1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd.; Marshall Zehr Group Inc., Intervenor

[Indexed as: 1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd.]

Ontario Reports Court of Appeal for Ontario Simmons, Harvison Young and Zarnett JJ.A. April 9, 2020 150 O.R. (3d) 186 | 2020 ONCA 250

Case Summary

Debtor and creditor — Execution — Priorities — Appellant obtaining judgment against company with a share of a beneficial interest in lands — Registered owner of lands giving construction financing charge to respondent — Appellant filing writ of seizure and sale and claiming priority over respondent — Execution Act giving no substantive rights to judgment creditors as claimed by appellant — Execution Act, R.S.O. 1990, c. E.24, ss. 9, 10, 13.

Real property — Land titles — Registration — Actual notice — Appellant obtaining judgment against company with a share of a beneficial interest in lands — Registered owner of lands giving construction financing charge to respondent — Appellant filing writ of seizure and sale and claiming priority over respondent — Appellant not acquiring priority under Land Titles Act — Lands Titles Act, R.S.O. 1990, c. L.5, s. 93(4).

The appellant obtained a judgment for payment of $100,000 against a company which, pursuant to an unregistered trust agreement, was entitled to a 35 per cent beneficial interest in lands under development. The lands were registered under the Land Titles Act. The registered owner gave a construction financing charge to the respondent and the intervenor. The appellant filed a writ of seizure and sale with the sheriff in the jurisdiction where the lands were located, directing the sheriff to sell the real and personal property of the debtor company within the jurisdiction. The appellant also gave the respondent actual notice of its writ of seizure and sale and asserted that any subsequent advances under the respondent's charge would be subordinate to the appellant's writ. The respondent disagreed. The appellant applied for declarations that its writ of seizure and sale against the debtor applied against or bound the respondent, that its writ of seizure could be executed against the respondent, and that any advances to the owner from the respondent made after a certain date would rank subordinate to its interest. The application was dismissed. The appellant appealed.

Held, the appeal should be dismissed.

The Execution Act was a procedural statute facilitating the collection of debts through the mechanisms contained in it, and did not purport to grant substantive rights to judgment creditors. In particular, it did not authorize effectively adding the legal owner of a property in which a judgment debtor had an unregistered beneficial interest to a writ of seizure and sale against the judgment debtor. The appellant's argument that it acquired priority over subsequent advances by the respondent under s. 93(4) of the Land Titles Act by giving actual notice of its writ of seizure and sale was misconceived. That provision spoke to the priority of advances made under a previously registered charge following registration of a further transfer, charge or other instrument executed by the chargor or the chargor's successors. The appellant as holder of a writ of seizure and sale did not fall within the section. An execution creditor's remedy against land under a writ of seizure and sale was the right to have the sheriff seize and sell the lands of the execution debtor, with the sheriff having no higher rights than the execution debtor.

Michaud v. Coreslab Structures (Ont.) Inc., [2012] O.J. No 312, 2012 ONSC 355, 76 E.T.R. (3d) 109, 2012 OREG Â58,904 (S.C.J.), consd

Other cases referred to

• Ferrier v. Civiero, , [2001] O.J. No. 1883, 147 O.A.C. 196, 42 R.P.R. (3d) 12, 105 A.C.W.S. (3d) 543 (C.A.), affg 2000 CarswellOnt 5277 (Div. Ct.), affg [1999] OJ No 4892, 93 A.C.W.S. (3d) 841, 1999 CarswellOnt 4197 (S.C.J.)
• Gibb v. Jiwan, [1996] O.J. No. 1370, 1996 CarswellOnt 1222 (Gen. Div.)
• Jellett v. Wilkie (1896), , 26 S.C.R. 282, [1896] S.C.J. No 34
• Sherlick v. Harley, [1932] O.J. No. 55, 41 O.W.N. 85 (H.C.J.)
• Yaiguaje v. Chevron Corp. (2018), 141 O.R. (3d) 1, [2018] O.J. No. 2698, 2018 ONCA 472, 423 D.L.R. (4th) 687, 293 A.C.W.S. (3d) 741, 2018 CCSG Â51,683, 2018 BCLG Â79,246, 2018 OCLG Â52,059, 2018 CCLR Â201,403, 2018 A.C.L.G. Â79,822
• Young v. LeMon, [1985] O.J. No. 1649, 3 C.P.C. (2d) 163, 31 A.C.W.S. (2d) 218 (Dist. Ct.)

Statutes referred to

• Creditors' Relief Act, 2010, S.O. 2010, c. 16, Sch. 4, s. 14
• Execution Act, R.S.O. 1990, c. E.24, ss. 1, 9, (1), 10, (4), (5), (6), (7), 13, 37
• Land Registration Reform Act, R.S.O. 1990, c. L.4, s. 6
• Land Titles Act, R.S.O. 1990, c. L.5, ss. 6(2), 62(1), (2) 68(2), 71, 72, (1), 93, (4), 136

Rules and regulations referred to

• Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 60.0

APPEAL from a dismissal of an application for declaratory relief of Corbett J. dated June 12, 2019, 2019 ONSC 3673 (S.C.J.).

Counsel: Kevin Sherkin, for appellant 1842752 Ontario Inc. Cary Schneider, for respondent Firm Capital Mortgage Fund Inc. Harvey Chaiton, for intervenor MarshallZehr Group Inc.

BY THE COURT: --

Introduction

[1] The appellant, 1842752 Ontario Inc., has a judgment and writ of seizure and sale against Fortress Wismer 3-2011 Ltd. ("Fortress Wismer"). Fortress Wismer owns an undivided 35 per cent beneficial interest in lands registered under the Land Titles Act, R.S.O. 1990, c. L.5. The registered owner of the lands holds the land for Fortress Wismer and two other corporations under an unregistered trust agreement. Under s. 62(1) of the Land Titles Act, notice of an express, implied or constructive trust "shall not be entered on the register or received for registration".

[2] The appellant applied for declarations that the writ of seizure and sale is binding on and enforceable against the registered owner of the lands and gives the appellant priority over a previously registered charge to the extent of advances under it made following actual notice of the writ.

[3] The application judge dismissed the appellant's application. For the reasons that follow, we dismiss the appellant's appeal.

Background

[4] Pace Developments (The Mark) Ltd. ("Pace Mark") is the registered owner of lands being developed as an 18-storey residential condominium (the "lands"). The lands are registered under the Land Titles Act.

[5] Pace Mark holds the lands under an unregistered trust agreement specifying that Fortress Wismer, Pace Developments Inc. ("Pace") and 1839392 Ontario Limited ("1839392") are the beneficial owners of the lands as tenants in common. Under the trust agreement, Fortress Wismer is entitled to a 35 per cent beneficial interest in the lands.

[6] In 2016, Pace Mark gave a construction financing charge to Firm Capital Mortgage Fund Inc. ("Firm Capital") and a further charge to MarshallZehr Group Inc. ("MarshallZehr").

[7] The appellant, 1842752 Ontario Inc., is a judgment creditor of Fortress Wismer, having obtained a judgment against Fortress Wismer for payment of $100,000 plus interest and costs in November 2017.

[8] On January 30, 2018, the appellant filed a writ of seizure and sale with the sheriff in the jurisdiction where the lands are located, directing the sheriff to sell the real and personal property of Fortress Wismer within the jurisdiction. The appellant also gave Firm Capital actual notice of its writ of seizure and sale and asserted that any subsequent advances under Firm Capital's charge would be subordinate to its writ. Firm Capital disagreed.

The appellant's application

[9] Subsequently, the appellant applied for declarations that: (i) its writ of seizure and sale against Fortress Wismer applies against or binds Pace Mark, the registered owner of the lands as bare trustee for Fortress Wismer, Pace and 1839392; (ii) its writ of seizure and sale may be executed against Pace Mark; and (iii) any advances to Pace Mark from Firm Capital made after January 30, 2018 rank subordinate to its interest.

[10] The application judge granted intervenor status to MarshallZehr on the application. For ease of reference, Firm Capital and MarshallZehr will be referred to as respondents on this appeal.

The application judge's decision

[11] The application judge concluded that the appellant is not entitled to enforce its writ of seizure and sale against Pace Mark, nor to priority over the arm's length construction financing provided by Firm Capital and MarshallZehr.

[12] The application judge acknowledged that s. 9(1) of the Execution Act, R.S.O. 1990, c. E.24 authorizes the sheriff to whom a writ of execution is delivered to seize and sell the lands of the execution debtor "including any lands whereof any other person is seized or possessed in trust". However, he noted that the Execution Act is a procedural statute that does not confer substantive rights but rather provides mechanisms for the collection of judgment debts: Yaiguaje v. Chevron Corp. (2018), 141 O.R. (3d) 1, 2018 ONCA 472 (C.A.), at para. 54.

[13] Further, the application judge observed that, in this case, Pace Mark holds the lands not just for Fortress Wismer but also for two other companies, Pace and 1839392. The beneficial owners' rights are governed by the trust agreement. The application judge concluded that the appellant, as a judgment creditor, could have no higher interest in the lands than Fortress Wismer. Further, he found that as Fortress Wismer has no right, as a beneficial owner, to force a sale of the lands or interrupt ongoing construction financing, neither could the appellant have any such right.

[14] Finally, the application judge concluded that the appellant's statement that it did not intend to force a sale against Pace Mark did not assist its position; if it obtained a declaration entitling it to enforce its writ against the registered owner, it would be entitled to force a sale of the lands.

[15] Notably, the application judge observed the appellant may well be entitled to enforcement through other remedies, such as garnishment or appointment of a receiver.

The Appellant's Position on Appeal

[16] The appellant submits that the application judge erred by conflating the issue of the sheriff's ability under the Execution Act to seize and sell the whole of the lands (which the appellant concedes cannot be done) with the issue of whether its writ of seizure and sale is binding on the lands and gives the appellant priority over mortgage advances made under a previously registered mortgage following actual notice of its writ of seizure and sale.

[17] The appellant argues that on a plain reading of ss. 9, 10 and 13 of the Execution Act and s. 93(4) of the Land Titles Act, it is entitled to the relief it seeks.

[18] Section 9 of the Execution Act gives the sheriff authority to seize and sell lands of an execution debtor that are held in trust. Section 10 confirms that a writ of execution "binds the lands against which it is issued". Section 13 stipulates "land . . . belonging to any person indebted" is "liable to and chargeable with all . . . debts . . . owing by any such person" and subject to seizure and sale to satisfy those debts. To make the lands "liable to and chargeable with" Fortress Wismer's debt, the appellant argues that, patently, its writ of seizure and sale is binding on and enforceable against Pace Mark.

[19] Further, says the appellant, various authorities have confirmed that, even where lands are registered under the Land Titles Act, which prohibits registration of notice of an express, implied or constructive trust, the court will consider a prior unregistered trust agreement to determine that a writ of execution is not binding on particular land because the execution is in the name of a registered owner who holds the land in trust: see Michaud v. Coreslab Structures (Ont.) Inc., 2012 ONSC 355 (S.C.J.), citing Young v. LeMon, [1985] O.J. No. 1649, 3 C.P.C. (2d) 163 (Dist. Ct) and Gibb v. Jiwan, [1996] O.J. No. 1370, 1996 CarswellOnt 1222 (Gen. Div.); and Jellett v. Wilkie (1896), 26 S.C.R. 282, [1896] S.C.J. No. 34, cited in Gibb. As a corollary to that reasoning, the appellant's writ of seizure and sale against Fortress Wismer should be binding on and enforceable against Pace Mark.

[20] Concerning Firm Capital's charge, the appellant submits that under s. 93(4) of the Land Titles Act, subsequent advances under a prior charge following registration of a "transfer, charge or other instrument" maintain priority over such transfer, charge or other instrument unless the original chargee had actual notice of such transfer, charge or other instrument. Here, the appellant gave Firm Capital actual notice of its writ of seizure and sale against Fortress Wismer, such that Firm Capital lost the priority to which it was otherwise entitled under s. 93(4).

[21] The appellant also relies on the following statements in a headnote from Sherlick v. Harley, [1932] O.J. No. 55, 41 O.W.N. 85 (H.C.J.) and a paragraph in the Canadian Encyclopedic Digest as supporting its claim for priority over subsequent advances by Firm Capital:

Sherlick v. Harley -- headnote -- unknown court

Plaintiff's mortgage was registered before an execution against the lands of the mortgagor was placed in the sheriff's hands. Plaintiff made an advance thereafter. Held: On a reference in an action on the mortgage, the mortgagee was prior to the execution in respect of all advances made without actual notice.

CED 4th (online), Mortgages (Ont.), Miscellaneous: Tacking (XIII.6) at 821:

Apart from registration, the doctrine of purchaser for value without notice does not apply to equitable interests in land. However, a person holding the legal estate by way of mortgage and making a further advance on the security of the same land without notice of an intervening interest can tack his or her second advance to the legal estate and refuse to be redeemed until the whole loan is repaid. In this way, he or she obtains priority for the second advance over the intervening interest.

[22] Finally, the appellant submits that because it confirmed on its application that it would not be instructing the sheriff to sell the Pace Mark lands, the application judge erred in failing to grant the more limited remedy it requested. With the requested declarations in hand, all the appellant will do is await the sale of the lands -- at which time the purchaser will require clear title from Pace Mark and Pace Mark will be required to address the appellant's writ of seizure and sale.

The Respondents' Position on Appeal

[23] The respondents assert that while the Execution Act gives the appellant the right to have the sheriff seize and sell Fortress Wismer's interests in the lands, it does no more than that. In particular, it gives the appellant no higher rights than Fortress Wismer, a partial beneficial owner and creates no priority over Firm Capital's mortgage advances.

[24] Moreover, the respondents contend that under the Land Titles Act, the registered owner is considered the absolute owner of land as the Land Titles Act does not recognize a trust relationship. As set out above, s. 62(1) of the Land Titles Act provides that "[a] notice of an express, implied or constructive trust shall not be entered on the register or received for registration". Further, s. 62(2) provides that describing the owner of land as a trustee "shall be deemed not to be a notice of a trust".

[25] Further, the respondents rely on s. 72(1) of the Land Titles Act, which provides that "[n]o person, other than the parties thereto, shall be deemed to have any notice of the contents of any instruments, other than those mentioned in the existing register of title . . . or . . . entered in the records of the office kept for the entry of instruments. . .".

[26] In addition, the respondents point to various decisions that have held a writ of seizure and sale does not create an interest in land and gives the sheriff no right to apply for partition: see, e.g., Ferrier v. Civiero, [1999] O.J. No. 4892, 1999 CarswellOnt 4197 (S.C.J.), affd 2000 CarswellOnt 5277 (Div. Ct.), affd , [2001] O.J. No. 1883, 147 O.A.C. 196 (C.A.).

[27] Finally, the respondents say that, on its face, s. 93(4) of the Land Titles Act does not apply to an execution creditor.

[28] Overall, the respondents assert that the appellant has failed to identify any authority, whether statutory or otherwise, to support its entitlement to the declarations it seeks.

Discussion

[29] We agree with the respondents' overall position that neither the statutory authorities nor the case law supports the appellant's entitlement to the relief it seeks.

[30] As a starting point, the sections of the Execution Act upon which the appellant relies do not support its position that its writ of seizure and sale should be declared binding on Pace Mark and that it may be executed against Pace Mark.

[31] As the application judge observed, s. 9(1) of the Execution Act gives the sheriff the authority to seize and sell lands of an execution debtor subject to a writ of seizure and sale, including lands held in trust for the execution debtor:

(Emphasis added)

[32] Subsections 10(4)-(7) stipulate the date from which a writ of execution binds land. In the case of lands registered under the land titles system, s. 10 is supplemented by s. 136 of the Land Titles Act. Subject to certain exceptions and the sheriff complying with statutory obligations concerning entry of the writ into an electronic data base, essentially, these sections provide that a writ of execution binds the lands against which it is issued from the date it is received by the sheriff.

[33] Section 13 provides that land and real estate belonging to a person are liable to and chargeable with the person's debts and subject to the remedies provided under the Execution Act. However, s. 13 does no more than confirm that lands are subject to the remedies of seizure and sale provided for under the Execution Act:

(Emphasis added)

[34] Beyond stipulating that a writ of seizure and sale binds the lands of the party named in the writ and authorizing the sheriff to sell those lands even if they are held in the name of a trustee, the Execution Act provides no further remedy to a judgment creditor in relation to a writ of seizure and sale.

[35] As has been observed on many occasions, including by the application judge, the Execution Act is a procedural statute that facilitates the collection of debts through the mechanisms contained in it. It does not purport to grant substantive rights to judgment creditors: Yaiguaje, at para. 54. In particular, the sections of the Execution Act upon which the appellant relies do not authorize effectively adding the legal owner of a property in which a judgment debtor has an unregistered beneficial interest to a writ of seizure and sale against the judgment debtor.

[36] Assuming there was an available market, and subject to the terms of any co-tenancy agreement, the sheriff could conceivably sell Wismer's 35 per cent beneficial interest in the lands. However, that fact does not make the appellant's writ of seizure and sale binding on or enforceable against Pace Mark.

[37] Nor does Michaud assist the appellant. The underlying principle animating that decision is that, unless displaced by a statutory provision to the contrary, an execution creditor may seize and sell no more than the debtor's interest in land. Put another way, the execution creditor stands in no better position than the debtor. Accordingly, lands to be sold at the request of an execution creditor are sold subject to the charges, liens and equities to which they were subject in the hands of the debtor. In Michaud, it was thus held that a prior unregistered trust declaration or agreement made by the registered owner had priority over an execution creditor. An execution creditor of a registered owner subject to an unregistered trust agreement cannot sell the beneficial interest in lands because the registered owner does not own it: see Michaud, at paras. 57 to 63.

[38] However, Michaud does not support the appellant's request for a declaration that its writ of seizure and sale against Fortress Wismer is binding on and enforceable against Pace Mark. As the appellant stands in no better position than Fortress Wismer, the appellant's entitlement is limited to having the sheriff seize and sell whatever Fortress Wismer's interest in the lands may be and, as will be explained below, to share in the proceeds of sale of that interest in accordance with the priorities set out in the Creditors' Relief Act, 2010, S.O. 2010, c. 16, Sch. 4.

[39] Further, the appellant's argument that it acquired priority over subsequent advances by Firm Capital under s. 93(4) of the Land Titles Act by giving Firm Capital actual notice of its writ of seizure and sale is misconceived. Section 93(4) is reproduced below. Section 93(4) gives a registered charge priority over "every . . . person claiming by, through or under the chargor". It does not create any priorities over a prior registered charge for an execution creditor. Rather, s. 93(4) speaks to the priority of advances made under a previously registered charge following registration of a further transfer, charge or other instrument executed by the chargor, or the chargor's successors. The appellant as the holder of a writ of seizure and sale does not fall within the section. A writ of seizure and sale is not created through a transfer, charge or other instrument executed by the chargor or the chargor's heirs, executors, administrators or estate trustees as required under the section.

[40] Section 93(4) of the Land Titles Act reads as follows:

(Emphasis added)

[41] Further, as the respondents point out, under s. 72(1) of the Land Titles Act, absent registration or entry in appropriate records, only the parties to an instrument are deemed to have notice of it. Absent such registration or entry, the notice the appellant purported to give to Firm Capital was of no effect.

[42] Similarly, the headnote from Sherlick v. Harley and the extract from the Canadian Encyclopedic Digest on which the appellant relies are of no assistance. Apart from the complete lack of context and specificity, both speak to mortgages as opposed to charges -- the latter are the relevant instruments under the Land Titles Act: s. 93. Notably, unlike the mortgage referred to in the Canadian Encyclopedic Digest reference, a charge does not operate as a transfer of the legal estate in the land to the chargee: Land Registration Reform Act, R.S.O. 1990, c. L.4, s. 6. These authorities therefore do not appear to relate to the land titles system.

[43] In any event, as we have explained, an execution creditor's remedy against land under a writ of seizure and sale is the right to have the sheriff seize and sell "the lands of the execution debtor": Execution Act, s. 9. The sheriff steps into the shoes of the execution debtor and can have no higher rights than the execution debtor: Michaud, at paras. 57-63. Further, s. 37 of the Execution Act provides that following a sale of property, the sheriff shall distribute the proceeds of sale in accordance with the Creditors' Relief Act, 2010. Among other things, that act establishes the priorities among persons entitled to share in the proceeds of sale following a sheriff's sale of land.

[44] Section 14 of the Creditors' Relief Act, 2010, gives an execution creditor priority over a charge registered subsequent to an execution. The Creditors' Relief Act, 2010 does not, however, give an execution creditor priority over subsequent advances made under a charge registered prior to the execution being filed. It is the only section of the Creditors' Relief Act, 2010 that speaks to priorities between an execution creditor and a chargee or mortgagee.

[45] Although not at issue on this appeal, s. 14 of the Creditor's Relief Act, 2010 may not give an execution creditor of an unregistered beneficial owner of property registered under the Land Titles Act priority over a subsequent charge given by the registered owner. That is because s. 14 addresses only priorities between an execution creditor and a subsequent charge executed by the execution debtor, not a subsequent charge executed by another party. It is not, however, necessary to express any final views on that issue.

[46] The appellant pointed to no other authority establishing it is entitled to the declarations it seeks.

[47] Although we are satisfied that the appellant is not entitled to the declarations it seeks, these reasons should not be taken as expressing any opinion on how, if at all, a beneficial interest might be protected under the Land Titles Act or how, if at all, an execution creditor seeking to have a sheriff sell a beneficial interest under the Land Titles Act might protect its remedies under that Act.

[48] The appeal is dismissed. Costs of the appeal are to the respondent and intervenor on a partial indemnity scale fixed in the amount of $6,700 to Firm Capital and $9,600 to MarshallZehr inclusive of disbursements and HST.

Appeal dismissed.

APPENDIX A

Creditors' Relief Act, 2010, S.O. 2010, c. 16, Sch. 4, s. 14

14(1) This section applies if,

(a) one or more executions are filed with the sheriff; and (b) after at least one execution is filed with the sheriff, the debtor executes a mortgage or other charge that is otherwise valid on all or part of his or her property.

(2) The following rules apply:

1. The sheriff may sell the encumbered property under an execution filed before the mortgage or charge was given, as if the mortgage or charge had not been given.
2. The sheriff shall prepare a scheme of distribution of the proceeds of sale of the encumbered property that proposes the distribution of the amount of the proceeds, before taking into consideration the amount owing under the mortgage or charge, i. firstly among any creditors who have priority under section 2, and ii. secondly among those creditors whose executions were filed with the sheriff before the mortgage or charge was given.
3. To the extent the proceeds of sale exceed the total amount plus costs that would be distributed as described in paragraph 2, the scheme of distribution must provide for the distribution to the encumbrancer of the amount owing under the mortgage or charge, or all of the remaining amount if it does not exceed the amount owing.
4. If proceeds would still remain after the payments proposed under paragraphs 2 and 3, the sheriff shall prepare a separate scheme of distribution of the balance among the creditors who filed executions with the sheriff after the mortgage or charge was given.

(3) Section 11, other than subsection 11 (1), and sections 12 and 13 apply if a person who would be affected by a scheme of distribution under this section wishes to object to the proposed distribution.

Execution Act, R.S.O. 1990, c. E.24, ss. 1, 9(1); 10; 13; 37

1 In this Act,

"writ of execution" includes,

(a) a writ of seizure and sale, (b) a writ of seizure and sale of land, (c) a writ of seizure and sale of personal property, (d) a writ of sequestration, (e) a subsequent writ that may issue for giving effect to a writ listed in any of clauses (a) to (d), (f) an order for seizure and sale of personal property, real property or both real property and personal property, (g) any other process of execution issued out of the Superior Court of Justice or the Ontario Court of Justice having jurisdiction to grant and issue warrants or processes of execution.

9(1) The sheriff to whom a writ of execution against lands is delivered for execution may seize and sell thereunder the lands of the execution debtor, including any lands whereof any other person is seized or possessed in trust for the execution debtor and including any interest of the execution debtor in lands held in joint tenancy.

10(1) A writ of execution against real property and personal property or against only personal property and any renewal of it binds the personal property against which it is issued from the time it is filed with the sheriff and entered into the electronic database maintained by the sheriff as the index of writs of execution.

(2) Despite subsection (1), a writ of seizure and sale of personal property issued out of the Small Claims Court,

(a) is not entered into the electronic database maintained as the index of writs of execution; and (b) is binding on personal property of the execution debtor only from the time the personal property is seized.

(3) Despite subsection (1), no writ of execution against personal property, other than bills of sale and instruments in the nature of chattel mortgages, prejudices the title to the personal property if the personal property is acquired by a person in good faith and for valuable consideration unless the person had notice at the time of acquiring title to the personal property that a writ of execution under which the personal property of the execution debtor might be seized or attached has been filed with the sheriff and remains unexecuted.

(4) A sheriff to whom a writ of execution, a renewal of a writ of execution or a certificate of lien under the Bail Act is directed shall, upon receiving from or on behalf of the judgment creditor the required fee in accordance with the Administration of Justice Act and instructions to do so, shall promptly take the following actions:

1. Enter the writ, renewal or certificate of lien, as the case may be, in the electronic database maintained by the sheriff as the index of writs of execution.
2. Indicate in the electronic database that the writ, renewal or certificate of lien, as the case may be, affects real property governed by the Land Titles Act.

(5) As part of maintaining the electronic database that is the index of writs of execution, the sheriff shall do the following:

1. Assign consecutive numbers in the electronic database to each writ and certificate of lien in the order in which the writs and certificates of lien are entered in the database.
2. Note in the electronic database the effective date of each writ, renewal of a writ and certificate of lien.
3. Give access to the electronic database to the land registrar of each land titles division wholly or partially within the sheriff's jurisdiction.

(6) Subject to section 11 and the Land Titles Act, a writ of execution, a renewal of it or a certificate of lien under the Bail Act binds the lands against which it is issued from the effective date of the writ, renewal or certificate noted in the electronic database maintained by the sheriff as the index of writs of execution.

(7) The date of receiving a writ, a renewal of it or a certificate of lien referred to in clause 136 (1) (d) of the Land Titles Act is deemed to be the effective date referred to in subsection (6).

13 Subject to the Courts of Justice Act and the rules of court, land and other hereditaments and real estate belonging to any person indebted are liable to and chargeable with all just debts, duties and demands of whatsoever nature or kind owing by any such person to Her Majesty or to any of her subjects and are assets for the satisfaction thereof and are subject to the like remedies, proceedings and process for seizing, selling or disposing of them towards the satisfaction of such debts, duties and demands, and in like manner as personal estate is seized, sold or disposed of.

37 The money and proceeds from property received by a sheriff under an execution or as a result of executing a writ of execution shall be applied and distributed by the sheriff in accordance with the Creditors' Relief Act, 2010.

Land Registration Reform Act, R.S.O. 1990, c. L.4, s. 6

6(1) A charge does not operate as a transfer of the legal estate in the land to the chargee.

(2) A charge ceases to operate when the money and interest secured by the charge are paid, or the obligations whose performance is secured by the charge are performed, in the manner provided by the charge.

(3) Despite subsection (1), a chargor and chargee are entitled to all the legal and equitable rights and remedies that would be available to them if the chargor had transferred the land to the chargee by way of mortgage, subject to a proviso for redemption.

Land Titles Act, R.S.O. 1990, c. L.5, ss. 61; 62(1), (2); 71; 72; 93(4); 136

61(1) No person shall be registered as owner of an undivided share in freehold or leasehold land or of a charge apart from the other share or shares.

(2) Where the extent of a co-owner's interest is not shown on the register, the co-owner may,

(a) transfer or charge a specified share in the land or transfer a share in the charge, as the case may be, upon providing the Director of Titles with proof of the co-owner's percentage of ownership in the manner specified by the Director of Titles; or (b) transfer or charge all of the co-owner's unspecified share.

62(1) A notice of an express, implied or constructive trust shall not be entered on the register or received for registration.

(2) Describing the owner of freehold or leasehold land or of a charge as a trustee, whether the beneficiary or object of the trust is or is not mentioned, shall be deemed not to be a notice of a trust within the meaning of this section, nor shall such description impose upon any person dealing with the owner the duty of making any inquiry as to the power of the owner in respect of the land or charge or the money secured by the charge, or otherwise, but, subject to the registration of any caution or inhibition, the owner may deal with the land or charge as if such description had not been inserted.

71(1) Any person entitled to or interested in any unregistered estates, rights, interests or equities in registered land may protect the same from being impaired by any act of the registered owner by entering on the register such notices, cautions, inhibitions or other restrictions as are authorized by this Act or by the Director of Titles.

(1.1) An agreement of purchase and sale or an assignment of that agreement shall not be registered, but a person claiming an interest in registered land under that agreement may register a caution under this section on the terms specified by the Director of Titles.

(2) Where a notice, caution, inhibition or restriction is registered, every registered owner of the land and every person deriving title through the registered owner, excepting owners of encumbrances registered prior to the registration of such notice, caution, inhibition or restriction, shall be deemed to be affected with notice of any unregistered estate, right, interest or equity referred to therein.

72(1) No person, other than the parties thereto, shall be deemed to have any notice of the contents of any instruments, other than those mentioned in the existing register of title of the parcel of land or that have been duly entered in the records of the office kept for the entry of instruments received or are in course of entry.

(2) For the purposes of subsection (1), the highways register provided for in the regulations shall be deemed to be a record kept for the entry of instruments.

(3) Subject to the regulations, the Trans-Canada Pipe Line register provided for in the regulations shall be deemed, for the purposes of this Act, to be a register of the title of land or interests therein, including easements, owned by TransCanada PipeLines Limited.

93(1) A registered owner may in the prescribed manner charge the land with the payment at an appointed time of any principal sum of money either with or without interest or as security for any other purpose and with or without a power of sale.

(2) A charge that secures the payment of money shall state the amount of the principal sum that it secures.

(3) The charge, when registered, confers upon the chargee a charge upon the interest of the chargor as appearing in the register subject to the encumbrances and qualifications to which the chargor's interest is subject, but free from any unregistered interest in the land.

(4) A registered charge is, as against the chargor, the heirs, executors, administrators, estate trustees and assigns of the chargor and every other person claiming by, through or under the chargor, a security upon the land thereby charged to the extent of the money or money's worth actually advanced or supplied under the charge, not exceeding the amount for which the charge is expressed to be a security, although the money or money's worth, or some part thereof, was advanced or supplied after the registration of a transfer, charge or other instrument affecting the land charged, executed by the chargor, or the heirs, executors, administrators or estate trustees of the chargor and registered subsequently to the first-mentioned charge, unless, before advancing or supplying the money or money's worth, the registered owner of the first-mentioned charge had actual notice of the execution and registration of such transfer, charge or other instrument, and the registration of such transfer, charge or other instrument after the registration of the first-mentioned charge does not constitute actual notice.

(5) An instrument in the nature of a deed of trust and mortgage that provides for the issuance of bonds or debentures may be registered as a charge upon the lands of the grantor, and the entry in the register shall state the aggregate principal sum and the rate of interest of such bonds or debentures.

(6) Repealed: 1998, c. 18, Sch. E, s. 135 (4).

(7) Repealed: 1998, c. 18, Sch. E, s. 135 (4).

(8) A charge registered under subsection (5) may be discharged by a cessation in the prescribed form.

(9) A charge in the form of a debenture or similar instrument shall not be registered unless the name of the person entitled to receive the money payable thereunder and to give a discharge thereof is set out in the instrument.

136(1) A sheriff to whom a writ of execution, a renewal of a writ of execution or a certificate of lien under the Bail Act is directed shall, upon receiving from or on behalf of the judgment creditor the required fee and instructions to do the actions described in clauses (a) and (b), forthwith,

(a) enter the writ, renewal or certificate of lien, as the case may be, in the electronic database that the sheriff maintains for writs of execution; (b) indicate in the electronic database that the writ, renewal or certificate of lien, as the case may be, affects land governed by this Act; (c) assign a number in the electronic database consecutively to each writ, renewal and certificate of lien in the order of receiving it; (d) note in the electronic database the date of receiving each writ, renewal and certificate of lien; and (e) give the land registrar of each land titles division wholly or partially within the sheriff's territorial jurisdiction access to the electronic database.

(2) No registered land is bound by any writ of execution, renewal or certificate of lien mentioned in subsection (1) until the sheriff has complied with that subsection.

(3) No sale or transfer under a writ of execution or certificate of lien mentioned in subsection (1) is valid as against a person purchasing for valuable consideration before the sheriff has complied with that subsection, although the purchaser may have had notice of the writ or certificate of lien, as the case may be.

(6) A writ of execution or certificate of lien mentioned in subsection (1) has no effect under this Act if it is issued against the registered owner under a different name from that under which the owner is registered.

(7) A writ of execution, renewal or certificate of lien mentioned in subsection (1) does not bind land being transferred or charged as against the transferee or chargee if the land registrar,

(a) decides that the name of the execution debtor appearing in the writ, renewal or certificate of lien, as the case may be, and the name of the registered owner as it appears in the records of the land registry office of the land registrar do not represent the same person; and (b) does one of the following: 1. Issues a certificate to the effect that the land registrar has made the decision described in clause (a). 2. In the case of a transfer, registers the transfer free of the writ, renewal or certificate of lien, as the case may be.

(8) No additional fee is payable to the sheriff or to the land registrar in respect of a certificate under section 12 of the Execution Act.

Notes

1 All legislative provisions referred to in this decision are reproduced in full in Appendix A.

2 Although s. 62(1) of the Land Titles Act prohibits registration of notice of an express, implied or constructive trust, s. 68(2) states:

68(2) Subject to the maintenance of the estate and right of the registered owner, a person having a sufficient estate or interest in the land may create estates, rights, interests and equities in the same manner as the person might do if the land were not registered.

See, also, ss. 71 and 72 concerning the protection of and effect of unregistered instruments.

3 In its appeal factum, the appellant confirmed that Firm Capital received actual notice of the appellant's writ of seizure and sale on February 13, 2018. Accordingly, on appeal the appellant seeks a declaration that any advances to Pace Mark from Firm Capital made after February 13, 2018 rank subordinate to its interest.

4 The appellant obtained a writ of seizure and sale to enforce its judgment under rule 60.07 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Under s. 1 of the Execution Act, "writ of execution" is defined as including a writ of seizure and sale.

5 Sherlick v. Harley is apparently unreported save for this headnote. The headnote refers to the court that made the decision as unknown.

6 Although not applicable in this case, it may be noteworthy that s. 62(2) reads, in part, as follows:

62(2) Describing the owner of freehold . . . land . . . as a trustee, whether the beneficiary or object of the trust is or is not mentioned, shall be deemed not to be a notice of a trust within the meaning of this section, nor shall such description impose upon any person dealing with the owner the duty of making any inquiry as to the power of the owner in respect of the land . . . but, subject to the registration of any caution or inhibition, the owner may deal with the land . . . as if such description had not been inserted.

(Emphasis added)

7 Note, however, that a bona fide purchaser for value at a sheriff's sale who registers prior to registration of a prior unregistered beneficial interest may acquire priority over the beneficial interest: Jellet v. Wilkie, cited in Michaud, at para. 63.

8 Section 6(2) of the Land Titles Act reads: "The system of registration under this Act shall be known as the land titles system."