At DBS LLP, we often act in disputes where parties seek to protect their claimed interest in land during ongoing litigation. In real estate, joint venture, estate, and fraud-related disputes, parties must move swiftly to prevent the dissipation, transfer, or encumbrance of property. Two of the most powerful tools available in Ontario are the Certificate of Pending Litigation (CPL) and the Caution, each serving as an instrument to secure claims involving real property. Although both appear in the title, they are distinct in their legal basis, evidentiary threshold, and strategic consequences.
Purpose and Legal Basis
A Certificate of Pending Litigation is governed by section 103 of the Courts of Justice Act and may be granted where the claimant asserts an interest in land. The court will not issue a CPL lightly; the applicant must demonstrate a triable claim to an interest in the property itself, such as a constructive trust, resulting trust, co-ownership, or contractual right to transfer. By contrast, a Caution is registered under the Land Titles Act. It is not court-issued but unilaterally filed by a party claiming an unregistered interest or equity in land. A Caution does not prove ownership but serves as notice that the registrant asserts a claim which may affect title.
Threshold Requirements
A CPL requires judicial approval or consent and is only available where the underlying action genuinely seeks an interest in land. Mere allegations of debt are insufficient. The court will assess whether there is a reasonable claim, standing above mere monetary relief. The evidentiary test is analogous to an interlocutory injunction: the applicant must show a prima facie case that the property is subject to the dispute. A Caution, by comparison, may be registered without court order, but carries less procedural protection. It is available where an individual claims an interest or equity in the land, even if that interest may not ultimately support a trust or ownership finding. However, it may be challenged by motion, and the registrant may be compelled to justify the claim or commence litigation.
When These Instruments Are Used
We seek Certificates of Pending Litigation most frequently in disputes involving constructive trusts, joint venture breakdowns, co-ownership disagreements, estate litigation, fraudulent conveyances, and breach of Agreements of Purchase and Sale. Where a purchaser seeks specific performance of a real estate contract, particularly where a vendor attempts to terminate the transaction or sell to another party, a Certificate of Pending Litigation is often necessary to preserve the purchaser’s claimed interest in the land. Without it, the property may be transferred or encumbered before the dispute is adjudicated.
A Caution is often used at an earlier stage, particularly where litigation has not yet been commenced or where interim protection is required before seeking judicial relief. It is commonly registered in situations involving anticipated claims arising from an aborted purchase and sale transaction, unregistered equitable interests, or promises to transfer ownership that have not been fulfilled. Although a Caution provides notice of a claimed interest, the registrant must be prepared to commence litigation or respond to a motion to vacate if challenged.
Risks and Challenges
Registration of a CPL or Caution is a serious step. Improper or strategic registration, particularly where no legitimate interest in land exists, exposes the registrant to damages under section 132 of the Courts of Justice Act. Courts retain broad jurisdiction to discharge a CPL where it is oppressive or where the moving party offers security in lieu of tying up title. Similarly, a Caution may be vacated if it is shown to be unfounded or improperly used as leverage. We routinely defend motions to discharge title instruments and pursue damages arising from wrongful registration.
Judicial Discretion and Security in Lieu
The court maintains discretion not only to grant or discharge a CPL but to impose conditions, including the posting of security. In some cases, where the party defending title is willing to post financial security equal to the claimed interest, the court may vacate the CPL and allow the property to be sold or refinanced. These motions often turn on timing, urgency, and the prejudice to either side. In commercial contexts, we weigh whether maintaining a CPL may unnecessarily obstruct secured financing or commercial transactions.
Strategic Use in Real Estate Litigation
A CPL or Caution is not an end in itself, but part of a broader litigation strategy. In joint venture collapses, investor disputes, and allegations of secret transfers, we use CPLs to preserve the res pending determination of the claim. In family and estate conflicts, a Caution may be used to prevent quiet transfers before an executor or beneficiary dispute is resolved. Both instruments are powerful but must be used with precision; once registered, they alter the balance of leverage between the parties.
Conclusion
When litigation involves real property, securing the asset is often the first and most critical step. The choice between registering a Caution or seeking a Certificate of Pending Litigation depends on the nature of the claim, the strength of the asserted interest, and the urgency of the situation. At DBS LLP, we assess and deploy title protection strategically, whether to preserve equitable claims or to defend against improper encumbrances.
If you are engaged in litigation involving property rights or require protection through a CPL or Caution, you may contact Prabhjot Singh Badesha in the Real Estate Litigation Group at DBS LLP for advice on securing title, responding to discharge motions, and pursuing equitable remedies in land disputes.
