A Trust Can Defeat a Judgment Creditor’s Claim on Registered Land

The Dispute

A woman was the sole registered owner of a Metro Vancouver home, but her adult son had funded the entire purchase years earlier so the family could live there. Her adult daughter had separately agreed in writing to pay for and manage a complete rebuild of the home, in exchange for eventually receiving legal title. A former tenant obtained a Residential Tenancy Branch order against her for roughly $50,000 and registered it against the title to her home. He then asked the court to have the property sold to satisfy the debt.

The Parties’ Positions

The judgment creditor argued that a show cause hearing under the Court Order Enforcement Act was confined to three narrow questions. Those questions were whether the property sat in the land title district where the judgment was registered, whether a judgment was in fact registered against title, and whether he held a registered interest in the land. On that reading, any dispute over who actually owned the property beneficially belonged to the later reference to a district registrar, not to the show cause stage. The debtor’s status as the person registered on title, he submitted, was itself enough to make her interest liable to satisfy the judgment.

The registered owner and her adult daughter resisted the application on the ground that the owner held no beneficial interest in the property at all, relying on two independent grounds. First, a written family agreement, made before the tenant’s Residential Tenancy Branch order was even granted, set out that the daughter would pay all construction and contractor costs to rebuild the home and would manage the rebuild, in exchange for the owner eventually transferring legal title to her. They said this agreement created an express trust under which the owner held the property only as trustee. Second, the owner’s adult son had funded the entire original purchase of the property, which they said gave rise to a resulting trust in his favour, since the owner had never contributed value for the title registered in her name.

The Court’s Decision

The court agreed with the registered owner and her daughter on the substance of the application. It held that a genuine dispute over beneficial ownership can be resolved at the show cause hearing itself, without waiting for a registrar’s reference. On the evidence, it found that the family agreement created an express trust under which the owner held the property only for her daughter’s benefit, and that the son’s funding of the entire purchase independently gave rise to a resulting trust in his favour. The owner therefore had no beneficial interest for the judgment to attach, and the application was dismissed. On costs, the creditor recovered the expense of registering the judgment and of the proceeding up to the date the family made an offer he ought reasonably to have accepted. The family recovered none of its own costs, because the court found their conduct had made the proceedings more complex and expensive than necessary.

Key Lessons for Judgment Creditors and Family Property Trustees

• Confirm beneficial ownership before relying on a title search. Registering a judgment against land binds only the debtor’s actual beneficial interest, not bare legal ownership, so a judgment against someone who holds a property in trust for a relative may attach nothing at all.
• Put a family property arrangement in writing before any dispute arises. The agreement here was made and signed before the tenant’s order against the owner was even granted, a timing point the court noted in its reasons.
• Do not assume a beneficial-interest dispute must wait for a registrar’s reference. A court can decide who actually owns a property at the first enforcement hearing where the facts allow it, which can resolve or defeat an application well before a full reference is ever ordered.
• Weigh a serious settlement offer carefully before continuing to litigate. A creditor who presses on after a reasonable offer risks losing the costs of everything that follows, even where the underlying claim and the original registration were entirely reasonable.
• The outcome of this application turned on the family’s specific written agreement and on who actually paid for the property. A similar dispute may resolve differently on different facts.

ATAC LAW acts for judgment creditors and property owners in enforcement proceedings under the Court Order Enforcement Act.

Raymond Jin acted for the registered owner in this matter. Raymond Jin, Associate Lawyer