Beneficiary’s interest dictates security from sale of property following litigation cancellation

The British Columbia Court of Appeal has ruled that when cancelling certificates pending litigation over an estate’s property, the amount of security from the sale should be proportionate to the interest claimed by the suing beneficiary.

In Wosnack v. Ficych, 2022 BCCA 139, Kevin Wosnack, Barry Wosnack, Roger Ficych, and Sharon Kjos were stepchildren of Donald Daken. Donald passed away in 2017, and his will named Kevin as executor. In dividing his estate, a dispute arose involving the family home.

In 2016, Donald transferred his interest in the property to himself and Kevin as joint tenants. He also executed a gift letter stating that Kevin should receive his interest in the property upon his death. After Donald’s death, the property was transferred to Kevin under the right of survivorship.

Barry, Roger, and Sharon each commenced an action contesting the gift, alleging that the property should form part of Donald’s estate because Kevin either held the property in trust or he procured it with undue influence. Barry and Roger registered certificates pending litigation (CPLs) against the property.

In 2021, Kevin accepted an offer to sell the property and later applied to cancel the CPLs. Both parties agreed to the cancellation but disagreed as to the security that should be provided. The chambers judge issued an order permitting the sale, but the entire net proceeds were to be held in trust pending further order.

Kevin appealed, alleging that the security exceeded the collective interest of Barry and Roger in the property.

The appeal court agreed.

The court found that interest in land is a key requirement to filing a CPL under the Land Title Act, R.S.B.C. 1996, c. 250 (LTA). In cancelling the CPL in favour of a sale, this interest determines whether adequate relief is achieved in requiring all or a part of the proceeds be posted as security under the LTA, said the court. In setting the security amount, the court ruled that only relevant factors, such as probability of success and range of damages entitled, in relation to the claim involving interest in land be considered.

In this case, the court noted that Barry and Roger were not suing on behalf of the estate, which would have been entitled to all the proceeds of the sale. Rather, they sued in their own names, and since each beneficiaries’ interests in property was 25 percent, the judge’s order requiring the entire net proceeds be held as security failed to recognize the limitations of their potential interests, said the court.