Certificate of Pending Litigation
June 24, 2014
If an “interest in land” is disputed between parties, the Courts of Justice Act and the Rules of Civil Procedureprovide a potent remedy for a litigant to seek a Court Order to register a “Certificate of Pending Litigation” (“CPL”) against title to the land(s) at issue.
The purpose of a CPL is to put the parties and the public on notice that the land(s) at issue are subject to a legal proceeding. Practically, a CPL restrains dealing (i.e. sale, refinancing, mortgaging) with the property while the action or application is pending. As such, a CPL is an effective pre-trial remedy to obtain a form of security to preserve the property until a judgment can be obtained.
There are numerous instances where it may be appropriate for a litigant to seek a court Order for a CPL claiming an “interest in the land,” such as:
- a property owner’s name has been fraudulently removed from title;
- a purchaser seeks to compel completion of the sale of land where the vendor refuses to close;
- a party claims an interest in a mortgage. For example, a lender may have an equitable mortgage and seek an equitable charge in the property;
- an interest in land arising from a claim for a constructive or resulting trust;
- recovery of property that has been fraudulently conveyed;
- a claim for breach of fiduciary duty giving rise to equitable interests in property or an order for restitution;
- a claim for leasehold interest in land; or,
- a vendor’s claim for rescission.
A motion for a CPL can be brought with or without notice to the parties in the lawsuit. If the motion is brought without notice, it is essential that full disclosure of all material facts be disclosed to the court. Otherwise, a party seeking to set aside or “discharge” a CPL could succeed solely on the grounds of incomplete disclosure, even if the non-disclosure is inconsequential to the court’s determination on the merits of the CPL motion.
If a motion is brought to discharge a CPL, the court will consider whether the action has been prosecuted with due diligence, whether there is an adequate interest in land, and whether the sum of money would be an adequate alternative to an interest claim in land. Further, the court will also address the following non-exhaustive factors:
1. is the plaintiff a shell corporation;
2. is the land unique;
3. the intent of the parties acquiring the land;
4. whether there is an alternative claim for damages;
5. the difficulty or ease of calculating damages;
6. whether damages would be a satisfactory remedy; and
7. the prejudice or harm to the parties if the CPL is discharged, with or without security.
Legal advice should be obtained in order to evaluate a litigant’s circumstances to determine whether a CPL is an appropriate pre-trial remedy. If so, a CPL can be utilized as a strategic and tactical tool in a lawsuit to preserve the property until trial or to precipitate an advantageous settlement.