Adelaide Capital Corp. v. Minott et al. [Indexed as: Adelaide Capital Corp. v. Minott]

87 O.R. (3d) 469

Ontario Superior Court of Justice,

Divisional Court,

Jennings, Gans and Coats JJ.

September 20, 2007

Debtor and creditor -- Execution -- Delay -- Plaintiff bringing application under rule 60.07(2) to issue writ of seizure and sale and under rule 60.08(2) to issue notices of garnishment 14 years after obtaining judgment -- Plaintiff offering no explanation for delay -- Motion judge having discretion to refuse leave solely on basis of unexplained delay despite fact that limitation period in s. 45(1)(c) of Limitations Act had not expired -- Limitations Act, R.S.O. 1990, c. L.15, s. 45(1)(c) -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 60.07(2), 60.08(2).

The plaintiff brought an application under rule 60.07(2) of the Rules of Civil Procedure to issue a writ of seizure and sale and under rule 60.08(2) to issue notices of garnishment. No explanation was offered for the 14-year delay between [page470] obtaining the judgment and bringing the application. The motion judge was not persuaded that leave should be granted and dismissed the motion. The plaintiff appealed.

Held, the appeal should be dismissed.

Unexplained delay can be taken into account in determining whether the discretion provided in rule 60.07(2) and rule 60.08(2) should be exercised, notwithstanding that the applicable limitation period (in this case, the 20-year period set out in s. 45(1)(c) of the Limitations Act) has not expired. The rule is procedural and is designed to permit the court to control its own process. It does not take away from the legal and substantive right of action to sue on a judgment within the limitaiton period.

APPEAL from an order dismissing an application to issue writ of seizure and sale and notices of garnishment.

Cases referred to Shmegilsky v. Slobodzian, 1964 265 (ON SC), [1964] 1 O.R. 633, [1964] O.J. No. 706 (S.C.), not folld Other cases referred to Adelaide Capital Corp. v. 412259 Ontario Ltd., 2006 34725 (ON SC), [2006] O.J. No. 4175 (S.C.J.); Adelaide Capital Corp. v. Panetta (24 July 2006), Brampton (S.C.J.); Ballentine v. Ballentine, 2000 27004 (ON CA), [2000] O.J. No. 2870, 10 R.F.L. (5th) 11 (C.A.), affg (1999), 1999 15088 (ON SC), 45 O.R. (3d) 706, [1999] O.J. No. 3103, 50 R.F.L. (4th) 211 (S.C.J.); Royal Bank of Canada v. Correia, 2006 26976 (ON SC), [2006] O.J. No. 3206, 36 C.P.C. (6th) 284, 150 A.C.W.S. (3d) 621 (S.C.J.); South Holly Holdings Ltd. v. Nguyen, [2006] O.J. No. 5225, 154 A.C.W.S. (3d) 481 (S.C.J.) Statutes referred to Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) Family Law Act, R.S.O. 1990, c. F.3 Limitations Act, R.S.O. 1990, c. L.15, s. 45 [rep.] Succession Law Reform Act, R.S.O. 1990, c. S.26 Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 60.07(2) [as am.], 60.08(2)

Lee Guarino, for plaintiff (appellant). Chris Bowman, for defendants Pauline Minott and Sheila Minott (respondents in appeal).

[1] Endorsement by THE COURT: -- The narrow issue upon which leave to appeal was granted from the decision of Paisley J. dated July 13, 2006, is as follows:

In matters other than proceedings under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) the Family Law Act, R.S.O. 1990, c. F.3 and the Succession Law Reform Act, R.S.O. 1990, c. S.26 does a judge have a discretion under rule 60.07(2) and rule 60.08(2) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] to refuse leave solely on the basis of delay, when having regard to s. 45(1)(c) of the Limitations Act, R.S.O. 1990, c. L.15? [page471]

[2] For the reasons which follow we conclude the answer to the question posed is yes.

[3] The respondents were guarantors on a mortgage entered into by their brother-in-law which was placed on his residence. Upon default, the property was sold under Power of Sale and a deficiency of $34,555.38 remained owing. The principal debtor went into bankruptcy. The respondents were aware of the debt and their liability for it, but no steps were ever taken to enforce the judgment. The judgment bears interest at 12 per cent and the amount of the judgment now stands at about $95,000.

[4] The appellant brought an application under rule 60.07(2) to issue a writ of seizure and sale, and under rule 60.08(2) to issue notices of garnishment. Although these motions were properly heard by the Master, they came on for hearing before Paisley J. No evidence was placed before Paisley J. to address the issue of the extraordinary delay of over 14 years that had elapsed between the judgment and the motion before him. Apparently no law was cited to Justice Paisley. In a brief endorsement he held [at paras. 8 and 9]:

The applicant has failed to explain its reason for delaying enforcement of its judgment

I am not persuaded on this record that leave should be granted. The motion is dismissed.

[5] Before us, the appellant argued that it was entitled as of right to have a writ of execution issued, regardless of the leave requirements under the rule, so long as the motion for leave to issue the writ is made within 20 years of the date of the judgment. Section 45(1)(c) of the Limitations Act, R.S.O. 1990, c. L.15, which is applicable to this matter provides that an action upon a judgment shall be commenced within 20 years after the cause of action arose.

[6] The appellant relied upon the decision of Senior Master Marriott in Shmegilsky v. Slobodzian, 1964 265 (ON SC), [1964] 1 O.R. 633, [1964] O.J. No. 706 (S.C.), where the Senior Master held at p. 634 O.R.:

Once it is established that the judgment was obtained within the limitation period, that the judgment is unsatisfied, and that a writ of execution may properly be enforced against a judgment debtor personally there appears to be no authority that supports the proposition that the court has jurisdiction to refuse an order on equitable grounds. . . . if the court were to grant relief on the ground of delay it would in effect be shortening the period of limitation prescribed by the statute. This of course would be clearly wrong.

[7] The reasoning in Shmegilsky appears to have been applied by Mossip J. in Adelaide Capital Corp. v. Panetta, an unreported [page472] endorsement released July 24, 2006, and in which she declined to follow the judgment of Paisley J. now under appeal.

[8] The recent cases of Adelaide Capital Corp. v. 412259 Ontario Ltd., 2006 34725 (ON SC), [2006] O.J. No. 4175 (S.C.J.), Royal Bank of Canada v. Correia, 2006 26976 (ON SC), [2006] O.J. No. 3206, 36 C.P.C. (6th) 284 (S.C.J.), both decisions of Master Dash, and Ballentine v. Ballentine (1999), 1999 15088 (ON SC), 45 O.R. (3d) 706, [1999] O.J. No. 3103 (S.C.J.), a decision of Cullity J., have declined to apply Shmegilsky, holding instead that unexplained delay could be taken into account in determining whether the discretion provided in rules 60.07(2) and 60.08(2) should be exercised. These decisions are helpfully reviewed by Baltman J. in her decision in South Holly Holdings Ltd. v. Nguyen, [2006] O.J. No. 5225, 154 A.C.W.S. (3d) 481 (S.C.J.) (December 22, 2006), in which she held that delay must be explained as a pre- condition to the exercise of the discretion.

[9] We are of the opinion that a consideration of unexplained delay is a proper exercise of the judicial officer's discretion contained in the rule. The rule is procedural and is designed to permit the court to control its own process. It does not take away from the legal and substantive right of action to sue on a judgment within the limitation period to which we have referred. Requiring the appellant to sue on its judgment may not speak well for the efficient use of judicial resources, but the appellant has invited this result by refusing to put before Paisley J. some explanation to account for the 14-year delay so as to trigger the exercise of the discretion. The threshold imposed is not a high one.

[10] To the extent that these reasons may be taken to modify the judgment of Senior Master Mariott in Shmegilsky, we point out that before the Senior Master there was evidence to explain the delay which in our opinion would have met any reasonable threshold necessary to trigger the exercise of the discretion.

[11] Having regard to the agreement between the parties, costs are payable by the appellant to the respondent fixed at $700, inclusive.

Appeal dismissed. [page473]