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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)
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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.''' | 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.''' | ||
If the client is a garnishee who wishes to dispute indebtedness to the defendant or judgment debtor, they should file a dispute notice as soon as possible with the court. If they do not dispute it, a second order, called an order absolute may be issued (see [[Relevant Forms for Creditors%27 Remedies (10:App A) | Appendix A: List of Relevant Documents]]: Affidavit in Support of Garnishing Order After Judgment). This order operates as a judgment and execution may be taken against him or her. '''Inactivity could render a garnishee liable even if they never owed the money to the defendant/judgment debtor.''' | |||
==== b) Which Debts Can be Garnished? ==== | |||
Any debt that is “due or accruing due” to a judgment debtor may be garnished by a judgment creditor. This requires that the debt be an existing or perfected debt even though payment is not yet due. Bank accounts can be garnished as long as it is not a joint bank account, except where the debt is owed jointly by the same parties or the creditor is exercising its right of offset. For example, a creditor bank may garnish a debtor’s personal account, including a joint account, to offset the debtor’s debts to that bank. Term deposits may be garnished as long as any conditions on withdrawal are mere matters of procedure and administration, though there may be complications where the account is transferable. | |||
'''Registered plans such as RRSPs and RRIFs are exempt from enforcement processes under section 71.3 of the ''COEA''. However, the debtor may lose any contributions made within the previous 12 months.''' Also, many pension plan payments are exempt pursuant to s 63 of the ''Pension Benefits Standards Act''. Section 15 of the ''COEA'' provides that a creditor may seek a garnishing order that will attach a debt maturing in the future. This form of garnishing order may be useful in attaching monthly payments, since all future monthly payments can be attached by one order rather than issuing a garnishing order for each payment. | |||
==== c) Procedure for Pre-Judgment Garnishing Order ==== | |||
The creditor must swear in an affidavit that an action is pending, provide the date of its commencement, the nature of the cause of action, and the actual amount (i.e. liquidated or ascertained sum) of the debt, claim or demand, and that the same is justly due and owing. The affidavit may be sworn before or after the action is commenced (although the form of the affidavit will differ). The affidavit must also state that another person, the garnishee, is indebted to the debtor, and provide the garnishee’s residential address (''COEA'', ss 3(2)(e) and (f)). | |||
The garnishing order may be set aside if the procedural requirements are not strictly complied with because it is considered an extraordinary remedy. For example, a pre-judgment garnishing order will be set aside where the affidavit in support sets out an amount including interest and the affidavit does not allege the existence of an agreement on the part of the debtor to pay interest: see ''Nevin Sadler-Brown Goodbrand Ltd. v Adola Mining Corp. and Prophecy Developments Ltd.'' (1988), 24 BCLR (2d) 341. Never claim court ordered interest in the affidavit. | |||
The court has discretion to set aside a pre-judgment garnishing order, but the applicant must submit a meritorious set-off claim or show extraordinary hardship arising out of the garnishment. While there is some conflicting law regarding whether the plaintiff’s solicitor may swear in an affidavit as to what is the amount owing (see ''Caribou Construction v Cementation Co (Canada)'' (1987), 11 BCLR (2d) 122 (SC); ''Trade Fortune Inc v Amalgamated Mill Supplies'' (1994), 89 BCLR (2d) 132 (SC)), most practitioners prefer never to swear an affidavit to support a pre-judgment garnishing order. Whenever possible, the client should swear the affidavit: see ''Samuel and Sons Travel v Right on Travel'' (1987), 19 BCLR (2d) 199. The remaining procedure is the same as for post-judgment garnishing orders (below) except that the court retains the money pending the action’s outcome. | |||
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