How To Remove A Certificate Of Pending Litigation In Ontario

A certificate of pending litigation (CPL) can stop a sale, sink a refinancing, and leave an owner carrying a property they cannot deal with — sometimes for years. But a CPL is not permanent, and it is not immune from challenge. Ontario courts can discharge a CPL long before the lawsuit behind it is resolved.

For an overview of what a CPL is and how courts decide whether to grant one, see our post on certificates of pending litigation in Ontario. 

Yes. A CPL stays on title until the action is over or the court orders it discharged. Section 103(6) of the Courts of Justice Act gives the court a broad discretion to discharge a CPL, with or without terms, and Rule 42.02(1) of the Rules of Civil Procedure provides that the discharge order is obtained by motion.

A CPL can also come off title by consent — typically as part of a settlement, or after the claim is discontinued or dismissed. Either way, removal is not automatic: the consent or order must be registered before the parcel register is clean.

Section 103(6) sets out when the court may discharge a CPL. In practice, the grounds fall into five groups.

A CPL protects a claimed interest in land — not a claim for money. Where the party who obtained it claims a sum of money in place of, or as an alternative to, the interest in land, the court may discharge it. If the real goal is a damages award, a CPL is the wrong tool. (Our post on Mareva injunctions explains the much higher bar for freezing assets to secure a money judgment.)

The court may discharge a CPL where the party who obtained it does not have a reasonable claim to the interest in land. This is the most frequently argued ground. Owners often succeed where the pleading asserts an interest in land in name only — a debt or breach-of-contract claim dressed up as a constructive or resulting trust claim.

A CPL is not meant to sit on title while the claimant does nothing. The court may discharge a CPL where the party who obtained it has not prosecuted the proceeding with reasonable diligence. The onus is on the owner to prove the delay, and courts will scrutinize the explanations offered for it.

The court may discharge a Certificate of Pending Litigation where the claimant’s interests can be adequately protected by another form of security. Owners commonly offer to pay money into court, post a letter of credit, or hold sale proceeds in trust pending trial. This is often the fastest way to save a pending transaction — the deal closes and the dispute moves on to the money.

Section 103(6)(c) allows the court to discharge a CPL on any other ground it considers just. Non-disclosure is a recurring example. Most CPLs are obtained on motions without notice, and a party moving without notice must make full and fair disclosure of all material facts under Rule 39.01(6). A failure to do so is, on its own, sufficient grounds to set the order aside. In Moses v. Metro Hardware and Maintenance Inc., 2020 ONSC 6684, the court set aside a CPL obtained without notice after finding the plaintiffs had not fully disclosed material facts.

On a motion to discharge, the court applies the same test it would apply on a motion to grant a CPL on notice: Perruzza v. Spatone, 2010 ONSC 841. The claimant must still show a triable issue as to its interest in the land, and the court then weighs the equities. Relevant factors include:

• whether the property is unique to the claimant;
• whether damages would be an adequate remedy;
• whether there is a willing purchaser for the property; and
• the harm to each side if the CPL is, or is not, removed.

Because discharge is discretionary, evidence matters. A signed agreement of purchase and sale, an approaching mortgage renewal, and proof of available equity can shift the balance.

A CPL carries risk for the party who obtains it. The Courts of Justice Act makes a party who registers a CPL without a reasonable claim to an interest in land liable for the damages its registration causes. Courts may also award costs against a claimant who forces an owner to bring a motion to remove a CPL that should never have been registered. For an example of when a CPL is properly granted, see our post on using a CPL to freeze a fraudulent property transfer.

• Get the record. Obtain the order, the motion materials, and the pleading. If the CPL was obtained without notice, look for gaps in disclosure.
• Ask for consent. A written request for a consent discharge — ideally with an offer of security — often resolves the issue and supports a costs claim if the claimant refuses.
• Build the evidence. Address weaknesses in the claimed interest, any delay, the property’s equity, and the concrete prejudice the CPL is causing.
• Offer security. Where a deal is pending, propose paying the net proceeds into court or holding them in trust.
• Move quickly. If a closing date is at stake, schedule the motion on an urgent basis.
• Register the order. A discharge order only clears title once it is registered. 

Whether you need a CPL removed from title or are defending one, we move quickly when a transaction is at stake. Call us at 416.901.9984 or email info@pintoshekib.ca for a confidential consultation about real estate disputes in Toronto and across Ontario.