Seizure of Real Property

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.

[35] As has been observed on many occasions, including by the application judge, the Execution Act is a procedural statute that facilitates the collection of debts through the mechanisms contained in it. It does not purport to grant substantive rights to judgment creditors: Yaiguaje, at para. 54. In particular, the sections of the Execution Act upon which the appellant relies do not authorize effectively adding the legal owner of a property in which a judgment debtor has an unregistered beneficial interest to a writ of seizure and sale against the judgment debtor.

[36] Assuming there was an available market, and subject to the terms of any co-tenancy agreement, the sheriff could conceivably sell Wismer’s 35 percent beneficial interest in the lands. However, that fact does not make the appellant’s writ of seizure and sale binding on or enforceable against Pace Mark.

[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.

Citi Cards Canada v. Pleasance, 2010 ONSC 1124 (CanLII)

[14] The Mortgages Act defines a “mortgagor” to include “any person deriving title under the original mortgagor or entitled to redeem a mortgage, according to the person’s estate, interest or right in the mortgaged property.”[4]

[15] Citi Cards argues that it filed its Writ of Seizure and Sale after the Banks’ mortgages were registered. Consequently, pursuant to section 31 of the Mortgages Act, the Banks are required to send Citi Cards a Notice of Sale Under Mortgage before exercising a power of sale. Section 31 of the Mortgages Act prohibits the Banks from exercising a power of sale unless a notice in the form provided is sent to every person appearing by the parcel register and the index of executions to have an interest in the property.[5]

[16] Upon receiving a Notice of Sale, Citi Cards would be entitled to redeem Mr. Pleasance’s mortgages. The Notice of Sale is equivalent to a mortgage or discharge statement and would satisfy the Sheriff’s requirement for such a statement. Citi Cards submits that its rights to the Statements should not depend on whether the mortgages are in default or on whether the Banks decide to issue a Notice of Sale.

[17] I do not agree. It is precisely the mortgagor’s default that entitles the mortgagee to issue a Notice of Sale and it is the Notice of Sale that jeopardizes the judgment creditor’s security, derived from registering a writ of seizure and sale against the property. It is therefore the default that entitles Citi Cards to redeem the mortgage that is in default. Without a default in the mortgage, Citi Cards has no right to redeem the mortgage and, in the absence of such a right, it is not a “mortgagor” as defined by the Mortgages Act.