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Difference between revisions of "Creditors' Remedies against Debtors (10:III)"
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Creditors' Remedies against Debtors (10:III) (view source)
Revision as of 04:11, 11 June 2016
, 04:11, 11 June 2016→3. Exemptions from Seizure
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Certain interests have been held to fall outside s 71 and therefore are not exempt from seizure. Partial interest and equitable interests do not fall within s 71 and thus, for example, a purchaser under a conditional sales agreement cannot prevent seizure of the goods sold under the agreement. Similarly, the section does not apply to a charging order or a garnishing order since the section only refers to “forced seizure and sale”. Thus, monies in court and debts or wages being garnished cannot form part of the judgment debtor’s exemption under the ''COEA''. | Certain interests have been held to fall outside s 71 and therefore are not exempt from seizure. Partial interest and equitable interests do not fall within s 71 and thus, for example, a purchaser under a conditional sales agreement cannot prevent seizure of the goods sold under the agreement. Similarly, the section does not apply to a charging order or a garnishing order since the section only refers to “forced seizure and sale”. Thus, monies in court and debts or wages being garnished cannot form part of the judgment debtor’s exemption under the ''COEA''. | ||
a)Execution Procedure: Chattels, Money, Shares, Etc. The judgment creditor obtains an order for seizure and sale (Small Claims Court) or a writ | ==== a) Execution Procedure: Chattels, Money, Shares, Etc. ==== | ||
The judgment creditor obtains an order for seizure and sale (Small Claims Court) or a writ of seizure and sale (Supreme Court) directing the sheriff or bailiff to seize and sell sufficient goods or securities to satisfy the debt plus expenses (''COEA'', ss 58 and 60). The seizure of shares involves particular problems: see ss 64 and 65; see also ''Peligren v Ajac's Equipment'' (1982) Inc (1984), 56 BCLR 17, [1984] 5 WWR 563 (BCSC). | |||
Where the sheriff seizes goods, the sheriff’s officers are entitled to assume that all the goods and chattels on the premises are the property of the judgment debtor at the time of the seizure. The judgment debtor has a duty to claim that some of the property is personal property or the personal property of others: see ''Supreme Auto Body v. British Columbia'' (1987), 21 BCLR (2d) 101 (CA). | |||
==== b) Execution Procedure: Land ==== | |||
'''NOTE:''' LSLAP students cannot help with issues relating to land. These cases must be referred to the Lawyer Referral Service. | |||
If the judgment creditor registers a judgment in any Land Title Office, a lien is created against the interest in the real property of the judgment debtor that is registered in the land registration district in which the judgment is registered (s 82). Once a lien is formed, the judgment creditor may seek a court order to have the sheriff sell the land (ss 92 and 96), unless the land is held in joint ownership and the debt is in one party’s name only. In that case, an application must be brought for partition and sale of the property. The execution procedure, however, is slow and potentially expensive. The judgment creditor must renew the judgment after two years or it is extinguished, unless it is a non-expiring judgment (i.e. a judgment registered under the ''Family Maintenance Enforcement Act''). | |||
'''NOTE:''' Where there is a conflict between the ''PPSA'' and the ''Land Title Act'', the ''Land Title Act'' prevails (''PPSA'', s 74). | |||
==== c) Legal Advice on Execution Orders ==== | |||
Once the execution process has begun, the debtor usually has one final opportunity to pay. In the case of land, the sheriff may not sell until one month after receiving the order for sale (s 100). The debtor should be advised to pay if possible because the amount recovered on a forced sale may not be as high as otherwise obtained on a normal sale of property. | |||
=== 4. Garnishment of Bank Accounts and other Accounts Receivable === | |||
==== a) Garnishment Before or After Judgment ==== | |||
Garnishment is a judicial proceeding in which a creditor asks the court to order a third party who is indebted to the debtor to turn over to the creditor any of the debtor’s property. The creditor is the garnishor. The third party is the garnishee. The ''COEA'' provides that a garnishing order may be obtained before or after judgment. | |||
A pre-judgment garnishing order is paid into court pending the outcome of the proceedings, and may be used in circumstances where the debtors ability to pay may be compromised before judgment. A pre-judgment garnishing order is not available against wages. The creditor’s action against the debtor must be for a liquidated (i.e. explicitly specified) or ascertained sum. E.g. damages for a breach of contract must be quantified as a term of that contract (see ''Gibbons v Specialty Cars'' (27 January 1989), F.5885590 (BC County Ct.)). A definition of liquidated sum is found in ''Hydro Fuels v Wilder'', [1968] 1 OR 169 at 276 (HCJ). The accompanying affidavit must disclose the nature of the cause of action and the specified amount claimed. Note that recourse to a pre-judgment garnishing order is extraordinary and therefore the provisions of the ''COEA'' must be strictly complied with or it may be overturned. Never swear an affidavit in support of a pre-judgment garnishing order for a client because you may not have all the relevant facts. Have the client swear the affidavit him or herself. | |||
A creditor who begins an action for a liquidated sum may seek to garnish a debt owed to the debtor to have the money paid into court to “ensure” payment if the creditor is successful in court. However, remember other judgment creditors may also be trying to ensure payment. | |||
If the order has not yet been made and the debt is valid, it may be in the debtor’s best interest to pay the creditor if possible, since the debtor is liable for payment of the costs of the garnishing proceedings. | |||
If the order has already been made, the creditor should examine the possibility of having the garnishment released and an order for payment by instalments substituted under s 5, or in the case of garnishment of wages, having the exemption increased under s 4. The creditor should be advised that hardship may be used as a defence. | |||
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