The Supreme Court of British Columbia declared a certificate of pending litigation (CPL) invalid and ordered the return of $265,000 deposited as replacement security. The underlying dispute concerned approximately $222,000 in loans, but the lenders had not pleaded facts establishing a sufficient interest in the borrower’s property.
A CPL protects a claimed interest in land. It is not a general mechanism for securing repayment of a debt before judgment.
The Loans and the Registered CPL
In Chen v. Zeng, 2026 BCSC 1776, it was undisputed that one of the defendants had borrowed RMB 1.15 million, approximately CAD $222,000, from the plaintiffs between 2015 and 2021. The loans were payable on demand at 12% annual interest and were documented in promissory notes.
The lenders claimed that the money had been transferred to Canada and used toward the defendants’ Vancouver home or mortgage. They registered a CPL against the property while pursuing repayment.
To allow a sale to proceed, the owners deposited $265,000 into the plaintiffs’ lawyer’s trust account as security, without admitting the CPL was valid. They later sought a declaration that it was invalid and return of the money.
A Debt Claim Was Not an Interest in Land
Section 215 of B.C.’s Land Title Act permits a CPL where the claimant asserts an estate or interest in land. The plaintiffs relied on a constructive trust, but the Court found their pleadings insufficient.
The claim did not identify how much of the loan proceeds had been applied to the property’s purchase or mortgage, when those payments occurred or a sufficiently clear connection between the transfers and the home. The promissory notes documented debts, not an ownership interest.
The lenders also argued that damages were inadequate because the defendants might sell the property and move the proceeds beyond their reach. The pleadings did not establish a sufficient factual basis for that concern or explain why a proprietary remedy was appropriate.
The Court held that a CPL cannot function as prejudgment security for what is essentially a monetary claim. A freezing injunction may be considered in appropriate circumstances, but it is a distinct remedy with separate requirements.
The Court was assessing what the pleadings disclosed, not deciding whether the loans were owed. It declared the CPL invalid and ordered immediate return of the $265,000 security, leaving the debt dispute unresolved.
What Lenders and Property Owners Should Understand
Private lenders should not assume that financing a property purchase or mortgage gives them a registrable interest in the land. If real estate is intended to secure repayment, the arrangement should be properly documented and secured.
A claimant relying on constructive trust must plead material facts connecting the funds to the property and supporting the need for a proprietary remedy rather than damages alone.
For property owners, an invalid CPL can be challenged even after replacement security has been provided to permit a sale. In this case, substituting $265,000 did not validate the original registration or resolve the underlying loan claim.
