Certificate of Pending Litigation Not a Slam Dunk
Obtaining an Order for the registration of a Certificate of Pending Litigation (“CPL”) is an often considered tool in the context of estate proceedings when looking at the preservation and non-depletion of estate property. This is a common consideration in estate disputes as are other forms of injunctive relief.
The test for granting a CPL is well established and was confirmed and applied in two recent decisions of the Superior Court, namely, Guz v. Olszowka 2019 ONSC 5308 and Caroti v. Kegalj 2019 ONSC 5772.
The test as set out in Perruzza v. Spatone 2010 ONSC 841 is also recited in the Caroti decision with an addendum as follows:
[40] The relevant principles relating to whether a CPL should be granted were set out by Master Glustein (as he then was) in Perruzza v. Spatone (2010 ONSC 841 (CanLII)). At paragraph 20, he stated:
I rely on the following legal principles:
(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) (“Homebuilder) at para. 1);
(ii) The threshold in respect of the “interest in land” issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 20555835 Ontario Ltd, 2007 CarswellOnt 756 (Ont. S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen. Div. [Commerical List]) at para. 62);
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has “a reasonable claim to the interest in the land claimed” (G.P.I Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (Ont. C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (vii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras. 10-18); and
(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc, 1991 CarswellOnt 460 (Ont. Gen.Div).); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para. 9).
[41] In addition, the Courts have considered principles relating to the timing of a CPL. Where a party has delayed in seeking a CPL, this is a factor that the Court will consider in denying the request for a CPL. See Nanton v. Julien 2019 ONSC 68 (CanLII) (at para 30) and Wilanmar Holdings Ltd. v. Meredith 2008 CanLII 63166.
In Caroti, the applicants for the CPL clearly had an interest in the property that was under development. However, the court dismissed the motion after considering all of the Peruzza factors and concluding that their claims could be satisfied by an award of damages.
Similarly in Guz, the Court dismissed a motion for a CPL on the basis that damages would be an appropriate remedy, thereby permitting the Estate Trustee to sell the property subject to an additional order that one-half of the net proceeds be paid into court.
In Guz, the Court also emphasized that the determination of whether there is a triable issue as to an interest in land is made without an assessment of credibility or disputed issues of fact [HarbourEdge Mortgage Investment Corp. v. Community Trust Co 2016 ONSC 448 at paragraph 45].
These motions are an evidence based exercise on a consideration of the Perruzza factors. Seeking a CPL to preserve the status quo is not sufficient. These considerations of registration and discharge are also relevant where a CPL has been obtained without notice on an ex parte basis, especially when considering costs.
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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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Written by: WEL Partners
Posted on: October 10, 2019
Categories: Commentary
Obtaining an Order for the registration of a Certificate of Pending Litigation (“CPL”) is an often considered tool in the context of estate proceedings when looking at the preservation and non-depletion of estate property. This is a common consideration in estate disputes as are other forms of injunctive relief.
The test for granting a CPL is well established and was confirmed and applied in two recent decisions of the Superior Court, namely, Guz v. Olszowka 2019 ONSC 5308 and Caroti v. Kegalj 2019 ONSC 5772.
The test as set out in Perruzza v. Spatone 2010 ONSC 841 is also recited in the Caroti decision with an addendum as follows:
[40] The relevant principles relating to whether a CPL should be granted were set out by Master Glustein (as he then was) in Perruzza v. Spatone (2010 ONSC 841 (CanLII)). At paragraph 20, he stated:
I rely on the following legal principles:
(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) (“Homebuilder) at para. 1);
(ii) The threshold in respect of the “interest in land” issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 20555835 Ontario Ltd, 2007 CarswellOnt 756 (Ont. S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen. Div. [Commerical List]) at para. 62);
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has “a reasonable claim to the interest in the land claimed” (G.P.I Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (Ont. C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (vii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras. 10-18); and
(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc, 1991 CarswellOnt 460 (Ont. Gen.Div).); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para. 9).
[41] In addition, the Courts have considered principles relating to the timing of a CPL. Where a party has delayed in seeking a CPL, this is a factor that the Court will consider in denying the request for a CPL. See Nanton v. Julien 2019 ONSC 68 (CanLII) (at para 30) and Wilanmar Holdings Ltd. v. Meredith 2008 CanLII 63166.
In Caroti, the applicants for the CPL clearly had an interest in the property that was under development. However, the court dismissed the motion after considering all of the Peruzza factors and concluding that their claims could be satisfied by an award of damages.
Similarly in Guz, the Court dismissed a motion for a CPL on the basis that damages would be an appropriate remedy, thereby permitting the Estate Trustee to sell the property subject to an additional order that one-half of the net proceeds be paid into court.
In Guz, the Court also emphasized that the determination of whether there is a triable issue as to an interest in land is made without an assessment of credibility or disputed issues of fact [HarbourEdge Mortgage Investment Corp. v. Community Trust Co 2016 ONSC 448 at paragraph 45].
These motions are an evidence based exercise on a consideration of the Perruzza factors. Seeking a CPL to preserve the status quo is not sufficient. These considerations of registration and discharge are also relevant where a CPL has been obtained without notice on an ex parte basis, especially when considering costs.
—
This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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