Michael Odumodu

The appellant and respondent jointly owned a property and had joint debt with an execution creditor.

After the property was sold under power of sale, a surplus remained.

The appellant had filed a consumer proposal, triggering a stay of proceedings under the Bankruptcy and Insolvency Act.

The application judge ordered the execution creditor's debt to be paid from the total surplus before dividing the remainder equally between the appellant and respondent.

The Court of Appeal allowed the appeal, holding that the stay of proceedings precluded the execution creditor from recovering against the appellant's share.

The joint tenancy was severed, and the execution creditor's debt could only be paid from the respondent's 50 percent share of the surplus.

A mortgagee applied to pay surplus sale proceeds from a power of sale into court where competing claims existed between joint mortgagors and an execution creditor.

One respondent had filed a consumer proposal under the Bankruptcy and Insolvency Act and argued the execution creditor’s writ could not attach to her share of the surplus due to the statutory stay.

The court held that a writ of execution filed with the sheriff constitutes an encumbrance and a subsequent encumbrancer under s. 27 of the Mortgages Act.

Accordingly, the execution creditor had to be paid from the surplus before any residue became payable to the mortgagors.

The remaining residue was divided equally between the joint owners.