November 29, 2023
We have written before about the importance of certificates of pending litigation (CPL), and the process to discharge them.
Because a certificate is usually obtained without notice, the defendant’s discharge motion is often the big fight. If the Plaintiff loses, not only might they not recover what they want, they may have to pay damages to the property owner.
THE ISSUE
It is important to know what judges mean when they say that a CPL is available when you claim “an interest in land”.
THE CASE
McNicoll v. Pavilion Diamonds et al is an example of what is NOT an “interest in land”.
McNicoll claimed that she had been defrauded by Pavilion and its owner. McNicoll learned that the owner lived in a home that was about to be sold. She worried the money might disappear.
The hitch was that the property was registered in the owner’s wife’s name.
So McNicoll sued the owner and the wife for fraudulent conveyance.
The next hitch was that the property had been in the wife’s name since 1993. Tough to prove fraudulent conveyance on those facts.
Even tougher though is that this did not even make it as far as the discharge motion, because the associate judge hearing the unopposed motion without notice for the order granting the CPL pointed out that a claim of fraudulent conveyance is NOT a claim for an “interest in land”. Thus, the court had no jurisdiction to issue a CPL.
What McNicoll was attempting is similar to enforcement of a judgment prior to obtaining judgment. As the associate judge pointed out, a CPL is not intended to secure a claim for damages.
The better interim remedy might be a Mareva injunction freezing assets, but the associate judge suggests that would be unavailable as well on these facts, and quotes another case where it is said that a “CPL ought not to be used to achieve pre-judgment execution on what is fundamentally a claim for damages…if a Mareva injunction would not be available…”.
McNicoll is fortunate that the associate judge did not “rubber stamp” the motion without notice. In a recent case to discharge a CPL that was similarly a weak effort where a Mareva injunction was not obtained, the defendant was awarded costs of almost $9,000.00 for the motion. Those costs were based on the higher scale of costs called substantial indemnity (usually about 80% of full indemnity) as opposed to partial indemnity (closer to 50 or 60 % of full indemnity).
TAKEAWAYS
- A CPL is not a substitute for a Mareva
- A CPL requires a claim for an interest in land itself, not just to freeze the land to secure payment of a judgment for damages.
- Obtaining a CPL is not the end of the fight.
- Registering a CPL that is later discharged may be costly.
- Sometimes, if a Mareva injunction is not available, you might decide to take that risk and seek a CPL but be aware that the odds are against you.
WHAT WEILERS LLP CAN DO TO HELP YOU
Our experienced litigation team are effective advocates with a sound knowledge of the law affecting real estate and debt litigation, whether or not a certificate of pending litigation or a Mareva injunction is required. Fumbling the ball at this early stage off an action can be an expensive proposition, so if you are claiming an interest in land, or are a landowner subject to a CPL, give Weilers LLP a call and see if we should carry the ball for you.