Until now, mortgagees could commence their enforcement lawsuits anywhere in Ontario they pleased, regardless of where the mortgaged property is located. That option is now gone.
On March 31, 2015, rule 13.1.01 of the Rules of Civil Procedure is amended by adding the following new subrule (3):
(3) In the case of an originating process, whether it is brought under Rule 64 (Mortgage Actions) or otherwise, that contains a claim relating to a mortgage, including a claim for payment of a mortgage debt or for possession of a mortgaged property, the proceeding shall be commenced in the county that the regional senior judge of a region in which the property is located, in whole or in part, designates within that region for such claims.
Stated more simply, mortgage enforcement actions must now be brought at one of the court locations in the judicial region where the property is located that is designated by the local regional senior judge.
The eight judicial regions of the Superior Court are illustrated on the accompanying map, along with the various court locations within each region. The local practice direction for each judicial region (available online here) will list one or more court locations (or “counties”) in that judicial region that are designated for mortgage enforcement actions to be brought. In some regions, all of the court locations are designated. In others, only one or two court locations are designated.
While the wording of the new subrule (3) above does not expressly include condominium lien enforcement actions, condo liens are likely captured by its spirit because s.85(6) of the Condominium Act, 1998 provides that a condominium lien “may be enforced in the same manner as a mortgage.” Indeed, our lawsuits to enforce condo liens include a claim for possession of the liened unit and where the unit owners or their mortgagees refuse to pay the debt after we obtain judgment, we often require a sheriff’s eviction to remove the occupants and take physical custody of the unit so that we can prepare and sell it. It would be a stretch to argue that condo lien cases are not subject to this new geographical requirement.
This new requirement poses no appreciable impact on condominium corporations or mortgagees, but it makes a difference for the lawyers doing the work. My office acts for condominium corporations across Ontario and our practice has been to commence condo lien enforcement cases at Superior Court in Toronto, regardless of where the condo is located. It is inexpensive and quick for us to file paperwork in Toronto and it is both easy and inexpensive to travel the two blocks to the courthouse for appearances (which is required only very rarely since few debtors ever contest these lawsuits). The local court staff are familiar with our paperwork and we are likewise well aware of their specific procedures, requirements and concerns. Now that we must commence and prosecute many of these cases in various other courts across Ontario, the legal costs (which are ultimately paid by the defaulting unit owner) will inevitably increase slightly and there will be a short period of uncertainty as we start working at courts where we haven’t worked before. It’s not a big deal on either count, but the change disrupts an otherwise very efficient machine. So is there a good reason for it?
The only potential benefit this change brings to defaulting unit owners or mortgagors is that they can now count on lawsuits enforcing their mortgage or condo lien being brought in the judicial region where their property is located. While seemingly helpful, this requirement is of no benefit to someone who owns a Muskoka recreational condo unit but lives in Toronto, for example. Further, the subrule does not require these action to be commenced at the court location nearest to the subject property. This bodes poorly for the owner of property in the East judicial region but outside the City of Ottawa (which is the sole designated court location in that region), or where the plaintiff commences suit in Woodstock in respect of a property in Windsor. Where I have a choice of venue to commence an action, I may consider the cost of filings and the distance and ease of travelling to that location on those rare occasions that personal appearance is required. The proximity of the court location to the property at issue is now of slightly greater importance but still not paramount importance, and the added benefit to the defendant is small.
If the change is of only modest benefit to defendants, then the change is likely intended to benefit the court administration. But will there actually be a net benefit? The impact of the new subrule on the workload and wait times of the various designated court locations remains to be seen but is potentially massive. Given that lawyers for many major lenders have traditionally filed all their lawsuits at one or two select court offices outside Toronto, there will be a flood of new cases at other courts, most notably in the City of Toronto, that have until now processed relatively low volumes of mortgage cases. The tremendous progress that has been achieved in reducing court delays in the Toronto region may be wiped away in short order and we may be on the cusp of a bureaucratic boondoggle of epic proportion.
If the new rule 13.1.01(3) was implemented as a way to increase access to justice, it will be both ironic and extremely unfortunate if the actual result decreases access to justice and adds to court congestion and costs. Time will tell. Meanwhile, our firm’s condo lien enforcement roadshow is about to kick off and may soon visit a town near you.