Executive Summary: Key Legal and Evidentiary Issues

• RStyle Enterprises Ltd. appealed the cancellation of a certificate of pending litigation (CPL) registered against ten lots in a failed $11 million real estate transaction.

• The chambers judge relied on a lower court decision (133 (SC)) that was subsequently overturned by the BC Court of Appeal in 133 (CA), which recognized a purchaser's lien as an equitable interest in land capable of grounding a CPL.

• A central dispute arose over whether the appellant's amended pleading — which struck out the specific performance claim and instead sought termination, return of the $1.1 million deposit, and a purchaser's lien — disclosed a sufficient interest in land.

• The respondent contended that the deposit was not paid "on account of the purchase price" and therefore could not support a purchaser's lien, relying on Tang v. Zhang and Pan Canadian.

• Applying the principle of horizontal stare decisis, the Court of Appeal held that 133 (CA) was binding and the amended pleading contained all requisite material facts for a purchaser's lien claim.

• The appeal was allowed, the lower court order was set aside, and the appellant was directed to give the respondent five business days' notice prior to registering another CPL on any of the lots.

The failed real estate deal at the heart of the dispute

RStyle Enterprises Ltd. (the appellant) entered into a contract with 1308879 B.C. Ltd. (the respondent) to purchase ten lots for $11 million. Pursuant to the contract, RStyle paid a deposit of $1.1 million directly to the respondent in two instalments — the first instalment of $500,000 by May 17, 2023, and the second instalment of the remaining deposit by June 9, 2023. The contract required the respondent to provide certain services to the boundaries of the lots, and the appellant to complete the purchase within 30 business days of receiving written notice that these services had been installed.

The dispute over completion and the deposit's fate

The respondent notified the appellant. A dispute arose as to whether the services were in fact completed and whether proper notice was given. The appellant refused to complete the purchase and alleged the notice of completion was defective. The respondent accepted the appellant's failure to complete as a repudiation of the contract and elected to treat the deposit as forfeited to it.

The certificate of pending litigation and the amended claim

RStyle registered a CPL the day after it filed a notice of civil claim that sought specific performance of the contract and damages (the "NOCC"). When the respondent applied for an order that the CPL be cancelled, RStyle filed and served an amended notice of civil claim (the "ANOCC"). Along with striking out the specific performance claim, the ANOCC added an allegation that the appellant accepted the respondent's refusal to complete the sale of the lots as a repudiation of the contract and elected to terminate it. The ANOCC also asserted that in these circumstances the appellant was entitled to the return of the deposit and to a purchaser's lien against the property for the amount of the deposit paid, being $1,100,000.

The chambers judge's decision to cancel the CPL

The chambers judge observed that a CPL may be cancelled under s. 215(1) of the Land Title Act if the pleaded claim does not meet the threshold criterion of claiming an interest in land, and that the issue is determined based solely on examining the pleadings. He concluded the pleaded election to terminate the contract and seek a return of the deposit was inconsistent with the assertion of an ongoing interest in land, based on the reasoning in 1332404 B.C. Ltd. v. 1266685 B.C. Ltd., 2024 BCSC 592. The judge found the two cases were "materially indistinguishable."

The intervening appellate authority: 133 (CA)

The Supreme Court decision that the chambers judge relied upon had been subsequently overturned on appeal. In 1332404 B.C. Ltd. v. 1266685 B.C. Ltd., 2025 BCCA 46, Justice Harris, writing for the Court, identified a purchaser's lien as an equitable interest in land that arises when a deposit is paid directly to a seller. Relying on Pan Canadian Mortgage Group III Inc. v. 0859811 B.C. Ltd., 2014 BCCA 113, he explained that a purchaser acquires an equitable interest in land from the moment the land is validly contracted to be sold; a purchaser's lien arises when the purchaser advances money to the vendor; and this too creates an equitable interest in land that continues even if the contract is lawfully rescinded by the purchaser. Justice Harris specified the material facts required to properly claim an interest in land based on a purchaser's lien include: the existence of a valid contract of purchase and sale between the parties; the payment of funds pursuant to that contract by the purchaser to the seller; and the contract having "gone off" through no fault of the purchaser. He emphasized that under s. 215(1) a CPL should only be cancelled when the pleadings are incapable of supporting a claim to an interest in land, and not based on assessing the true nature of the pleaded asserted claim.

The respondent's arguments on appeal

The respondent advanced several arguments to uphold the cancellation. First, without suggesting 133 (CA) is distinguishable, it asserted that payment to the vendor under the contract on account of the purchase price, which the ANOCC does not plead, is also essential to support a purchaser's lien claim. Second, relying on Tang v. Zhang, 2013 BCCA 52, the respondent argued that a deposit is non-refundable by nature; since the contract did not complete, it followed that the deposit was not made on account of the purchase price and the ANOCC therefore did not disclose an interest in land. Third, referring to the ANOCC's clauses 6(c) and 8, the respondent argued that what is pleaded is payment of the deposit under the contract as consideration for an option to purchase (the "Option"), rather than towards the purchase price, and that the Option pleading is a legal claim to an equitable interest that effectively ousts the purchaser's lien claim.

The Court of Appeal's analysis and ruling

The Court of Appeal rejected each of the respondent's arguments. It found that the issue in Tang was entirely different — whether damages must be proven for the seller to retain the deposit, where the buyer fails to complete the purchase as required — and that Tang does not establish that a deposit is not on account of the purchase price, where the seller fails to complete as required by the contract. As for the Pan Canadian argument, the Court noted that Justice Harris in 133 (CA) recited the same passage from Pan Canadian but did not read it as requiring a plaintiff to plead "on account of the purchase price" to support a claim to an interest in property based on a purchaser's lien. Applying the principle of horizontal stare decisis, the Court held that decisions of three-justice divisions are, with limited exceptions, treated as binding precedent, and that none of those limited exceptions were raised. The Court also found that while the Option provision in clause 6(a) could be interpreted as impacting on, or constraining the purpose of the deposit, it cannot be said that the ANOCC is incapable of supporting a claim to an interest in land based on a purchaser's lien claim.

Outcome and directions

The British Columbia Court of Appeal allowed the appeal, set aside the judge's order, and directed the appellant to give the respondent five business days' notice prior to registering another CPL on any of the lots. The Court further directed that if the issue remains outstanding, the respondent is required to bring a new application to cancel any subsequently registered CPL, based on grounds other than s. 215(1) of the Land Title Act. RStyle Enterprises Ltd. was the successful party in this appeal; however, no specific monetary award was ordered in this decision, as the appeal concerned the cancellation of the CPL. The underlying claim for the return of the $1,100,000 deposit and the purchaser's lien was not adjudicated on the merits in this proceeding.