A Certificate of Pending Litigation (“CPL” for short) is an important litigation tool. Typically, it is used to tie up a property where one party claims an interest in that property to which they are not the registered owner on title. The most common examples of an unregistered interest in land are where there is a purchaser who has a contract to buy a property that has not yet closed.
A CPL is meant to provide a notice or warning to the public that the property is the subject of a court battle and that they should be careful if they are lending money against the property, buying the property, or otherwise.
Obtaining a CPL
A person claiming an interest in a land should consider whether or not they are entitled to a CPL at an early stage in the litigation. In order to obtain a CPL, a motion needs to be brought before the courts either “on notice” to the other parties or “without notice”.
The following will be a discussion of the test for a CPL for a motion made on notice, which is the same as the test for a motion to discharge a CPL.
In determining whether to grant a CPL, a court will first determine whether the threshold test has been met: is there a triable issue in respect of the moving party’s claim to an interest in the property? It is the moving party who bears the onus of proving that there is a triable issue.
Assuming the threshold test is met, the court will then consider if it is equitable to grant a CPL based on a number of factors. Some of the factors the court will consider include but are not limited to:
- whether the plaintiff is a shell corporation;
- whether the land is unique;
- the intent of the parties in acquiring the land;
- the ease or difficulty in calculating damages;
- whether damages would be an adequate alternative to the claimed interest in the land;
- the presence or absence of a willing purchaser;
- the harm to each party if the CPL is or is not removed with or without security;
- whether the interests of the party seeking the CPL can be adequately protected by another form of security; and
- whether the moving party has prosecuted the proceeding with reasonable diligence.
A Cautionary Tale: Sadiq v. Simcoe Ridge (ARH) Homes Ltd.
The case of Sadiq v. Simcoe Ridge (ARH) Homes Ltd., 2022 ONSC 2630 is a cautionary tale of a Plaintiff bringing a motion for a CPL. He had purchased a pre-construction corner lot on a new subdivision called Simcoe Landing.
After sending an email purporting to cancel his purchase in July of 2020, Mr. Sadiq did little to try to rectify what he said was an erroneous email. As a result, Mr. Sadiq brought the lawsuit and motion for a CPL to block the sale of the lot to another person which was set to close in May of 2022.
Unfortunately, Mr. Sadiq’s delay of 19 months between his email purporting to cancel the agreement of purchase and sale, and him starting his motion in February 2022 was cause enough to justify denying the motion according to the Judge.
Furthermore, the motion also failed on the basis that the Plaintiff failed to meet the “rigorous proof” required to prove that the lot was unique to him and that there is “no readily available substitute.” By failing to provide evidence of the lot’s uniqueness, the Plaintiff again had another strike in the equitable component of the test.
Given the number of factors which weighed against granting the CPL, the Associate Justice refused to grant the motion for a CPL.
The lesson to learn from this matter is that not all properties are sufficiently unique to warrant a CPL and additionally, delay is your enemy if you intend on tying up a property by asking the court to issue a CPL.