Distribution by sheriff where amount levied insufficient to meet all claims
32. (1) Where at the time for distribution the money is insufficient to pay all claims in full, the sheriff shall first prepare for examination by the debtor and the debtor’s creditors a list of the creditors entitled to share in the distribution, with the amount due to each for principal, interest and costs. R.S.O. 1990, c. C.45, s. 32 (1). Contents of list (2) The list shall be so arranged as to show the amount payable to each creditor and the total amount to be distributed, and the sheriff shall deliver or send by regular lettermail a copy of the list to each creditor or creditor’s solicitor. R.S.O. 1990, c. C.45, s. 32 (2); 1994, c. 27, s. 44 (1). Time for distribution (3) If within 10 days after all the copies have been delivered or posted, or within such further time as the judge may allow, no objection is made as provided by this Act, the sheriff shall make distribution forthwith pursuant to such list. R.S.O. 1990, c. C.45, s. 32 (3); 1994, c. 27, s. 44 (2). Where objection made (4) If objection is made, the sheriff shall forthwith distribute rateably so much of the money made, and among such persons, as will not interfere with the effect of the objection in case it should be allowed. Right of contestation (5) Any person affected by the proposed scheme of distribution may contest it by giving, within the time mentioned in subsection (3), a notice in writing to the sheriff stating the person’s objection to the scheme and the grounds thereof. Order (6) The contestant shall within eight days thereafter apply to the judge for an order adjudicating upon the matter in dispute, otherwise the contestation shall be taken to be abandoned. Appointment (7) The contestant shall, within the time mentioned in subsection (6), obtain from the judge an appointment for hearing and determining the matter in dispute. Service (8) A copy of the appointment and a notice in writing in Form 7, in English or French, of the objections stating the grounds thereof shall be served by the contestant upon the debtor, unless the debtor is the contestant, and upon the creditors or such of them as the judge may direct. Determination of dispute (9) The judge may determine any question in dispute in a summary manner, or may direct an action to be brought or an issue to be tried with or without a jury in any court and in any county for the determination thereof, and may make such order as to the costs of the proceeding as he or she considers just, and subsections 13(2) and (3) apply. Distribution of money retained (10) Where a claimant is held to be not entitled or to be entitled to part only of a claim, the money retained pending the contestation or the portion as to which the claimant has failed shall be distributed among the creditors who would have been entitled to it as it would have been distributed had the claim in respect thereof not been made. Rights of subsequent execution creditors where first execution followed by a mortgage (11) Where a debtor has executed a mortgage or other charge, otherwise valid, upon the debtor’s property or a part thereof after the receipt of an execution by the sheriff and before distribution, such mortgage or charge shall not prevent the sheriff from selling the property under an execution or certificate placed in his or her hands before distribution as if such mortgage or charge had not been given, nor prevent creditors whose executions or certificates are subsequent thereto from sharing in the distribution; but, in distributing the money realized from the sale of such property, the sheriff shall deduct and pay to the person entitled thereto the amount of such mortgage or charge from the amount that would otherwise be payable out of the proceeds of such property to such subsequent creditors. Scheme of distribution in above case (12) In the case provided for in subsection (11), the sheriff shall prepare a separate scheme of distribution of the proceeds of the encumbered property without reference to the mortgage or charge, and from the dividends payable according to such scheme to subsequent creditors there shall be deducted the amount of the mortgage or charge, and the amount so deducted shall be paid to the encumbrancer. R.S.O. 1990, c. C.45, s. 32 (4-12).