Decision: Successful Motion to Discharge Improper Caution (Judge v. Tsougios)
Background
The plaintiffs are corporate entities that own and operate dining establishments originally co-founded by the defendant, who resigned from the business in December 2023. While the Plaintiff has since assumed sole responsibility for managing the corporations, ownership of shares remains equally divided between the two.
The dispute centers on alleged financial liabilities that the defendant is said to owe to the corporations. Despite the litigation being a shareholder dispute with no connection to real property, the plaintiffs registered three separate cautions against the defendants’ matrimonial home in an effort to prevent its sale. The third caution, filed on October 16, 2024, jeopardized an Agreement of Purchase and Sale scheduled to close on October 30, 2024. The plaintiffs also previously sought a Certificate of Pending Litigation, which at the time was still under reserve by another judge.
Court’s Decision
Justice Baltman found that the plaintiffs had no legal interest in the property and were improperly attempting to secure execution before judgment. The matrimonial home had no connection to the plaintiffs’ business affairs, and the plaintiff admitted in his affidavit that the caution was intended to secure recovery of alleged damages in the corporate dispute, not to protect a legitimate interest in land.
The court rejected the plaintiffs’ argument that alleged misappropriation of funds used for home improvements created a constructive trust. Even if such a trust existed, it would not fall within the scope of a caution under section 71 of the Land Titles Act (the “Act”). Additionally, the plaintiffs violated section 130 of the Act by registering a third caution in respect of the same matter without the land registrar’s permission.
Justice Baltman ordered the immediate removal of the caution and prohibited further registrations against the property. The plaintiffs were also ordered to pay costs of $4,500 within 30 days.
Outcome
This decision reinforces that cautions under the Land Titles Act must be grounded in a legitimate interest in land. Attempts to use cautions as leverage in unrelated litigation, particularly shareholder disputes, will not be tolerated.
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