Executive Summary: Key Legal and Evidentiary Issues

• Whether an unpaid private construction loan and a covenant not to sell created a proprietary interest in land sufficient to justify a Certificate of Pending Litigation (CPL).
• Characterization of the plaintiff’s rights as purely contractual versus proprietary, given the express bar on registering the loan on title.
• Impact of the parties’ July 18, 2023 agreement, including the clause prohibiting registration or encumbrance of the private loan on title.
• Application of the Dhunna factors to assess whether equitable considerations favoured granting or refusing the CPL.
• Adequacy of damages as a remedy, including the ease of quantifying the loan-related loss and the availability of monetary judgment.
• Prejudice to the defendant’s ability to complete construction and obtain financing if a CPL were placed on title despite ongoing construction and uncertain loan balance.

Background and parties
This case arises out of a dispute between the plaintiff, Yexin Tian, and the defendant, Tongfang Jiang, concerning an alleged unpaid private loan advanced to fund construction and improvements at 10 McPhillips Avenue in Markham, Ontario, and an abutting severed property on Milne Drive. The plaintiff commenced an action in December 2024 seeking, among other relief, a declaration of a beneficial interest in the McPhillips property, the registration of a Certificate of Pending Litigation (CPL), an accounting, or alternatively repayment of the outstanding loan. The motion before the Ontario Superior Court of Justice concerned whether the plaintiff should be granted leave to register a CPL on title to the McPhillips property.

The private loan and contractual arrangements
The private loan was advanced in the context of a series of agreements between the parties, culminating in a July 18, 2023 agreement. Under this “July agreement,” the parties agreed that the properties would not be sold until the private loan had been paid off. At the same time, the agreement expressly provided that the private loan was not to be registered on title to the McPhillips property and that the plaintiff would not encumber the property. The plaintiff relied on the combination of the unpaid loan and the contractual covenant not to sell as the foundation for claiming an interest in the property sufficient to support a CPL. The defendant, in contrast, emphasized that the agreement deliberately kept the loan off title and framed the arrangement as purely contractual, with any remedy lying in damages rather than an interest in land.

The earlier CPL and its setting aside
After issuing the claim, the plaintiff obtained an ex parte order permitting registration of a CPL on title. That CPL was later set aside by the court on June 10, 2025. The court found that the plaintiff had failed to make full, frank, and fair disclosure in the ex parte materials; that construction on the property remained incomplete; that the construction loans had not yet been paid off; that clause 5 of the July agreement explicitly prohibited registering the private loan on title; and that the plaintiff had improperly asserted that the defendant was attempting to sell the property. However, the court left open the possibility that the plaintiff could renew the request for a CPL on proper notice to the defendant, leading to the present motion.

Positions of the parties on the renewed motion
On the renewed motion, the plaintiff argued that his outstanding private loan, combined with the covenant that the property would not be sold until the loan was repaid, created a reasonable interest in the land. He contended that this interest justified a CPL to prevent any sale of the property before his claim was resolved. The defendant countered that the plaintiff had no proprietary interest at all; his claim was essentially a debt or contract claim. The explicit terms of the agreements prevented registration of the loan on title and barred encumbrances. The defendant also submitted that the construction loan had merely been replaced, that the construction was not yet complete, and that the plaintiff’s effort to obtain a CPL was effectively a disguised attempt to secure an unsecured loan. Relying on the discretionary nature of CPLs and the Dhunna factors, the defendant urged the court to refuse the relief.

Legal framework for certificates of pending litigation
The court reviewed the purpose and legal test for a CPL. A CPL serves to give notice that an interest in land is in issue in litigation and to protect that claimed interest from being defeated by transfers or dealings with the land by persons who might otherwise claim to be innocent purchasers without notice. The party challenging a CPL must show that there is no triable issue as to whether the party seeking the certificate has a reasonable claim to an interest in land. If the claimant has such a reasonable claim, the court then weighs the equities by applying the Dhunna factors, including the uniqueness of the land, the nature of the parties, whether there is an alternative claim for damages, whether damages would be adequate and calculable, the existence of a willing purchaser, and the relative harm if the CPL is granted or refused. The court also reiterated that CPLs are not meant to secure claims for damages; they are intended to protect true proprietary interests where other remedies would be ineffective.

Court’s analysis of proprietary interest and contractual rights
In examining the nature of the plaintiff’s claim, the court concluded that there was no reasonable proprietary interest in the McPhillips property. The plaintiff asserted no constructive trust or resulting trust, and this was not a specific performance case involving the purchase and uniqueness of the property. Nor was there any enforcement mechanism tied directly to the land, such as a right of possession, a charge on sale proceeds, or a registered security interest. The covenant not to sell until the private loan was repaid was found to be entirely contractual and did not create any proprietary right in the land itself. If the defendant sold the property in breach of that covenant, the plaintiff’s remedy would be an action in damages for breach of contract, not an assertion of property rights. The court emphasized that while the plaintiff might care deeply about when and whether the property is sold, that practical interest in timing does not equate to a proprietary interest that would justify a CPL.

Application of the Dhunna factors and practical considerations
The judge went on to explain that even if he were wrong on the absence of a proprietary interest, the CPL would still be denied under the Dhunna factors. There was no evidence that damages would be inadequate, and indeed there was “not a shred of evidence” that damages could not properly compensate the plaintiff. Damages were entirely capable of being ascertained; both parties had retained experts to assist in valuing the loan-related claims. It also remained uncertain how much of the private loan, if any, was still outstanding, a factor cutting against the extraordinary step of encumbering title. The court noted that approximately $156,000 in additional funds were required to complete construction on the property and that the plaintiff had stopped advancing money for that purpose. A CPL on title risked hampering the defendant’s ability to obtain further financing, potentially stalling completion of the project. The court further observed that this was not a Mareva injunction application; there was no evidence that the defendant was dissipating or removing assets from the jurisdiction. Reviewing the series of agreements, the judge found that the parties’ original intention in acquiring and severing the Milne property was that each would independently develop their respective parcels, and they should be allowed to proceed on that basis. Given that the plaintiff had expressly covenanted not to register the private loan on title and not to encumber the property, the court considered a CPL to be functionally equivalent to registering the loan. It would operate as an encumbrance if it interfered with the defendant’s ability to finance, market, or sell the property, contrary to the bargain the parties had made.

Outcome and implications
In the result, the court dismissed the plaintiff’s motion and refused leave to register a CPL on title to 10 McPhillips Avenue. The defendant, Tongfang Jiang, was therefore the successful party. The court did not fix any specific monetary judgment, damages, or costs in this decision. Instead, it directed that if the parties could not agree on the costs of the motion, they were to arrange a further appearance before the same judge to address that issue. As a result, no determinate dollar amount can currently be stated for any monetary award, costs, or damages ordered in favour of the successful party.