The Plight of Creditors: A Step in the Right Direction
By Carrie Kennedy, Devry Smith Frank LLP
The Supreme Court of Canada (SCC) recently overturned the Ontario Court of Appeal’s decision which ranked individual privacy rights over judgment creditors’ rights relating to sheriff sales of a debtor’s property. A sheriff needs a current mortgage statement before conducting a sheriff sale. Mortgagees, believing mortgage statements were protected by privacy legislation, refused to produce them.
Lower courts upheld that view, rendering sheriff sales moot against mortgaged property. The SCC held that judgment creditors should not be required to undergo cumbersome and costly procedures to realise on debts and that mortgagees are not precluded by privacy legislation from disclosing mortgage statements to execution creditors. When granting a mortgage, a reasonable mortgagee would be aware that the financial details of the mortgage are publicly registered on title and that default on unsecured debt could result in a judgment empowering the sheriff to the mortgaged property. The mortgage balance may be provided to the sheriff as a matter of law and the property would be sold to satisfy the unsecured debt. The SCC questioned whether parliament intended to protect debtors by preventing judgment creditors from realising on their judgments and ultimately found that it had not. It stated: “ensuring access to justice requires paying attention to the plight of all litigants” including judgment creditors. (Royal Bank of Canada v. Trang, 2016 SCC 50)
Carrie KennedyDevry Smith Frank LLP, Toronto, Canada
T: +1 416 449 1400
Since 1964,Devry Smith Frank LLP (DSF) has been a trusted advisor and advocate for corporations, individuals and small businesses. Comprised of over 175 dedicated legal and support staff, DSF prides itself on effective representation and a drive to deliver value to clients.
Carrie Kennedy is an Ontario lawyer practicing in the areas of commercial litigation, bankruptcy and insolvency, debt recovery, real estate litigation, and employment. She enjoys representing businesses, banks and individuals in these fast-paced matters with the support of her full service firm.
Published: Spring 2017 l Photo: Colourbox.de - Giovanni