When people invest in property together, such as a home or piece of land, disagreements can arise if relationships between the parties break down. In such cases, a Certificate of Pending Litigation (CPL) can help protect an individual’s interest in the property while the dispute is being resolved in court.
Walker Law recently won a motion for a judge to order a Certificate of Pending Litigation, along with a costs award, for our client in the Ontario Superior Court of Justice. Gentles v Lynch, 2024 ONSC 2656.
Our client was one of three people who agreed to buy a pre-build house together. During the purchasing stage, the parties agreed that the defendant would be the sole legal owner of the property. However, before the deal closed, the romantic relationship between our client, the plaintiff, and the defendant fell apart. The defendant then refused to acknowledge our client’s part-ownership of the property, despite clear evidence that he had made multiple payments toward the purchase price.
Upon the plaintiff’s request, the court ordered the defendant to give an undertaking (an official promise to the court) that she would not sell or mortgage the property for two years, allowing the parties time to resolve their respective interests in the property. The parties were unable to solve their problems within the two-year window, so the plaintiff brought a motion to either extend the two-year undertaking or request a Certificate of Pending Litigation.
What Is a Certificate of Pending Litigation, and When Can It Be Issued?
A CPL is a legal tool that can be issued by a court when real property, like a house or piece of land, is involved in a lawsuit. The CPL is registered on the legal title of the property and acts as a notice to the public that the property is subject to an ongoing lawsuit. Essentially, it prevents the property from being sold, mortgaged, or otherwise dealt with until the court makes a final decision.
For a CPL to be granted, the court uses a two-part test:
- First, the court asks, “Does the plaintiff have an interest in the land in question that could succeed if the issue went to trial?” It is important to note that the threshold here is quite low. The person asking for the CPL does not have to prove they will win the case; they simply need to show that they have a legal claim worth going to trial. The relevant case law even states that a court may issue a CPL even if the plaintiff’s case seems weak.
- Second, the court applies the Dhunna factors. This is a non-exhaustive list of factors that the court is required to consider, but the court must also exercise its discretion in equity to decide whether to grant the CPL. These factors include the strength of the plaintiff’s claim, whether the property is unique, and the potential harm to both parties.
In its decision, the court declined to extend the defendant’s undertaking. However, it found that the plaintiff’s claim passed the two-part test and, as a result, granted the CPL.
Costs Awarded
In addition to granting the CPL, the court awarded costs to the plaintiff because the defendant should have resolved the matter by consent instead of opposing the motion. By opposing the motion, the defendant and plaintiff both incurred legal fees that were unnecessary. The court also stated that since the plaintiff was successful on the motion, and the facts of the case clearly demonstrated that the plaintiff had a triable issue regarding an interest in the property, it was reasonable to award costs.
Key Takeaways
- A Certificate of Pending Litigation is a legal notice that is registered on the title of a piece of land to alert the public that it is involved in ongoing litigation, making it difficult to sell or mortgage the property until the dispute is resolved.
- A CPL protects the interests of anyone who has a legal claim to the property, ensuring their rights are preserved during the court process.
- In any litigation, costs are a significant factor. When a party is successful on a motion, as in this case, costs can be awarded to compensate for legal expenses incurred. It is essential to approach disputes strategically, as opposing a motion unnecessarily may result in a cost penalty.
If you are facing a partnership dispute involving property, it is crucial to seek legal advice as early as possible to protect your interests. Please contact a member of Walker Law’s civil litigation team for guidance on how we can assist you.