Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs sought to maintain certificates of pending litigation (CPLs) against strata properties under the Fraudulent Conveyance Act, alleging assets were transferred to defeat their $14.3 million judgment.

• Whether a CPL under s. 215(1)(b) of the Land Title Act requires a claim to an estate or interest in land, or merely a right of action "in respect of land," was central to the dispute.

• The court examined if a shareholder's indirect ownership through closely-held corporations qualifies as an action "in respect of land" for CPL purposes.

• Bare assertions of beneficial ownership without material facts were deemed insufficient to support a CPL registration.

• Applicants failed to demonstrate sufficient hardship or inconvenience under ss. 256-257 of the Land Title Act to warrant CPL discharge.

• Corporate reorganization transferring ownership from one spouse to another was analyzed as a potential fraudulent conveyance.

Background and loan default

By agreement dated September 1, 2022, the plaintiffs—1046056 B.C. Ltd. and related entities—loaned $12 million to New Oakridge Investment Limited Partnership and 8866999 (New Oakridge) Ltd. to develop the New Oakridge project located across Cambie Street from Oakridge Mall in Vancouver. The loan was secured by a second mortgage on the New Oakridge property and by personal guarantees given by Mr. Liang and others. When the New Oakridge project failed, the first mortgagee brought foreclosure proceedings which resulted in a judgment dated July 20, 2023 for $60,145,912.13. The property later sold on July 15, 2024 for $52,500,000. All the net proceeds went to the first mortgagee, leaving a shortfall on that loan of approximately $7,645,000. Thus, there were no funds left to satisfy any amount of the plaintiffs' second mortgage. On August 1, 2024, the plaintiffs obtained a personal judgment against the Judgment Debtors in the amount of $14,383,762.42 plus costs.

The Park Station development and alleged fraudulent conveyance

Prior to August 2023, Mr. Liang and Ms. Huang each held a 50% interest in JPV Real Estate Capital (Cambie48) Ltd. ("JPV Cambie"), which in turn held a 50% interest in 0985313 BC Ltd.—the company holding legal title to the Park Station lands. The other 50% interest in 0985313 BC Ltd. was held by THC Real Estate Investment (Cambie) Ltd. ("THC"). THC is not a Judgment Debtor. The beneficial owner of the Park Station lands was L&A Real Estate Investments Limited Partnership. Through this structure, Mr. Liang effectively held a 25% interest in the Park Station property through his shares in JPV Cambie. Ms. Huang also held a 25% interest the same manner. The other 50% interest in Park Station was owned by THC.

In August 2023, shortly after judgment was given in favour of the first mortgagee on the New Oakridge property, the ownership of the Park Station project was reorganized such that Mr. Liang's 25% interest was essentially transferred to Ms. Huang. 0985313 BC Ltd. continued to hold legal title to the Park Station lands, but JPV Cambie's 50% ownership in 0985313 BC Ltd. was transferred to a new company called 1429917 B.C. Ltd., which is 100% owned by Ms. Huang. THC's 50% interest in 0985313 BC Ltd. was unchanged. The beneficial ownership of the Park Station lands was transferred out of the L&A Limited Partnership and into a new company, 1430155 B.C. Ltd., which is jointly owned by 1429917 B.C. Ltd. and THC. The NOCC alleges this reorganization constitutes a fraudulent conveyance under the Fraudulent Conveyance Act, in that Mr. Liang essentially divested his interest in the project to Ms. Huang to defeat the plaintiffs' claim against him as a Judgment Debtor.

The family home claim

The NOCC alleges that Mr. Liang represented to the plaintiffs that he held a 100% interest in a residential property on West 53rd Avenue in Vancouver. In fact, legal title to this property is held jointly by Mr. Liang and Ms. Huang and registered as such in the Land Title Office. However, the plaintiffs assert, based on Mr. Liang's alleged representation, that Ms. Huang once held her 50% interest in trust for Mr. Liang as that is the only way he could hold a 100% interest at the time of his alleged representation. They argue that Mr. Liang transferred his beneficial 50% interest to Ms. Huang and allege this was a fraudulent conveyance. The court found the particulars of this alleged transaction "very well concealed" within the NOCC but found the NOCC adequate, though "barely so," to support the claim to a CPL on the West 53rd home.

Legal analysis of CPL requirements

The court determined that the right of action given by another statute under s. 215(1)(b) need only be "in relation to land" and need not claim an interest in land. The phrase "in respect of" was interpreted broadly, following Supreme Court of Canada precedent in Nowegijick v. The Queen establishing that these words are "words of the widest possible scope." The court found it unnecessary for Mr. Liang to have a direct ownership interest in the land to bring the plaintiffs' claim within s. 215(1)(b) of the Land Title Act because an action "in respect of land" is broad enough to capture land that is owned through a closely-held corporation controlled by a judgment debtor.

However, the court found the plaintiffs' general assertion that Mr. Liang holds a beneficial ownership interest in the Park Station lands is insufficient to make the Fraudulent Conveyance claim an action "in respect of land." Without material facts supporting this claim, the claim to an estate or interest in land is "pure conjecture." The court emphasized that a CPL is "an extraordinary and powerful pre-trial tool" and that s. 215(1) is not a tool to freeze an asset so that a plaintiff can investigate a potential claim which, at present, has no known or suggested factual basis.

Hardship analysis and outcome

The Applicants failed to establish sufficient hardship or inconvenience to warrant CPL discharge under ss. 256-257 of the Land Title Act. They claimed the properties are earning a rental income of $56,306.28 annually and the carrying costs are $87,237.95 annually, leaving an annual shortfall of just under $31,000. They claimed the companies do not have adequate funds to carry those expenses but provided no evidence of their financial circumstances. The court noted there was no evidence of a pending sale for one or both of the two unsold properties, nor evidence that the CPLs are deterring potential buyers from making an offer. To the contrary, the court observed that one of the units sold after a CPL was registered against it.

Justice Kirchner dismissed all applications. The court found the CPLs were properly registered against the three Park Station properties under s. 215(1)(b), not because the plaintiffs plead that Mr. Liang holds a beneficial ownership interest in the properties but because the transactions of the corporate entities controlled by Mr. Liang are alleged to have been done to delay, hinder or defraud the plaintiffs from realizing on their judgment. Costs will be in the cause.