Real Estate Law | Certificate of Pending Litigation
Certificate of Pending Litigation: A Useful Tool in Litigation
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A Certificate of Pending Litigation (“CPL”) is a notice to the public, registered on title, indicating that the interest or title to a specific piece of land is subject to a Court dispute. A CPL restrains all dealings with the land until the litigation is resolved. This ensures that the land in dispute will still be available once the litigation is over.
The Process to Obtain a Certificate of Pending Litigation
In order to obtain a Court judgement granting a CPL, the claim for the CPL must be included in the originating process, such as the Statement of Claim or Notice of Action. The Court stated in Dileo v Ginell, that the Court did not have jurisdiction to grant a CPL where there was not a claim for one included in the originating process.
The plaintiff must submit an affidavit showing that there is a triable issue as to whether they have a reasonable claim to an interest in the land. This can be done on a motion with or without notice. In certain circumstances the Court may require that the other party be given notice. On a motion with notice, the defendant has the opportunity to challenge the evidence presented in the plaintiff’s affidavit. On a motion without notice the plaintiff bears a higher burden to fully and fairly disclose all relevant material facts to the Court. The Court will not consider the likelihood of success at trial in reaching its decision to grant or dismiss the motion.
Reasonable Claims to an Interest in Land
Some reasonable claims that a party may have to an interest in land, amongst other things, are as follows:
- An Agreement of Purchase and Sale;
- Family law claims;
- Fraudulent conveyances; or
- An interest in a mortgage.
Where a party registers a CPL on title without a reasonable claim to an interest in land, the party may be liable for any damages sustained by the landowner as a result of the CPL, pursuant to section 103 of the Courts of Justice Act. For example, if the party holding title to the land was unable to continue with an Agreement of Purchase and Sale and was later unable to sell the property for a similar market value.
Failure to Disclose Relevant and Material Facts
Failure to disclose all of the relevant and material facts in the affidavit could result in the motion being dismissed, or alternatively if the motion is granted the order may be later set aside, pursuant to Rule 39.01 of the Rules of Civil Procedure. In Passarelli v Di Cienzo , as adopted from J & P Goldfluss Ltd. v 306539 Ont. Ltd.(1977), 4 C.P.C. 296, the Court stated that the seriousness of non-disclosure could not be overlooked and that non-disclosure would result in an order being set aside even where the order would have been granted had all of the facts been disclosed originally.
The Courts have recently been more inclined to look at the nature of the non-disclosure. Where the non-disclosure is inadvertent, the Court may not set aside the order.
Discharge of a Certificate of Pending Litigation
A CPL will be discharged once the litigation is complete or on a motion to discharge by the defendant. The defendant must prove on a motion to discharge that no triable issue exists.
The Court can consider the following factors, as set out in 572383 Ontario Inc. v Dhunna, 1987 CarswellOnt 551, when determining whether to discharge the CPL:
- Whether the plaintiff is a shell corporation;
- Whether the land is unique;
- The intent of the parties in acquiring the land;
- Whether there is an alternative claim for damages;
- The ease or difficulty in calculating damages;
- Whether damages would be a satisfactory remedy;
- The presence or absence of a willing purchaser; and
- The harm to each party if the CPL is or is not removed with or without security.
The Court can use its discretion to consider other relevant matters as well.
Please contact Michael Paiva for more information about Certificates of Pending Litigation, or if you require assistance with a litigation matter.