Creditor Priority - Seizure and Sale of Land

1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd., 2020 ONCA 250 (CanLII)

[1] The appellant, 1842752 Ontario Inc., has a judgment and writ of seizure and sale against Fortress Wismer 3-2011 Ltd. (“Fortress Wismer”). Fortress Wismer owns an undivided 35 percent beneficial interest in lands registered under the Land Titles Act, R.S.O. 1990, c. L.5. The registered owner of the lands holds the land for Fortress Wismer and two other corporations under an unregistered trust agreement. Under s. 62(1) of the Land Titles Act[1], notice of an express, implied or constructive trust “shall not be entered on the register or received for registration.”

[2] The appellant applied for declarations that the writ of seizure and sale is binding on and enforceable against the registered owner of the lands and gives the appellant priority over a previously registered charge to the extent of advances under it made following actual notice of the writ.

[3] The application judge dismissed the appellant’s application. For the reasons that follow, we dismiss the appellant’s appeal.

[31] As the application judge observed, s. 9(1) of the Execution Act gives the sheriff the authority to seize and sell lands of an execution debtor subject to a writ of seizure and sale, including lands held in trust for the execution debtor:

9 (1) The sheriff to whom a writ of execution against lands is delivered for execution may seize and sell thereunder the lands of the execution debtor, including any lands whereof any other person is seized or possessed in trust for the execution debtor and including any interest of the execution debtor in lands held in joint tenancy. [Emphasis added.]

[43] In any event, as we have explained, an execution creditor’s remedy against land under a writ of seizure and sale is the right to have the sheriff seize and sell “the lands of the execution debtor”: Execution Act, s. 9. The sheriff steps into the shoes of the execution debtor and can have no higher rights than the execution debtor: Michaud, at paras. 57-63. Further, s. 37 of the Execution Act provides that following a sale of property, the sheriff shall distribute the proceeds of sale in accordance with the Creditors’ Relief Act, 2010. Among other things, that act establishes the priorities among persons entitled to share in the proceeds of sale following a sheriff’s sale of land.

[44] Section 14 of the Creditors’ Relief Act, 2010 gives an execution creditor priority over a charge registered subsequent to an execution. The Creditors’ Relief Act, 2010 does not, however, give an execution creditor priority over subsequent advances made under a charge registered prior to the execution being filed. It is the only section of the Creditors’ Relief Act, 2010 that speaks to priorities between an execution creditor and a chargee or mortgagee.

[48] The appeal is dismissed. Costs of the appeal are to the respondent and intervenor on a partial indemnity scale fixed in the amount of $6,700 to Firm Capital and $9,600 to MarshallZehr inclusive of disbursements and HST.