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Property Fails “Uniqueness” Test for CPL

Under Canadian law, where a person wants to obtain a Certificate of Pending Litigation (“CPL”) and have it registered against real property in anticipation of an upcoming full trial, he or she must show among other things that the property was “unique”.  In a recent case, the court rejected a developer’s bid for a CPL in an unsuccessful purchase of a gas station because its features “could likely be duplicated elsewhere, or built, as needs be.”

The intended buyer was a developer who agreed to buy a gas station from the seller.  After the negotiations during a 10-day conditional period failed, the deal fell through with the buyer asserting the seller did not allow the conditions to be fulfilled.  Both parties blamed the other, and the seller sold to a third party for the same price.  This prompted litigation, with the buyer registering a caution and then bringing a motion before the court to have a CPL registered on title.

In assessing the merits of the buyer’s motion, the court first summarized the law.  The court had the statutory authority to issue a CPL if it was satisfied that certain preliminary tests had been met, which included the buyer showing that it had a reasonable claim to an interest in the gas station land.  This test was easily met here.

The next hurdle required looking at other factors, including whether the land was unique.  The intent of the buyer at the time of the purchase had to be considered, along with the question of whether damages were a satisfactory alternative remedy to compensate him for the deal falling through.  In other words, the court could only grant a CPL if the land was unique, if substitute land is not readily available, and where damages were inadequate. The onus of establishing these rested with the buyer.

Over many years this particular buyer had developed, operated, and bought-and-sold more than 70 gas stations.  Currently, he still owned 40 of them.  While he claimed that this specific gas station was “extremely rare” and “very well suited” to a project that he had envisioned for some time, the court found that it was not unique to the area.  It was admittedly large, with a two-story building, convenience store and restaurant, but this did not cause it to “rise to the required level of uniqueness”.

This did not mean that a commercial property could never be unique, but the circumstances and intent of the buyer were both relevant.  In this case there was no evidence that it would be rare or impossible for the buyer to construct a suitable building on another property. “After all, that is all part of what Developers typically do”, the court said.

The court also noted that the buyer had sold some of his 70 properties in the past, which suggested that he did not have any personal attachment to them, as might be the case with a buyer of a unique residential property.  In fact, this failed deal was only one of many  projects the buyer had pursued in the course of his successful career as developer, with the court noting that it was obvious he had “not been waiting for just this one piece of property.”  The court added that the seller would likely incur harm if the re-sale of the property to the third party was blocked by the existence of the CPL.

As for showing the inadequacy of damages as an alternative remedy, this required more than just a bald assertion on the buyer’s part.   Ideally, the buyer should have tendered the evidence of a chartered accountant or valuator, but he failed or omitted to do so here. In any event, the court found the buyer’s putative losses for the seller’s breach were capable of being quantified in damages in the usual way, at the pending trial.  The court therefore refused to issue the requested CPL.  See: Shcolyar v. 1241 Scaw Inc., 2019 ONSC 3701.