Court File and Parties

COURT FILE NO.: CV-22-000000930-0000

DATE: 2022-08-05

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Royal Bank of Canada, Applicant

AND:

Steven Hammond, Respondent

BEFORE: Kurz J.

COUNSEL: G. Bowden, for the Applicant

HEARD: July 7, 2022

ENDORSEMENT

Introduction

[1] The Applicant bank (“RBC”) obtained a judgment and writ of seizure and sale against the Respondent. As it has in a number of cases, including Royal Bank v Wong, 2022 ONSC 54 (“Wong”), RBC applies to enforce its judgment through a reference and the appointment of a referee under Rule 54.02 of the Rules of Civil Proceedings. It seeks to do so as a pre-requisite to its sale of the real property interest of the Respondent under Rule 55.06. In this decision I refer to this process as the reference/judicial sale process.

[2] While RBC does not claim that special circumstances apply here, it asserts that the reference/judicial sale process is the preferable manner of enforcing all judgments that can be enforced by the sale of real property. In other words, it asserts that special circumstances need not apply to in order to obtain an order for a reference and judicial sale of real property in the ordinary course.

[3] In support of that argument, RBC relies on the affidavit of Murray Nightingale, the partner of RBC’s lawyer in this application, Mr. Bowden. RBC argues that Mr. Nightingale’s affidavit does not suffer from the evidentiary problems cited in Wong. Rather, it offers a compelling evidentiary basis for the court to decide not to follow Wong.

[4] In the interests of full disclosure, I am the author of the decision in Wong. Mr. Bowden candidly pointed to his conundrum of attempting to either distinguish Wong or argue that it was wrongly decided, to the judge who authored that decision. I instructed him to make his full arguments and that I would be open to considering them. I have done so.

[5] For the reasons set out below, I do not find that Wong was wrongly decided. Nor does the evidence of Mr. Nightingale convince me, in light of the analysis set out in Wong, that a judicial sale should be generally ordered to enforce a judgment and writ of seizure of sale against real property. Thus, I dismiss this application.

Background

[6] On July 17, 2015, RBC received a default judgment from the Small Claims Court in Sault St. Marie against the Defendant for $11,957.08. Of that amount, $6,652.28 was the debt and the rest was prejudgment interest and costs. RBC subsequently obtained a writ of seizure and sale from the Sault St. Marie Small Claims Court. That judgment has yet to be satisfied.

[7] The Defendant is, along with Jodi Hammond, a joint owner of the real property located at 128 Pardee Avenue, Sault St. Marie (the “property”). They purchased the property for $50,000 on October 1, 1982. To the best of RBC’s knowledge, the Defendant and Jodi Hammond remain joint owners of the property. Jodi Hammond has not participated in the application and appears not to have been served with RBC’s materials.

[8] There is no evidence before the court of RBC’s attempts to enforce its judgment. In particular, there is no evidence that RBC attempted to engage in a sheriff’s sale of the property. Based on the evidence of Mr. Nightingale, it is most likely that RBC made no such attempt here.

Evidence of Nightingale Affidavit

[9] Mr. Nightingale deposes that he has been at the bar since 1986, which he asserts to be the source of his knowledge of the matters to which he deposes. He does not profess to be an expert in any of the matters to which he opines, including real estate values. Yet he offers his opinion throughout the affidavit. In fact, Mr. Nightingale’s affidavit contains a mixture of his opinion and a few examples from his experience in the enforcement of debts.

[10] Rather than offer a simple recitation of facts, Mr. Nightingale’s affidavit reads instead as a written argument for his firm’s decision to avoid sheriff sales in favour of the process sought in this application. That point is demonstrated in his statement that “[t]he purpose of this affidavit is to give evidence on how a judicial sale is the most expeditious and least expensive way to successfully sell a debtor’s property unlike a sheriff’s sale”.

[11] The Nightingale affidavit makes two points. First, sheriff’s sales do not obtain the best possible price. Second, they are expensive. In saying this, he refers to three sheriff’s sales in which his firm was engaged. He speaks of his view as to the extent to which the full value of the property sold was or was not obtained on a sheriff sale, and the costs of the sale. He argues in effect that a sheriff’s sale, while being expensive, only obtains roughly 65% of the equity in the property. Further he lists the prices that sheriffs charge as a deposit for the sale of real property. The amounts vary throughout the province, from $5-10,000.

[12] Having reviewed Mr. Nightingale’s affidavit, I note the following:

a. First, while I do not question his credibility, Mr. Nightingale is far from an objective observer. The point of his affidavit is to defend the superiority of the manner in which his firm attempts to enforce judgments, as opposed to utilizing sheriff’s sales. That point is particularly relevant as there is no response to Mr. Nightingale’s assertions.

b. Second, and a related point, the cases on which RBC relies, including Canaccede International Acquisitions Ltd. v. Abdullah, 2015 ONSC 5553 (“Canaccede”) and the unreported decisions were also not defended. I will have more to say about those cases below.

c. Third, the information provided to the court regarding sheriff sales is limited. RBC has provided details of the deposit against fees charged by the sheriff in a number of Ontario jurisdictions. It has also provided Mr. Nightingale’s evidence of his or his partners’ experiences in sheriff sales. However, that information comes from a very limited number of sales in which RBC’s counsel has been involved. Mr. Nightingale is candid in stating that the examples of sheriff sales that he offers “are not very recent”. That is because “we found sheriff sales to be so unsuccessful and problematic that our office relies, quite successfully, on judicial sales due to the decision in [Canaccede]” I will have more to say about the Canaccede decision and the manner in which it was distinguished in Wong, below.

d. Fourth, and in a related manner, while Mr. Nightingale’s affidavit points to what he claims to be the pitfalls regarding the recovery and costs of sheriff’s sales, he fails to apply the same critical eye to the reference/judicial sale process. That omission is particularly telling as this application represents the second time that RBC has sought to persuade this judge to implement the reference/judicial sale process.

e. Mr. Nightingale fails to offer the full anticipated costs of the reference/judicial sale process, including the costs that are being sought simply for bringing this application (which RBC will seek to have the Respondent pay). Insofar as RBC relies on other decisions granting a judicial sale based upon the Canaccede precedent, I have to assume that that information has not been offered to any of my fellow judges.

f. I rhetorically ask how the court can determine the superiority of one process over the other when, in an uncontested proceeding, it only hears the worst of one process and nothing but the alleged strengths of the other. It is a one-sided argument.

g. Mr. Nightingale may be an experienced lawyer, but he is not an expert on valuing homes. Yet he offers opinion evidence on the percentage of the value of the homes sold through the sheriff sale process.

h. Finally, nothing that Mr. Nightingale says in his affidavit speaks to the facts of this case. Rather it is a generic affidavit which I assume has been used in a number of other proceedings in which present counsel has been involved. That point is relevant because the primary authority on which RBC relies, Canaccede, holds that the reference/judicial sale process is applicable in the event of special circumstances. But RBC does not bother to argue for special circumstances here. It apparently has abandoned that branch of its argument.

[13] In his very able submissions, Mr. Bowden articulated the heart of the argument in favour of the reference/judicial sale process. He asked me to consider what process I would prefer to utilize if there were no Execution Act, and the decision could be made on a blank canvas. But that is far from the test before me when the alternative processes are set out in a statute (the Execution Act) or a regulation (the Rules of Civil Procedure). Further, it is not for me, even within my judicial role, to impose my view of the better process over that of the Ontario Legislature.

[14] RBC also argues that it seeks a process that is “kinder and gentler” for the debtor. That being said, its counsel fairly concedes that it is hard for a “Big 5” bank to assume the mantle of consumer protector or advocate for the “little guy”. That is especially so when an application is made in the Milton court to engage in a two-part judicial process to sell a home where both the debtor and the property are located in Sault St. Marie. I recognize that this is an age of Zoom hearings, but still the home and debtor reside half of a province away. All of this is to enforce what was originally a $6,652.28 debt that was litigated in the Sault St. Marie Small Claims Court pursuant to that court’s rules.

Wong Decision

[15] The exact issue before the court in this proceeding was before it in Wong. In that case, as in this, RBC relies on the precedent of the decision of Broad J. in Canaccede that determined the propriety of the reference/judicial sale process when a sheriff sale is available.

[16] As I cited in Wong, the analysis of Broad J. in Canaccede held that ordinarily, in order to engage in the reference/judicial sale process, there must be:

a. an impediment to the employment of a sheriff’s sale, which Broad J. referred to as “special circumstances”; and

b. a benefit to the employment of an equitable receiver that would make their use just and equitable.

[17] In agreeing to grant the reference/judicial sale process in Canaccede, Broad J. found special circumstances in the case before him. Those circumstances arose from the finding of the Court of Appeal for Ontario in Citi Cards Canada Inc. v. Pleasance (2011), 103 O.R. (3d) 241, [2011] O.J. No. 15, 2011 ONCA 3 (“Citi Cards”). In Broad J.’s words at para. 23 of Canaccede, the Citi Cards decision “held that a mortgagee is prevented by the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 (‘PIPEDA’) from providing a mortgage statement to a third-party judgment creditor of the mortgagor/debtor so that the creditor may pursue a legal remedy to enforce its judgment.” Even if PIPEDA is not a “complete impediment” to a sheriff’s sale, it created what Broad J. found to be ‘special circumstances”. Those circumstances allow the court, in Broad J.’s view, to exercise its inherent jurisdiction to call for a reference and judicial sale.

[18] Wong cited the decision of Gray J. in Luu v. Abuomar, 2016 ONSC 4299 (“Luu”). There, Gray J. rejected the application of the Canaccede approach in any but truly special circumstances, particular to the case before the court. Gray J. also pointed to the fact that the Supreme Court of Canada was, at the time, reviewing the rationale in Citi Cards, which Broad J. found to create special circumstances. In fact, the Supreme Court of Canada ultimately overturned the Citi Cards precedent in Royal Bank of Canada v. Trang, 2016 SCC 50, 2016 S.C.C. 50, [2016] 2 S.C.R. 412. There, the Supreme Court found that PIPEDA did not preclude a mortgagee from producing a mortgage discharge statement to a mortgagor’s judgment creditor without the mortgagor’s express consent.

[19] As I put it at para. 30 of Wong:

In other words, the “special circumstance” relied upon by Broad J. to ground a foray into an alternative judicial method to sell a home when a sheriff’s sale is available, no longer commonly applies. It seems fair to say that if the Supreme Court’s decision in Trang had been released before Broad J. decided Canaccede, the result may well have been a different one.

[20] In Luu, Gray J. considered the nature and costs of a judicial sale. That is something that Broad J. was not asked to do in Canaccede because that proceeding was undefended. That fact distinguishes Luu from all of the cases that RBC relies upon in this application. Gray J. found that the process of appointing a referee and conducting a judicial sale is cumbersome and expensive by nature.

[21] In Wong, I also considered the issue of the propriety of the reference/judicial sale process. In addition to considering the Canaccede and Luu decisions, I looked to two other factors:

a. First, the Ontario legislature, through its statute, the Execution Act, signalled its choice of a sheriff’s sale as the vehicle for the enforcement of a writ of seizure and sale against real property.

b. Second, as Gray J. pointed out in Luu: the process requested by RBC is not, strictly speaking, equitable relief. Rather, it is a process set out in a regulation, the Rules of Civil Procedure. Thus, where there is a conflict between a statute and a regulation, the latter must be read as not violating the statute. If that is not possible, the regulation is ultra vires: Belanger v. R., (1916) 1916 CanLII 87 (SCC), 54 S.C.R. 265, 1916 CarswellNat 50 (S.C.C.), at para. 34; Krossel v. Vocational Rehabilitation Services, 1972 CanLII 423 (ON CA), [1972] 1 O.R. 895, 1972 CarswellOnt 340 (Ont. C.A.), at para.8.

[22] In considering all of the above I dismissed RBC’s application in Wong, finding that:

a. RBC has failed to offer any substantial evidence of any exceptions to the rule favouring a statute over a regulation;

b. RBC failed to offer any evidence of special circumstances that would make the two-part reference/judicial sale process the most just and expeditious as well as least expensive process for the sale of Ms. Wong’s lands, per Rule 1.04(1); and

c. The reference/judicial sale process fails to meet the Rule 1.04(1.2) requirement that the court make orders and give directions that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

d. this court simply cannot afford to offer additional resources to the type of endeavour that RBC calls upon it to engage. Thus, our courts should not be asked to engage in the reference/judicial sale process unless the reasons for the request are exceptional and compelling. They cannot be, as many institutional litigants seem to wish them to be, routine.

Additional Authorities Relied Upon by RBC

[23] Counsel for RBC brings three further cases to the court’s attention. They are: Nissan Canada Financial Services Inc. v. Colborne CV-19-00141866-0000, Royal Bank of Canada v. Haque, CV-17-132090-00, RBC v Shawesh CV-21-00001216-0000. Each of these decisions are in cases brought by RBC’s counsel. Each is brief. Two are one paragraph endorsements on the back of a motion record. Those two, the Nissan Canada and Haque decisions, were decided before Wong. They simply rely on Canaccede to grant the relief requested. Neither considers the factors cited in Luu or Wong.

[24] In Shawesh, Chaney J. was provided with an affidavit and factum which I assume are similar to the ones before me. He agreed with the position of RBC, writing:

[4] The plaintiff has provided a factum and affidavit setting out the advantages to all parties of proceeding by way of judicial reference sale rather than sheriff’s sale. The affidavit evidence persuades me that the judicial reference sale is more likely to achieve a fair market value sale than the antiquated sheriff’s sale method. The judicial reference sale is more advantageous to all parties concerned, including the debtor. The judicial reference sale is more reflective of the current approach to real estate sales than the sheriff’s sale, which remains anchored in the 19^th century.

[25] RBC brought the Wong decision to the attention of Charney J. He distinguished one part of that decision as follows:

[7] IN RBC v Wong 2022 ONSC 54, at para. 37, Kurz J. was particularly concerned about the potential burden on judicial resources if the judicial reference approach is used. Given my understanding of the nature of a judicial reference sale, I do not agree that this approach is likely to burden judicial resources in any kind of disproportionate way. Any disputes that might arise in a judicial reference (e.g., priority of creditors) would likely come before the court in some other proceeding if it could not be resolved. If there are no such disputes the judicial reference may proceed before an Associate Judge and be dealt with in short order.

[26] With great respect to my colleague, I must differ with him. As set out above, I am less than convinced by the advocacy of Mr. Nightingale’s affidavit. I also note that applications such as these are usually brought before busy judges dealing with what are often heavy motions lists, mainly comprised of contested matters. The problems are compounded when, as in Shawesh, only one side offers arguments in favour of their preferred process, without offering any balancing evidence about the alternative. With regard to the point upon which Charney J. distinguished Wong, again, and with great respect, that is not the key reason to distinguish Canaccede, the case upon which the court in Shawesh relies. That decision did not grapple with the issues raised above and in Luu. It did not set out why those factors are inapplicable. In sum, I do not follow Shawesh.

[27] I add that Associate Judges only hear references commenced in Toronto and Ottawa. While certain Associate Judges do circuit to other Regions surrounding Toronto, they do not preside over references as part of their judicial duties. References require continuity of the judicial officer. As this cannot be assured, Associate Judges who circuit cannot be called upon to preside over references that are initiated outside of Toronto.

Order

[28] For the reasons set out above, I dismiss this application without costs. I direct counsel for RBC to serve this endorsement upon both the Respondent and Jodi Hammond, the joint owner of the property, who has an interest in the result of this proceeding.

Final Note

[29] I add that RBC counsel, in both this case and in Wong, acted fairly and in full accord with their obligations as counsel, by bringing decisions contrary to its interests to my attention. I assume that it will continue to do so with this decision should it continue to seek the same relief sought in this motion.

“Marvin Kurz J.”

Electronic signature of Justice Marvin Kurz

Date: August 5, 2022