Ontario Court Denies Certificate of Pending Litigation in Tian v. Jiang
Executive Summary
In Tian v. Jiang, 2026 ONSC 1947, the Ontario Superior Court of Justice reaffirmed a fundamental principle in property law: a contractual promise does not, by itself, create a proprietary interest in land. The Court denied the plaintiff’s motion to register a Certificate of Pending Litigation (CPL), emphasizing that CPLs are not tools to secure unsecured debts or enforce purely contractual rights. This decision highlights the importance of properly structuring private lending and development agreements, particularly where real property is intended to serve as security.
Background
The dispute arose from a private financing arrangement between the plaintiff, Yexin Tian, and the defendant, Tongfang Jiang, involving construction and improvements to residential properties in Markham, Ontario.
Under their final agreement dated July 18, 2023, the parties agreed that the properties could not be sold until the private loan was fully repaid and that the loan was not to be registered on title.
Following a dispute over repayment, the plaintiff commenced legal proceedings and sought to register a CPL over the properties. An initial CPL was obtained on an ex parte basis but was later set aside due to failure to provide full and frank disclosure; incomplete construction; outstanding construction financing; and contractual restrictions prohibiting registration.
The plaintiff then renewed the motion on notice to the defendant.
Legal Framework: Certificate of Pending Litigation
A CPL is a statutory mechanism used to notify third parties that a legal claim affecting land is pending. It serves to preserve a claimed interest in land until the dispute is resolved. In other words, a CPL does not create a proprietary interest. It merely protects one that already exists.
To obtain a CPL, a claimant must show a “reasonable claim to an interest in the land.” If that threshold is met, the court then weighs equitable factors set out in 572383 Ontario Inc. v. Dhunna (1987) – the so-called Dhunna factors – including whether damages would be an adequate remedy, the risk of harm to each party, and the intent behind the agreement.
Court’s Analysis
- No Proprietary Interest
The Court found that the plaintiff’s claim was purely contractual.
The provision prohibiting sale of the property until loan repayment was characterized as an in personam obligation, enforceable only against the contracting party, and not against the land itself. The plaintiff did not assert a constructive trust, resulting trust, a claim for specific performance or any right directly tied to the land. As such, there was no legal basis for claiming an interest in land.
The Court held that any breach of the agreement would give rise to a claim for damages, but not a proprietary remedy.
- CPL Is Not a Security Device
The Court reiterated that a CPL cannot be used as a substitute for security or as leverage in a contractual dispute. Where the underlying claim is monetary in nature, the appropriate remedy is a damages award, and not the encumbrance of title.
- Contractual Prohibition on Registration
Another critical factor in the Court’s reasoning was the parties’ express agreement not to register the loan on title. The Court declined to permit a CPL that would effectively circumvent this contractual restriction.
Dhunna Factors Analysis
Even if a proprietary interest had been established, the Court held that the CPL would still be denied based on the Dhunna factors. The Court found that: construction remained incomplete and required additional funding; registration of a CPL could impair the defendant’s ability to secure financing; the parties intended to independently develop their respective properties; and there was no evidence of asset dissipation or bad faith. Hence, the Court concluded that damages would be an adequate remedy.
Key Implications for Practice
- Contractual Rights vs. Property Rights
A restriction on sale does not create an interest in land. Legal practitioners must distinguish between personal obligations and proprietary rights.
- Importance of Security Structuring
Private lenders should ensure that agreements include enforceable security mechanisms, such as registered mortgages, charges or equitable liens.
- Enforceability of No-Encumbrance Clauses
Courts will uphold contractual provisions that prohibit registration on title. These clauses must be carefully considered during negotiations.
- Limits of CPL Applications
CPLs are not tools for debt recovery or negotiation leverage. Their use is limited to protecting legitimate claims to land.
- Clarity in Construction Financing Agreements
Agreements should clearly distinguish between loan repayment and refinancing or replacement of existing financing.
Conclusion
The decision in Tian v. Jiang underscores the importance of aligning contractual arrangements with intended legal outcomes. For transactional lawyers, the key takeaway is clear: if the intention is to secure an interest in land, that interest must be expressly created and properly documented. Failure to do so may leave parties with only a personal claim for damages, without recourse against the property itself.
