The Appellant appealed a decision from the Court of Queen’s Bench on the distribution of surplus funds after a foreclosure action. The foreclosure proceedings were brought by the Toronto Dominion Bank (“TD Bank”) regarding a mortgage that ranked first on priority on title. The Respondent’s encumbrance was in third position and the Appellant’s interests flowed from an encumbrance occupying the fourth position on title. The Appellant argued that, because the Respondent had taken no action to collect the funds, the Respondent had not established an enforceable claim on the surplus funds.

The Alberta Court of Appeal affirmed the Decision of the Court of Queen’s Bench and stated that the Respondent was not required to commence proceedings after TD Bank had commenced its proceedings within the limitations period. Further, as stated in Rule 3.77 and as is the practice in Alberta, there was no requirement for the plaintiff to make a subsequent encumbrancer a party to the claim unless possession is claimed from that subsequent encumbrancer. In this case, no such possession was claimed. Accordingly, the Respondent and other encumbrancers were entitled to “ride the coattails” of TD Bank and were not required to commence separate actions to enforce their interests.