Creditor’s Action to Enforce Judgment Severed Joint Tenancy

An Ontario Court decision illustrates how a creditor’s steps to enforce judgment against a debtor can effectively sever the debtor’s joint tenancy with another party.
In 1992, John and Agnes bought a condominium unit as joint tenants. When they defaulted on their mortgage with Royal & SunAlliance Insurance Company (“Royal”), Royal obtained a default judgment against John for more than $730,000, and then obtained a writ of seizure and sale for the condo. John paid about $44,000 toward satisfying the debt in 1999, but paid nothing further. Royal then instituted sale proceedings and informed John and Agnes by letter in 2001.  The property was advertised for sale as required, including an advertisement in a local paper. However, the condo unit failed to sell.
Meanwhile, in 2006 Agnes executed a will, leaving John all her property except for her joint share of the condo, which she left to her son Michael.  She died in November 2008, and when Royal learned of the fact, it sought a court order deleting Agnes’ name as joint owner of the condo, and amending Registry records to show John as the sole surviving joint tenant.
The son Michael resisted, however, claiming he was the successor as tenant-in-common under Agnes’ will. Specifically, he claimed the original joint tenancy was severed when Royal tried to collect against John. Royal disagreed, claiming instead that John became the sole owner when Agnes died.  Alternatively, it claimed that Agnes’ interest as tenant-in-common passed to her husband, rather than to her son.
The Ontario Superior Court dismissed Royal’s application, agreeing that the steps it took to enforce the judgment against John legally severed the joint tenancy. By itself, filing a writ of execution did not result in severance, but the act of advertising the sale was sufficient to commence execution. Indeed, Royal’s steps in this case had gone even further, and effectively severed the joint tenancy and converted it to a tenancy-in-common.  Agnes’ will was evidence of her intent to bequeath her half-interest in the condo to her son Michael. This left Royal with only the right to effect its execution against John’s 50 per cent undivided interest in it. See Royal & SunAlliance Insurance Company v. Muir and Muir, 2011 (ONSC).