Ontario Court Endorses Alternative to Enforcement by Sheriff’s Sale

December 22nd, 2015 by

By Michelle Stephenson

Following a case in British Columbia, a recent decision of the Ontario Superior Court, Canaccede International Acquisitions Ltd. v Abdullah et al., supports an alternative process available to a judgment creditor to enforce a judgment against a debtor who owns property.

The alternative, proposed by the applicant in Canaccede, is a two-step judicially-supervised sale of real property. To enforce a judgment debt this way, the steps are as follows:

  1. By application to the court, obtain an order pursuant to rule 54.02(2)(b) of the Rules of Civil Procedure for a reference hearing regarding the proposed sale of the debtor’s property. This hearing would address:
    1. What property or interest in lands is liable to be sold under the judgment;
    2. Who has interests in the lands;
    3. The priority of interests in the lands;
    4. How the proceeds of sale should be distributed; and
    5. Issues related to whether it would be unjust or inequitable to require the sale.
  2. Once the reference hearing has been completed, if it is determined that the respondent does have an interest in the land that may be sold to satisfy their judgment debt, the applicant returns to court with the referee’s report and moves for an order for sale by private contract pursuant to rule 55.06(1).

Once it was determined that the Execution Act was “not a complete code” and the Court has jurisdiction to order an alternative form of sale, such as this one, it was found to be appropriate in the circumstances.  A judicially-supervised sale was compared to receivership, as an equitable enforcement tool used by the courts to overcome impediments in the common law or legal enforcement processes.

The Court noted that the benefits to this alternative form of sale included the following:

  • Where a sale is ordered, it allows for “realistic and active marketing of the properties”, which would likely result in a higher sale price, to the benefit of all parties;
  • It avoids the possible expense of a second sheriff’s auction, where the first one would not have resulted in a high enough offer to purchase; and
  • It is equitable in that it preserves the rights of other parties to show on a case-specific basis why a sale should not proceed.

It should be noted that, as a form of equitable relief, this method of enforcement must be pursued through the Superior Court of Justice, even if the judgment to be enforced is granted by the Small Claims Court.

The “recognition and adoption of an alternative method for the enforcement of money judgments against land” in Canaccede was stated to be an example of “evolution and improvement of the common law” in accordance with changing times.

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