Certificate Of Pending Litigation For Fraudulent Property Transfers In Ontario

When a defendant sees a lawsuit coming, some try to move their assets out of reach before judgment can be enforced. A parent transfers a property to family members for a nominal sum. The property gets listed for sale weeks later. By the time a plaintiff wins, there’s nothing left to collect.

A recent Ontario Superior Court decision, Wang et al v. Jazzar Holdings Inc. et al, 2025 ONSC 1727, shows how a certificate of pending litigation (CPL) can stop exactly this kind of maneuver, even before a plaintiff has obtained judgment.

For a general overview of what a CPL is and when courts will refuse one, see our post on certificates of pending litigation in Ontario.

This article focuses on a narrower and increasingly common scenario: using a CPL to freeze a property that was allegedly transferred to defeat creditors.

The plaintiffs had sued a builder and its principal for breach of contract and misrepresentation arising from a $525,000 home construction dispute. 

Examinations for discovery were conducted, and the defendants failed to answer numerous undertakings regarding invoices and construction costs.

While that action was ongoing, the corporate defendant transferred a 239-acre Ontario property, purchased for $1,950,000 less than three years earlier, to two elderly residents of Amman, Jordan, believed to be the principal’s parents. 

The consideration for the transfer was $2.00. Three weeks later, the property was listed for sale at $2,400,000. 

The plaintiffs moved, without notice, for a CPL against the property to stop the sale before the proceeds left the jurisdiction entirely.

Where a plaintiff seeks a CPL to set aside an allegedly fraudulent transfer under the Fraudulent Conveyances Act, before judgment in the main action, and where the main action doesn’t itself concern an interest in the transferred land, the court applies a three-part test:

1- High probability of success in the main action. The claimant must show more than a balance of probabilities that they will recover judgment against the defendant. The court described this as a strong, well-substantiated case going beyond a prima facie claim.

2 – Intent to defeat or delay creditors. This branch has a lower threshold: the claimant only needs to show a triable issue that the transfer was made to defeat or delay creditors. A transfer for less than fair market value lightens this burden considerably.

3 – Balance of convenience. The court weighs the prejudice to each side, including whether the property is likely to be sold or the proceeds moved out of reach before trial.

The court noted that the defendants had failed to produce documentation to support the invoices they charged the plaintiffs, and had not answered discovery undertakings on this point. It was prepared to draw an adverse inference from these gaps. Combined with an undisputed failure to enrol the home under the Ontario New Home Warranties Plan Act, the court found a high probability that the plaintiffs would recover at least some judgment, even without pinning down the exact amount owing. 

On the intent branch, the court pointed to several factors, sometimes called “badges of fraud,” that are common in these motions:

• Nominal consideration ($2.00) for a property worth nearly $2 million;     

• Transferees with no connection to Ontario;

• Transferees who were likely family of the defendant; and,

• No evidence of any legitimate business purpose for the transfer.

None of these facts had to be proven conclusively. The court only needed to find a triable issue that the transfer was intended to defeat or delay creditors, which it did.

The court accepted that a CPL would prejudice the defendants by making the property harder to sell. But it weighed that against the risk to the plaintiffs: if the property sold before trial, the proceeds would likely end up in Jordan, out of reach of any future judgment. That risk of injustice outweighed the prejudice to the defendants, and the CPL was granted.

This decision is a useful reminder that a CPL isn’t limited to disputes about who owns a specific property. It can also be a tool to preserve a defendant’s assets generally, where those assets happen to be real property, once there’s evidence the defendant is trying to move them out of reach. For plaintiffs in commercial, construction, or debt-related disputes, that distinction matters:

• You don’t need a judgment first. A CPL can be obtained at the pleadings stage if the fraudulent conveyance test is met. 

• Nominal or below-market consideration is a strong indicator courts take seriously, and it lowers your evidentiary burden on the intent question.

• These motions can move quickly and are often brought without notice, which matters if a sale is already listed or imminent.

For defendants, the reverse is also true: transferring property to family or associates while litigation is pending, even for what looks like a private family arrangement, can invite exactly this kind of order and expose the transferee to further scrutiny.

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