Cautions are a useful tool in the estate litigator’s toolbox. A caution allows for a “no dealings” warning to be temporarily placed on title to real property. Potential purchasers are placed on notice about an ongoing dispute related to the property. However, lawyers must be cautious about the cost consequences of using this tool.
The recent case of Marcy v. Marcy is illustrative of this issue. The estate trustee had sold the deceased’s house with an upcoming closing date. Counsel for the Respondent beneficiary registered a caution mere days before closing, causing an urgent motion to be brought. Even though counsel voluntarily removed their caution, the motion was necessary to remove the “no dealings” indicator on title and to vacate the caution.
Counsel for the Respondent asserted that the Respondent had a vested interest in the property due to the expiration of the three-year period after the death of the deceased pursuant to section 9 of the Estates Administration Act. This was a position he had not previously taken, despite previous and protracted litigation related to the estate.
Justice Myers rejected this argument and found that “it was not reasonable for Brian Marcy to register a caution intending to prevent a closing of a sale of property based on an assertion of title under a law that (a) does not apply by its own terms; and (b) the Court of Appeal for Ontario has held does not apply.” Full indemnity costs were awarded in favour of the Applicant.
Any party considering registering a caution must be on a strong legal foundation to do so, otherwise they run the risk of cost consequences and the potential for damages against them if a sale is frustrated due to their actions.
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