Lawyers trying to enforce a money judgement against real property now have an alternative to the beleaguered sheriff’s sale process.
According to lawyer Todd Christensen, who succeeded in getting an alternative, judicially supervised sale process approved, the “last nail in the coffin” for the sheriff’s sale process came after a ruling in Citi Cards Canada Inc. v. Pleasance. In that case, the court found privacy laws precluded banks from handing over mortgage statements to creditors who want to enforce a judgment via the sheriff’s sale process.
“Given that a mortgagee is prevented by PIPEDA [the Personal Information Protection and Electronic Documents Act] from providing such mortgage discharge statements required by sheriffs, the practical implication is that an execution creditor who wishes to initiate a sheriff’s sale of any encumbered property will likely be required to undertake potentially protracted and expensive examinations in aid of execution and other process, with uncertain outcomes, just to get into the position of being able to initiate the sale process,” wrote Justice David Broad in Canaccede on Sept. 9.
“PIPEDA, in preventing a mortgagee from providing a mortgage statement to an execution creditor proposing to initiate a sheriff’s sale, does represent an impediment to employment of the sheriff’s sale process,” Broad noted.
In the alternative process approved by the court, a reference hearing would involve all interested parties in a subject property, including the mortgagee bank. The bank, as a party to the matter, may have to disclose the mortgage payout statements to the creditor, says Christensen.
Christensen, who represented the applicant, Canaccede, along with his colleague Zameer Hakamali, points out restrictions under PIPEDA aren’t the only barrier while dealing with the sheriff’s sale process.
“You need to pay a $7,000 deposit upfront, and the sheriff uses that to hire its own solicitor to conduct the sheriff’s auction and then it uses the money to advertise the auction,” he says.
But even if an offer came up that would be sufficient to pay out all of the writs of seizure and sale, the sheriff can reject the bid, he adds.
“And then you’re done. The whole process is over; there’s no appeal. You have to start all over. Your money’s gone because the sheriff invariably spends it all.”
The applicants argued the court had jurisdiction to allow an alternative to the sheriff’s sale process. With no submission from the respondents to counter their argument, the court made a finding that creating an alternative isn’t a job to leave to the legislature.
“I have considered the question of whether the court should refrain from endorsing an alternative approach to the enforcement of judgments against land in favour of leaving it to the legislature to address any difficulties in the judgment enforcement process by legislative reform,” wrote Broad.
“In my view, where the court has an inherent jurisdiction to make an appropriate order which will do justice between the parties, the court is at liberty to do so and should do so where the circumstances warrant it, in the absence of binding authority or an overriding policy reason constraining it from following such a course,” he added.
Lawyer Inga Andriessen of Andriessen & Associates PC says the decision is “a good step in the right direction for creditors’ rights.”
“Ontario is a fantastic place to be a judgment debtor if you have the stomach to walk away from your debts,” she says. “The Rules of Civil Procedure that govern enforcement are so weighed in favour of the debtor that if you’re a small creditor . . . if you don’t have hundreds of thousands of dollars owed to you, then the cost to enforce a judicial order is prohibitive.”
The alternative process will mean “huge cost savings,” says Andriessen, noting it eliminates the need to get the payout statement from the bank by going through an examination in aid of execution.
With PIPEDA restrictions in place, Andriessen says obtaining information from debtors had become particularly frustrating, especially if they were hiding from creditors.
If the debtor is avoiding a process server, the creditor has to go to court to bring a motion for an order to serve via an alternative method, such as mail. If the debtor doesn’t respond to the mail correspondence and doesn’t show up at the examination in aid of execution, the creditor must take the certificate of non-attendance and bring another motion to compel attendance at the examination.
“Now you serve that order by mail because you’re smart enough to ask the judge to serve it by mail. You serve it, and they don’t show up again,” says Andriessen. The creditor then has to get a contempt of court order, “but in order to get a contempt of court order, you have to personally serve the judgment debtor who is evading you,” says Andriessen, noting every step of the process is costly.
Broad also noted the alternative of a judicially supervised sale of the subject properties “preserves the right of the respondents and the encumbrances to show cause on a case-specific basis why a judicial sale should not proceed.”
That’s why the process isn’t just an enforcement mechanism, according to Christensen. “It’s a fair process because it gives anyone with an interest in the property to show cause [as to] why it would be unjust or inequitable for the court to order the property sold,” he says.