Singh v Mangat, 2016 ABQB 349

Court of Queen ’ s Bench of Alberta Citation: Singh v Mangat, 2016 ABQB 349 Date: 20160624 Docket: 1201 05525 Registry: Calgary Between: Arvind Singh Plaintiff - and - Manny Mangat also known as Nazar Singh Mangat also known as Nazar S. Mangat Defendant _______________________________________________________ Memorandum of Decision of A. R. Robertson , Q.C., Master in Chambers _______________________________________________________ Introduction [ 1 ] These applications have been brought to resolve the entitlement to sale proceeds resulting from the sale of lands pursuant to writ proceedings. The dispute is among (

a) judgment creditors who registered writs of enforcement on title before the judgement debtor’s wife’s certificate of lis pendens (the “CLP”) mentioned next,

(

b) the judgment debtor’s wife, who has brought a matrimonial property action and registered a CLP on the title, and (

c) judgment creditors who registered writs of enforcement subsequent to the CLP. [ 2 ] The circumstance is unusual, and previous reported decisions do not resolve the priorities of these claims. They involve what I describe as a “CLP sandwich.” As indicated above, there were some writs registered ahead of the CLP and more writs registered after the CLP. [ 3 ] The plaintiff in the matrimonial property proceedings is the wife of the judgment debtor Manny Mangat. She is Pavitra Mangat (“Mrs. Mangat”). She claims priority because of a provision in the Matrimonial Property Act , RSA 2000 c.

M-8 (the “ MPA ”). [ 4 ] The writs of enforcement attached a one-third interest of her husband in the matrimonial home, which has now been sold, so the dispute is over the proceeds of sale. [ 5 ] The one-third interest held by Mr. Mangat was sold by court order at the behest of a civil enforcement agency instructed by the plaintiff in these proceedings, Arvind Singh, who was one of the prior writ holders.

The funds have been held in trust pending agreement, or court order, as to how they should be distributed. [ 6 ] There are, at least conceptually, various resolutions that could be considered appropriate given the “CLP sandwich”. [ 7 ] The CLP’s registration and its priority does not change the distribution provisions set out in the CEA . The CLP has priority over subsequent writs, but the prior writ binds the judgment debtor’s lands and the distribution scheme set out in the CEA groups all of the writ holders together in writ proceedings for distribution amongst eligible claims in one distributable fund.

The CEA expressly provides that the distribution of the proceeds from the writ proceedings is to occur “as if the subordinate interest did not exist”: subsection 34(2). [ 8 ] The CEA creates a method of distribution of the funds, essentially a code, and the guiding principle is that writ holders are paid pari passu . That code entitles all writ holders to share in the distributable fund, and in the circumstances here there is no excess to be paid to Mrs.

Mangat. [ 9 ] For the reasons which follow, it is my conclusion that that sale proceeds are to be distributed to the writ holders, both those prior to and subsequent to the CLP, and not to Mrs. Mangat, as holder of the CLP. Facts [ 10 ] In January of 2007 Mrs. Mangat commenced matrimonial property proceedings against Manny Mangat. [ 11 ] Five years later, on May 2, 2012, the plaintiff in this action, Mr. Singh, obtained a judgment against Mr. Mangat in The Provincial Court of Alberta (Civil Division) in the amount of $19,200.00.

The judgment was then filed with the Clerk of the Court of Queen’s Bench the same day. The writ of enforcement that was issued was registered against Mr. Mangat’s property interest in the land owned by Mr. Mangat, Mrs. Mangat and Amarjot S. Mangat, each as to one third interest, on July 20, 2012. [ 12 ] On June 7, 2012, another writ of enforcement was registered against Mr.

Mangat’s interest by the Bank of Montreal (for $20,155.00 and costs). [ 13 ] On February 19, 2013 a caveat was registered with the Registrar of Land Titles by the civil enforcement agency to give notice of an intention to sell under the CEA . [ 14 ] It was at that time that Mrs. Mangat learned that no CLP had been registered in her matrimonial proceedings which had been ongoing for six years - since January 2007. [ 15 ] On February 22 nd , 2013, Mrs. Mangat filed a CLP pursuant to section 35(1) of the MPA . [ 16 ] As mentioned, the one-third interest held by Mr. Mangat was sold.

The current owner of the property, apparently a relative of Mrs. Mangat’s, acquired the property subject to her CLP. [ 17 ] Mrs. Mangat did not oppose the proposed sale of her husband’s share of the house, which was their matrimonial home. However, Mr. Mangat opposed the sale. He requested that the sale wait for the resolution of the matrimonial action, but he did not attend the court application that allowed it to proceed, and he has not taken

part in the proceedings before me. [ 18 ] After arranging for the sale of the interest for $225,000, Allied Shortridge Civil Enforcement Agency Inc. brought an application before Master Farrington to seek an order allowing the sale to go ahead. That was heard on August 28, 2015. No one associated with these applications, other than Mr.

Shortridge for his civil enforcement agency, attended. [ 19 ] By that time, additional writs had been registered by Kulwant Dhillon ($61,477.01 and costs), Chetankumar Arv Patel (for $33,500.00 and costs), Jasbir Chahal (for $82,200.00 and costs), Ritika Anand and Vision 10 Productions Inc. (for $57,623.00 and costs) and Justice Canada ($8,620.53).

They were registered at the Land Titles Office between October 9, 2013 and August 15, 2014. [ 20 ] That created the “CLP sandwich” – writs ahead of the CLP, writs behind. [ 21 ] In the result, after deducting the distributing authority’s fees, the total amounts of the judgments exceed the sale proceeds. [ 22 ] After the sale was complete and the funds were available for distribution, the civil enforcement agency proposed a distribution. That is where the matters stalled. Priority was asserted by counsel for Mrs. Mangat, and the parties were not able to find a resolution.

[ 23 ] These applications have been brought by Mrs. Mangat to oppose the distribution and by the civil enforcement agency for directions. Issue [ 24 ] The issue before this Court is the interplay between the priority established by the Matrimonial Property Act and the priority established by the Civil Enforcement Act where the CLP is registered between writs. The Opposing Positions The Civil Enforcement Agency [ 25 ] The civil enforcement agency wants a clear direction as to how proceeds from a sale are to be distributed. Allied Shortridge Civil Enforcement Agency Inc. sought the sale here, and holds the funds.

It is the agency’s view that all of the net sale proceeds are governed only by the CEA and that the existence of the CLP is not relevant. [ 26 ] Mr. Shortridge argues that there is only one “distributable fund” contemplated by the CEA and the only eligible claims against that distributable fund are those described in

section 99 of the CEA . In this case, that group is limited to writ holders. That position is shared by the subsequent writ holders ( i.e. , those whose writs were registered after Mrs. Mangat’s CLP). The Writ Holders [ 27 ] The writ holders suggest that Mrs. Mangat is claiming priority twice: firstly, as against the proceeds of the sale, and secondly as against the current owner of the property. (This may not be true: her own interest in the lands (also a one-third interest) remains part of the MPA proceedings. The interest of her husband has been sold and is now represented by the proceeds. The purchaser takes free of his interest: see paragraph 34(2)(

b) of the CEA – although the CLP remains on the title.) The Wife [ 28 ] It is the view of the estranged wife of the debtor, Mrs. Mangat, that her CLP has a priority given by the MPA , and although she acknowledges that priority does not affect the priority of the prior writ holders ( i.e. , those whose writs were registered before her CLP) she argues that

section 35 of the MPA gives her priority as against the subsequent writ holders. She claims a priority for the amount remaining after paying the sale costs, the civil enforcement agency’s charges, and the first two (prior) writ holders’ judgments. [ 29 ] She says, in essence, that it is not her concern how the funds are paid to the writ holders, provided that no more than the claims of the prior writ holders is paid before she is entitled to claim against the funds. The Correct Approach to Resolution [ 30 ] The priority stated in the MPA and the remedies set forth in the CEA do not expressly address each other.

The resolution of these competing priorities must come from the provisions in the legislation, reading them in harmony with each other, since neither expressly says that it is to operate in priority to the other.

According to Sullivan, Sullivan on the Construction of Statutes , (5 th ed. 2008) at p. 412, Statutes enacted by a legislature that deal with the same subject are presumed to be drafted with one another in mind, so as to offer a coherent and consistent treatment of the subject. [ 31 ] And at p. 416 she says, Often two or more statutes enacted by a legislature touch on the same subject or are analogous to one another without actually constituting a single integrated scheme.

Statutes that deal with the same subject are presumed to operate together harmoniously. [ 32 ] Accordingly, the object is to look closely at the relevant legislation and determine if the answer is clear and can be read so as to allow both the CEA and the MPA to sing a duet in harmony, having reference to previous court decisions. The Legislation The Matrimonial Property Act [ 33 ] Section 35(1) of the MPA allows the filing of a CLP with the Registrar of Land Titles. That

section reads as follows: 35(1) A spouse who commences proceedings under this Act may file a certificate of lis pendens with the Registrar of Land Titles.

(3) If a certificate of lis pendens has been registered under this section, any instrument that (

a) is registered after the registration of the certificate of lis pendens, and (

b) purports to affect land included in the certificate of title, is subject to the claim of the spouse who filed the certificate of lis pendens. [ 34 ] This

section creates some kind of priority. The question is whether it provides the priority sought by Mrs. Mangat here. Does a statement that an instrument that is registered after the CLP is subject to the claim of the spouse who filed it mean that the subsequent writ holders are not entitled to share in the distribution under the CEA ?

[35] Of course, a CLP does not protect a secured interest. It is merely a notice that a claim is being advanced against the land. Furthermore, the claim in a proceeding under the Matrimonial Property Act is not for a specific present entitlement to an interest in theland, but rather for the potential award that might be granted by a court in the MPA proceedings: see Groot v Kotake, 2014 ABQB 53 atpara. 40, citing Deloitte, Haskins & Sells Ltd v Graham, (AB KB), 42 A.R. 76, [1983] AJ No 714 (Q.B.). Until suchaward is actually granted, the person seeking the award has no particular right against the land.

Until the dispute has been litigated underthe MPA, the sorting process as between a prior CLP registered under

section 35 as against a subsequent writ cannot take place. [36] The concept at that point is that the land against which the writ is registered did not previously “belong” to the debtor, if theultimate resolution under the MPA is that the debtor is not entitled to it: Maclean v. Ryan, 2007 ABQB 453 at para. 20 to 22. At para.20, L.J.

Smith, J. made it clear that once a CLP has been registered, it gives notice that legal action is pending under the MPA. “Byoperation of that Act, the property interests of spouses are adjusted to reflect the ownership interests triggered by the separation and theclaim under that Act.” [37] At para. 22, she said: Until matters are litigated under the Matrimonial Property Act, this sorting process cannot take place.

It would do violence to thematrimonial property regime to allow a debtor spouses’ creditors to collect on property which did not ‘belong’ to the debtor, before thespouses’ property can be separated. [38] Where the CLP is registered before there are any writs, this statement of the law is clearly correct.

Similarly, if the CLP isfiled after one writ, and either the enforcement debtor or his or her spouse buys that claim, or simply pays the debt, then the concern ofthe prior writ becomes non-existent. [39] A conflicting reality to the sharing of matrimonial assets in proceedings under the MPA is that during the marriage a spouse isfree to use his or her equity in the home as justification for creditor confidence in the promise to repay, and as against third parties thefact of marriage has minimal effect on property rights – at least until dissolution: Groot v Kotake, 2014 ABQB 53, para. 42, quoting Klotz, Bankruptcy, Insolvency and Family Law, 2nd ed, c. 4 at pp. 4-21. [40] Priority on title is normally paramount in the Torrens land titles system.

For example, see Minaei v Brae Centre Ltd, 2004ABQB 597, at para. 19, citing Holt Renfrew & Co v Henry Singer Ltd, 1982 ABCA 135 , 135 D.L.R. (3d) 391 (Alta. C.A.) forthe proposition that first registered has priority, even in the case of knowledge of another claim, absent a claim of fraud. The Civil Enforcement Act [41] The writ holders and the civil enforcement agency rely on the CEA.

As will be discussed, the CEA addresses “writproceedings” as having a different level of claim compared to the mere registration of a writ of enforcement. [42] These are the relevant provisions (with emphasis added in places): 33(2) A writ, (

b) in the case of land under the Land Titles Act, on being registered under the Land Titles Act binds all of the enforcementdebtor’s exigible land described in the certificate of title against which the writ is registered; 34(1) Except as otherwise provided in sections 35 to 40 or in any other enactment, an interest acquired in property after the property isbound by a writ is subordinate to the writ.

(2) Where an interest in property is subordinate to a writ, (

a) the property is subject to writ proceedings to the same extent that the property would have been if the subordinate interest didnot exist, and (

b) a person who acquires the property as a result of writ proceedings acquires the property free of the subordinate interest. [43] I pause to note that subsection 34(2) says that where an interest in property is subordinate to “a writ”, it is subject to “writproceedings to the same extent that the property would have been if the subordinate interest did not exist.” [44] Therefore, a mortgage following a writ is subject to writ proceedings as if the mortgage did not exist. This is an importantguide to the distribution provisions of the CEA.

I will touch on this again, below. 42(1) An interest in property is not subordinate to a writ by reason only of the fact that the interest is subordinate to another writ.

(2) Nothing in this

section is to be construed so as to create any priority as between writs. 94 In this Part [Part 11, Distributions], “distributing authority” means (

a) in the case of writ proceedings other than garnishment, an agency ... 95 For the purposes of this Part, a claim made against an enforcement debtor under an enactment other than this Act shall be treated inthe same manner as a related writ if (

a) under that enactment (

i) the claim is deemed to be or is referred to as a writ of enforcement or it is otherwise indicated in that enactment that the claim isto be treated as a writ of enforcement, or

(ii) the person making the claim is deemed to be or is referred to as an enforcement creditor or it is otherwise indicated in that enactment that the person making the claim is to be treated as an enforcement debtor, and (

b) the claim is registered in the Personal Property Registry. [ 45 ]

Section 95 addresses claims made under another enactment. However, Mrs. Mangat’s CLP was not registered in the Personal Property Registry, and it could not have been registered there. Furthermore, the CLP is not deemed to be a writ of enforcement by the MPA , and a claimant under the MPA is neither deemed to be an enforcement creditor nor treated as one. Accordingly, Mrs. Mangat’s claim and the CLP are not helped by

section 95. [ 46 ] Additional relevant provisions are these: 96(1) All money that (

a) is realized through writ proceedings , or (

b) is otherwise received by an agency as a result of the existence of an enforcement debt, must be dealt with in accordance with this Part. (2) ...

(3) Nothing in this Part other than

section 102 shall be construed so as to prejudice any right to money that is based on an interest, including a security interest or an encumbrance , (

a) in the money, or (

b) in the property from which the money is derived, where that interest has priority over the relevant writs.

(4) Where a distributing authority receives money in which a person has a security interest or other interest that has priority over the claims of enforcement creditors , the distributing authority must pay to that person the money to which the person is entitled, and any money paid under this

section does not form part of a distributable fund . (This provision is addressed below.) 97 For the purposes of determining what constitutes a distributable fund, the following applies: (

a) subject to clauses (

b) and (c), any money to which this Part applies constitutes a distributable fund when the money is received by a distributing authority ; (

b) where this Act or an order of the Court requires that money that is received by a distributing authority not be distributed before a certain period of time elapses or a certain event occurs, that money constitutes a distributable fund only when the period elapses or the event occurs; (

c) money payable in accordance with section 96(4) or 98 does not constitute or form part of a distributable fund. [ 47 ] (Section 98 addresses money derived from exempted property, which is not part of the dispute here.) [ 48 ] Another relevant provision is this: 99(1) The eligible claims against a distributable fund are (

a) the amounts outstanding on all related writs that are in force against the enforcement debtor , and (

b) the costs that the Court has directed to be paid out of the fund pursuant to section 103(2), if not otherwise included in an eligible claim.

(2) Subject to section 103(2), eligible claims against a distributable fund shall be identified and the amount of each claim fixed as of the date the fund is constituted.

(3) Where the total amount of the eligible claims exceeds the amount of a distributable fund, the distributing authority must apply the distributable fund toward the claims in the following order of priority: (

a) repealed 2002 c17 s1(2) ; (

b) first, to other fees and expenses of a distributing authority that may be claimed against the enforcing debtor that were earned or incurred in connection with the enforcement measures that have produced the fund; (

c) second, to other costs that may be claimed against the enforcement debtor that were incurred by the instructing creditor in connection with the enforcement measures that have produced the fund and any other costs that the Court has directed to be paid out of the fund;

(

d) third, to claims referred to in section 103(1); (

e) fourth, to eligible claims that by virtue of any other enactment or law in force in Alberta are entitled to priority over the eligibleclaims of enforcement creditors generally; (

f) fifth, to the balance of the instructing creditor’s claim up to an amount not exceeding (i) $2000, plus (ii) after the payments referred to in clauses (

a) to (

e) are made, 15% of the amount by which the balance of the fund remainingexceeds $15 000; (

g) sixth, to all other eligible claims, including any unpaid balance of the instructing creditor’s claim, on a prorated basis. [49] (Sections102 and 103, referenced in subsection 96(3) and in

section 99 have no application here.) Case Law on MPA Authority [50] The priority of a CLP under the MPA as against a subsequent writ holder has previously been litigated before Alberta courts inMcCullough-Grieff v Canada Revenue Agency (Taxation), 2014 ABCA 202 and Markey v Revenue Canada Taxation, 1997 ABCA288. Both are decisions of the Alberta Court of Appeal. However, in those cases the facts did not involve the CLP sandwich that we seehere: a prior writ or writs of enforcement followed by the CLP, then followed by more writs of enforcement.

Where there is simply aCLP followed by a writ, the writ holder must await the outcome of the MPA proceedings, because of the priority established by section35. That creates a potential for some of the abuses that the writ holders here have identified. [51] In this case, all parties agree that the writ holders whose writs were registered before the CLP have priority ahead of the CLP. But how is the “distributable fund” to be distributed to those prior writ holders, given the group of subsequent writs? [52] Is the “distributable fund” just for the benefit of the prior writ holders?

Do both the prior writ holders and the later-registeredwrit holders have to wait to find out what they are to receive – leaving the subsequent writ holders not receiving anything until the MPAproceedings are complete, as in McCullough-Grieff and Markey? How can a subsequently filed CLP affect a prior writ? [53] Are there two “distributable funds”; one created now based on known entitlements and another one later once the outcome ofthe MPA proceedings is known?

Is there a kind of “phantom” secondary distributable fund that does not clearly come into view until theMPA proceedings are resolved? [54] Case Law on Priorities Issues Relating to Writs [55] The case law dealing with priorities relating to writs of execution, now called writs of enforcement, is difficult and somewhatconfusing. [56] A relatively early case, which dealt with a “builder’s lien sandwich” was Seel Mortgage Investment Corp v Tri-Dell JamesConstruction Ltd, (AB KB), 1981 CarswellAlta 223, 19 R.P.R. 297, 32 A.R. 299, where Master Funduk was dealingwith surplus funds remaining after a foreclosure sale and mortgage proceedings.

He directed the surplus proceeds to be paid to the writholders registered before a builder’s lien, then to the builder’s lien claimant, and there was then nothing left for subsequent writ holders. [57] At first blush, this would seem to present an appropriate resolution here that recognizes the priority established by

section 35of the MPA, by treating the CLP the same as the builder’s lien claim that was before Master Funduk. [58] However, there are two reasons why that is not the appropriate resolution. [59] Firstly, it is important to remember it that those are not the facts before the court here. [60] Secondly, Master Funduk followed Beck J’s approach in Edmonton Mortgage Co v Gross, (AB KB), 3Alta.

L.R. 500, 18 W.L.R. 385 (S.C. 1911), which also dealt with a surplus remaining after a foreclosure sale, and the approach used byBeck J and by Funduk MC is no longer accepted as appropriate. [61] In Seel Mortgage, Master Funduk concluded that the mere registration of the writ was not a seizure, and the ExecutionCreditors Act did not apply so as to require a pari passu sharing. He held that the requirement for a pari passu sharing applied onlywhen property had been “seized”: see para. 19 of Seel Mortgage.

Accordingly, in the circumstances before him he concluded that thefirst registered writ should be paid in full, and the balance of funds applied to the builder’s lien, not pari passu. [62] There was insufficient money to pay the subsequent writ holders, and accordingly there was no need to consider whether thewrits subsequent to the builder’s lien would share pari passu among themselves or would be entitled to priorities in accordance with theLand Titles Act (see paragraph 27). (However, he then considered case law which suggested that, in fact, they would have been entitledto share pari passu had there been funds to do so.) [63] For our purposes, it is important to note that if the case before Master Funduk had involved the proceeds of a sale by a writholder his decision would likely have been different.

Since the proceeds were from another source, he followed the Torrens system ofpriority and did not deal with the writ holders as a group. [64] This approach (paying surplus proceeds using the registration priority of the writs rather than the Execution Creditors Actapproach of pari passu sharing amongst wit holders) was followed in Alberta Treasury Branches v Floral Holdings Ltd., (AB KB), 1989 CarswellAlta 330, [1989] 3 W.W.R. 236, 65 Alta. L.R. (2d) 6, which again dealt with surplus funds remaining aftera foreclosure sale. In that case, Mason J lamented the current state of the law, at paragraph 28:

His comments [an annotation by Prof. Dunlop of the University of Alberta to a 1983 decision] make it clear that the current state of thelaw is unsatisfactory. Whether the policy behind the [Execution Creditors Act] should extend to the proceeds of the sale of land, whetherunder mortgage foreclosure or execution, is a decision to be made and clearly expressed by the legislature of this province. [65] In fact, the Alberta Court of Appeal had already touched on the issue in a very brief memorandum of decision, in Bank ofMontreal v Bank of Nova Scotia, 1984 CarswellAlta 231, [1989] A.W.L.D., 67 Alta.

L.R. (2d) 273, which, as will be apparent from acareful review of the citation, was not broadly reported until five years after the decision was released. That case was also subject to acomment by Prof. Dunlop, who described the decision as “laconic and confusing”. [66] Nonetheless, two different approaches were followed by the courts. One applied where the sale was pursuant to a writ. Forexample, in CIBC v Bastarache , [1995] A.J. No. 1388, Master Quinn followed Bank of Montreal and directed that the proceeds be paidto writ holders pari passu.

However, in an apparently unreported decision, Master Quinn directed the payment of writ holders based ontheir registered priority (not pari passu) where there had been a court ordered sale at the request of the landowner, in Master ExcavatorsCo v Domil Homes Ltd. That decision was partly reversed at , 41 Alta. L.R. (3d) 148.

Master Quinn approacheddistribution entitlements differently based on whether the fund was created by writ proceedings or a prior foreclosure. [67] It is helpful to recall that in the days before the Civil Enforcement Act, the Personal Property Security Act and the modernprovince-wide computer registration systems used by the Land Titles Office and the Personal Property Registry there were 13 sheriffs,each of whom accepted writs for filing, and the ability to register writs of execution province-wide in the PPR and the LTO simply didnot exist.

The new legislation and the new computer systems that began to be introduced in the 1980’s brought with them an opportunityfor new approaches for registration by creditors and for determination of priorities. [68] Issues relating to priorities and the confusing law of distribution came before Master Hanebury in Resmor Trust Company vWood, 2006 ABQB 841, 410 A.R. 355, where, after discussing CIBC, Bank of Montreal, Master Excavators and ATB she said: This was the state of the law with the coming into force of the Civil Enforcement Act.

Writ holders who were paid out under theExecution Creditors Act were paid pari passu. Those paid out from a fund remaining after a judicial sale were paid on the basis of whenthe writ was registered in the land titles office. It seemed an unsatisfactory state of affairs. The enforcement system was described as “apatchwork of English and Canadian legislation and judge made rules which do not fit together in a comprehensible or workable pattern”. [69] Her decision was accepted as a correct statement of the law in Gnam v Thackeray, 2007 ABQB 401, 2007 CarswellAlta 1815,where P.J.

McIntyre J commented at para. 17: In my view there is an argument that those who have perfected writs against title to land, or perhaps who have done nothing more thanfiled in the general Registry of the Land Titles Office, are entitled to share in surplus funds from a foreclosure without the need for filingin the Personal Property Registry. [70] One clear surviving principle stated in Seel Mortgage is that the mere filing of a writ of enforcement is not the same as aseizure of the land, although it “binds all of the enforcement debtors’ exigible land described in the certificate of title against which thewrit is registered” according to paragraph 33(2)(

b) of the CEA.. This was expressly discussed in both Seel Mortgage and in EdmontonMortgage: see paragraph 15 of Seel Mortgage. The concept of “binding” the land involves creating a charge upon it. That statement inSeel Mortgage has not been questioned. [71] Similarly, under the CEA, the mere filing of a writ against land is not a seizure. It does not even automatically entitle thecreditor to have property sold. There is a waiting period, after the delivery of a notice of intention to sell of 180 days, unless the courtotherwise permits: sections 70 and 72 of the CEA.

Also, there is a requirement for at least 30 days’ notice on the enforcement debtor andany other person specified by the regulations: subsection 74(1). [72] But the approach to the distribution of funds has changed since Seel Mortgage and Edmonton Mortgage, as explained inResmor and Gnam. The proceeds are to be distributed pari passu regardless of how the sale of land occurred.

The “Torrens only”approach in Seel Mortgage and in Edmonton Mortgage is not the law. [73] And here, the case involves a sale specifically under the writs of enforcement, so the Torrens priority approach does not applyas between writ holders, even if Seel Mortgage and Edmonton Mortgage were considered as guiding cases. Even Master Funduk in 1981would not have paid following the Torrens system of priority given the “builder’s line sandwich” that was before him if he had proceedsof sale by a writ holder. [74] The CEA is clear about relative priorities of claims that appear on title.

It does this by focussing on proceeds recovered by“writ proceedings”. [75] The definition of “writ proceedings” is set out in paragraph 1(1)(uu) of the CEA: “Writ proceedings” means any action, step or measure authorized by this Act to be taken for the purpose of enforcing a money judgment. [76] The delivery of a notice of intention to sell is a step authorized by the Act taken for the purpose of enforcing a moneyjudgment and is therefore the commencement of “writ proceedings”. [77] The CEA then defines what happens to the proceeds resulting from writ proceedings.

Interim Order [78] At the appearance before me on March 10, I ordered the partial interim distribution from the distributable fund in favor of thewrit holders who had registered before the CLP. As their priority had been conceded by Mrs. Mangat, it was clear that they were goingto receive some of their claim regardless of the outcome of the issue currently before the Court. The instructing writ holder would

receive the entire debt owing to him given the amount of his claim and the special priority created under the CEA for the instructing judgment creditor. The Bank of Montreal, as the other prior writ holder, would receive only a portion of its debt on this interim basis, based on a pro rata distribution as if all writ holders shared equal priority. What is a “Fair” Resolution? [ 79 ] Simply saying that Mrs. Mangat’s priority means that her claim stands ahead of subsequent writs seems appealing. Without a careful analysis of the CEA , this seems a “fair” resolution.

But to be “fair”, it must be fair to all parties, and the concept of giving her what seems to be a simple priority must be examined on a principled basis. [ 80 ] It is helpful to consider the possible solutions that one can imagine. Pay Prior Writ Holders Pari Passu Now? [ 81 ] Perhaps the prior writ holders should be paid the amounts they would receive as if the CLP were not registered (using the current proposed distribution - this has now been done, as discussed below), and the balance should be held until there has been a resolution of the MPA proceedings.

Then the distribution would be re-visited. [ 82 ] But that would have the effect of interfering with the prior writ holders’ priority.

Their entitlement to the proceeds of the sale instructed by them is at least held up, and potentially adversely affected, by her subsequent CLP: if she is entitled to the residue, or part of it, then it would be paid to her, and the prior writ holders would not share in that amount. [ 83 ] If she is not entitled to any of the proceeds as later determined in her MPA proceedings, or she is entitled to some but not all of them, any remaining amount would be distributed amongst the writ holders generally on a pro rata basis, using the total claims as the numerator and the total distribution (including the money previously distributed) as the denominator, but deducting from the amount paid to Mr.

Singh and the Bank of Montreal the amounts that they had already been paid. [ 84 ] That would leave, in this case, the Bank of Montreal as a prior writ holder, waiting for its share of the proceeds for the outcome of proceedings referenced in a subsequent registration. (As explained below, in the particular circumstances here the instructing writ holder Mr.

Singh is entitled to full payment regardless of the outcome.) [ 85 ] The Bank’s priority to the CLP would not actually give it a real priority since it would have to wait even to find out what it is entitled to, and its ultimate entitlement to proceeds could be adversely affected by her claim. That would be an odd result. Pay the Prior Writ Holders 100%? [ 86 ] Or the Bank of Montreal’s position could be improved by her subsequent CLP.

Its position could be better ( i.e. , it would receive more money) if the prior writ holders are to be paid first out of the distributable funds without regard to the CLP or the subsequent writs. Mrs. Mangat suggests this is a possible result. Then any excess would be held while Ms. Mangat’s MPA claim is resolved, and only then would funds be paid to the subsequent writ holders on a pro rata basis taking into account only the subsequent writs. If this separation among writ holder claims is allowed, the Bank would actually benefit from the existence of the CLP, a subsequent registration.

That too would be an odd result. [ 87 ] The Bank of Montreal did not appear on the application, but subsequent writ holders did, and their interest is the inverse of the Bank’s – if the Bank is fully paid as a prior writ without regard to their claims, there is less money potentially available for them, assuming there will be any residue following the resolution of the MPA proceedings. Furthermore, if they are to share pari passu with the Bank in the distribution, they would benefit from the priority of the first two writ holders’ priority.

The Potential for Abuse [ 88 ] There are several potential problems identified by the judgment creditors that arise if the CLP’s priority is found to interfere with the distribution process set out in the CEA that may arise depending upon how these questions might be resolved. Potential Misuse of Priority Claim [ 89 ] The first problem is that the MPA proceedings have been going on for many years with no clear signs of resolution in the near future. [ 90 ] It is the submission of the civil enforcement agency and the subsequent writ holders that if Mrs.

Mangat’s CLP is allowed to prevent the distribution of the proceeds of sale amongst the writ holders, then the process could easily be open to abuse by a judgment debtor and his or her spouse: instead of allowing the interest of the judgment debtor in jointly-owned (or commonly-owned) property to be sold and the proceeds paid to satisfy writ holders of the judgment debtor, married owners could file a certificate of lis pendens to stop the distribution of the funds even amongst prior writ holders, and then never finalize their matrimonial property claim.

They could keep the house in both their names and frustrate collection. [ 91 ] The writ holders would be prevented from receiving their money indefinitely, with no ability to control the pace of the resolution of the matrimonial property proceedings.

That could become a negotiating tool used against creditors - even against prior writ holders. [ 92 ] Depending on the amount if the prior writs, their proportion to the writ amounts as a whole, and the apparent equity, there could be little interest by writ holders in directing a sale if the proceeds could not be accessed until after the MPA proceedings are concluded. (That is already a possible misuse of priority where all of the writs follow the CLP in time, but where that has happened the motive for deliberate abuse of the priority may not be as obvious: in such a case, the couple would have first engaged in MPA proceedings, and only afterwards have judgments and writs of enforcement been filed.

Furthermore, that result appears to have been the

logical consequence of the enactment of

section 35 of the MPA as interpreted by courts previously.) Dissipation [ 93 ] Another potential complication is that because of the possible application of

section 97 of the CEA , as long as the court directs that the money is not to be distributed any further judgment creditors who obtain writs of enforcement might be able to claim against the existing distributable fund. An interim distribution to the prior writ holders would be impossible if that is true, because the pro rata shares would continue to be in flux. The pie might have to be cut into ever-smaller portions. [ 94 ] This, of course, would open up yet another potential for abuse by an unscrupulous judgment debtor.

Once the distributable fund has been created by the sale of his property, if he finds a way to delay the distribution while continuing to default on debts, the creditors who advanced their claim and supported the sale of the property could then find that their entitlement is eroded by the inclusion of other unpaid creditors who have filed writs - in a process over which the instructing writ holders have little control, perhaps for a period of many years. [ 95 ] The judgment debtor (in this case the husband) would be controlling not only when his judgment creditors can get paid from the sale of his assets, but also which ones are able to share, by delaying resolution of his MPA dispute until the creditor(

s) he wants included have filed their writs. [ 96 ] In practical terms, the result would likely be that creditors would simply not take steps to enforce their claims against land (other than filing their writs) once a CLP had been registered at the Land Titles Office, even if all of the writs were registered before the CLP under the MPA . As long as one writ follows the CLP on title, confusion would reign. Writ proceedings already underway would be stymied.

Everything would wait until the MPA claim is resolved. “Fairness” Depends on Perspective [ 97 ] It is apparent that there is no obvious “fair” approach to resolving the issue of priorities. What is “fair” depends on your perspective. A careful analysis of the legislation is the correct approach. Analysis [ 98 ] Turner v Russell , 2013 ABQB 704 at para. 29 was cited on behalf of the civil enforcement agency. It says that an MPA claim does not have priority over a writ, but that case does not deal with the priority of a CLP under the MPA .

It does not answer the question here. [ 99 ] The answer the question lies within the CEA . A review of the relevant provisions, set out above, leads to the conclusion that there is only one distributable fund, and that a subsequent interest in land (not just a CLP under the MPA , but even clear presently- registered interests such as mortgages and builders’ liens) stand behind writ proceedings. [ 100 ] If the priority created by

section 35 of the MPA were intended to create the super-priority argued by Mrs. Mangat, it would result in an amendment to the CEA and clearer words to the effect would be required. AS the

section stands now, the MPA and the CEA can be read in harmony. [ 101 ] The entire interest of the judgment debtor in the exigible lands is attached by the registration of the first writ. A subsequent and intervening CLP does not result in the creation of two distributable funds or change the priorities as between writ holders. [ 102 ] Section 33(2) of the CEA provides that in the case of land, a writ binds all of the enforcement debtor’s exigible land described in the title. It does not say that it binds it only for the benefit of that writ holder.

The proceeds of the sale of the land are available for distribution in the “writ proceedings”. [ 103 ] Subsection 34(1) of the CEA is clear that an interest acquired after the writ is subordinate to the writ. (In passing, I note that a CLP under the MPA is not even in a position to claim “an interest acquired in property after the writ”; as mentioned above, it does not establish any interest, merely a claim that might, after a court order, become an interest in land.) [ 104 ] One important key to

interpretation is paragraph 34(2)(a), which makes it clear that where an interest in land that is subordinate to a writ “ the property is subject to writ proceedings to the same extent that the property would have been if the subordinate interest did not exist ”, and paragraph 34(2)(

b) says the purchaser acquires the property free of the subordinate interest. That is, even if the registration of the CLP recorded a clear present interest in land (which it does not) it would still be subject to “writ proceedings”. [ 105 ] Subsection 42(1) begs attention. It says: “An interest in property is not subordinate to a writ by reason only of the fact that the interest is subordinate to another writ.” [ 106 ] Assume that there is a writ (writ #1) registered on title, followed by an interest in land, followed by another writ (writ #2).

Subsection 42(1) clarifies that the priority of an interest that is subject to writ #1 does not automatically make it subordinate to writ #2, but this subsection does not address “writ proceedings.” Reading subsections 34(2) and 42(1) together, the conclusion is that if the debt secured by writ #1 were paid by the debtor without any writ proceedings, or the underlying judgment were to become stale and unenforceable, then writ #1 would be discharged. If it were not yet actually discharged from title, writ holder #1 would not be entitled to initiate (or take

part in) writ proceedings. The intervening interest in land would then stand in priority to subsequent writ #2. [ 107 ] Subsection 42(1) simply clarifies that if there was a prior writ #1 at the time of registration of the interest in land, the existence of the prior writ #1 does not automatically place the interest subject to the subsequent writ #2 - but its wording suggests that some additional factor might lead to that result. [ 108 ] To use the “CLP sandwich” descriptor, once the lid of the sandwich is removed it is no longer a CLP sandwich. There is no

“open-faced CLP sandwich.” There is just a CLP registered ahead of writs. [ 109 ] But when the interest is sold as a result of writ proceedings, at least where they have been commenced by one of the prior writ holders, the proceeds are addressed in the CEA and a “distributable fund” is created. [ 110 ] Subsection 96 is clear that “ All money that is realized through writ proceedings must be dealt with in accordance with [Part 11: Distributions]”. [ 111 ] Subsection 96(3) says that nothing (except

section 102, which does not apply) prejudices “any right to money that is based on an interest ... in the property from which the money is derived, where that interest has priority over the relevant writs.” This does not create a priority; it preserves a priority that exists elsewhere for an interest in land. Furthermore, the examples given in subsection 96(3) are a security interest or an encumbrance.

Although the references to them are only inclusive, the examples suggest that the subsection refers to an existing interest in land, not an unproven claim that does not exist until a court says that it does. [ 112 ] But even so, it does not advance the registered interest holder’s entitlement ahead of the writ proceedings. If the money is derived from writ proceedings, and the interest has a higher priority than all of the writs, the interest holder must be paid first.

That is consistent with subsection 96(4). [ 113 ] Subsection 96(4) applies to “a security interest or other interest that has priority over the claims of enforcement creditors”. It says that “the distributing authority must pay to that person the money to which the person is entitled”. [ 114 ] There are a few reasons why this does not assist Mrs. Mangat. Firstly, she does not hold a “security interest” or any other interest. Secondly, to the extent that her claim has priority, it is, at best, only prior to some of the writ holders.

The use of the plural “enforcement creditors” illuminates that this exception’s application does not apply to a party who holds a priority of some kind over only some of the writ holders. It applies only where the person has priority over “enforcement creditors” generally. (Since an “enforcement creditor” is defined in paragraph 1(1)(

p) as meaning “a person in hose favour a writ is in force”, it means a writ holder.) [ 115 ] Therefore, if a civil enforcement agency sells the land and the purchaser does not buy it subject to an existing prior-registered mortgage or builder’s lien, then the sale proceeds must firstly be paid to the prior -registered mortgagee or builder’s lien claimant – that is, a mortgage or builder’s lien registered prior to any writs. If the money reflecting that portion of the equity in the land is received by the civil enforcement agency in its capacity as distributing authority, “it does not form part of a distributable fund.” [ 116 ]

Section 97 makes it clear that “ any money to which this Part applies constitutes a distributable fund when the money is received by a distributing authority”. [ 117 ]

Section 99 makes it clear that eligible claims against a distributable fund are “the amounts outstanding on all related writs that are in force against the enforcement debtor”. It goes on to set out how the funds are to be distributed amongst those with eligible claims when the claims exceed the amount of the fund. [ 118 ] Subparagraph 99(3)(

e) provides for some priority to “eligible claims” that “are entitled to priority over the eligible claims of enforcement creditors generally ”. That might apply to an MPA CLP that is registered ahead of all writs, but the priority is only over “the eligible claims of enforcement creditors generally ”. That provision does not give Mrs. Mangat’s MPA claim a priority over prior writs.

Section 35 of the MPA creates a priority over subsequent instruments – in this case, individual writs, not over “writ proceedings” commenced by prior writ holders. [ 119 ]

Section 35 does not purport to create a priority as against prior claims registered on title. Here, the CLP was not filed until after the civil enforcement agency served notice of its intention to sell. There is no basis for asserting a priority ahead of the prior writs, for any amount, and Mrs. Mangat concedes that point. [ 120 ] Consistent with this reading of the CEA , we see that (

a) subparagraph 99(3)(

g) provides for pari passu distribution amongst the writ holders after (in essence) paying the expenses associated with the writ proceedings and the instructing creditor’s $2,000 priority; and (b) subsection 42(2) provides that nothing in

section 42 “is to be construed so as to create any priority as between writs”. [ 121 ] Although they are not directly relevant to the analysis, the last words of subparagraph 99(3)(e) (which addresses payments to “eligible claims that .. are entitled to priority over the eligible claims of enforcement debtors generally ”) tend to confirm my reading, which is that the enforcement creditors are to be treated as a group, sharing in the distribution of funds realized from the sale of assets as a result of writ proceedings brought by one of the judgment creditors. [ 122 ] In

summary, my reading of the CEA is that once any prior writ holder has instructed writ proceedings, the proceeds resulting from those “writ proceedings” are to be distributed in accordance with the CEA . Only one distributable fund is created. The eligible claims are those by writ holders. [ 123 ] In the result, the MPA proceedings adjust the ownership interests as between spouses , but not necessarily as between creditors.

Where the registration of the CLP precedes any writs of enforcement, or at least its registration precedes the commencement of writ proceedings taken under a prior registered writ, the comment in Maclean , quoted above, is applicable. But where there are writ proceedings already under way, the CEA directs what happens to the funds recovered in the writ proceedings. [ 124 ] The priority created by

section 35 of the MPA is simply not in play as against those proceeds. For it to be effective so as to interfere with the provisions dealing with writ proceedings and the distributable fund, it would have the effect of revising the CEA so as to create two distributable funds, or it would have to deem her claim to be a writ for an unknown amount, for which there is no judgment to make it equivalent to a writ. [ 125 ] Without amendments to the MPA saying that, reading the current words in this fashion would not be a harmonious duet of the two Acts . That would be one singer following her own beat, to a different melody, while she elbows her way downstage.

[ 126 ] It is not a necessary consequence of

section 35 of the MPA that the distribution provisions of the CEA be deemed to be amended. Conclusion [ 127 ] Accordingly, the application by Mrs. Mangat is dismissed and Allied Shortridge Civil Enforcement Agency Inc. is directed to distribute the balance of the sale proceeds as it had originally proposed, subject to the interim payment already made. [ 128 ] If the parties are unable to agree on costs, they may make arrangements for an appearance to argue them. Heard on the 13 th day of January and the 10 th day of March, 2016. Dated at the City of Calgary, Alberta this 23 rd day of June, 2016. A. R.

Robertson, Q.C. M.C.C.Q.B.A. Appearances: John Shortridge Allied Shortridge Civil Enforcement Agency Inc. the Applicant Lindsay Rydl Reich Law for the Applicant, Pavitra Mangat Daniel D. Peterson, Q.C. D’arcy & Deacon LLP for the Respondent, Arvind Singh, Vision 10 Productions Inc., Chetankumar Patel, and Jasbir Chahal (writ holders) Guy L. Lacourciere Lacourciere, LLP, for the Respondent, Kulwant Dhillon (writ holder)