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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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 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 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.  
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.  
==== d) Procedure for Post-Judgment Garnishing Order ====
A judgment creditor or their solicitor must swear an affidavit stating:
*a) that a judgment has been recovered;
*b) the amount that is unsatisfied;
*c) that another person, the garnishee, is indebted to the judgment debtor; and
*d) the address of the garnishee’s residence in the jurisdiction (s 3(2)).
The affidavit is filed in the court registry along with the form of order requested. Barring any technical problem resulting in the registry declining to issue the order, the garnishing order will usually be issued on the same day. The garnishee is then served with a copy of the order, which commands him or her to pay the money into court. A copy of the order is then served on the debtor as soon as possible after service on the garnishee. The garnishee may dispute indebtedness to the judgment debtor (see Section II.B: Legal Advice for Debtors Who are Garnished, below). Where the garnishee pays money, the court keeps the money until it is paid out to the judgment creditor under ss 11, 12, and 13. Funds held jointly to the credit of the defendant and another person, who is not a party to the action, cannot be garnished, except where  a creditor bank exercises its right of offset: see 238344 BC Ltd. v Patriquin et al (1984), 57 BCLR 224.
e)Payment by Instalments A debtor against whom a garnishing order has been made may apply for a release of the garnishing order, and for an order for the payment of the debt by instalments on the basis of hardship (see Bank of Montreal vMonsell (1994), 58 BCLR 11 (SC)). This order, if granted (it is rare), will bind the debtor’ s creditors, but will only continue for as long as the debtor is not in default on any payment for more than five days, and so long as no other garnishing order is issued against him or her for any other debt (s 5). The  creditor  may  apply  to  have  the  order  varied  if  new  evidence  of  the  debtor’ s finances comes to light. 5.Garnishment of Wages a)Judgment Required Garnishment of wages can only occur after a judgment (s 3(4)). b)Deductions and Exempt Wages 70 percent of any wages due by an employer to an employee is exempt from seizure or attachment under a garnishing order.  Therefore,  only 30 percent of wages after statutory  deductions  (i.e.  Employment  Insurance  premiums,  Canada  Pension  Plan, Income Tax, etc.) can be garnished (s 3(5)). However, a single person cannot be left with  less  than  $100  per  month  (or  calculated pro  rata  for  a  shorter  period),  and  a person with dependants cannot be left with less than $200 per month (or calculated pro  rata  for  a  shorter  period)  (s  5).  However,  where  wages  are garnished  to  pay maintenance  or  support  for  the  debtor’ s  family,  the  exemptions  allowed  to  that person are 50 percent of wages not exceeding $600 per month or 33 and 1/3 percent of wages exceeding $600 per month (COEA s.3(7)). These exemptions must not be less than $100 per month (s 4(6)). Garnishment by the Family Maintenance Enforcement Program is called a Notice of Attachment.  The Family  Maintenance  Enforcement  Act  Regulation,  BC  Reg  346/88


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