Court of Appeal Considers Debts and Joint Tenancy

The Ontario Court of Appeal decided on 26 April 2023.that debts against the husband follow the husband’s interest only, and not that of the wife in a joint tenancy situation.

The husband incurred some debts in favour of a third party, 2401242 Ontario Inc. He was also in arrears in his taxes and Canada Revenue Agency was also seeking payment.

A major asset that was held by Mr. and Mrs. Senthillmohan was their matrimonial home which was held in joint tenancy.

So, who gets the money from the sale?


January 28, 2021, the Superior court granted an order directing a sale of the matrimonial home and that the net proceeds of the sale be held in trust pending further agreement between the parties or court order.

September 2021, 2401242 Ontario Inc., a third-party creditor, had obtained default judgment against the husband, and filed a writ of execution against him.

October 2021, Mr. and Mrs. Senthillmohan entered into an Agreement of Purchase and Sale to sell the matrimonial home.

2401242 agreed to temporarily lift the writ to facilitate the sale. The home ultimately sold for $1.9M.

The proceeds, after the discharge of secured encumbrances, was approximately $925,000.

February 2022, the wife brought a motion for the release of her 50% share of the net sale proceeds, which led to the order under appeal.

Court Analysis

The Court said:

“[8]          Because a creditor cannot seize the interest of a non-debtor joint tenant, the appeal must be dismissed.

[9]          In our view,

the appellant’s position fundamentally misunderstands the law of creditors’ remedies against jointly-held property where only one of the owners guaranteed the debt.

Having so concluded it is not necessary to consider the appellants’ arguments about the date of severance.

…………. While Royal & SunAlliance does set out the characteristics of joint tenancy – unity of title, unity of interest, unity of possession, and unity of time –

it does not support the conclusion that where the debt itself is not jointly held that the entire property is exigible.

  • Royal & SunAlliance Insurance Co. v. Muir, 2011 ONSC 2273, 9 R.P.R. (5th) 104.
[11]       While there is little jurisprudential guidance on this discrete question, it is the natural corollary of the generally accepted and commonly cited proposition that an execution creditor

can execute against the debtor’s interest in jointly held property.

[13]       In Ontario, s. 9(1) of the Execution Act, R.S.O. 1990, c. E.24 provides that:

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. [Emphasis added.] [14]       The process of seizure and execution on debts only contemplates the execution against the debtor’s exigible interest in the land held in joint tenancy.

For instance, when a sheriff takes sufficient steps to seize property,

the joint tenancy is severed and,

once severed, the debtor joint tenant has no claim to the whole.

So, too, for the creditor, who can now execute against the debtor’s share of the tenancy in common.

[15]       Section 10(6) of the Execution Act also provides that a

writ “binds the lands against which it is issued”.

While this does not expressly state that a writ can effect only a seizure of the debtor’s exigible interest in land held in joint tenancy,

it is the natural interpretation of the provision when read in conjunction with s. 9 and the right of survivorship.

That is to say, where property is jointly held and one joint tenant dies, the remaining joint tenant acquires the entire interest in the property through their right of survivorship.

And, where a writ is filed against jointly held land before the debtor joint tenant’s death, it does not continue to bind the surviving non-debtor’s complete interest in the property acquired through their right of survivorship: Power v. Grace, [1932] O.R. 357 (Ont. C.A.).

Court Decision

[16]       The wife is therefore entitled to her half-share of the net proceeds from the sale of the matrimonial home, which was correctly calculated by the motion judge to be $602,356.19.

[17]       The appellant challenges the apportionment between the husband and wife, which continues to conflate their respective interests.

The motion judge properly deducted, in equal amounts from each respondent’s share,

their mortgage, construction lien, legal fees and real estate commission on the sale; and

correctly concluded that the husband’s $278,893.97 CRA lien was not a shared debt and should only be deducted from his share,

which led to $602,356.19 being held in trust for the wife,

and $323,462.22 for the husband. We see no error in that conclusion.

[18]       We reject the appellant’s argument about equalization.

The wife’s claim to the sale proceeds has nothing at all to do with equalization.

Hers is a direct ownership claim: Rawluk v. Rawluk, [1990] 1 S.C.R. 70.


The Court awarded $20,000.00 in costs inclusive of disbursements and HST.


Just a quick review here.

Property was in Joint Tenancy. That was severed when the Third party got its Execution. This was never a debt of the wife, just the husband.

So, first pay off their joint debts and expenses related to the sale:

  • First mortgage
  • Construction liens
  • Legal fees. and
  • Real estate commission

Then, divide the proceeds equally.

Wife takes her share.

Husband’s share is paid as follows:

  • First to CRA, superpriority debt
    • Then, to 2401242 Ontario Inc.
    • Balance, if anything, to the husband

You can appreciate that 2401242 Ontario Inc.’s debt exceeded the amount that the husband had leftover, otherwise they would not have pursued this matter to the Ontario Court of Appeal.

Brian Madigan LL.B., Broker

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