Following on my blog on scheduling urgent hearings for commercial lease matters, this blog is on the scheduling of an urgent hearing involving a real estate closing.
In Ali v. Tariq, 2020 ONSC 1695, the applicant had sold her property and discovered that a writ of execution had been registered against her property during routine searches performed for the closing. Apparently, her former father-in-law had obtained default judgment against her in small claims court and obtained a writ of execution at around the time of her divorce. A writ of execution filed in the county or district in which the property is located will effectively prevent the sale of the property until the judgment is set aside or fully satisfied. After the applicant’s offer to pay the sale proceeds into her lawyer’s trust account was rejected, the applicant sought an urgent hearing before the Ontario Superior Court of Justice under the Notice to the Profession. The matter was urgent because the closing was scheduled to take place the very next day, and a hearing on setting aside the default judgment and the writ of execution was required to permit the closing to take place.
Although Justice Myers stated that it was not clear that the Ontario Superior Court of Justice had the authority to set aside a small claims court judgment, the applicant argued that the court had inherent jurisdiction to deal with title to property and the court had jurisdiction to grant equitable relief which small claims court did not have. Justice Myers granted an urgent application hearing to be held the next day, but stated the following:
As the purpose of a writ of execution is to seize a party’s equity in her property to pay a judgment, allowing a sale to close with the proceeds to be held by counsel would seem to be steps that work in favour of the judgment creditor. It is hard to see any prejudice to either party by converting the land to cash rather than watching a sale disappear in a time of unprecedented market uncertainty. This seems to me to be a matter that counsel acting in good faith ought to be able to lead their clients to settle today.
The matter, however, did not settle and the motion was heard the next day.
In Ali v. Tariq, 2020 ONSC 1740, Justice Leiper held that the Ontario Superior Court of Justice had inherent jurisdiction to hear the matter. Further, the Courts of Justice Act provided that “Every judge of the Superior Court of Justice is also a judge of the Small Claims Court”. Justice Leiper found that the applicant would be prejudiced if she paid the judgment because the respondent was not a resident of Canada and the funds may never be recovered if the matter was successfully defended. Justice Leiper ordered the writ of execution be lifted in order to allow the transaction to close with the sale proceeds paid into trust and the issue of setting aside default judgment was adjourned to be heard at small claims court when operations resumed.
If you require legal advice or legal representation in respect to urgent residential or commercial real estate disputes before the Ontario Superior Court of Justice, please contact us for an initial consultation.
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