



COURT OF APPEAL
        FOR BRITISH COLUMBIA




Citation:



Chu
                v. Chen,









2005 BCCA
            21




Date: 20050114




Docket: CA030373; CA030376

Docket: CA030373

Between:

Peter Kong
      Chu, Mei Yee Sung,
Kan Chak Wan, Yun Mui Lui,
Lam Chan, Shui Ying Wong Chan
and Frank Cheuk Man Lai

Appellants
(
Plaintiffs
)

And

Francis
      Chok-Yan Chen and
Margaret Ming Wai Lee

Respondents
(
Defendants
)

- and -

Docket:  CA030376

Between:

Peter Kong
      Chu, Mei Yee Sung,
Kan Chak Wan, Yun Mui Lui,
Lam Chan, Shui Ying Wong Chan
and Frank Cheuk Man Lai

Respondents
(
Plaintiffs
)

And

Francis
      Chok-Yan Chen and
Margaret Ming Wai Lee

Appellants
(
Defendants
)









Before:



The Honourable
            Madam Justice Southin





The Honourable
            Mr. Justice Braidwood





The Honourable
            Mr. Justice Mackenzie









K. J. MacDonald



Counsel for the Appellants in CA030373
            and for the Respondents in CA030376





D. Moonje



Counsel for the Interested Parties





Place and Date of Hearing:



Vancouver, British Columbia





24th and 25th November, 2003





Place and
            Date of Judgment:



Vancouver, British Columbia





16th April, 2004 and
23rd September, 2004





Written Submissions Received:



25th October and
30th November, 2004





Date of
            Supplementary Judgment:



14th January, 2005














Supplementary
              Reasons by
:





The Honourable
            Madam Justice Southin





Concurred
              in by:

The Honourable
            Mr. Justice Braidwood

The Honourable
            Mr. Justice Mackenzie





Reasons for Judgment
        of the Honourable Madam Justice Southin:

[1]

Reasons
      for judgment in this unusual matter were delivered on the 16th April, 2004
      (2004 BCCA 209).

[2]

In
      those reasons, the Court extended an invitation for further submissions
      which led to counsel for the successful appellants submitting a draft order
      which contained this term:

AND THIS COURT FURTHER
      ORDERS AND DECLARES that the Plaintiffs hold an unpaid vendors' lien against
      those lands which are known and described as:

Parcel Identifier:  014-690-411
Lot D, Block 13, District Lot 196, Plan 22415

(the "Lands")

in priority to the interest therein or claims thereto of the Respondents
      and of any persons claiming by, through or under them.

[3]

For
      present purposes, the critical words are "any persons claiming by,
      through or under them" because there are many persons whom we have
      called the interested parties who will be caught by those words.

[4]

On
      23rd September, 2004, the Court issued supplemental reasons (2004 BCCA
      486) saying, in part:

[7]  But it is possible
      that equitable interests arose in some or all of the interested parties
      before the certificate of pending litigation was registered.  Since that
      is possible, the first issue is one of fact.  Did whatever the agreements
      were create any interest in land which a court of equity would recognize
      and enforce?  If no, there is nothing to argue about.

[8]  If yes, then
      the various complexities of equitable priorities might arise.  A useful
      discussion of these, something rarely encountered in British Columbia,
      is to be found in c. 3 of Snell's
Principles of Equity
, my edition
      of which is the 24th, published in 1954.

[9]  To order an inquiry into priorities in the absence of evidence from
      which there is at least a reasonable possibility that there are equitable
      interests created before 3rd November, 1997, the date of registration of
      the certificate of pending litigation, would be unfair to the appellants.

[5]

We
      then invited submissions from the interested parties.  Those submissions
      have been made.

[6]

The
      issue now is whether, on that material, "there is at least a reasonable
      possibility that there are equitable interests created before 3rd November,
      1997."

[7]

Mr.
      Moonje's submission on behalf of the interested parties is a model of clarity
      and therefore I quote from it:

B.  THE EVIDENCE

4.  Several affidavits
      are appended to this Outline.  Rather than provide an affidavit for each
      Interested Party, affidavits are included from certain lenders where the
      circumstances are unique.  The Respondent, Mr. Francis Chen has sworn an
      affidavit in respect of the other loans.  Referencing the Court's findings
      of fact in the relevant proceedings to date and these affidavits, the salient
      facts may be summarized as follows.

5.  In 1995, the Appellants
      and the Respondents agreed to develop the Property.

6.  In July 1996,
      the Appellants agreed to sell their interest in the Property to the Respondents.  The
      Appellants transferred their interest in the Property to the Respondents,
      and in exchange were given cheques, post dated to June 30, 1997.

7.  On or about June
      30, 1997, the Appellants presented their cheques for payment, only to find
      there were insufficient funds in the Respondents' account to allow payment.

8.  On November 3,
      1997, the Appellants filed a Certificate of Pending Litigation against
      title to the Property.  The Appellants asserted a vendors' lien.

9.  Throughout this
      time period, specifically between July 1996 and October 1997, most of the
      Interested Parties lent money to Mr. Chen in regards to the Property.  Some
      loans post-date the registration of the Appellants' CPL.

10.  The loans at
      issue and the security promised may be summarized as follows:

Loans that predate
        the November 3, 1997 Registration of the CPL:




Party



Date of Advance



Amount



Security Promised





Wai Shing Chiu



July 1996



$250,000.00



Verbal promise of a Mortgage





Bill Wah Chan



August 1996

February 1997

May 1997

October 1997



$100,000.00

$ 50,000.00

$ 20,261.71

$ 28,000.00



Verbal promise of a Mortgage and a written agreement
            that Mr. Chan could acquire units in the building





Gabriel & Lily Mak



January 1997

February 1997



$ 50,000.00

$150,000.00



Verbal promise of a Mortgage and a written agreement
            setting out an option to acquire a fractional interest in the Property





Ken Wong



February 1997



$ 12,000.00



Verbal promise of a Mortgage





Eric Cheuk



June 1997



$ 20,000.00



Verbal promise of a Mortgage





David & Connie Chien



August 1997

August 1997



$ 50,000.00

$ 30,000.00



Verbal promise of a Mortgage





Alan Chi Wai Lau



August 1997



$ 80,000.00



Verbal promise of a Mortgage





Winnie Lam



September 1997



$ 20,000.00



Verbal promise of a Mortgage





Wendy Kam Chee Kow & Nancy Lau



September 1997



$120,000.00



Verbal promise of a Mortgage





Hans Wing Hang Wong



September 1997



$100,000.00



Verbal promise of a Mortgage






[8]

I
      do not quote the passage relating to loans after the registration of the
      Certificate of Pending Litigation as I am unable to perceive any legal
      ground upon which the subsequent lenders could avoid the operation of the
Land
      Title Act
, R.S.B.C. 1996, c. 250.

[9]

The
      loans prior to 3rd November, 1997 fall into two categories:  those made
      before the 30th June, 1997, the date the cheques in payment of the purchase
      price were payable, and those made after.

[10]

I
      put it thus because a question not expressly concluded by the principal
      reasons is whether the appellants' vendors' lien arose on 27th December,
      1996, the date of the transfer of the lands to the respondents, or on the
      30th June, 1997, the date when the cheques given in payment of the purchase
      price were dishonoured, or at some later, and, if so, what, date.

[11]

I
      am of the opinion that the lien arose at the latest on 30th June, 1997,
      and see no purpose to argument directed to a later date.

[12]

That
      being so, by the application of the principle
qui prior est tempore
      potior est jure
, the vendors' lien takes priority over all interests,
      whatever they may be, created on or after 30th June, 1997.

[13]

That
      leaves those made before 30th June, 1997, which, as I understand paragraph
      10 of the submission, are said to amount in total to $652,261.71.

[14]

Those
      transactions give rise to these issues:

1.    Were the transactions as the lenders
      alleged them to be?  an issue of fact;

2.    Will the Court, as a
      court of equity, recognize as creating an equitable interest an oral agreement
      to grant a mortgage?  an issue of law.

[15]

In
      the supplemental reasons, the Court said:

[10]  I have concluded,
      balancing the interests of the appellants and of the interested parties,
      that if the latter want to proceed, they should bring an application to
      this Court supported by detailed affidavits as to the transactions.  I
      do not mean by that that each person who has a claim need file a detailed
      affidavit.  I would leave it to counsel to make a sensible selection.  The
      evidence should include, among other things, any documents, including cancelled
      cheques and so forth, which support not only the existence of these alleged
      interests but also the date of their creation.

[11]  Any such application, if it is to be brought, should be brought
      within 30 days.  If it is brought, the Court will then fix a date for a
      hearing on whether an inquiry should be ordered.

[16]

In
      light of the submissions, however, I now consider an oral hearing at this
      point may not be useful.  I say that quite apart from the usual logistical
      difficulties of reassembling a panel upon a date which is also convenient
      to counsel.

[17]

Therefore,
      counsel are invited to make submissions on these points of law:

1.    When did the vendors' lien arise?

2.    Upon the assumption the
      evidence of the "lenders" is true, do their oral agreements constitute
      an interest recognized in equity?

[18]

If
      the Court answers the questions in favour of the interested parties, i.e.
      that the lien arose on 30th June, 1997, and that equity would recognize
      interests created orally before then, then, as I see the matter, an inquiry
      must be ordered as to the facts of the transaction in issue.  This Court
      is not in a position to determine whether the evidence of the interested
      parties is true.  If, however, either question is answered in favour of
      the appellants, the proceedings will be at an end.

[19]

We
      leave to counsel the order and timing of submissions.  If they cannot agree,
      either, by memorandum to the Deputy Registrar, may ask this Court to lay
      down the procedure to be followed.



The Honourable Madam Justice Southin



I agree:

The Honourable Mr. Justice Braidwood

I agree:

The Honourable
      Mr. Justice Mackenzie






