CIVIL PROCEDURE - Lis pendens (certificate of pending litigation) – Availability - Title to land in issue

Law360 Canada (June 8, 2022, 5:41 AM EDT) -- Appeal by Unterschultz from the chambers judge’s order to release the amount of the sale proceeds on the grounds that the chambers judge erred by holding that the certificate of lis pendens only encumbered AG Partner’s right to the proceeds under the loan agreement with Norcan, rather than the full amount held in trust. Unterschultz and Clark separated and had since been involved in intense matrimonial litigation. Unterschultz registered a certificate of lis pendens against title to real property owned by Veteran’s Way, because she believed that her ex-husband, Clark, had an interest in the real property. Veteran’s Way’s only shareholder was Norcan. Clark owned AG Partner which owned 48 per cent of the voting shares of Norcan. The remaining voting shares were owned by the respondents. Veteran’s Way sold the lands. Unterschultz agreed to discharge the certificate of lis pendens in consideration of $7,300,000 of the sale proceeds being held in the solicitor’s trust account of Veteran’s Way pending a final order of the Court or a written agreement between AG Partner, the respondents and Unterschultz. The amount of AG Partner’s interest was reduced and the amount of the proceeds payable to AG Partner was $271,771. The chambers judge found the certificate of lis pendens was properly registered and piercing the corporate veil to allow Unterschultz to register the certificate of lis pendens against the lands was warranted. However, the chambers judge found the certificate of lis pendens only captured AG Partner’s remaining interest in the sale proceeds being held by Norcan and did not give Unterschultz a greater interest in the land than Clark had himself. The certificate of lis pendens only encumbered $271,771 of the $7,300,000 held in trust. The chambers judge ordered the release of amounts payable to the respondents from the sale proceeds held in trust and ordered $271,771 owing to AG Partner to remain in the trust account....
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