Judgment Creditors Beware: The Challenges Of Collecting From A Beneficial Landowner

• Published date: 15 July 2020
• Law Firm: Gowling WLG
• Author: Ms Susan Rosen

In the case of 1842752 Ontario Inc. v. Fortress Wismer 3-2011 Ltd.¹(the "Fortress Case"), the Ontario Court of Appeal held that a judgment creditor is not entitled to enforce a writ of seizure and sale against a registered owner that holds land in trust for a judgment debtor, nor to priority over arm's length construction financing.

Pace Developments (The Mark) Ltd. ("Pace Mark") was the registered owner of certain lands under the Land Titles Act² pursuant to an unregistered trust agreement. In the unregistered trust agreement, Fortress Wismer 3-2011 Ltd. ("Fortress Wismer") and two other corporate entities were named as the beneficial owners of the lands.

In 2016, Firm Capital Mortgage Fund Inc. ("Firm Capital") and MarshallZehr Group Inc. secured construction financing charges against the lands naming Pace Mark as the chargor.

In 2017, 1842752 Ontario Inc. (the "Judgment Creditor") obtained a judgment against Fortress Wismer in the amount $100,000.00 plus interest and costs. In 2018, the Judgment Creditor filed a writ of seizure and sale with the sheriff having jurisdiction over the lands, directing the sheriff to sell...