ONTARIO – Arbitration and Certificates of Pending Litigation(“CPL”) – The Court has jurisdiction to authorize the issuance and registration of a CPL even if the underlying dispute must be resolved through arbitration pursuant to agreement between the parties.

Berthault v. Green Urban
2021 ONSC 8039,  November 30, 2021
Ontario Superior Court, Spencer Nicholson J.

The Applicants were 11 purchasers of condominium homes in a development. Before the transactions closed, the Respondent, developer gave notice terminating the agreements, under the Tarion Warranty Schedule and offering to resell the homes to the Applicants at a higher price. The Applicants denied the developer’s right to do so.

The Tarion Warranty provided for binding arbitration in respect of disputes regarding termination of the agreements and also gave the arbitrator the power to consolidate multiple arbitral proceedings involving common issues. The arbitrator also has jurisdiction to grant “any form of relief permitted by the Arbitration Act, 1991 (Ontario), whether or not the arbitrator concludes that the Purchase Agreement may properly be terminated.”: para. 7.

The Applicants wished to protect their interests in the property pending disposition of the arbitration by registering Certificates of Pending Litigation (“CPL”) against the property.  The issue in the case was whether the Court had jurisdiction to issue a CPL where the there is a binding agreement to arbitrate in respect of the underlying dispute.

S. Nicholson J. referred to 2033363 Ontario Limited v. Georgetown Estates Corp, [2006] O.J. No. 687 (Ont. Sup.Ct. Master Albert) as authority for the proposition that the court has jurisdiction to issue a CPL notwithstanding that the underlying dispute will be determined by an arbitrator pursuant to an arbitration clause: para. 29-30.

The Court held, as Master Albert did, that the court has the jurisdiction to authorize the issuance and registration of a CPL even if the underlying dispute must be resolved through arbitration pursuant to an agreement between the parties: para. 34.

Justice Nicholson relied on s.8(1) of the Arbitration Act, 1991, which provides that the Court’s powers with respect to the detention, preservation and inspection of property, interim injunctions and the appointment of receivers are the same in arbitrations as in court actions: para. 36.

Justice Nicholson then embarked on a review of the test and the jurisprudence for issuance of a CPL and concluded that the Applicants met the test were entitled to the Order. A CPL was issued and registered on title.