October 28, 2015
Cheaper, Faster, Better? An Alternative Process to a Sheriff’s Sale
The Ontario Superior Court recently recognized a novel way
for judgment creditors to move for a sale of their judgment debtors’ property,
outside of the sheriff’s sale process set out in the Execution Act. In Canaccede
International Acquisitions Ltd. v Abdullah,
Justice Broad allowed the judgment creditor to move under the rules of court
for a “reference” which, in this instance, resulted in a judicially-supervised
sale of the property. This is the first
time an Ontario Court has imposed this remedy outside of a mortgage enforcement
proceeding, family law proceeding, or other litigation with respect to a
The benefits of the findings in the Canaccede case are clear. The proposed sale procedure will likely
be a faster and cheaper mechanism to enforce judgments as against a debtor’s
property, without requiring the involvement of the sheriff. The proposed sale procedure also provides
fair notice to all those with potential claims against the property. As a result, judgment creditors may wish to
consider enforcement of their outstanding judgments by way of the procedure
proposed in Canaccede.
Privacy Laws Prohibit Third-Party Judgment Creditors from
Obtaining Mortgage Discharge Statements
The Court’s willingness to use the reference procedure for a
judicially-supervised sale stems from the 2011 Court of Appeal decision in Citi Cards Canada Inc. v. Pleasance.
In Citi Cards, the
Court of Appeal held that a mortgagee is prevented by the Personal Information Protection and Electronic Documents Act from
providing a mortgage statement to a third-party judgment creditor of the
mortgagor/debtor. The Court of Appeal
acknowledged that this causes a challenge for the enforcement of judgments by
way of a sheriff’s sale, as mortgage statements are required by the
sheriff. The only alternative is to
conduct “protracted and expensive” examinations in aid of execution, the
outcomes of which are uncertain.
The Court’s Jurisdiction to do Justice Between the Parties
Justice Broad noted that unless a specific statute sets out
otherwise, the Superior Court has jurisdiction “to do justice between the
parties”. Here there was no statute or
other regulation prohibiting the proposed procedure.
Importantly, the judgment creditor’s proposed procedure
preserved the right of the respondents and the encumbrancers to show cause on a
case-specific basis as to why a judicial sale should not proceed. In addition, if a sale of the property was
ordered, the proposed process would allow for the “realistic and active
marketing of the properties” and should “result in higher sale prices, to the
potential benefit of all interested parties.”
In the result, the Court approved the judgment creditor’s
proposed procedure, as follows:
Step One: An Order Directing a Reference
As a prerequisite to seeking an order for sale, the judgment
creditor first must seek an order pursuant to Rule 54.02(2)(b) of the Rules of Civil Procedure directing a
reference to inquire into and determine all issues relating to the conduct of
the sale of the property of the judgment debtor.
The judgment creditor in this case proposed that the
reference hearing perform the following functions:
- determine what property or interest in the lands
is liable to be sold under the judgment;
- determine who has interests in the lands;
- define those interests and determine their
- determine how the proceeds of a sale should be
- allow an opportunity for the respondent or any
interested party in each case to show cause why it would be unjust or
inequitable to require the sale of the respondent’s property or interest in the
The judgment creditor in this case personally served an
Application Record seeking this relief on the judgment debtor. The Application Record was also served on
each party shown on the parcel register for the property and shown on execution
searches against the judgment debtor as being parties having an interest in
each particular property.
Step Two: An Order for Sale by Private Contract
Once the initial reference hearing is complete, if the
referee determines that the respondent (i.e.
the judgment debtor) has an interest in the land that may be sold to
satisfy the judgment debt against him or her, the judgment creditor will return
to Court with the referee’s report and move for an order for sale by private
contract pursuant to Rule 55.06(1).
The decision in Canaccede
acknowledges the reality of the sheriff’s sale process: it is unpredictable
and expensive, can lead to no recovery for the judgment creditor, and modern
privacy legislation makes it difficult to obtain important information about
the debtor’s property. Judgment
creditors may therefore wish to consider the approach taken in Canaccede as an alternative process to
the sheriff’s sale.
1990, c. E.24 (“Execution Act”).
 2015 ONSC 5553 (“Canaccede”).
ONCA 3 (“Citi Cards”).
2000 c. 5 (“PIPEDA”).