Understanding Certificates of Pending Litigation & Ontario Estate Law

A hand holding keys in front of a house showing the importance of a certificate of pending litigation

Disclaimer: This article discusses estate law.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

One of the largest assets in many people’s estates is their real property – whether that’s their primary residence, a vacation home or something else. 

What happens if there is a dispute about the property? Perhaps you believe you’re entitled to the entire property, while another beneficiary argues that it should be sold and the proceeds divided among the heirs.

How can you protect your rights to the property? A certificate of pending litigation can help. 

This article will review what it is (we talked about it in more detail here), as well as some of the risks of seeking this remedy. 

What is a Certificate of Pending Litigation? 

A certificate of pending litigation is an official document issued by a court and recorded on title. It signals that there’s a claim tied to the property in question. We would apply for a certificate of pending litigation if we wanted to stop any transactions involving the land, like selling or mortgaging it. 

Why seek a CPL?

There are a few reasons why someone may want to register a CPL against a piece of property.

However, in estate law, they are most commonly used to protect estate assets from being sold when there is a disagreement over the estate. For example, let’s say there’s a dispute among the heirs of an estate over who should inherit a valuable piece of property, like a family home. One heir believes they’re entitled to the entire property, while another heir argues they should sell the property and split the proceeds.

To prevent the property from being sold off before the dispute is settled, the heir who wants to keep the property intact can apply for a CPL. Once granted, the CPL would be registered against the property’s title, effectively preventing it from being sold or transferred until the dispute is resolved in court.

In this way, the CPL serves to safeguard the estate’s assets, ensuring they remain intact until a fair resolution is reached among the disputing parties or by the court.

Can I apply for a CPL? 

In order to obtain a CPL, you do need to successfully answer these questions. 

Do you have a triable interest in the land? 

If you are the party seeking the CPL, you must prove that you have a triable interest in the property. What does “an interest in the property” mean? It is a low threshold. Basically, it’s just showing that you have some connection to the property or a claim to it and that you have a triable issue. The court has no interest in determining whether your claim is likely to succeed, just that a triable issue exists. 

Could you be adequately protected by another form of recourse or remedy? 

When deciding whether to grant a CPL, the courts will then consider if an equitable form of security would be more appropriate. For example, if putting a lien on the property or using some other type of legal protection could work just as effectively, they might prefer that option. 

There are a number of factors that the court will look at, such as whether the land is unique, whether damages could be calculated, or if there are any alternative remedies.  

The potential risks of registering a CPL

The courts have consistently viewed Certificates of Pending litigation as a tool for estate litigation. However, if you make a motion to have one registered on title, it is not guaranteed that the courts will grant it. 

The Courts of Justice Act notes that if someone registers a CPL without a reasonable claim to the property, they can be held responsible for any resulting damages.

For example, registering a CPL could hinder the sale of a property because potential buyers are unlikely to want a property tied up in legal disputes. In such a case, the owner of the property may seek compensation for the lost sale proceeds. 

It’s crucial to use the CPL as a tool to safeguard your legitimate rights rather than as a tactic to unfairly disrupt transactions.

Obtaining a CPL without giving notice

Justice Kurz’s recent ruling in McNeil v. Kaloustian highlights the risks of obtaining a Certificate of Pending Litigation (CPL) without informing the other party. Some CPL applications are urgent or involve fraud, so they’re pursued without notifying the other party.

Rule 39.01(6) requires the party seeking a CPL without notice to fully and fairly disclose all relevant facts. Failing to meet this requirement can lead to the order being overturned, regardless of the CPL request’s merits. In McNeil, Justice Kurz stressed the importance of transparency and adherence to legal duties. 

Despite the plaintiff’s right to seek the CPL without notice, their failure to fulfill their duty of candor resulted in the CPL’s cancellation. This ruling emphasizes that parties seeking CPLs without notice must meet high standards, as preserving fairness in legal proceedings is crucial.

The point? Just because you can do something does not mean you should. 

Contact Us to Protect Your Rights

If you need legal assistance with CPLs or any estate-related matters, Beeksma Law is here to help. 

Our experienced team of lawyers can guide you through the complexities of CPL applications, ensuring your rights are protected and the legal process is fair. Contact us today for expert advice and representation.

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