Commercial Litigation and Dispute Resolution Blog

British Columbia has 28 Supreme Court registries scattered around the eight judicial districts (known as “counties”) being Cariboo, Kootenay, Nanaimo, Prince Rupert, Vancouver, Victoria, Westminster and Yale.  Ordinarily, a civil claim or petition can be commenced in whichever of those registries the claimant chooses.  However, for some types of claims there are restrictions on where the court proceeding has to be commenced.  These are colloquially referred to as “local venue rules”.  A failure to commence such claims in the right registry can result in the case being tossed out, whatever its actual merits may be.

Historically, local venue rules came into existence to prevent plaintiffs visiting additional and unnecessary expense on land owners by commencing claims in registries far from where the landowner lived.  Back in the day, a farmer in the Peace River valley could not reasonably be expected to defend a foreclosure proceeding in Vancouver.  This would be an unfair and costly proceeding to fight.  The policy rationale for the local venue rule was to reduce the expenses faced by defendant property owners and other encumbrancers by having the litigation take place near the subject land.  This thinking rested largely on the premise that land owners lived on or close to the subject land.

Based on this rule, foreclosure proceedings and builders’ lien claims must be commenced in specific registries that depend on where the land at issue is located.  In both circumstances, section 21 of the Law & Equity Act essentially mandates that the claim be filed at the registry closest to the land at issue.  Specifically, foreclosures and lien claims must be commenced either at the registry in the municipality where the subject land is located, or, if there is no such registry or the land is not in a municipality, at any registry within the judicial district where the land is located.

You would think that rules of this nature would be easy to understand and apply.  However, as is often the case in interpretation of the law, there can be fights over seemingly simple things like this.  A recent Court of Appeal decision resolved the most recent bun fight on this topic.

In this case, a lender commenced foreclosure proceedings in the Victoria registry for property located on an island near Nanaimo.  An order nisi was granted and the land owners, residents of Australia, appealed.  One of their arguments was that the foreclosure petition should have been commenced in the Nanaimo registry and, having been improperly commenced in Victoria, the foreclosure was a nullity (meaning it was entirely ineffective and there was, therefore, no foreclosure of the land).  Section 21 of the Law & Equity Act provides that “unless the court otherwise orders” a foreclosure must be commenced in the registry essentially closest to the subject land.  Relying on this phrase, the foreclosed landowners argued that unless the lender had received permission from the court before commencing the foreclosure to file in Victoria rather than Nanaimo, the proceeding was a nullity.  The court could not fix this after the foreclosure petition was filed.

The Court of Appeal held that such a limited interpretation of the phrase “unless the court otherwise orders” is too narrow.  Rather, this phrase is a statutory grant of discretion that includes the ability to cure procedural defects (such as filing in the wrong registry) after they occur.  In other words, section 21 of the Law & Equity Act is not restricted to being exercised only before proceedings have been commenced.  The court had the authority to allow the foreclosure to be continued in the “incorrect” registry if it was warranted.

However, this decision does not do away with the local venue rule.  As the court noted, that rule will “operate in almost all cases.”  If the venue is to be changed, the requesting party will always have the onus of persuading a court that there is good reason to depart from the local venue rule.  If the court is being asked to change the venue for a legal proceeding, that decision must be exercised judicially in a manner that is fair to both parties.  To succeed in changing the venue, you will need to establish that the new venue is as or more convenient to all or most of the parties involved, there are no greater practical difficulties and that costs will likely be lower.