrument creating it, against the indefeasible title of the dominant tenement.

(2) A transfer of the land covered by an indefeasible title on which an endorsement under subsection (1) has been made transfers, without express mention, the benefit of the covenant, easement, agreement or right. [ 22 ] Second, the purpose of a CPL is to give notice to third persons of a claim to an interest in the land. If the CPL were cancelled, mortgagees and potential purchasers would not know that Ms. Grant is claiming that the benefit of the easement should not be attached to Mr. Sandhu’s land. The existence of easement may be significant to those third persons. Interpreting s. 215 to include the easement promotes this purpose. [ 23 ] Third, this

interpretation is consistent with other legislative provisions. Section 35(1) of the Property Law Act , upon which Ms. Grant relies in the underlying action, refers to an easement as either a charge or interest against land. It states:

(1) A person interested in land may apply to the Supreme Court for an order to modify or cancel any of the following charges or interests against the land, whether registered before or after this

section comes into force: (

a) an easement;… Hardship and inconvenience [ 24 ] Having concluded that the CPL meets the criteria in s. 215(1) (a), I turn to Mr. Sandhu’s claim regarding hardship and inconvenience. [ 25 ]

Section 256 of the Land Title Act provides: 256

(1) A person who is the registered owner of or claims to be entitled to an estate or interest in land against which a certificate of pending litigation has been registered may, on setting out in an affidavit (

a) particulars of the registration of the certificate of pending litigation, (

b) that hardship and inconvenience are experienced or are likely to be experienced by the registration, and (

c) the grounds for those statements, apply for an order that the registration of the certificate be cancelled. [ 26 ] In Youyi v. Group Holdings (Canada) Ltd. v. Brentwood Lanes Canada Ltd. , 2014 BCCA 388 , the court discussed the conflicting authorities in B.C. on the degree of hardship required under s. 256 and concluded: [28] As a preliminary matter the applicant must show that it is experiencing or likely to experience “hardship and inconvenience” as a result of the registration of the CPL.

It appears that the degree of hardship required is the subject of disagreement in the Supreme Court of British Columbia. While some judges have proceeded on the basis that the hardship need not be “significant” (see, e.g., Enigma Investments Corp. v. Henderson Land Holdings (Canada) , Ltd. 2007 BCSC 1379 , and 0966349 B.C. Ltd. v. Shell Canada Limited , Reasons dated February 28, 2014, New Westminster Docket S151234), others have required “severe suffering” (see, e.g., the lower court decision in Liquor Barn Income Fund v.

Mather , 2009 BCSC 1092 , at para. 7 [aff’d 2011 BCCA 141 ].) The Shorter Oxford Dictionary (6th ed., 2007) defines “hardship” to mean “the quality of being hard to bear” or “severe suffering or privation”; “significant” to mean “important, notable; consequential”; and “insignificant” to mean “of no importance; trivial, trifling” or “meaningless”. To the extent that these or other decisions of the trial court suggest that “hardship” in s. 256(1) may be met by proof of hardship that is “insignificant” or “not significant”, I would disagree.

I doubt that the Legislature intended the threshold under s. 256 to be surmounted by proof of hardship that is only “trifling”. On the other hand, I agree that a court should not be “exacting” in its analysis of hardship and inconvenience. [ 27 ] In Liquor Barn Income Fund, the court stated at para. 7 that “inconvenience in this context means an interference with the ability of an owner to deal freely with his or her property”. [ 28 ] The onus is on Mr. Sandhu to establish by evidence that the CPL is causing him hardship and inconvenience. Mr.

Sandhu argues he has and is experiencing hardship because it is preventing him from restructuring his business in a more tax-effective manner. He has not filed his own affidavit. Instead, two of his adult children have filed affidavits. [ 29 ] Evidence at the hearing established that the East Lot is a former orchard with a residence, and the West Lot is an orchard. From 1997 to the end of 2018, Mr. Sandhu farmed the orchard portion of the East Lot under a crop lease, and the West Lot under a crop lease or as owner. [ 30 ] On July 9, 2019, Mr. Bikaramjit Sandhu, the son of Mr. Sandhu, swore an affidavit.

He states that his father and family own a farming business on the West Lot. His family first learned of the effect of the CPL in February 2019 when “we were in the process of obtaining financing for a project that we were very passionate about. The Property was to be used as security for the financing”. He states their banker, a Ms. Diaz from the Bank of Montreal, required them to furnish legal advice regarding the CPL and the bank obtained their own legal advice. As a result the project was delayed by about a month.

He states (paragraph numbering removed): The Bank of Montreal is not pleased with the fact that a CPL has been registered against our Property. In addition, the CPL has harmed our reputation with the Bank of Montreal. In order to obtain financing for future projects that we have planned the Bank of Montreal has indicated it requires that the CPL be removed from the title of the Property. Due to the CPL, our project has been delayed, and as a result our target time of completion will not be met. It also reduced our chances of selling the project once completed. Both of these facts could result in financial loss.

[ 31 ] On November 21, 2019. Ms. Chanpreet Sandhu, the daughter of Mr. Sandhu, swore an affidavit. She states that prior to 2019 her father operated a sole proprietorship on the West Lot, which is subject to financing by the Bank of Montreal. She then states (paragraph numbering removed): All income earned from the operation of the business has been included in my father’s personal income tax return and taxed accordingly.

In early 2018, my father consulted with his accountant, Omland Heal LLP, and it was determined that it would be advantageous to pursue an option to incorporate the business and transfer his properties, including the [West Lot] to the new corporation. The accountant has advised the corporate tax rate is much lower than the personal tax rate and this would result in additional cash flow to accelerate the repayment of the debt.

On May 2, 2019 my father incorporated a company called Mangal Capital Inc. … It is my father’s intention to proceed with the transfer of [the West Lot] into the name of the incorporate company, Mangal Capital Inc. It will also be necessary to move the debt presently in my father’s name, into the new incorporated company, Mangal Capital Inc. My father is working with the Bank of Montreal to remortgage [the West Lot].

As a result of the Certificate of Pending Litigation registered against [the West Lot] my father is unable to move forward with this plan to transfer the West Lot into the corporation and to restructure the debt, therefore resulting in the loss of expected savings on taxes and the inability to accelerate the repayment of his debt. [ 32 ] Ms. Grant points to the vague nature of the affidavits and argues Mr. Sandhu has not shown that it is the CPL as opposed to the litigation over the easement which is allegedly causing the bank to not provide financing. Ms.

Grant refers to the Liquor Barn Income Fund decision where the defendants sought removal of CPLs to replace existing financing to reduce interest charges and where there was some evidence from a bank that the advance of funds was hindered by the CPL as well as the underlying litigation.

The court stated at para. 13 that: ...The applicants must demonstrate not only hardship and inconvenience, but must also provide sufficient particulars to demonstrate a causal connection between that hardship and inconvenience and the filing of a certificate of pending litigation against title. … [ 33 ] In my view, the affidavits do not establish hardship and inconvenience, or the required causal connection between the CPL and the alleged hardship and inconvenience. The affidavits are inconsistent, and the inconsistency is not explained.

The son refers to an unidentified project for which the West Lot would be used to secure financing. The daughter refers to something different; restructuring for effective tax planning. Both affidavits lack any detail of the project, or restructuring. There is no information regarding the amount of expected savings. [ 34 ] The affidavits contain vague conclusory statements, such as the “bank is not pleased” with the CPL. There is no correspondence from the bank or accountants appended to the affidavits, nor are there affidavits from Ms. Diaz or the accountant.

There is no evidence that would establish that it is the CPL as opposed to the litigation over the easement that may be impeding re-financing. The comments regarding the position of the Bank of Montreal and the opinion of the accountant are hearsay (without the required specific reference to the source) and possibly double hearsay. It is not clear that either of the adult children have personal knowledge of some of the matters stated. The way the affidavits are worded leaves me in doubt that they have personal knowledge of some of the matters stated. Mr.

Sandhu, who is the owner of the property, did not swear his own affidavit. [ 35 ] Given my finding that Mr. Sandhu has not established hardship and inconvenience, or that the hardship and inconvenience are caused by the CPL, it is not necessary to consider Ms. Grant’s alternative argument that if the CPL is canceled, Mr. Sandhu should be required to post security under s. 257 of the Land Title Act . Conclusion [ 36 ] Mr. Sandhu’s application to cancel the CPL registered under No.

CA6950845, against the following lands, is dismissed: PID: 012-569-887, The West ½ of Lot 5, Block A, District Lot 974, ODYD, Plan 268 except Plan 18584. [ 37 ] Mr. Sandhu is at liberty to renew an application for cancellation of the CPL on the ground of hardship and inconvenience if circumstances arise in the future which merit such an application. “Norell J.”