Have you ever seen a property with a placard reading “property for sale with a certificate of pending litigation” but don’t know what it means?
Well, I won’t be surprised if you said you are hearing or seeing this for the first time. After all, you are not a legal person.
In fact, this legal terminology may be strange to some lawyers and law students because it’s not in use or common in all jurisdiction.
So whatever the case may be, this article is one the verge of explaining what is a certificate of pending litigation.
You’ll be exposed to why Court of law issue it, how it can be cancelled, and the exceptions therein.
Thus, let’s take our time to digest the following subheadings.
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What is a Certificate of Pending Litigation and when can it be filed?
A Certificate of Pending Litigation (CPL) is an instrument by which an aggrieved party may secure before the court to claim an interest in the land.
In a more simpler form, the certificate of pending litigation is the paperwork issued by the court on behalf of a party who claims to have an interest in a particular land.
Hence, the certificate gives a clear notice to the whole world that the legal or beneficial title to the said property is in dispute.
And also, CPL does not in any way prevent a change or actual transfer of title of such property.
However, any transfer of title or change to that effect would be subject to what is called the certificate of pending litigation, and in reality, very risky.
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Lastly, the certificate of pending litigation is not to be used (under no circumstances) as a form of pre-judgment execution in financial claim suit.
The courts have on several occasions emphasized that a “CPL” is extraordinarily a pre-judgment mechanism.
Most often, where a CPL is issued on an alleged interest in land or estate, it main purposes is to protect a valid claim in respect of such interest until the case is resolved.
So it is wrong in law to file a CPL as a leverage to get a financial claim. It’s very improper.
At this stage, it’s important to stress that the CPL could be issued by the court against any landed property.
Authority to File a CPL
In the Canadian Law, Section 215(1) of the Land Title Act provide as follows: A person who has commenced or is a party to a proceeding and who is
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(a) claiming an estate or interest in land, or
(b) given by another enactment a right of action in respect of land, may register a certificate of pending litigation against the land.
Factors to consider before a CPL can be granted
The law is not a one way traffic but two and three ways traffic. The law tends to do justice for both the plaintiff and the defendant.
And sometimes, the law also consider how the outcome of the case will affect or influence the society. Thus, a 3-way traffic.
Where the plaintiff has approaches the court for CPL, there are some certain elements the court will consider before it can be granted.
On this note, in the case of Ontario Inc. v. Kim at para. 30., Peterson J. set out the list of factors to be considered in granting of a CPL.
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Among them are:
i) whether the land in question is unique,
ii) whether there is an alternative claim for damages,
iii) the ease or difficulty of calculating damages,
iv) whether damages would be a satisfactory remedy,
v) the presence or absence of a willing purchaser,
vi) the balance of convenience or potential harm to each party, if the CPL is or is not granted,
vii) whether the CPL appears to be for an improper purpose,
viii) whether the interests of the party seeking the CPL can be adequately protected by another form of security, and
ix) whether the moving party has prosecuted the proceeding with reasonable diligence.
For further information, see the case of Interrant International Properties Inc. v. 1167750 Ontario Inc., [2013] O.J. No. 3385, at para. 15.
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Cancellation of a certificate of pending litigation
Haven explained what the certificate of pending litigation means, it is very crucial we consider how to cancel it where applicable.
Premise on this, the process for cancelling a CPL as set out by the Canadian Court of Appeal in Xiao case is as follows:
“Accordingly, the correct test to be applied in an application to cancel a CPL that is alleged to be non-compliant with S. 215 of the Land Title Act…”
That is to say, the only instance where a CPL can actually be cancelled is where there’s non-compliance with S.215 of the Land Title Act.
This section focus on whether the plaintiff pleadings disclose a claim for an interest in the land.
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And where it’s explicitly stated in such an application, S.215 of the (Canadian) Land Title Act says no evidence is to be considered.
“If the merits of the claim for an interest in land are challenged, a defendant should apply for a summary dismissal of that part of the claim under Rule 9-6(4), where evidence may be considered, and the test to be applied is whether there is a bona fide triable issue of fact or law.”
So where that part of the claim is successfully dismissed, the defendant may then apply (either orally or by way of motion) to have the CPL cancelled under Section 254 of the LTA.
The above explained quotation is also the position of the law in case of Bilin v. Sidhu, 2017 BCCA 429 and also the case of Berthin v. Berthin, 2018 BCCA 57.
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In addition, in the case of Lipskaya v Guo 2020, the Supreme Court of British Columbia (2090) canceled a CPL issued against a property.
The owner of the property where CPL was registered was indebted to the plaintiff for arrears of child maintenance.
The court, however, found that the Certificate of Pending Litigation had been maliciously and improperly filed because the claim is not related to an interest in land.