October 14, 2014
Once a creditor obtains judgment for the payment of money, and the judgment debtor does not remit payment within a reasonable time, one of the options available to enforce the judgment is to proceed with a notice of garnishment.
The Rules of Civil Procedure outline the procedure for issuance of a garnishment. By notice of garnishment, the garnishment entitles the creditor to seek payment for the recovery of monies, which a third party, the garnishee, owes to the debtor or holds on behalf of the debtor. The most common examples include wages remitted by an employer to the debtor, or the debtor’s funds being held in a bank account at a financial institution.
To issue a notice of garnishment with the Court in Ontario, the creditor is obliged to file a requisition for garnishment with the registrar, a copy of the order or judgment, an affidavit outlining certain prescribed information, and any other evidence necessary to establish the amount awarded in support of the creditor’s entitlement to garnish.
The notice of garnishment is in force for six years from the date of the Order, and must be renewed within six years. It is important to diarize these dates to ensure the garnishment does not expire.
If the creditor has no knowledge regarding the judgment debtor’s employment or bank accounts, the Rules of Civil Procedure entitle the creditor to conduct an examination in aid of execution, commonly referred to as a judgment debtor examination. An examination in aid of execution can be helpful because it provides the creditor with an opportunity to obtain information, under oath, regarding the judgment debtor’s property, sources of income, expenses, and dispositions or transfer of assets which may be attacked in Court as a fraudulent conveyance or unjust preference. If a judgment debtor fails to attend an examination in aid of execution, the creditor can bring a motion before the Court to compel an attendance. If the judgment debtor fails to attend the examination in the face of a Court Order, a judge of the Superior Court has jurisdiction to hold the judgment debtor in contempt, and in more egregious circumstances, order that the debtor be imprisoned.
If a garnishee does not make payment or respond to the notice of garnishment, the garnishee can be exposed for the full amount of the judgment. If the garnishment is disputed, the garnishee must serve and file a garnishee statement within 10 days of service of the notice of garnishment detailing why the garnishment is disputed. Should such a dispute arise, a creditor, debtor, or garnishee may request a garnishment hearing with the Court under Rule 60. A judge has broad discretion on a garnishment hearing to determine the rights and obligations arising from the garnishment.
It should be noted there are limitations to enforcement by garnishment. Garnishment of wages is limited pursuant to the Wages Act. Employment insurance, social assistance, and dependent payments cannot be garnished, even if the funds are deposited into the debtor’s account at a financial institution.
As a matter of best practices, a creditor should canvass the likelihood of collecting a judgment before issuing and/or deciding to proceed with a claim.