Court File and Parties

PETERBOROUGH COURT FILE NO.: CV-21-00000239 DATE: 2022-06-14

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Anthony Leigh Petgrave and Amy Wheeler Plaintiffs

– and –

Alex Merlin and Ashley Merlin Defendants

Counsel: Joel S, Moldaver, Counsel for the Plaintiffs

HEARD: In-Writing (Motion brought ex parte)

REASONS FOR DECISION

CHARNEY J.:

Introduction

[1] On October 27, 2021, the plaintiffs brought an ex parte motion for a Certificate of Pending Litigation (CPL) pursuant to s. 103 of the Courts of Justice Act. That motion was decided by Christie J. on November 11, 2021. Christie J. ordered the plaintiffs to give notice to the defendants.

[2] The plaintiffs declined to follow Christie J.’s Order, and, on May 4, 2022, brought an ex parte “request” in the form of a “memorandum” from counsel, asking the Court to reconsider Christie J.’s Decision on the basis that circumstances have changed.

Facts

[3] The plaintiffs allege that they entered into an agreement to purchase the property municipally known as 77 Emily Manor Drive, Omemee, Ontario (the property) from the defendants on November 11, 2018 (the agreement).

[4] The defendants are the registered owners of the property. The defendants take the position that the plaintiffs are tenants in the property.

[5] The plaintiffs allege that the defendants have refused to transfer the property to the plaintiffs even though the plaintiffs have complied with the terms of the agreement.

[6] The Statement of Claim was filed on October 27, 2021.

[7] The Statement of Defence was filed on January 18, 2022.

[8] Paragraph 1(a) of the Statement of Claim seeks a CPL. The plaintiffs also seek an order for specific performance.

Procedure for CPL

[9] The procedure on a motion for a CPL is set out in Rule 42 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194: Rahbar v. Parvizi, 2022 ONSC 1104, at para.18.

[10] The purpose of a CPL is to give non-parties notice of a claim of interest in land, permitting the party registering the CPL to protect their claim against the land pending the determination of their action. “Technically the CPL is a device for putting notice of the claim on title and it is not in fact an order that prohibits the owner from selling. In practical terms, however, the CPL freezes the land because anyone who purchased it in the face of the Certificate would be subject to the plaintiff’s claim. For that reason, the case law in recent years has equated the test on a contested motion with the tests on an injunction.”: Kalia v. Landmortgage Corp., 2004 33027 (ON SC), at para. 3.

[11] Rule 42.01(2) of the Rules of Civil Procedure provides that a party who seeks a CPL must include a claim for it in the Statement of Claim, together with a description of the property sufficient for registration. The plaintiff has satisfied that procedural requirement.

[12] Rule 42.01(3) expressly provides that a motion for a CPL may be brought without notice.

[13] Where a motion for a CPL is brought without notice, a party who obtains the order must serve the order and supporting affidavit material used at the hearing on the defendants “forthwith”: Rule 42.01(4).

[14] A party who is subject to a CPL may bring a motion to discharge the CPL pursuant to s. 103(6) of the Courts of Justice Act.

[15] While the Rules expressly provide that a motion for a CPL may be brought without notice, there remains a discretion in the Court to order service of the motion on affected parties before the motion is heard: Chippewas of Kettle & Stony Point v. Canada, 1994 7250 (ON SC), 17 O.R. (3d) 831.

[16] See also: Rule 37.07(5)(b):

37.07(5) Where it appears to the court that the notice of motion ought to have been served on a person who has not been served, the court may,

(b) adjourn the motion and direct that the notice of motion be served on the person;

[17] While moving without notice for a CPL is the norm, courts are often reluctant to grant ex parte relief unless the party bringing the ex parte motion provides some explanation for why the other party should not be given notice. For example, if there is some evidence that the opposing party will sell, encumber, or otherwise dispose of the property before the motion is heard, an ex parte motion is appropriate.

[18] The Court’s discretion to order service of a motion for a CPL on the opposing party if the interests of justice require it is not unique to the CPL. Similar considerations apply to motions for an interlocutory injunction or mandatory order under s. 101 of the Courts of Justice Act, which may also be brought without notice under Rule 40.02.

[19] Similarly, although the rules provide that motions for default judgment under Rule 19.02 may be brought without notice to the defaulting defendant, the court often orders that notice be given and this has evolved into the “best practice”: Madison Homes v. Ng, 2021 ONSC 3104, at paras. 7 and 8; Elekta Ltd. v. Rodkin, 2012 ONSC 2062, at para. 10; Casa Manila Inc. v. Iannuccilli, 2018 ONSC 7083, at paras. 16-17.

[20] Where a CPL is granted without notice, it usually just leads to another motion to discharge the CPL under s. 103(6) of the Courts of Justice Act and Rule 42.02 of the Rules of Civil Procedure, this time with both parties present. Thus, a CPL granted on an ex parte motion may be a short-lived victory once both sides are heard. An ex parte CPL motion also means that the same matter will usually be considered by two judges in two separate motions within a short period of time.

[21] Section 103(6) of the Courts of Justice Act provides as follows:

103(6) Order discharging certificate

The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,

(ii) does not have a reasonable claim to the interest in the land claimed, or

(iii) does not prosecute the proceeding with reasonable diligence;

(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or

(c) on any other ground that is considered just,

and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.

Original Motion

[22] In an affidavit sworn October 12, 2021, in support of his motion for a CPL, the plaintiff, Anthony Petgrave, noted that the defendants were trying to evict the plaintiffs “by way of the jurisdiction of the Landlord-Tenant Board under an N12 for personal use”, and he therefore “urgently’ sought a CPL as security against his interest in the property. He appended to his affidavit a copy of the defendants’ Form N12 Notice to Terminate Your Tenancy dated August 26, 2021, seeking to terminate the tenancy by October 31, 2021.

[23] The plaintiffs’ motion for a CPL came before Christie J. on November 11, 2021. Christie J. exercised her discretion to order that the motion should be made on notice. Her brief Endorsement stated:

Rule 42.01(3) allows for an Order granting a CPL to be made without notice. However, there would appear to be no reason in this case for notice not to be given. Moses v. Metro Hardware and Maintenance Inc., 2020 ONSC 6684 suggests that parties should strongly consider bringing the motion on notice. In these circumstances, notice should be given.

[24] Christie J.’s reference to Moses v. Metro Hardware was a reference to the decision of Myers J., where he stated at paras. 2 and 3:

The plaintiffs obtained the order for the issuance of the CPL without notice to the defendants. In doing so, the plaintiffs made no effort to fulfill their duties to make full and fair disclosure of all material facts to the Master. They failed to disclose material facts of which they were aware. They did not identify any of the defendants’ likely responses to their evidence and allegations. They relied improperly on inadmissible evidence.

There was no necessity for the plaintiffs to bring the motion for a CPL without notice. Having chosen to do so, as they were entitled to do, the plaintiffs voluntarily and knowingly undertook the extra obligations under Rule 39.01 (6) of the Rules of Civil Procedure, RRO 1990, Reg 194, to make full disclosure and fair disclosure of the facts and law to the Master. They did not even try to meet these obligations. Therefore, on that basis alone, the order should be set aside and the CPL discharged.

[25] Finally, Myers J. stated, at paras. 77 and 78:

I wish to be clear as well that I am not undermining in the least the law that accepts that moving without notice for a CPL is the norm. However, parties must be mindful of the nature of the enhanced and exacting duties that they undertake when they decide to do so. Sometimes, in face of true urgency, one has no practical alternative. However, parties often do have a choice as to whether they truly need to proceed ex parte. If they do not really need to do so, they may wish to consider whether it is worth the risk.

The test for a CPL is not a difficult test to meet. A plaintiff starts from the position an aggrieved party seeking the court’s protection. That is a favourable strategic position to occupy. However, on a motion to set aside an order obtained without notice due to a breach of the duties to make full and fair disclosure, the plaintiff is no longer seen as the aggrieved party facing a light test. Rather, it becomes the alleged wrongdoer facing a very high standard of performance. While it may be tempting to move without notice to obtain an order without opposition, in my view, it is a questionable strategy to voluntarily undertake the exacting duties of full disclosure and fair disclosure where it is not absolutely necessary to do so.

[26] Based on these considerations, Christie J. exercised her discretion and ordered the plaintiffs to bring the motion for a CPL on notice to the defendants.

[27] That was back in November, 2021. While the plaintiffs contended that their motion for a CPL was urgent, they did not bring it back on notice.

Request for Reconsideration

[28] On May 4, 2022, nearly six months after Christie J.’s Endorsement, counsel for the plaintiffs forwarded a “Memorandum” to the Court referencing Christie J.’s Endorsement, and stating:

Although my understanding is that there is no precedent requiring a CPL to be made with notice, the circumstances have now changed in that it is now necessary to obtain a CPL on an ex parte basis… I therefore ask that the issuance of an Order granting the CPL be reconsidered given the circumstances of the proceeding.

[29] This process was, to say the least, irregular. There is no Rule that permits counsel to send a “Memorandum” to the Court, asking that a decision be reconsidered. Rules 37.14 and 59.06 do permit counsel to bring a motion to vary an Order under specified circumstances. I am not aware of any process by which one party can write a memo to the Court without notice to the other side asking the Court to reconsider its decision. As a result of this procedural irregularity, the plaintiffs’ Memorandum and original motion material was not presented for my consideration until June 9, 2022.

Analysis

[30] Putting this procedural irregularity aside for the moment, I will consider the merits of the plaintiffs’ request.

[31] The new circumstances giving rise to the need for an ex parte motion are set out in the affidavit of an articling student, dated May 4, 2022. The affidavit references Christie J.’s Endorsement, but explains that no further action was taken to obtain the CPL because the parties were involved in settlement discussions “that made issuing the CPL on the Property detrimental to both parties.” These settlement discussions have stagnated, and now the plaintiffs want to move for an order to obtain a CPL.

[32] The affidavit states that “circumstances have now rendered the need to obtain the Order granting the CPL urgent.” These circumstances are set out at paras. h) and i) of the affidavit:

The Defendants to the proceeding have filed an Application with the landlord and tenant Board seeking an eviction of the Plaintiffs whereby the hearing is to occur on May 16th, 2022.

Furthermore, there is nothing preventing the Defendants from selling the Property to an innocent 3rd party who would be unaware that the Property is subject to litigation. This would jeopardize the Plaintiff’s claim for specific performance…The Defendants are aware that an Order granting a CPL will be sought and this could incentivize them to convey the Property before an Order is granted.

[33] Having reviewed the plaintiffs’ original motion material of October 12, 2021, and the supplementary material filed on May 4, 2022, the circumstances do not strike me as particularly changed such that reconsideration of Christie J.’s Order is appropriate.

[34] Both affidavits allege that the motion is urgent. The urgency of the first motion is belied by the fact that the plaintiffs did not pursue the motion when ordered to bring it back on notice. While the delay of six months has no doubt increased the urgency, the delay and any increased urgency was caused by the plaintiffs’ decision not to bring the motion on notice six months ago. The plaintiffs cannot now ask for a reconsideration of Christie J.’s decision based on their own decision not to follow her direction.

[35] Both affidavits allege that the defendants are trying to evict the plaintiffs under the Residential Tenancies Act in a proceeding before the Landlord and Tenant Board. This is not a change in circumstances.

[36] I also note that the Landlord and Tenant Board hearing was to proceed on May 16, 2022. I do not know whether the hearing proceeded or the outcome of the hearing. The Court should be advised of the outcome of that proceeding before any decision is made with regard to the issuance of a CPL. The decision of the Landlord and Tenant Board could well be a relevant consideration in weighing the harm to each party if the certificate of pending litigation is or is not granted: Rahbar, at para. 23.

[37] Finally, the May 4, 2022 affidavit states: “The Defendants are aware that an Order granting a CPL will be sought…”. Indeed, the defendants have been aware of this since the Statement of Claim was served in October 2021. If the defendants are already aware of the plaintiff’s intention to seek the CPL, I do not see the downside in giving the defendants notice as ordered by Christie J.

Conclusion

[38] For these reasons, the request to reconsider the Order of Christie J. dated November 11, 2021 is dismissed.

Justice R.E. Charney

Released: June 14, 2022

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Anthony Leigh Petgrave and Amy Wheeler Plaintiffs

– and –

Alex Merlin and Ashley Merlin Defendants

REASONS FOR DECISION

Justice R.E. Charney

Released: June 14, 2022