Jacobs v Yehia 2015 BCSC 267 contains an excellent summary on the law removing certificates of pending litigation.
Such a document is typically filed by a plaintiff who claims an interest in the lands in question, and the certificate is notice to the world under our Torrens land title system that litigation is ongoing concerning the ownership of the property, and in effect ties up the property.
21 Section 215(1) of the Land Title Act, R.S.B.C. 1996, c. 250 (the “Act“) permits a party to a proceeding who is claiming “an estate or interest in land” to register a CPL against the land. The CPL will be cancelled, however, if the party fails to demonstrate an arguable or prima facie case for an interest in land: 0861695 B.C. Ltd. v. Meola, 2013 BCSC 121, paras. 7-8.
22 Where there is no arguable case to be tried respecting a claim to an interest in land, the landowner should be free to deal with his or her land unburdened by a CPL even though a trial has yet to be conducted. This is so because the nuisance value of CPLs should not be permitted to override the legitimate exercise of the rights of landowners. In addition, a certificate of pending litigation should not be used as a tool to gain an advantage in litigation: Buchan v. Rome, 2011 BCSC 1206, paras. 78-79; Seville Properties Inc. v. Coutre, 2006 BCSC 1105.
23 Pursuant to s. 254 of the Act, a CPL will also be cancelled if the action in respect of which it is registered has been dismissed and no appeal from the dismissal has been filed. In the usual course, where an action claiming an interest in land is dismissed at trial an order cancelling the CPLs forms part of the trial order: DJ Estates Ltd. v. Rota, 2008 BCSC 223; Gadsby v. Barlow, 2008 BCSC 1313.
24 “An estate or interest in land” may include both legal and equitable interests. The test is not to be narrowly defined, but the mere fact that a claim relates to land does not convert it into a claim for a proprietary interest: Montgomery v. Klaassen,  B.C.J. No. 1739, para. 22; Seville Properties Ltd. v. Coutre et al., 2005 BCSC 1105.
25 Where funds are obtained through wrongful means and can be traced to the acquisition or improvement of land, the court may impose a remedial constructive trust sufficient to sustain a CPL. In addition, the claim for tracing may, in and of itself, justify an equitable charge on land for purposes of supporting a CPL: Meola, para. 9; Drucker, Inc. v. Hong, 2011 BCSC 905, paras. 19, 22 and 36; Samji (Trustee) v. Chatur, 2013 BCSC 1915, paras. 60-64; Lament v. Constantini,  B.C.J. No. 2988.
26 Constructive trusts are equitable remedies available for acts such as fraud and unjust enrichment. In Ibbotson v. Fung, 2013 BCCA 171, Garson J.A. commented that the distinction between a value survived monetary remedy and a constructive trust largely dissipates in some unjust enrichment claims, except to the extent that a constructive trust encompasses additional property rights over an asset until it is sold. Remedies for unjust enrichment retain a large measure of remedial flexibility to deal with differing circumstances according to principles rooted in fairness and good conscience. However, a plaintiff must establish that a monetary award would be an insufficient remedy before a constructive trust will be imposed. One of the factors for consideration is whether a monetary award will be paid: Drucker, para. 30; Ibbotson, para. 28; Kerr v. Baranow, 2011 SCC 10, paras. 53 and 72; Wilson v. Fotsch, 2010 BCCA 226, at para. 47.
27 Where an interest in land is claimed based on a constructive trust, the question on an application to cancel a CPL is not whether the plaintiff will be successful in proving entitlement to a constructive trust. It is enough to establish that a constructive trust is a possible remedy to sustain the CPL: Samji, para. 61.
28 In Tracy v. Instaloans Financial Solutions Centres (B.C.) Ltd., 2010 BCCA 357, the Court of Appeal considered the propriety of a constructive trust granted as a restitutionary remedy in a class action brought against the operators of a “payday loan” business. In doing so, the court reviewed the development of the remedy and some of the challenges associated with its application in the context of a commercial case. One such challenge relates to the timing of a plaintiff’s election as between a monetary remedy or restitution in the form of a proprietary remedy, given the rule that a party cannot obtain both remedies.
29 The court in Tracy noted that a plaintiff need not elect between a potential monetary or proprietary remedy until the time of final judgment. After referring to the English practice of split trials in which liability is determined before a plaintiff is required to elect between the alternative remedies of damages or an accounting of profits, Newbury J.A. stated, at para. 49:
In my opinion, the same reasoning should apply in cases where damages and constructive trusts are sought as alternative remedies. I see no error in the trial judge’s conclusion that the plaintiffs need not elect between the two until they are able to make an informed choice… As long as the plaintiffs make their election before final judgment is issued – and the order appealed from is obviously not a final order – it seems to me the defendants can have no objection. I need not decide whether, if the plaintiffs do not succeed in obtaining complete restitution by means of tracing, they may then revert to seeking damages. I do note Professor Smith’s suggestion in The Law of Tracing, supra, that only full recovery by one route (in personam or in rem relief) will eliminate the other…
30 Funds may be traced before or after legal or equitable rights have been established. As Masuhara J. explained in Drucker, tracing is a process, not a claim or a remedy. He went on to describe the nature of the tracing process in the context of an application to cancel a certificate of pending litigation in an action involving funds that were allegedly misappropriated. At paras. 37-39, he stated:
Hence, if the plaintiff successfully establishes a proprietary entitlement to the misappropriated funds in the hands of the defendant, it may trace or follow those funds from there into other property. The question is then whether or not the Property held by the defendant is sufficiently connected to those misappropriated funds to satisfy the requirements for a constructive trust. If it is, the plaintiff will then be entitled to assert a constructive trust against that property without the exercise of any further discretion by the court (Tracy at para. 33).