The issue of debt enforcement against jointly held property was the subject of an important clarifying ruling courtesy of the Senthillmohan decision, a recent decision of the Ontario Court of Appeal. The case considers and interprets how debt and ownership intersect when a property is jointly held, but the debt is only owed by one of the joint tenant owners. Although the case originates from matrimonial proceedings, the decision extends beyond the realm of family law into debt enforcement and real estate issues. The Senthillmohan case highlights an important principle: an unsecured debt against one joint tenant cannot be enforced against the interest of the other non-debtor, joint tenant.
The respondents in the Senthillmohan decision, Subhathini and Sockalingam, were married but separated. They jointly owned a home that was ultimately sold as a result of court intervention. The sale of the property resulted in net sale proceeds of approximately $925,000 after the discharge of secured encumbrances.
The wife, Subhathini, sought an Order releasing her 50% of the net sale proceeds to her. However, 2401242 Ontario Inc., a third-party creditor who had obtained a default judgment against the husband, Sockalingam, sought to enforce a writ registered against Sockalingam, against the entire net proceeds of sale, including against the interest of Subhathini.
The creditor argued that since joint tenants are considered one owner, a creditor has the right to enforce its judgment against the full property interest, in this case, against the entire net sale proceeds. The creditor argued that it ought to have access to Subhathini’s interest even though the debtor was Sockalingam alone.
The creditor relied on the cases Zeligs v. Janes and Royal & SunAlliance Insurance Co. v Muir to suggest that each joint tenant held an undivided interest in the entire property.
The court rejected the creditor’s argument, which found that “…a creditor cannot seize the interest of a non-debtor joint tenant…..”. The court found that the creditor’s right is limited only to the debtor’s interest in the jointly held property, not the non-debtor’s share. The non-debtor joint tenant and their interest cannot be encumbered by a debt that is not owed by them, and the creditor does not get an advantage by virtue of the debtor having an interest in a jointly held property.
The court agreed with Royal & SunAlliance Insurance that joint tenancy brings with it a unity of title, interest, possession, and time but found that the principle “does not support the conclusion that where the debt itself is not jointly held that the entire property is exigible”.
The court found that Ontario’s Execution Act, specifically section 10(6), read in conjunction with section 9, supports the interpretation that a debt can be enforced only insofar as the debtor’s interest in the land held in joint tenancy. [emphasis added] Section 9(1) specifically provides that the execution on a debt “only contemplates the execution against the debtor’s exigible interest in the land held in joint tenancy”. [emphasis added].
A plethora of couples, family members, or even business partners who own property in joint tenancy can rest assured that their interest will not be subjected to the consequences of another tenant’s debt obligations, at least not in the circumstances where the joint tenancy was still intact at the time the Writ is registered. For creditors, the Senthillmohan decision highlights that creditors can seek to enforce an unsecured debt only against the interest of the borrowing individual or owner and ought not to assume that the full value of the jointly held property is available to satisfy their debt.
However, the Senthillmohan decision did not address in detail some of the other issues arising from debt enforcement in the context of joint tenancy. For example, what about the rebuttable presumption that joint tenants hold their interests in “equal shares”? Is there evidence by which a creditor could argue that the debtor joint tenant had a more than equal share? And what happens if one of the joint tenants dies before the joint tenancy is severed, whether by the actions of the creditor or otherwise, and the surviving joint tenant becomes the sole owner by right of survivorship? If the surviving joint tenant is the debtor, presumably, the creditor gets a bit of windfall, but if the surviving joint tenant is not the debtor, then the creditor would be completely out of luck. Timing is everything, as the saying goes.
Whether you are an individual who holds property in joint tenancy, or a creditor looking for a remedy, the Senthillmohan decision offers a clear reminder of the complexities involved in joint tenancy ownership.
 Senthillmohan v. Senthillmohan, 2023 ONCA 280 at para 1
 Ibid at para 3
 Ibid at para 10
 Ibid at para 10
 Ibid at para 11
 Ibid at para 10
 Ibid at para 15
 Ibid at para 14
The author would like to thank Harinder Singh, Summer Student-at-Law, for his assistance with this blog.