r v. Civiero, 2017 ONSC 6658

CITATION: Luu v. Abuomar, 2017 ONSC 6658 COURT FILE NO.: 3959/17 DATE: 2017-11-06 SUPERIOR COURT OF JUSTICE - ONTARIO RE: XUAN LUU, Applicant AND: MOHAMED ABUOMAR also known as MOHAMED ABU-OMAR also known as MOHAMED A.R. ABUOMAR also known asMOHAMED A. ABU-OMAR, Respondent BEFORE: Gray J. COUNSEL: Timothy Morgan, Counsel for the Applicant Mohamed Abuomar, Self-represented HEARD: November 1, 2017 ENDORSEMENT [1] In this application, the applicant requests the appointment of an equitable receiver, to pursue payment of various costsorders and interest owed by the respondent in the approximate amount of $113,000.

Background [2] This matter has a long and complex history. I will not seek to describe all of it, but only enough to allow a properunderstanding of what is now on foot. [3] The respondent was the owner of a sole proprietorship in a strip mall in Mississauga. The applicant owns and operates agrocery store in the same strip mall. [4] Some 14 years ago, the applicant commenced proceedings against the respondent’s sole proprietorship. Ultimately, inthe course of those proceedings, the applicant succeeded in obtaining a number of costs orders.

By 2015, those costs orders, includinginterest, amounted to approximately $82,000. [5] The respondent and his wife jointly own a home in Oakville, which is estimated by the applicant, and certain appraisersretained by her, to have a value of approximately $1.5 million.

There are no mortgages or other encumbrances registered against theproperty. [6] The applicant has made many attempts to enforce the costs orders, but has collected almost nothing. [7] Enforcement attempts include conducting an abortive examination in aid of execution, and a number of attempted salesof the respondent’s interest in the jointly-owned property, none of which have succeeded in effecting a sale of the respondent’s interest. [8] The first attempted sale was scheduled by the Sheriff in the latter part of 2015.

After the respondent and his wife wereadvised of the potential sale, the respondent and his son fraudulently arranged for a judgment to be issued in favour of the son, againstthe respondent, in the amount of $700,000. [9] When the sale was attempted by the Sheriff, there was actually one bid for the respondent’s interest, and a deposit in theamount of $26,000 was provided.

The sale did not close, and the Sheriff proposed to distribute the net amount remaining after deductingthe Sheriff’s costs, and the respondent’s son was to receive the overwhelming proportion of the proceeds, having regard to his judgmentof $700,000. [10] Upon application by the applicant, I declared that the so-called judgment was fraudulent and void as against the applicant,and ordered that the judgment be ignored by the Sheriff in distributing any and all proceeds from a sale or attempted sale of theproperty: see Luu v.

Abuomar, 2016 ONSC 4299. [11] In the same decision, I rejected a request by the applicant that the property be sold by judicial sale, and that the applicant’scosts orders be satisfied out of the respondent’s share of the proceeds. I noted that the applicant, as an execution creditor, did not havethe right to apply under the Partition Act for a sale of land where land is owned jointly by an execution debtor and another person: seeFerrier v. Civiero (2001), (ON CA), 147 O.A.C. 196 (C.A.).

To allow the property to be sold by judicial sale wouldsimply be an indirect way of allowing the applicant to do what she could not do directly. [12] In my reasons, I noted that the use of the device of a judicial sale had been approved by Justice Broad in CanaccedeInternational Acquisitions Ltd. v. Abdullah (2015), 2015 ONSC 5553 , 127 O.R. (3d) 779 (S.C.J.). Justice Broad had held thatthe use of the process of judicial sale could be analogized to the use of an equitable receiver.

[ 13 ] In my reasons, I expressed some reservations, noting that the ordinary process of sale under the Execution Act by the Sheriff will usually suffice, and it was difficult to see how equitable remedies would necessarily be required. However, in any event, I noted that none of the sales at issue in the case before Justice Broad involved the potential sale of jointly-owned property. I stated that I was not aware of any authority that would authorize a receiver to interfere with the interests of a third party, in this case the respondent’s wife, who was not an execution debtor.

I also noted that partition and sale was not available at the instance of an execution creditor, as held by the Court of Appeal in Ferrier , supra . [ 14 ] Since the first attempted sale, there have been three more attempted sales by the Sheriff. None of them have produced any proceeds to satisfy the applicant’s costs orders which, as noted, now amount to approximately $113,000. Submissi o ns [ 15 ] Mr. Morgan, counsel for the applicant, submits that the circumstances are such that the court should appoint an equitable receiver in aid of execution.

He notes that Rumanek & Company Ltd. has executed a written consent to act as receiver. [ 16 ] Mr. Morgan submits that the applicant has done everything she possibly can to collect on her costs orders, and apart from the fairly small amount she collected as a result of the first attempted Sheriff’s sale, she has collected nothing. She has been frustrated at every turn by the respondent and by his representative, Emad Elguindy. He points out that Mr.

Elguindy reported the applicant’s counsel to the Law Society of Upper Canada after the first attempted Sheriff’s sale, and he has been found to have been engaged in fraudulently activities by many different courts on prior occasions. [ 17 ] Mr.

Morgan points out that the respondent even went to the length of setting up a fraudulent judgment in order to attempt to defeat, or at least seriously interfere with, the applicant’s attempts to collect on her costs orders. [ 18 ] Now that there have been four attempted Sheriff’s sales of the respondent’s interest in the property, and an examination in aid of execution that provided no helpful information, it can only be concluded that the applicant has simply exhausted all possible legal means of collecting on her costs orders. [ 19 ] Mr.

Morgan submits that in these circumstances, it is appropriate for a court of equity to come to the aid of the applicant and, in the exercise of its equitable jurisdiction, appoint an equitable receiver in aid of execution. [ 20 ] Mr. Morgan submits that a receiver, who will stand in the shoes of the respondent, will have the ability to apply, under the Partition Act , for partition or sale of the property. By such means, the receiver will be able to realise on the interest of the respondent in the property in a way that the Sheriff could not. [ 21 ] Mr.

Morgan submits that there have been other cases in which receivers have been able to apply for partition and sale of jointly-owned property, and he relies in particular on Weig v. Weig , 2013 ONSC 2325 . [ 22 ] Mr. Morgan submits, respectfully, that the comments I made in my Reasons for Judgment in dealing with the first application, regarding the powers of an equitable receiver, were made without consideration of a number of relevant authorities, including Weig , and Bennett on Receiverships (3rd Ed). [ 23 ] Mr. Morgan notes that at this point, the court is only being asked to appoint a receiver.

The issue of whether the receiver has the status to apply for partition and sale under the Partition Act must await appropriate proceedings to be commenced by the receiver, upon which the respondent and his wife will receive notice, and upon which they can appear personally or by counsel to oppose that relief if so advised. [ 24 ] Mr. Morgan submits that at the very least his client has met the threshold for the appointment of an equitable receiver, and urges that the court make the appointment. [ 25 ] Mr.

Abuomar, who appears personally, filed two separate written submissions, which clearly had been prepared by someone with some legal training. Mr. Abuomar was content to simply rely on the written submissions, and, in view of his language difficulties I do not blame him for that. I found his written submissions to be very helpful. [ 26 ] In his written submissions, Mr. Abuomar essentially takes the position that the ability to sell the property by the use of an equitable receiver has already been dealt with by me on the earlier application.

He submits that the matter is now res judicata and cannot be pursued again by the applicant. Analysis [ 27 ]

Section 101 of the Courts of Justice Act provides as follows: 101

(1) In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just or convenient to do so.

(2) An order under subsection (1) may include such terms as are considered just. [ 28 ] The concept of equitable execution, through the appointment of a receiver, is one of long-standing that derives from the powers of the Courts of Chancery, when those courts separately existed. The history of the remedy is helpfully outlined in Bennett on Receiverships (3rd Ed.).

[29] At page 789, the author states: Equitable execution is a form of relief previously exercised by the Court of Chancery when there was no remedy of execution at commonlaw.

As a form of equitable relief, the Court of Chancery could grant an injunction, make a sequestration order, a charging order orappoint a receiver by way of equitable execution, if there was no other means of enforcing an order or judgment for the payment ofmoney. [30] At page 790, the author states: A creditor could only invoke the appointment of a receiver by way of equitable execution, where there was a legal impediment in seizingthe debtor’s property or where the common law remedy was likely to be ineffective.

The appointment by way of equitable execution as aremedy assumes that all ordinary remedies to collect have been exhausted. [31] On pages 791 and 792, the author notes that there are four requirements that must be met by the creditor in order to beable to apply for the appointment of an equitable receiver. They are:

a) the creditor must obtain a writ of execution and file it with the Sheriff;

b) the creditor must request the Sheriff to attempt to levy execution and report back with a Certificate of nulla bona or certify that theSheriff was unable to find any property of the debtor to seize;

c) the debtor must own or have an interest in an asset which is not exigible at common law; and

d) there must be some kind of legal or practical impediment to seizure at common law. [32] In connection with the fourth criterion, the author states: If the creditor could not enforce the judgment by legal execution or where legal execution was difficult, if not impossible, there mightexist special circumstances. The creditor must show that there are special circumstances and that without an order appointing a receiver,it would be practically very difficult, if not impossible, to obtain any fruit of the judgment.

However, it is doubtful that a court wouldappoint a receiver if the creditor were merely inconvenienced in pursing the legal remedies. [33] In my view, there is some fusion of the third and fourth criteria. A common sense view must be taken as to whether anasset is exigible at common law. Theoretically, an undivided one-half interest in a jointly-owned property is exigible, and can be soldunder the Execution Act. However, the practical ability to sell such an asset is severely circumscribed.

Furthermore, where significantefforts are made by the debtor, as here, to place roadblocks in the way of selling the asset, it can be concluded that the asset is not reallyexigible in practical terms. I think the concept of “special circumstances”, as discussed by the author under the fourth criterion, mustalso be considered under the third. [34] I am persuaded that the applicant has satisfied, in the circumstances, all four criteria. She has writs of execution and theyare on file with the Sheriff.

There have been four attempts to sell the respondent’s undivided one-half interest in the property, andpractically nothing has been recovered. The property is not exigible, in practical terms, at common law. Legal execution is difficult, ifnot impossible. [35] I still entertain some doubts as to whether a receiver has the right to apply under the Partition Act for sale of jointly-ownedproperty, thus depriving the non-debtor joint owner of his or her interest in the property.

If an execution creditor in similar circumstancesis not entitled to utilize the Partition Act process, it may be that a receiver is likewise not so entitled. Mr. Morgan is correct that in Weiga receiver was permitted to apply under the Partition Act to sell jointly-owned property, but it does not appear that the receiver’s right todo so was challenged. [36] However, I need not determine that issue. It will be determined at the point at which the receiver makes application underthe Partition Act for sale of the jointly-owned property, assuming such an application is brought. [37] This matter is not res judicata.

The comments I made in my first decision were obiter, and were not necessary for thedecision itself. I simply determined that I would not order judicial sale of the property, and nothing more. Disposition [38] For the foregoing reasons, I will order that Rumanek and Company Ltd. be appointed as a receiver in aid of execution,without security. [39] As noted by Gibson Gray J. in Canadian Film Development Corp. v. Perlmutter et al. (1986), (ON SC),53 O.R. (2d) 283 (H.C.J.), the applicant in that case requested certain broad powers to be conferred on the receiver.

I think the powers tobe conferred on the receiver in this case should include:

a) to receive all property and income due to the debtor;

b) without restricting the generality of (a), to commence proceedings under the Partition Act for the partition and/or sale of anyjointly-owned property in which the debtor has an interest. [40] I wish to make it clear that by conferring on the receiver the power to commence proceedings under the Partition Act, thisdoes not in any way pre-judge the result of those proceedings, which, if commenced, will be determined by the court in due course.

[ 41 ] I invite counsel for the applicant to forward for my consideration a draft judgment which, if it is in proper form, I will sign. [ 42 ] The applicant, having been successful, is ordinarily entitled to costs. I will invite written submissions as to costs, not to exceed three pages together with a bill of costs or costs outline. Mr. Morgan will have five days to file submissions. Mr. Abuomar will undoubtedly need some time to obtain assistance in preparing submissions, and I will give him ten days after receipt of Mr. Morgan’s submissions to file his. There will be no reply. Gray J. Date: November 6, 2017