Fritz v. 848 Yates Nominee Ltd.

2019 BCSC 1294 Fritz v. 848 Yates Nominee Ltd.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Fritz v. 848 Yates Nominee Ltd., 2019 BCSC 1294 Date: 20190806 Docket: S184272 Registry: Victoria Between: Karl Fritz and Monica Jasmine Fritz Plaintiffs And: 848 Yates Nominee Ltd. Defendant Before: Master Bouck Reasons for Judgment In Chambers Counsel for Plaintiffs: M. Scherr Counsel for Defendant: D. Laudan Place and Date of Hearing: Victoria, B.C. July 31, 2019 Place and Date of Judgment: Victoria, B.C. August 6, 2019 The Application [1] These reasons address the defendant's application, brought on short leave, for the following relief: 1. An Order that the plaintiffs, within one day of this Order, remove the Certificate of Pending Litigation CA7138998 (the "CPL") registered against the defendants' property located at 848 Yates Street, Victoria, British Columbia, which has the following legal description: PID: 030-371-660 Lot A, Victoria City, District Plan EPP73063 ("848 Yates").

2. An Order that the Registrar of Land Titles immediately remove the CPL registered against 848 Yates.

3. Alternatively, that the CPL be immediately removed on posting of security fixed at $500, or such other amount as the Court deems appropriate.

4. Costs, payable forthwith in any event of the cause. [2] Following submissions, I ordered that the CPL be removed upon the posting of $50,000 as security and costs in the cause. These are my reasons for making that order. Background Facts [3] The defendant's notice of application sets out these facts: 5. The defendant is the registered owner of 848 Yates. The plaintiffs are the registered owner of the neighbouring property, located at 858/860 Yates Street, Victoria, British Columbia ("860 Yates"). The defendants are undertaking a mixed use commercial and residential development at 848 Yates (the "Project"). The project will have two buildings, the Yates Tower and the Johnson Tower. In order to support this, the defendant and the plaintiffs entered into a crane overswing and underpinning agreement (the "Agreement") allowing the defendant limited access to 860 Yates, on certain terms. The Agreement is registered in the Victoria Land Title Office as an easement registered as charge against title to 860 Yates, as servient tenement. The Agreement is also shown, as an easement, by way of a notation on title to 848 Yates.

6. On 2 October 2016, the plaintiffs issued a notice of civil claim, and on 11 October 2018, the plaintiffs filed an amended notice of civil claim claiming damages for alleged breach of the Agreement, and other relief, specifically: compensation under the terms of the Agreement, a certificate of pending litigation on 848 Yates, damages for breach of contract, negligence and trespass, an injunction restraining the defendant from continuing their work, interest and costs, and alternatively, cancellation of the Agreement from title. The plaintiffs do not, however, expressly claim an interest in land, much less a registerable interest in land, in 848 Yates.

7. On 17 October 2018, the plaintiffs obtained and filed a certificate of pending litigation against 848 Yates.

8. Construction of the Project has now filled the excavation and is well above ground. From a financing perspective, the next step in the Project is the subdivision from title to 848 Yates of an air space parcel for the Johnson Tower, which is needed for financing by BC Housing. Those funds are needed for the completion of the Project. Without them, the Project would be delayed or jeopardized. The CPL would prevent the subdivision the air parcel from 848 Yates. It is therefore a serious impediment for the Project. [4] The plaintiffs agree with those facts, but add the following: 2. The damage to the plaintiffs' building located at 860 Yates Street is significant and will require a professional inspection to determine the extent of the damage.

3. At the very least the remediation required will include leveling of the building, drywall repair on interior cracking, ground floor concrete removal and replacement, tile repair/replacement, trim repair/replacement and resolution of the door jamb issues if not solved by leveling of the building.

4. The disruption to the plaintiffs' tenants at 860 Yates has also been significant. The tenants have lost revenue and experienced a marked decrease in customers.

5. The plaintiffs have been forced to negotiate a rent abatement agreement with the main floor tenant of 860 Yates to offset the tenant's losses and preserve the tenant in the long term.

6. The plaintiffs have a right of action pursuant to the section 35 of the Property Law Act. [5] In late July 2019, the defendant commissioned a report from RJC Engineers to address any damage to the plaintiffs' property that might have been caused by the defendant's work. That report dated July 26, 2019 identifies some "damaged finishes and minor movement" resulting from the work, but that these are not structural safety concerns. A principal of RJC deposes that any remediation work for this damage will be in the range of $50,000 "allowing for some creep and remediation of conditions that pre-existed" the adjacent construction project. A report from a geotechnical engineer dated July 30, 2019 suggests that there will be no further movement of the plaintiffs' building related to the 848 Yates project. The report also notes that the defendant saved approximately $48,000 in construction costs by using a different shoring system than originally planned. The plaintiffs say that this change may well be the source of the building damage and present their own expert opinion in that regard. [6] Counsel advised that further expert evidence will be forthcoming once the damage to the plaintiffs' building is known with some certainty and a remediation plan is settled. [7] The plaintiffs depose that the liquidated amounts incurred to date as a result of the alleged damage are $25,000 in

engineering, survey, architect and legal expenses together with a rate abatement to the existing tenants of about $24,000. [8] The plaintiffs' have instructed counsel to seek security in the sum of $500,000. No evidence was led as to the defendant's ability to pay that sum or any other amount. Discussion [9] The relevant statutory authorities cited by the parties are: Land Title Act, RSBC 1996, c 250 (the "LTA"): Registration of certificate of pending litigation in same manner as charge 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, and the registrar of the court in which the proceeding is commenced must attach to the certificate a copy of the pleading or petition by which the proceeding was commenced, or, in the case of a certificate of pending litigation under Part 5 of the Court Order Enforcement Act, a copy of the notice of application or other document by which the claim is made. . (5) Despite subsection (1), if a person entitled to enforce a restrictive covenant or building scheme has commenced an action to enforce it, the person may register under this section a certificate of pending litigation in the form approved

by the director against land in respect of which a breach is alleged to have occurred. . Cancellation of certificate of pending litigation on other grounds 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. . Power of court to order cancellation 257 (1) On the hearing of the application referred to in section 256 (1), the court (a) may order the cancellation of the registration of the certificate of pending litigation either in whole or in part, on (i) being satisfied that an order requiring security to be given is proper in the circumstances and that damages will provide adequate relief to the party in whose name the certificate of pending litigation has been registered, and (ii) the applicant giving to the party the security so ordered in an amount satisfactory to the court, or (b) may refuse to order the cancellation of the registration, and in that case may order the party (i) to enter into an undertaking to abide by any

order that the court may make as to damages properly payable to the owner as a result of the registration of the certificate of pending litigation, and (ii) to give security in an amount satisfactory to the court and conditioned on the fulfillment of the undertaking and compliance with further terms and conditions, if any, the court may consider proper. (2) The form of the undertaking must be settled by the registrar of the court. (3) In setting the amount of the security to be given, the court may take into consideration the probability of the party's success in the action in respect of which the certificate of pending litigation was registered. (4) On hearing the application referred to in section 256 (2) and on being satisfied that (a) the facts set out in the affidavit are consistent with the records of the land title office, and (b) there is nothing in the pleading or petition by which the proceeding was commenced or notice of application attached to the certificate that expressly or by necessary implication alleges that the owner is not a purchaser in good faith and for valuable consideration, the court may make an order declaring that the owner's indefeasible title or charge is not affected by the certificate of pending litigation or the outcome of the proceeding. (5) On receipt of an order made under subsection (4), the registrar must file it and cancel the registration

of the certificate of pending litigation. Property Law Act, [RSBC 1996], c 377: Court may modify or cancel charges 35 (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; (b) a land use contract; (c) a statutory right of way; (d) a statutory building or statutory letting scheme; (e) a restrictive or other covenant burdening the land or the owner; (f) a right to take the produce of or part of the soil; (g) an instrument by which minerals or timber or minerals and timber, being part of the land, are granted, transferred, reserved or excepted. (2) The court may make an order under subsection (1) on being satisfied that the application is not premature in the circumstances, and that (a) because of changes in the character of the land, the neighbourhood or other circumstances the court considers material, the registered charge or interest is obsolete, (b) the reasonable use of the land will be impeded, without practical benefit to others, if the registered charge or interest is not modified or cancelled, (c) the persons who are or have been entitled to the benefit of the registered charge or interest have expressly or impliedly agreed to it being modified or cancelled, (d) modification or

cancellation will not injure the person entitled to the benefit of the registered charge or interest, or (e) the registered instrument is invalid, unenforceable or has expired, and its registration should be cancelled. (3) The court may make the order subject to payment by the applicant of compensation to a person suffering damage in consequence of it but compensation is not payable solely for an advantage accruing by the order to the owner of the land burdened by the registered instrument. (4) The court must, as it believes advisable and before making an order under subsection (2), direct (a) inquiries to a municipality or other public authority, and (b) notices, by way of advertisement or otherwise, to the persons who appear entitled to the benefit of the charge or interest to be modified or cancelled. (5) An order binds all persons, whether or not parties to the proceedings or served with notice. (6) The registrar, on application and the production of an order made or a certified copy of it must amend the registrar's records accordingly. [10] As can be seen, the defendant made alternative arguments in support of an order cancelling the registration of the CPL. The defendant's main argument is that the notice of civil claim is incapable of supporting a CPL pursuant to s. 215 of the LTA: Bilin v. Sidhu, 2017 BCCA 429. The plaintiffs submit that the CPL is validly claimed

pursuant to s. 215(1)(b) of the LTA and s. 35 of the Property Law Act. More specifically, the plaintiffs say that the CPL is providing notice of the existence of the dispute relating to title, protecting their claim for compensation from successors in title and providing the priority necessary pursuant to sections 26 through 29 of the LTA. [11] During the course of these submissions, I raised the question of whether a Master has jurisdiction to order the cancellation of a CPL other than pursuant to ss. 256 and 257 of the LTA. The defendant suggested that a Master has that jurisdiction citing Payne v. Voth 1990CarswellBC 2479 (S.C.). The plaintiffs do not address the jurisdiction issue in their application response. However, in chambers, their counsel submitted that only a Judge exercising inherent jurisdiction can make the order sought under items 1 and 2 of the notice of application. Neither party sought a direction that the application be referred to Judge's chambers despite this uncertainty. Having now considered the authorities, I have concluded that the plaintiffs' position is correct: NextGen Energy Watervliet TWP, LLC v. Bremner, 2018 BCCA 219 at para. 9, Berthin v. Berthin, 2018 BCCA 57 at para.

44. I also note that while at least one other Master of this court has considered a similar application, no order resulted, the issue of jurisdiction was not specifically addressed in the reasons for judgment and the application was made prior to the judgment being issued in NextGen Energy: see Blackhall v. Andrusko, 2018 BCSC 140. Given that a Master has no jurisdiction to make the orders sought in items 1 and 2 of the notice of application, I will not pursue any analysis of the parties' arguments concerning that relief. It is acknowledged that this circumstance presents a bit of a conundrum as there is no determination on the merits of the defendant's argument and thus the CPL is assumed to be valid. Nevertheless, the limited judicial resources available to hear this application afresh in the time constraints suggested by the defendant dictated that the alternative remedy be adjudicated upon regardless. [12] As to that alternative remedy under ss. 256 and 257 of the LTA, the plaintiffs concede that the defendant will suffer hardship and inconvenience if the CPL is not removed from title. The contest between the parties is with respect to the amount of security, if any, to be posted. [13] The considerations for the court on that aspect of this application are summarized in Dhillon v. Dasta, 2019 BCSC 729: [23] In the determination of the amount of security, the court may take

into consideration the probability of success in the action in which the CPL is registered, the potential for substantial damages, and the financial worth of the party called upon to post security (Enigma Investments Corp., at paras. 29-32; 0624708 B.C. Ltd. at para. 25). The probability of success factor is satisfied if the plaintiff has established an arguable case, equivalent to the "plain and obvious" test (Youyi Group Holdings (Canada) Ltd. at paras. 35 and 41; Kaur at para. 27). The amount of security to be posted need not necessarily be equal to the estimated damages (Marrello at para. 55; Kaur at para. 78). The amount of security may be equal to the estimated damages if the defendant's credibility is in serious question (Kaur at para. 89). [14] The parties disagree over the practical and financial consequences if the plaintiffs are able to prove their claim. The defendant says that the remedy to any building damage will be modest remediation, with that actual cost yet to be determined. As noted, the evidence to date is that the cost of remediation could be around $50,000 but some of that work would relate to the previous movement of an older building. In any event, the defendant says that the security must be nominal given the weakness of the plaintiff's claim for a CPL. [15] In contrast, the plaintiffs say that the building must be levelled and thus the security sought

reflects the potential significant losses related to that levelling exercise. [16] This is not a situation where the amount of security is relatively easy to determine, particularly where the plaintiffs acknowledge that the CPL is not securing an interest in the land but rather a right of action in respect of the land. A right of action in respect of the land may or may not have a particular monetary value. To explore that distinction further would mean delving into an issue and remedy that I have no jurisdiction to decide. In the result, the security of $50,000 was chosen to reflect a potential damage award for the cost of repairing the existing damage to the plaintiffs' building. "Master C.P. Bouck"