ZS – LAW 312 Debtor Creditor Relations – Prof. Freya Kodar – Spring 2015

Table of ContentsCredit Reporting...................................................................................................................................... 2

Privacy Issues [Personal Information Protection Act]............................................................................4

Payday Lending........................................................................................................................................ 5Criminal Rates and the Payday Loan Exception.......................................................................................5BC Legislation over Payday Loans [BPCPA]................................................................................................6

Payday Loan Regulations.................................................................................................................................................7

Debt Collection Practices................................................................................................................... 10Prohibited Collection Practices................................................................................................................... 10

Conduct Prohibited for Lawyers in Making Loan Repayment Demands.................................................15Licensing............................................................................................................................................................. 15Privacy [Personal Information Protection Act].......................................................................................16

Obtaining Judgment............................................................................................................................. 16Limitation Periods........................................................................................................................................... 16Methods of Obtaining Judgment..................................................................................................................18

Default Judgment.............................................................................................................................................................. 18Summary Judgment and Trial.....................................................................................................................................19Fast Track Litigation........................................................................................................................................................21

Registration and Action on Foreign Judgments.....................................................................................21

Judgments Against Lawyers.............................................................................................................. 22

Debtor Examinations........................................................................................................................... 23Examination in Aid of Execution (BCSC – SCCR).....................................................................................23Subpoena to Debtor (BCSC – SCCR).............................................................................................................23Small Claims Court (SCR)............................................................................................................................... 24

Injunctions (Pre-Trial Execution)................................................................................................... 24Mareva Injunction............................................................................................................................................ 25

Garnishment.......................................................................................................................................... 26Pre-judgment Garnishment.......................................................................................................................... 27Post-judgment Garnishment........................................................................................................................ 28

Garnishing Wages............................................................................................................................................................. 28Effect of Garnishment Orders.......................................................................................................................29Payment Out of Court...................................................................................................................................... 29Setting Aside Garnishing Orders................................................................................................................. 30Specific Issues (relating to 3Ps and debt dispute)................................................................................31

Execution Proceedings....................................................................................................................... 31Execution Against Land.................................................................................................................................. 31Execution Against Personal Property....................................................................................................... 34

Goods, Chattels, & Effects..............................................................................................................................................35Monies & Securities for Money...................................................................................................................................36Shares..................................................................................................................................................................................... 37

Equitable Execution......................................................................................................................................... 39

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Exemptions, Immunities and Priorities........................................................................................ 40Priorities............................................................................................................................................................. 40Exemptions......................................................................................................................................................... 43Immunities (Gov.)............................................................................................................................................ 44

First Nations Land [Indian Act]........................................................................................................ 44

Debts to Government.......................................................................................................................... 45

Fraudulent Conveyances.................................................................................................................... 46Professional Obligations – Lawyers (LSBC Code of Professional Conduct)..................................48

Consumer Bankruptcy and Insolvency.........................................................................................48Insolvent Lawyers (LSBC Rules)..................................................................................................................50Exemptions......................................................................................................................................................... 51Surplus Income................................................................................................................................................. 51Provable Claims................................................................................................................................................ 54Distribution of Property (in order)........................................................................................................... 54Discharge............................................................................................................................................................ 55Student Loans.................................................................................................................................................... 57

Credit Reporting1) defs. – Business Practices and Consumer Protection Act s. 106

a) credit information = info about an individual’s credit, including the individual’s name, age, place of residence, previous place of residence, marital status, spouse’s name and age, number of dependents, particulars of education or professional qualifications, place of employment, previous place of employment, estimated income, paying habits, outstanding debt obligations, cost of living, or obligations and assets

b) report = a written, oral or other communication respecting credit information of an individual

c) reporting agency = a person, whether in BC or not, whoi) provides reports for gain or profitii) provides reports on a routine, non-profit bases as an ancillary part of

a business carried on for gain or profit, oriii) is designated by regulation

2) persons must not obtain report respecting an individual without their consent, which can be obtained through application for credit, insurance, employment, or tenancy – BPCPA s. 107

3) reporting agency must not provide credit info except to this list of persons – BPCPA s. 108(1)

(a)to a person who is(i) extending credit or collecting debt from the individual(ii) intending to use info for a tenancy agreement(iii) using for employment, promotion, reassignment or

retention as an EME(iv) using for underwriting insurance(v)determining eligibility of an individual under an enactment(vi) otherwise has a direct business requirement for the report

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in connection with a transaction(b)to the federal or prov. government, or any agency of them(c) to a law enforcement agency in Canada(d)in response to a court order(e)to the director, to assist in inspection under this Act, or(f) under written consent of the individual to whom the info

relatesb) this list is exhaustive – BPCPA s. 108(2)

4) contents of the report must not include the following – BPCPA s. 109a) info, unless the name and address of the source of info is recorded or

can be readily ascertainedb) info not based on the most reliable evidence reasonably availablec) unfavourable info, other than unfavourable credit info, unless the

reporting agency hasi) corroborated the info, orii) made reasonable efforts to corroborate

d) info about legal proceedinge) info about a judgment 6 years after it was given, unless it remains

unpaidf) info about the bankruptcy of an individual 6 years after the date the

person was discharged, unless he/she has been a bankrupt more than once

g) info about criminal or summary convictions charges, unless they were convicted

h) info about conviction 6 years after date of conviction, or if imprisonment, 6 years after release or parole, but info about conviction must not be reported ifi) absolute or conditional discharge granted, orii) given a free pardon

i) info given orally, unless the content of the oral report is recordedj) info about race, belief, colour, sexual orientation, ancestry, ethnic

origin or political affiliation of an individualk) info about persons’ family, other than spousel) info about payment/nonpayment of lawfully imposed fines 6 years after

fine was imposedm) info about legal proceeding 12 months after date proceeding began,

unless the current status of proceeding has been ascertained and is included in the report

n) any other info adverse to the individual’s interest 6 years after the event happened that gave rise to this info

o) any other prescribed info5) a person who gives info to a reporting agency for remuneration/other

benefit except salary is not a source of info – BPCPA s. 109(2)6) if a person uses info in a credit report they receive to deny credit or

increase costs of credit, they must give written notice to the individual within 30 days in person or by mail – BPCPA s. 110a) if the individual requests within 60 days upon receiving notice, must

also inform them of the name and address of the reporting agency –

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BPCPA s. 110(4)7) an individual may give to a reporting agency, in writing of not more than

100 words, an explanation or additional info that relates to the info kept by the reporting agency about the individual – BPCPA s. 111(1)a) the reporting agency must retain the explanation or additional info, and

must include the explanation or additional info in any report given about the individual it relates to any info in the report – BPCPA s. 111(2)

b) PIPA s. 24 gives right to individual to make request for correction of error or omission in personal infoi) if org. is satisfied on reasonable grounds that the correction should

be made, then the org. must(1)correct it as soon as reasonably possible, and(2)send the corrected info to each org. that was sent the personal

info report during the year before the date the correction was made

c) procedure for making request to correct – PIPA s. 27 = make a written request that provides sufficient detail to enable the org. with reasonable effort to identify the individual and the personal info or correction being sought

d) n.b. a credit reporting agency has a duty to the person about whom they are creating the report to ensure its accuracy – Haskett v Equifax et al (ONCA 2003)

8) person must not supply false or misleading info to credit reporting agency, but does not contravene this provision if at the time of supplying info, person did not know or could not have known the info was false/misleading – BPCPA s. 112

9) if person suffers damage due to breach of above provisions, may bring action against the supplier, reporting agency, collector, bailiff or collection agency who engaged in or acquiesced in the contravention – BPCPA s. 171a) n.b. no punitive damages [see p. 13 for details on remedies]

10) person can make complaint to the regulator, who can then investigate and levy a fine – BPCPA s. 172 [see LS p. 58 for full procedure under s. 172]

Privacy Issues [Personal Information Protection Act]1) org. may collect personal info without consent if – s. 12

a) the org. is a credit reporting agency using that info to create a credit report + individual consents at the time the original collection takes place – s. 12(1)(g)

b) the personal info is necessary to facilitate – s. 12(1)(j)i) the collection of a debt owed to the org., orii) the payment of a debt owed by the org.

2) collection of EME personal info – s. 13a) may not collect EME personal info without consent unless – s. 13(2)

i) s. 12 allows it, orii) the collection is reasonable for purpose of

establishing/managing/terminating an employment relationship

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between the org. and the individualb) if collect, must notify the individual – s. 13(3)

3) use of personal info allowed without consent if within s. 12 [i.e. to create credit report] – s. 15

4) individuals can request their own credit report and it must be provided free of charge; must also disclose source of info, unless reasonable to assume that the individual can determine the source on his/her own – s. 23a) not required to disclose… - s. 23(3)

i) info protected by S/C privilegeii) info that may reveal confidential commercial info that could

reasonably harm the competitive position of the org.iii) names of the individuals and orgs. to whom the personal info was

last disclosed by the agency in a credit report more than 12 months before this request by the individual was made – s. 23(3.1)

Payday Lending1) payday loans = relatively small loans given in exchange for post-dated

cheques or other pre-authorized withdrawal from a bank account in the form of a loan + interest and other feesa) those who use payday loans tend to be more vulnerable consumers in

terms of their ability to access credit in the mainstream financial system or to cover basic living costs without incurring or increasing debt

b) to get a payday loan, must have ID + personal chequing account with a financial institution+ (usually) proof of regular income

2) reasons for payday loansa) unable to get cheaper forms of credit such as LOC or credit cardb) live in a community not served by mainstream banks, and/orc) dislike the borrowing process, location, and hours of mainstream

institutionsCriminal Rates and the Payday Loan Exception

1) criminal rate = an effective annual rateof interest calculated in accordance with generallyaccepted actuarial practices and principlesthat exceeds 60% on the credit advancedunder an agreement or arrangement (CC.347(2))

2) interest = the aggregate of all charges and expenses, whether in the form of a fee, fine, penalty, commission or other similar charge or expenses or in any other form paid or payable for the advancing of credit under an agreement or arrangement ... (CC.347(2))

3) every one who enters into an agreement/arrangement to receive interest at a criminal rate, or receives a payment/partial payment of interest at a criminal rate, is (a) guilty of an indictable offence or (b) guilty of an offence punishable on summary conviction (CC.347(1))

4) payday loan = an advancement of money in exchange for a post-dated cheque, a preauthorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on

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property and not through a margin loan, pawnbroking, a LOC or a credit card (CC.347.1(1))

5) s. 347 does not apply to payday loans if…(CC.347.1(2))a) the amount advanced is $1,500 or less and the term is 62 days or less; b) the person is licensed under the laws of a prov. to enter into the

agreement; andc) the prov. is designated under s. 347.1(3)

i) the Governor in Council shall, by orderand at the request of LG in council of a prov., designate the prov. if the prov. has legislative measures that protect recipients of payday loans and that provides for limits on the total cost of borrowing under the agreements (CC.347.1(3))

BC Legislation over Payday Loans [BPCPA]1) definitions – s. 112.01

a) payday loan = a credit agreement, as defined in s. 57, that is a loan of money, with a principal of $1500 or less and for a term of 62 days or less, made in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a LOC or a credit card

b) rollover = any of the following:i) the extension or renewal of a payday loan that imposes additional

fees or charges on the borrower, other than interestii) the advancement of a new payday loan to pay out an existing

payday loanc) APR = annual percentage rate calculated in accordance with the regs.

2) calculating the APR – s. 6(1)a) APR = (100 x C)/(T x P)b) C = total cost of credit (interest rate, not expressed as decimal)c) T = length of the term expressed in years (X/365)d) P = the average outstanding principal over the term

3) limited cost of total borrowing – s. 112.02(1)a) the LG in Council may by the regs. set the max amount, or establish a

rate, formula, tariff or method of determining the max amount, that may be charged, required or accepted by a payday lender in respect ofi) the total cost of credit for a payday loanii) any interest, andiii) any permissible charge

b) a payday lender must not charge, require or accept from the borrower or consumer any amount that exceeds the max – s. 112.02(2)

4) prohibitions on interest charges – s. 112.03(2) – if the borrower fails to make the last payment required under the loan agreement, the payday lender must not charge, require or accept any interest in respect of the payday loan for any period of time that exceeds the max number of days prescribed under s. 197.1(1)(c)

5) payday lender must not charge/require/accept… – s. 112.04(1)a) any fee, penalty, rate, commission, consideration, charge or other

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amount unless it is a permissible chargeb) any amount ...not disclosed in the loan agreementc) any amount that exceeds the amount disclosedd) any amount for cancellation of a payday loane) any amount for making a payment before it is due or for repayment of

the loan before the end of the termf) any amount for or in relation to a cash card

6) a borrower may cancel a payday loan at any time before the end of the next day that the payday lender is open for business following the date on which the borrower receives the first advance, or before the end of any longer period that may be prescribed in the regulations – s. 112.05(1)a) a borrower may cancel a payday loan at any time if the payday lender –

s. 112.05(2)i) does not advise the borrower of the his/her cancellation rightsii) fails to satisfy any of the requirements of ss. 112.06(2), (4)(a) and

(5) [payday loan agreements], oriii) contravenes a prescribed provision of this Act or the regs.

7) a payday lender must ensure that the loan agreement includes all of the following terms, information and statements – s. 112.06

(k) the total cost of credit and the APR for the loan(p)a statement that the loan is a “high cost loan”(q)a statement of the cancellation rights, setting out how those

rights can be exercised and identifying the time by which the borrower can exercise them

(r) a statement of the remedies available to the borrower under s. 112.10

8) payday lender must not do any of the following – s. 112.08a) grant rolloversb) issue a new payday loan to a borrower who already has a payday loan

issued by the lenderc) issue a payday loan in excess of a prescribed portion of a borrower’s

net pay or other net income to be received during the payday loan term

d) require/request/accept an assignment of wagese) require/request/accept as security for a payday loan, any personal

property or real propertyf) engage in any other practice prohibited by regs. under s. 197.1 [i.e.

catch all]9) remedies – s. 112.10

a) the borrower is not liable to pay the payday lender any amount that – s. 112.10(1)i) exceeds the maximum set by regs. under s. 112.02 (1), orii) a lender is prohibited from charging, requiring or accepting under s.

112.03b) if the borrower has paid an amount not liable for, the borrower is

entitled to a refund of all monies paid in excess of the principal of the payday loan – s. 112.10(2)

c) these are in addition to any other remedy available to the borrower and

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are additional to any other penalty that the payday lender may be subject to under this Act or the regs. – s. 112.10(11)

10) liability for penalties – s. 165a) an individual on whom an administrative penalty is imposed is liable to

a penalty of not more than $5000b) a corporation on which an administrative penalty is imposed is liable to

a penalty of not more than $50,000Payday Loan Regulations

1) power for LG to make regulations re: payday loans in s. 197.1 BPCPA2) payday lender must have a separate licence for each location from which

the payday lender conducts business in BC – s. 53) director may issue a license for a term not exceeding 3 years – s. 64) subject to any applicable fees set by the administrative authority, a

person must pay the following license application fees and submit the fees with the person’s application for a license – s. 9a) $1500 per year for the head office or primary locationb) $750 per year for each additional location from which the license

conducts business5) signs and notices – s. 13

a) payday lender must display at each of the lender’s place of businessi) a sign visible to borrowers immediately on entering the place of

business, andii) a sign visible to borrowers at each place where the payday loan is

negotiatediii) [see LS p. 84-85 for info required on the signs and notices]

6) permissible charges – s. 17a) max amount that may be charged, required or accepted by a payday

lender for a loan is 23% of the principal b) if the repayment amount specified in the agreement is not paid, a

payday lender may charge an amount up to the following max amounts as default fees:i) interest at a rate of 30% per annum on the outstanding principal;

[annual interest rate < criminal rate]ii) a one time fee of $20 for a dishonoured cheque or a dishonoured

pre-authorized debit7) prohibited practices

a) payday lender must not issue a payday loan in excess of 50% of the borrower’s net pay or other net income to be received during the term of a payday loan – s. 18

b) tied selling not allowed – s. 19i) a payday lender must not make a payday loan contingent on the

supply of other goods or servicesii) a payday loan agreement must not include a term or condition

relating to the supply of other goods or servicesiii) a payday loan agreement must include a statement that the supply

of other goods or services is separate and optionalc) a payday loan agreement must not contain a provision giving the

lender permission to collect on a delinquent loan from the borrower’s

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EMP – s. 20d) payday lender cannot require that a payday loan be due before the first

day on which the borrower will receive his/her pay or other income following the date of the loan – s. 21(1)

e) payday lender must not state or imply that a payday loan will improve the borrower’s credit rating if it will not do so – s. 21(2)

f) a payday lender must not require, request or accept info that would give the payday lender direct access to a borrower’s bank account, other than pre-authorization for repayment of a specific payday loan – s. 21(3)

g) a payday lender must not include an enticement to enter into a payday loan for a prize or reward in a representation or advertisement – s. 21(4)

h) a payday lender must not enter into a payday loan agreement that does not comply with this regulation – s. 21(5)

i) a payday lender must not accept a cheque from the borrower unless it is payable to the lender – s. 22

j) maximum repayment – s. 23i) a lender who enters into a 3 rd or subsequent agreement in a 62-day

period must… – s. 23(2)(1)if the borrower is paid or otherwise receives income on a bi-

weekly, semi-monthly or more frequent basis, provide in the loan agreement that repayment is to be spread over at least 3 pay periods, or

(2)if the borrower is paid or otherwise receives income on a less frequent basis than above, provide in the loan agreement that repayment is to be spread over at least 2 pay periods

ii) payday lender must not require a repayment under a loan agreement referred to in s. 23(2) that is more than… – s. 23(3)(1)for a borrower referred to in (1), 35% of the sum of the principal

and the cost of borrowing in relation to the loan, or(2)for a borrower referred to in (2), 50% of the sum of the principal

and the cost of borrowing in relation to the loaniii) if a payday lender contravenes s. 23 – s. 24

(1)all amounts in relation to the payday loan other than the principal cease to be permissible charges and

(2)the borrower is not liable to pay the lender any amount that exceeds the principal of the payday loan

Cash Store Financial Services v Consumer Protection BC, BCSC 2014Facts: Cash Store charging for cash cards, which brought the interest rate charged over 23%; if borrowers bought the cash card, would get money immediately, otherwise would have to wait for a chequeIssue: the Cash Store takes issue with the Consumer Protection BC’s decision that the Cash Store did not comply with certain provisions of the BPCPA and the Payday Loans RegulationHeld: Cash Store made the loan contingent on paying for the cash card – otherwise would have to wait for a cheque; Cash Store argued that they did not issue the cards, but another institution did – this does not matter did McBride exceed his jurisdiction by ordering payment of funds into the Consumer Advancement

Fund? – no s. 155 of the Act gives Mr. McBride the jurisdiction to make an order of the type made here –

see s. 155(4)(a)-(b)

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the order is consistent with a large and liberal interpretation of the legislation did Cash Store Make the Acquisition of a Payday Loan Contingent on Other Goods or Services? –

yes s. 19(1) Regulations prohibits this Cash Store’s customers were given the option of receiving an immediate loan, which would

require them to purchase a cash card, or they could wait to receive a loan for 2 to 7 days, in which case they could obtain the loan by way of cheque and without the cash card fees effectively, this ties the immediate loan to the purchase of a cash card

did Cash Store issue “cash cards” and charge, accept or require amounts for or in relation to cash cards? – yes Cash Store argues that to be a cash card under the Act, the card must be issued by a payday

lender to the borrower, and that DC Banks’ pre-paid cards are not cash cards within the meaning of the Act because the cards are not issued by a payday lender and Cash Store transfers money to DC Bank to the order of the borrower instead of issuing the card

Cash Store says that if a consumer purchases a pre-paid card (through its offices) from DC Bank, the customer is required to explicitly acknowledge and accept in the cardholder agreement that there will be fees associated, payable to DC Bank and DCMI but not to Cash Store

the purpose of the legislation is to not regulate only those charges required by the payday lender; there is regulation of all charges permitted by a payday lender, including as to the cost of credit, any interest or any other fee or charge

the words “issue” or “issued” as used in the BPCPA = to include the act of providing physical possession of an item to another concern here is not the original issuance of the cash card by its maker but the storefront exchange between the payday lender and consumer where the payday lender makes the option of a cash card available to its customer as an alternative means of receiving the proceeds of a payday loan Cash Store’s argument would mean that payday loan companies could set up a trust

company or act through another company to issue the cash cards, and as such escape the legislative reach of the BPCPA – such an interpretation is not plausible

Debt Collection Practices1) it is standard practice for a creditor seeking to recover repayment of a

debt to make a demand for repayment first (before commencing legal action)

2) this is often done through a demand letter sent from C’s counsel to the debtor

3) may be required by K between D and C4) also creates goodwill in the event litigation ultimately ensues5) however, such a demand letter will not be made if the C is concerned that

the D will attempt to hide assets once put on noticeProhibited Collection Practices

1) collector = a person, whether in BC or not, who is collecting or attempting to collect a debt – BPCPA s. 113

2) must not communicate with the following in a manner or with frequency to constitute harassment – BPCPA s. 114(1)a) Db) member of D’s family or householdc) relatived) neighbore) friendf) acquaintance of Dg) D’s EMP

3) what is harassment? – BPCPA s. 114(2)a) using threatening, profane, intimidating or coercive language;b) exerting undue, excessive, or unreasonable pressure

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c) publishing or threatening to publish a D’s failure to pay [n.b. non-exhaustive]i) there is no CL tort of harassment independent of the BPCPA;

however, there is s. 114 and D may have a cause of action for compensatory damages against the collection agency under s. 171; the D may also complain to Consumer Protection BC for the possibility of recovering damages (Roach)

4) disclosure or reasonable effort to make disclosure to D in writing required before a collector tries to collect payment of debta) collector must disclose … (BPCPA s. 115(1))

i) the name of the C with whom the debt was incurred,ii) the amount of the debt, andiii) the identity and authority of the collector to collect the debt from

the Db) verbal communication not allowed until 5 days after written disclosure

sent (s. 115(2))c) original C is exempt from the above requirement of sending notice by

the Debt Collection Industry Regulation s. 25) collector’s communication with D

a) collector must not communicate or attempt to communicate with a D at the D’s employment unless… - s. 116(1)i) the collector does not have the home address or telephone number

for the D and the collector contacts D solely for the purpose of requesting D’s home address or telephone number or both [n.b. there is ambiguity on what “contact” means]

ii) the collector has attempted to contact D at D’s home address or telephone number, but these were unsuccessful, or(1)if unsuccessful, collector can only verbally contact D at place of

employment once (BPCPA s. 116(2))iii) the collector has been authorized by D to communicate with D at

D’s place of employmentb) when collector communicates with D, must first indicate to D – s.

116(3)i) name of the C with whom the debt was incurredii) the amount of the debt, andiii) the identity and authority of the collector to collect the debt from D

c) collector must not continue to communicate with a D (BPCPA s. 116(4))i) except in writing if D

(1)has notified the collector to communicate in writing only, and(2)has provided a mailing address at which D may be contacted

ii) except through D’s lawyer, if D(1)has notified the collector to communicate only with D’s lawyer,

and(2)has provided an address for the lawyer, or

iii) if D has notified the collector and C that the debt is in dispute and that the D would like C to take the matter to court [n.b. this last provision does not apply in respect to debts due to gov. – Debt Collection Industry Regulation s. 2(4)]

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6) collector’s communication with others aside from Da) except for the purpose of obtaining D’s home address or telephone

number, a collector must not communicate or attempt to communicate with the following… (s. 117(1))i) a member of D’s family or household,ii) relative,iii) neighbor,iv) friend, orv) acquaintance … unless

(1)the person K’ed has agreed to pay the debt and is being contacted in respect of the guarantee, or

(2)D has authorized the collector to discuss the debt with the person contacted

b) must not contact D’s EMP except (s. 117(2))i) for the purpose of confirming D’s employment, business title, and

business address, orii) for other purposes authorized in writing by D

7) timing of communication (BPCPA s. 118(2)) – except on the request of the person contacted, a collector must not communicate, either by telephone or in person, with D or anyone listed in s. 117a) on a statutory holiday (= a holiday, except Sunday, unless the holiday

falls on a Sunday – s. 118(1))b) subject to (a), on a Sunday, except between the hours of 1 p.m. and 5

p.m. local time for the person contacted, orc) on any other day, except between the hours of 7 a.m. and 9 p.m. local

time for the person contacted8) collector cannot communicate using a method that will cost the C (s. 119)

– ex. courier, registered mail9) amount to collect – collector cannot (s. 120)

a) collect/attempt to collect money that exceeds the amount of the debt owing

b) collect/attempt to collect money from a person who is not liable for the debt, or

c) if a person has informed the collector that the person is not the D, continue to communicate with that person unless the collector first makes all reasonable efforts to ensure that the person is in fact the D

10) legal proceedings [n.b. this provision does not apply to the original C attempting to collect debt owed to C – Debt Collection Industry Regulation s. 2(2)]a) collector must not bring/continue a legal proceeding for the recovery of

a debt as P unless D has been given notice of the assignment, or bring a legal proceeding unless the collector first gives notice to D that the collector intends to bring the proceeding – BPCPA s. 121(1)

b) collector must not recommend to a C that a legal proceeding be brought, unless the collector first gives notice to D that the collector intends to recommend that a proceeding be brought – s. 121(2)i) this does not affect S/C privilege – s. 121(3)

c) collector must not directly or indirectly threaten, or state an intention,

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to bring or continue a legal proceeding for the recovery of a debt wherei) collector does not have written authority from C (s. 121(4)(a)) orii) there is no lawful authority (s. 121(4)(b))

11) removal, seizure, repossession and distress – collector must not do any of the following directly/indirectly – s. 122a) remove from inside D’s private dwelling any personal property claimed

under seizure/distress/repossession, in the absence of D, D’s spouse/agent/adult resident in D’s dwelling, unless there is a court order to the contrary (BPCPA s. 122(a))

b) seize/repossess/levy distress against personal property that is not specifically charged or mortgaged, or to which legal claim may not be made under a statute, court judgment or court order (s. 122(b))

c) remove/seize/repossess/levy distress against personal property during a day or during the hours of a day when removal/seizure/repossession/distress is prohibited by the regs. (s. 122(c))

12) false or misleading info – collector must not (BPCPA s. 123)(a)supply any false or misleading info(b)misrepresent the purpose of a communication(c) misrepresent the identity of the collector, or, if different, the

C, or(d)use, without lawful authority, a summons, notice, or demand,

or other document that suggests or implies a connection with a any court inside or outside Canada

13) in addition, to the above, collector must not commit or engage in a prescribed act or practice (BPCPA s. 124) [n.b. no regs. made yet]

14) remediesa) damages recoverable – BPCPA s. 171

i) if a person, other than supplier or person required to hold licence, has suffered damage or loss due to a contravention of this Act or the regs, the person who suffered damage or loss may bring an action against a(1)supplier(2)reporting agency, as defined in s. 106

(a)reporting agency = a person, whether in BC or not, who(i) provides reports for gain or profit,(ii) provides reports on a routine, non-profit basis as a ancillary

part of a business carried on for gain or profit, or(iii) is designated by regs.

(3)collector, as defined in s. 113(a)collector = a person, whether in BC or not, who is collecting or

attempting to collect a debt(4)bailiff, collection agent or debt pooler, as defined in s. 125

(a)bailiff = a person, whether in BC or not, who in the course of business acts, or assists a person to act, on behalf of another person in repossessing, distraining or seizing any personal property or in evicting a person from property

(b)collection agent = a person, whether in BC or not, who

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(i) in the course of business collects/attempts to collect payment of a debt for another person, or

(ii) in the course of business takes an assignment of a debt due to another person for the purpose of collecting/attempting to collect payment of the debt, and includes a bailiff

(c) debt pooler = person, whether in BC or not, who in the course of business arranges or operates a debt pooling system(i) debt pooling system = an arrangement or procedure under

which a D pays to a debt pooler money to be distributed or paid, according to a system, by that debt pooler to 3 or more Cs of the D

(5)person required to hold a licence under Part 9…who engaged in or acquiesced in the contravention that caused the damage or lossii) must not bring an action under this section if one has already been

brought under s. 192 (compensation to consumers)iii) the PC has jurisdiction for the purposes of this section, even though

a contravention of this Act or the reg. may also constitute a libel or slander

b) may also complain to Consumer Protection BC, with possibility of damages

15) court actions respecting consumer transactions – BPCPA s. 172a) director or a person other than a supplier, whether or not the person

bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in SC for one or both of the following (s. 172(1))i) a declaration that an act or practice engaged in or about to be

engaged in by a supplier in respect of a consumer transaction contravenes this Act or the regs.

ii) an interim or permanent injunction restraining a supplier from contravening this Act or the regs.(1)this injunction application may be done without notice to anyone

(s. 172(4))(2)under this application…(s. 172(5))

(a)court must give greater weight and the balance of convenience to the protection of consumers than to the carrying on of the business of a supplier

(b)the applicant is not required to post a bond or give an undertaking as to damages, and

(c) the applicant is not required to establish that irreparable harm will be done to the applicant, consumers generally or any class of consumers if the interim injunction is not granted

(3)if director applies for this injunction, the court must grant the interim injunction, on the terms and conditions it considers just, if the court is satisfied that there are reasonable grounds for believing there is an immediate threat to the interests of consumers dealing with the supplier b/c of an alleged

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contravention of this Act or the regs. in respect of a consumer transaction (s. 172(6))

b) director may sue on the director’s own behalf and/or on behalf of consumers generally or a designated class of consumers (s. 172(2))

c) if director is successful under (1), court may order one or more of the following (s. 172(3))

(a)that the supplier restore to any person any money or other property or thing, in which the person has an interest, that may have been acquired b/c of a contravention of this Act or the regulations;

(b)if the action is brought by the director, that the supplier pay to the director the actual costs, or a reasonable proportion of the costs, of the inspection of the supplier conducted under this Act;

(c) that the supplier advertise to the public in a manner that will assure prompt and reasonable communication to consumers, and on terms or conditions that the court considers reasonable, particulars of any judgment, declaration, order or injunction granted against the supplier under this section

d) in any action under this section, P is not required to provide security for costs (s. 172(7))

Total Credit Recovery v Roach, BCSC 2007 – no CL tort of harassment, but can sue under statuteFacts: P was behind on minimum payments of credit card debt; the collection agency sent her a letter on March 12th; they then proceeded to call her at home and her workplace one minute later; also sent faxes to her work; she then sent them a letter telling them to stop; the collector continued to contact her at work despite her letter; left calls leaving “urgent” messages when there was no “urgency”Held: collectors’ actions do not meet CL law tort but there was harassment under the statute; there was clear evidence to support a finding that the debt collection agency used excessive and/or unreasonable pressure when the first call was made – at that time, they knew she was employed there and further, the calls leaving “urgent” messages when there was no urgency was a clear breach; finally, there was evidence that they were trying to collect in excess of what was due

Conduct Prohibited for Lawyers in Making Loan Repayment Demands[LSBC Code of Professional Conduct]

1) if a person is represented by a lawyer wrt a matter, another lawyer must not, except through or with the consent of the person’s lawyer (7.2-6)a) do the following

i) approach, communicate or deal with the person on the matter,ii) attempt to negotiate or compromise the matter directly with the

personb) exception = 7.2-7: lawyer who is not otherwise interested in a matter

may give a second opinion to a person who is represented by a lawyer wrt that matteri) the opinion should be based on sufficient infoii) such info may include facts that can be obtained only through

consultation with the first lawyer involvedc) this rule applies to communications with any person, whether or not a

party to a formal adjudicative proceeding, K or negotiation, who is represented by a lawyer concerning the matter to which the communication relates

d) the prohibition on communications with a represented person applies

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only where the lawyer knows that the person is represented in the matter to be discussed (i.e. lawyer has actual knowledge of the fact of the representation, but actual knowledge may be inferred from the circumstances)

2) lawyer must not, in an attempt to gain a benefit for a client, threaten, or advise a client to threaten – 3.2-5a) to initiate or proceed with a criminal or quasi-criminal charge

(bankruptcy); orb) to make a complaint to a regulatory authority

Licensing1) person must not engage in a “designated activity” unless the person is

(BPCPA s. 143)a) licensed to engage in the designated activity, or

i) “designated activity” = a business, industry, trade, profession, occupation or employment designated by regs. under s. 142.1 of the regs.

ii) designated by reg.: 1) collection agent, 2) debt pooler, and 3) bailiff [see p. 13 for defs.] (Debt Collection Industry Regulation s. 1.1(b))

b) exempt by regs. from the requirement to be licensed exemptions in Debt Collection Industry Regulation s. 3 are

(a)lawyers in the regular practice of their profession(b)persons acting as officers of or under the process or authority

of any court(c) trust companies and trustees acting under the terms of any

will, marriage settlement or deed of trust(d)chartered banks(e)credit unions, in respect of services provided by the credit

union to its members(f) insurance agents licensed under the Financial Institutions Act,

in respect of the collection of insurance premiums(g)brokerages licensed under the Real Estate Services Act, their

related licensees within the meaning of that Act and their EMEs, in respect of collections incidental to the business of the applicable brokerage

(h)persons collecting debts in the course of their employment with the government

(i) sheriffs(j) discounters, as defined in s. 2 of the Tax Rebate Discounting

Act (Canada), exercising rights to refunds of tax acquired from taxpayers

(k) trustees licensed or appointed under BIA (Canada)(l) corporations, in respect of the collection of debts for other

corporations that are their affiliate, as defined in s. 1 Business Corporations Act

Privacy [Personal Information Protection Act]1) PIPA creates prohibitions on collections, use and disclosure of personal

info and applies to all org. engaged in commercial activity

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2) an org. may collect personal info about an individual without consent or from a source other than the individual, if...the personal info is necessary to facilitate (s. 12(1)(j))a) the collection of a debt owed to the org., orb) the payment of a debt owed by the org.

3) an org. may use personal info about an individual without the consent of the individual, if…the personal info is needed to facilitate (s. 15(1)(j))a) the collection of a debt owed to the org., orb) the payment of a debt owed by the org.

Obtaining JudgmentLimitation Periods

1) def. (Limitations Act s. 1)a) claim = claim to remedy an injury/loss/damage that occurred as result

of act/omissionb) extraprov. judgment = judgment/order/award other than local onec) judgment = extraprov. or local judgment

2) basic limitation period = 2 yrs from day after claim is discovered (LA s. 6)3) ultimate limitation period = 15 yrs (LA s. 21) [n.b. discovery does not

matter]4) gov. limitation period = deemed to be 6 yrs (Financial Administration Act,

s. 86.1(2)(b))a) if other limitation period established for gov. under another Act, follow

the other Act (FAA s. 86.1(3))b) applies to all gov. claims = debt, or any other claim for

payment/recovery of money in a specific/ascertainable amount by (FAA s. 86.1(1))i) gov.ii) corp. or other org. within taxpayor-supported gov. reporting entityiii) corp. or other org. not within TPSGRE but was within TPSGRE on or

after the date on which the act/omission took place and before the expiry of the limitation period applicable

iv) includes ICBC claimsc) n.b. TPSGRE = gov. reporting entities excluding self-supported gov.

enterprises (Budget Transparency and Accountability Act)i) gov. reporting entity means

(1)gov.(2)gov. corps. other than those solely by reason of being under an

Act agents of the gov.(3)education and health sector orgs.

(a)“education and health sector organization” =(i) the following as defined in s. 1 College and Institute Act

1. a university2. an institution

(ii) the following as defined in s. 1 School Act1. a board2. a francophone education authority

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3. a board as defined in s. 1 Health Authorities Act4. a hospital as defined in s. 1 Hospital Act

(4)corps/orgs. that under generally accepted accounting principles are considered to be controlled by a gov. org.

(5)corps/orgs. that are included within the gov. reporting entity by regulation under s. 24(2)(d)(i) [see LS p. 160 for list]

ii) self-supported gov. enterprise means a corp. that(1)is within the gov. reporting entity(2)is carrying on a business(3)provides goods/services to persons outside the gov. reporting

entity as its principal activity, and(4)in OCB, maintains its operations and meets its liabilities mainly

from revenues from sources outside the gov. reporting entity5) latest date to enforce judgment for money or return of personal property

(LA s. 7)a) if local 10 yrs from the date it became enforceable (i.e. date

judgment issued)b) if extraprov. earlier of

i) expiration of home jurisdiction time limit for enforcement orii) 10 yrs after judgment was enforceable in the foreign jurisdiction

c) COEA s. 29(1) – if limitation date hasn’t expired (within 10 yrs or extraprov. expiry date) can apply to register the judgmenti) n.b. COEA applies only to reciprocating states [see p. 140 LS for list]

d) ECJDA s. 5(1) – if limitation date hasn’t expired (within 10 yrs or extraprov. expiry date) can apply to register the judgment

e) Interpretation Act s. 25 – include the first day and exclude last day so it ends up on the anniversary of the date (i.e. 1st to 1st in following year)

6) discovery (LA s. 8) – from first day on which person knew or reasonably ought to have known all of the followinga) that injury/loss/damage had occurredb) that injury/loss/damage was caused by or contributed to by an

act/omissionc) that the act/omission was caused by the person P is claiming againstd) that, having regard to the nature of the injury/loss/damage, a court

proceeding would be appropriate to seek remedy7) if limitation period expires while in process of enforcement, may continue

enforcement or continue proceedings in the case of a charging order (LA s. 23)

8) if the court makes an order staying execution, the limitation period is postponed or suspended for as long as the order staying execution is in force (LA s. 23)

9) acknowledgment resets limitation period for both basic and ultimate limitation, and period is deemed to begin again from day on which acknowledgement is made (LA s. 24(1)) [n.b. reset ultimate = date of omission/act that gave rise to cause of action deemed to be date of acknowledgment ]a) requirements

i) must come before expiry (LA s. 24(1))

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ii) be in writing (LA s. 24(6) – for all that is below)iii) signed by hand or electronic signatureiv) made by person making acknowledgment or person’s agent, andv) made to person with the claim, the person’s agent or an official

receiver or trustee acting under the BIA (Canada)b) if D acknowledges interest liability, also acknowledges the principal,

and interest due after acknowledgment (LA s. 24(2))c) if D pays part of a liquidated sum, acknowledges the whole sum (LA s.

24(7))d) acknowledgment rule applies even if D refuses to pay the sum or

balance of the sum still owing (LA s. 24(10))Methods of Obtaining Judgment

1) Small Claims $25k limit2) Supreme Court no limit, but if P’s claim is under $25k and P has no

good reason for not bringing it in Small Claims, not entitled to additional rewards/damages – R 14-1(10)

Default Judgment1) may be obtained in Supreme or Prov./Small Claims Court2) Prov./Small Claims (Small Claims Rules)

a) only allowed if D fails to respond by the time limit (14 days – R 6(1))b) proof of service is criticalc) no default order will be made on a counterclaim or 3P notice, except

under R 16(6)(c) – R 6(2)d) procedure: complete Form 5 + file it at registry + file also certificate of

service (Form 4) + pay the required fee – R 6(3)e) once the above procedure is done, the registrar must make a default

order requiring D to pay immediately (amount claimed + interest – R 6(4))

f) if the claim is not for debt , registrar must set a date for a hearing before a judgei) if D has not filed a reply, not entitled to receive notice of a hearing

(R 6(7)) and not entitled to file a reply without the permission of a judge (R 6(8))

ii) purpose of hearing = allow judge to determine (R 6(9))(1)amount claimant is entitled to, if for money(2)terms of an appropriate order, in any other case

g) result of hearing = judge may (R 6(10))i) make default order that requires D to pay, if for moneyii) make the appropriate order, in any other case

3) Supreme Court (Supreme Court Civil Rules)a) must be a claim for a debt or liquidated damages – i.e. amount is easily

ascertainable (R 3-8(3))i) if there is interest accruing, the amount is still considered

ascertainable since it can be calculated (R 3-8(4))ii) if P’s action includes multiple claims for damages, and some of

those are not specified or ascertainable, can separate those claims and obtain judgment for the ascertainable claims only (R 3-8(5))

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b) P must…(R 3-8(2))i) prove serviceii) prove D failed to respond within the time limit (21 days Supreme

Court)iii) have a requisition endorsed by a registrar showing no responseiv) have a draft default judgment order in Form 8

c) if registrar is not certain default judgment can be given, registrar may refuse and P may apply to a judge or master for default judgment (R 3-8(8))

d) procedure (R 3-8(10)): apply under R 8-4 + give affidavit evidence + swear P knows no fact that would constitute a defence to the claim + if several Ds, court may impose terms on the judgment or adjourn the application until trial of action against other Ds

e) setting aside default judgment – SCCR R 3-8(11)i) allowed on 2 grounds

(1)no service(2)procedural defect

(a)claim not for liquidated amount(b)claim exceeds court’s jurisdiction

ii) or by discretion of court, even if D had notice and no defects – but D must satisfy onerous requirements based on affidavit evidence; factors to consider (Miracle Feeds v D&H Enterprises Ltd, BCSC 1979)(1)no blameworthiness element for D’s decision not to show up(2)there was an application made right away after D understood

about the default judgment or knew about his defence – i.e. there was an explanation for the time gap

(3)evidence that D had meritorious defence, or a defence that was worth investigating(a)n.b. CL after Miracle Feeds: fairness is the overriding principle

Summary Judgment and Trial1) Small Claims Rules, R 9.1 & 9.2

a) R 9.1 – simplified process for claims up to $5k, not including interest or expenses (Robson or Richmond registry) [n.b. if over $5k, must abandon claim – which is done by saying so on notice of claim – R 9.1(6)]i) the trial is scheduled for 1 hour, and is simplifiedii) Vancouver deals with all claims up to $5k except those capture by R

9.2(1)Vancouver also deals with personal injury claims up to $5k(2)trials held in the evening

iii) Richmond(1)during the day(2)up to $5k but does not include personal injury claims

iv) it is a JOP who can hear the claim, where as R 9.2 has to be a judgev) procedure [see LS p. 184-188] – ex. changing dates, how trial

conductedb) R 9.2 – deals with small debt for up to $25k (Robson registry) and is a

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summary trial process for claimants who are commercial lendersi) the rule applies if claimant is in business of lending money and

extending credit, and the claim is for a debt that arose from a loan or extension of credit, for claims up to $25k – ex. credit card debt (R 9.2(1)(d))

ii) the claim must be started at the Vancouver registry – it cannot be transferred from another registry

iii) if the above requirements are met, trial streamlined and limited to ½ hr

iv) at the end, judge will make either payment order, dismiss the claim, or set up a longer trial process or mediation

v) do not have to comply with formal procedures or rules for evidence (R 9.2(9))

vi) procedures [see LS p. 188-190]2) SCCR R 9-6 – summary judgment

a) once application is made, court can grant judgment to P as long as there is no defence and no triable issue raised by the pleadings

b) if court thinks only issue is amount that parties are claiming, judge can issue a judgment with directions on how to determine that amount

c) if judge thinks only issue is a QOL, they can decide it and pronounce itd) debt actions are one of the more likely actions to be successful under

this rulee) if court thinks a party used this rule in bad faith or to delay, court may

fix the costs of this application as special costs and set a due date where those costs must be paid – R9-6(9)

3) SCCR R 9-7 – summary trial [see LS p. 202-205 for details]a) if there are triable issues or disputes in law that make it inappropriate

to make an application for summary judgment, then court has power to grant a judgment based on affidavit evidence through summary trial

b) summary trial must be heard at least 42 days before scheduled trial date (R 9-7(3))

c) on hearing summary trial application, court may (R 9-7(15))i) grant judgment, unless court is unable on the evidence decide QOL

or QOFii) impose terms respecting enforcement of judgmentiii) awards costs

d) MacMillan v Kaiser, BCSC 2003, sets out the factors to consider when granting applications for summary triali) complexity of matterii) amount of $ at issueiii) its urgencyiv) the costs of taking the case to a conventional trialv) any other issues relevant

(1)n.b. in MacMillan v Kaiser, summary trial allowed b/c TJ could resolve the conflict based on the affidavit evidence, and b/c conventional trial would have been lengthy and expensive

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Fast Track LitigationSCCR, Rule 15-1

1) applies ifa) the only claims in the action are for one or more of money, real

property, a builder’s lien and personal property and the total of the following amounts is $100k or less, exclusive of interest and costsi) the amount of any money claimed in the action by P for pecuniary

lossii) the amount of any money to be claimed in the action by P for non-

pecuniary lossiii) the FMV, as at the date the action is commenced, of

(1)all real property and all interests in real property, and(2)all personal property and all interests in personal property… claimed in the action by P

b) the trial of the action can be completed within 3 daysc) the parties to the action consent, ord) the court, on its own motion or on the application of any party, so

orders2) notice must be served on all parties of record3) damages not limited to $100k – R 15-1(3)

Registration and Action on Foreign Judgments1) option 1: CL action – for non-recip. state or cannot use ECJDA

a) take foreign money judgment and commence action in BC to enforce itb) essentially, the court asks if there was a real and substantial

connection between the subject matter of the litigation and the place where the action was brought

c) avoid this – it is costly and time consuming2) option 2: COEA – for reciprocal jurisdictions [see LS p. 140 for list]

a) applies to reciprocating states unlessi) time for enforcement expired in original state, orii) 10 yrs passed since judgment became enforceable in original state

b) no notice needed ifi) JD was personally served originally, or appeared/defended/attorned/

otherwise submitted, andii) under law of originating state, appeal time expired, no appeal

pending, or appeal made and disposed of(1)if above conditions not met, must give notice to JD (s. 29(5))

c) no order for registration if (s. 29(6))i) original court acted without jurisdiction or without authorityii) JD was not carrying on business nor ordinarily resident in state of

original court, and did not voluntarily appear/submitiii) JD was not duly servediv) judgment was obtained by fraudv) appeal is pending or appeal time not expired

d) effect of registration = as if this court gave the order (s. 33)i) except, if JC registers without notice to the JD under s. 29(2), JC

cannot act on it until 1 month after the JD has notice of the

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registratione) registration does not preclude right to bring an action on the judgment,

or on the original cause of action (s. 38)3) option 3: ECJDA [n.b. best option – for Canadian prov. and territories]

a) simplified filing and registration [likely can register interim orders but can only enforce a money order if it is a final order/judgment]

b) procedures for registering (s. 3)i) have copy of judgmentii) have it certified as trueiii) file additional information required by applicable rules of court

c) if in French, need to translate it and file certified copy of foreign (SCCR 19-2)

d) effect of registration = can be enforced like any other BCSC order (s. 4)e) timing: cannot be registered or enforced after time for enforcement has

expired in another prov. or 10 yrs since registered (s. 5(1))f) cannot look behind judgment (s. 6(3)) – i.e. court cannot order stay or

limiting of enforcement solely on grounds thati) original court lacked jurisdictionii) this court would have come to a different decisioniii) a defect existed in the proceeding in the original court

g) C may recover all costs incurred in registration of the foreign judgment (s. 8)

h) enforcing parties’ other rights not affected by registration – ex. to bring an action on the original cause of action (s. 9)

4) option available for Criminal Code that will create an enforceable judgmenta) monetary judgment can be created through the CC – ss. 738-741 ex.

amount for income for support for bodily harm, or expenses for moving the offenders family out of the householdi) restitution to victims of offences – s. 738ii) restitution to persons acting in good faith – s. 739iii) priority to restitution – s. 740iv) enforcing restitution order – s. 741

b) s. 741 – all of these order are enforceable as if they were civil judgments in any court in Canada

c) s. 741.1 – if the court makes such an order, they must give notice of the order

Judgments Against LawyersLSBC Rules

1) 3-43.1: must satisfy money judgment against a lawyer within 7 days after date of entry otherwise fail to meet minimum standard of financial responsibility

2) 3-44(1): if do not satisfy money judgment within 7 days, lawyer must immediately notify the Executive Director in writing of circumstances of judgment, including whether the JC is a client or former client + proposal for satisfying the judgment

3) 3-43: applies to lawyers, non-practicing member of law society, retired member, articled student, practitioner of foreign law, visiting lawyer, law

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corp.Debtor Examinations

[i.e. finding out about D’s property and assets and debts]Examination in Aid of Execution (BCSC – SCCR)

1) may be used concurrently with other execution processes2) JC need only be entitled to commence enforcement proceedings3) may examine JD for discovery wrt: (R 13-4(2))

a) any matter pertinent to the enforcement of the order,b) reason for non-payment or non-performance of the order,c) the income and property of the JD,d) the debts owed to and by the JD,e) the disposal the JD has made of any property either before or after the

making of the order,f) the means the JD has, had or may have of satisfying the order, andg) whether the JD intends to obey the order or has any reason for not

doing so4) do you need an order?

a) may examine officer or director of a corporate JD, or person liable in partnership or firm, without an order – R 13-4(3)

b) if examiner JD’s spouse, need order – R 13-4(5)i) but if the judgment is not against the spouse jointly, can only ask

spouse questions relating to JD’s debtii) cannot ask questions about the property they own or their assets

etc. unless you can show the JD contributed to those propertyc) if examining manager of financial institution where JD does business,

need an order – R 13-4(5)d) not allowed to examine same JD more than once in same year for the

same proceeding (R 13-4(4))5) JC can use info gained in examination as evidence (R 13-4(6))6) service of notice (R 13-4(10))

a) if lawyer ensure at least 7 days before examination, serve on lawyer and witness fees tendered to lawyer

b) if no lawyer ensure at least 7 days before examination, serve on person and witness fees tendered to person

Subpoena to Debtor (BCSC – SCCR)1) this avenue should be taken where JC has exhausted all attempts to

enforce an order and wants a specific order relating to the way debt should be paid; the matters that can be discussed are narrower in scope than in examination in aid of execution, and it cannot be used with other execution proceedings

2) a JD prefers this method b/c it leads to reasonable payment schedules, minimal info provided to the JC, and so long as payments are being made the JC may not initiate other enforcement proceedings

3) cannot issue subpoena if writ of execution outstanding (R 13-3(1))4) subpoena must be directed to person if JD is individual, and to

officer/director if corporation (R 13-3(2))

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5) scope of questions (R 13-3(4))a) the income and property of JD;b) the debts owed to and by the JD;c) the disposal the JD has made of any property;d) the means the JD has, or has had, or in future may have, of satisfying

the order6) if JD refuses to attend or respond in a satisfactory manner, examiner can

order committal or apprehension if examiner is master or registrar, and can order committal if examiner is the court (R 13-4(8)) [n.b. committal = send to jail]

Small Claims Court (SCR)1) payment hearing vs default

a) payment hearing = assessment of ability to payi) purpose: allow JOP or judge to asses JD’s ability to pay + consider

whether payment schedule should be ordered (R 12(1))b) default hearing = you haven’t actually obtained the order (R 13)

i) payment hearing must occur before a default hearing 2) payment hearing will be held if it is – R 12(2) [see LS p. 193-194]

a) requested by JC under R 12(3)b) requested by JD under R 12(10), orc) ordered by judge under R 11(5)(a)

i) n.b. if JC has order for seizure and sale outstanding, may not ask for payment hearing without permission of judge (R 12(4))

3) if JD is company, officer/director/EME may be summoned to the hearing (R 12(5))

4) if JD is partnership, partner may be summoned (R 12(6))5) service of summons must be 7 days before day of payment hearing (R

12(7))6) if JD asks for payment hearing, must complete Form 13 + file it at registry

(R 12(10)) + JD must serve notice on JC at least 7 days before (R 12(11))7) scope of questions – R 12(12)

a) the income and assets of the JD;b) the debts owed to and by the JD;c) any assets that the JD has disposed of since the claim arose;d) the means that the JD has, or may have in the future, of paying the

amount owed8) payment schedule may be ordered (R 12(13))9) if JC does not show up, judge or JOP may hold the hearing, cancel it, or

postpone it (R 12(14))Injunctions (Pre-Trial Execution)

1) only available in BCSC2) generally, the courts do not want to make any orders wrt a party’s assets

until a trial has been completed, or until judgment has been obtained3) usually JC will have to wait to proceed against JD’s assets until JC has the

judgment – Listor & Co v Stubbs4) exception Law and Equity Act s. 39(1) – BCSC has wide equitable power to

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issue injunctionsa) order preservation of subject matter in disputeb) orders to prevent fraudc) orders to project integrity of systemd) where there is real/impending threat that the D will remove the assets

from the jurisdiction or waste them5) R 10-4 – works in conjunction with s. 39(1) LEA

a) party may ask for pre-trial injunction whether or not it is claimed as a relief in the notice – R 10-4(1)

b) application for pre-trial injunction may be made before the start of a proceeding – R 10-4(2)

c) if application made without notice, court may grant an interim injunction – R 10-4(3)

d) injunctions only available by court order – R 10-4(4)e) order for pre-trial or interim injunction must contain applicant’s

undertaking to abide by any order for damages, unless court otherwise orders – R 10-4(5)

Mareva Injunction[available through LEA s. 39(2)]

1) Mareva injunctions = equitable interlocutory injunctions that prohibit anyone named in the order from selling, encumbering, or otherwise dealing with D’s property except as permitted by the injunction; they are an extraordinary pre-trial remedy b/c they affect the D’s property before trial

2) only available in BCSC3) may be used to effectively force a settlement4) generally, do not require notice5) to get Mareva injunction, party must show (ProSuite)

a) establish a strong prima facie/good arguable caseb) prove the balance of convenience favours granting the order – balance

interests of both parties to reach a just and convenient result (Tracy v. Instaloans); factors to consider include…i) evidence that establishes existence of assets in BC (domestic

injunction) or outside (national/international injunction) if the assets are quite far away, or do not have reciprocal agreement with that state, will be harder to enforce the judgment

ii) real risk of asset disposal or dissipationiii) how much of D’s assets are going to be tied upiv) stage of litigationv) history of D’s conductvi) evidence of irreparable harm

ProSuite Software Ltd v Infokey Software Inc, BCSC 2013Facts: development of computer software for use in real estate transactions; CR infringement allegedHeld: injunction not granted the long-established rule in Lister & Co v Stubbs, [1886-90] All ER 797 (CA) = security for a debt

will not be ordered before judgment even where the success of the claim is highly probable the exceptions, summarized by the BCCA in Tracy v Instaloans Financial Solutions Centres (BC) Ltd

(BCCA 2007) are: 1) for the preservation of assets, 2) where generally the processes of the court must be protected even by initiatives taken by the court itself, 3) to prevent fraud, and 4) real or

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impending threat to remove contested assets from the jurisdiction the Mareva injunction is not a remedy which would ordinarily be granted – “Courts will be reluctant

to interfere with the parties' normal business arrangements, and affect the rights of other creditors, merely on the speculation that the plaintiff will ultimately succeed in its claim and have difficulty collecting on its judgment if the injunction is not granted.” – Newbury J. in Silver Standard Resources v Joint Stock Co Geolog (BCCA 1998)

application of the test there is a good arguable case of CR infringement as it relates to the 3 real estate transactions but fails on 2nd stage

factor #1 – value of the claim: the applicant must also demonstrate the value of its claim, and the value of Infokey’s claim has not been established; the evidence of CR infringement is currently confined to 3 transactions, and this is not sufficient to justify freezing $800,000 currently held by PSL or the $1,250,000 payable to PSL

factor #2 – risk of assets being dissipated: no genuine risk of the Ps dissipating the assets of PSL in a manner which is distinct from the usual or ordinary course of business; the Society currently has sufficient funds

factor #3 – stage of litigation: litigation here is in early stages; while counsel for Infokey suggests the magnitude of its claim is potentially extremely large, as noted above, it is admitted that the only evidence of CR infringement currently relates to the 3 real estate transactions

factor #4 – others: Infokey has potentially sought to use the application for an injunction to embarrass and pressure the Society to settle

Garnishment1) the garnishee is a 3P and the order is on the 3P2) a GO will intercept a debt due to the JD from the garnishee, and the

money will be put into court3) post-judgment, it will go to the JC (if the JC wins)4) pre-judgment, it acts as security for the JC5) can only get a GO if your claim against the D is for a liquidated amount;

cannot get GO for unliquidated amount; do not need to set out separately the claim for liquidated vs. unliquidated in the statement of claim (A.L. Sims & Son)

6) the rights and obligations must have crystalized and the debts owed must be discernable, otherwise it will be a conditional debt and cannot be garnished (Dabrowski; Vater v Styles) i.e. must be a debt due or debt accruing duea) test for attachment by a GO = D must be in a position to maintain an

action for the debt against the garnishee and the debt must be of such a character that it would vest in the D’s assignee or TIB if D became insolvent (Ahaus)

7) specific categories that are/are not subject to garnishmenta) wages – can only garnish wages post-judgment [see p. 28 for details on

wages]b) employment deductions – cannot garnish as not “debts due and owing”

to the EMEc) rent – cannot be garnished as not conditional debt; overdue rent can be

garnishedd) lawyers’ trust accounts – can be garnished, but if money is in lawyer’s

retainer (work has been done), it is not a debt due to the JD so cannot be garnished; funds help for a client transaction may be garnished

e) joint bank accounts – cannot be garnished (Neidemayer)f) bank accounts – can be garnished; cannot garnish a LOC as not due to

JD

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g) term deposits – can be garnished unless they are conditional; term deposits with a future date that have not yet measured (i.e. defined term deposits) can be garnished and the order will be paid when they mature (COEA s. 15)

h) RRSP – exempt (COEA s. 71.3(2)), and “registered plan” includes DPSP, RRIF, RRSP (COEA s. 71.3(2))i) property contributed to a registered plan after/within 12 months

before the date on which the debt came due can be garnished (COEA s. 71.3(3))

ii) the exemption does not apply to property that has been/is being paid out of a registered plan (COEA s. 71.3(3))(1)if an enforcement process is pursued against property being paid

out, that property is deemed, for COEA purposes, to be a debt due to the planholder for/wrt the salary/wages (COEA s. 71.3(4)) – treats money withdrawn from RRSP as wages, and can garnish 30%

8) disadvantages of using GOa) costly, must be renewed every pay periodb) many exemptions, so JC may not get muchc) preferred method is to obtain payment order or subpoena to D d) time consuming, expensive b/c must get a GO for every debt duee) rare to get a continuing order

9) advantages of using GO = it is the easiest pre-judgment to remedy to secure

CIBC v Dabrowski, BCSC 1951 – the essential time is when the GO was issued, not the time it was servedFacts: CBC got GO#1 at 10:30am; auction was at 11:30am, and auction proceeds = debt; BMO got GO#2 few days laterIssue: who gets the money?Held: BMO got the money b/c at the time CBC got the GO, there was no “debt due” and you cannot get a GO if no debt due; court relied on Vater v Styles – a conditional obligation is not attachableVater v Styles, BCCA 1930 – a conditional obligation is not garnishable or attachable – must be a debt due or accruing dueFacts: insurance company, the garnishee, owes Styles a disability pension that is payable subject to conditions; the company gets a GO for it on Aug. 7Held: GO set aside; first, Styles will only get the pension on the condition that the disability will continue; thus, the debt was technically not accruing or due at the time the GO was issued; second, if Styles had died, the company will be obligated to pay the pension to the beneficiary, so the disability payment would not have been paid, and thus no debtAhaus Developments Ltd v Savage, BCCA 1994 – the rights and obligations must have crystalized and the debt owed must be discernable, otherwise it will be a conditional debt and can not be garnished; purchase moneys held in a conveyancing transaction by a lawyer or notary are attachable; a lawyer or notary who is served with a GO that conflicts with an undertaking should file a dispute note, as doing nothing results in personal liability for the debtFacts: Notary is agent for Savage; net proceeds of sale are approx. $120k; condition is she has to discharge (i.e. pay) the mortgages; after discharging mortgages, she has about $30k – this is the “debt due”; she gives the money to Savage, and not Ahaus; Ahaus gets order that Savage owes the money to them; Savage is appealing the order.Held: dismissed; Savage argues that at time of GO, no “debt due” or “accruing debt due” – she had received all the funds on condition of paying out the mortgages, and so Savage could not have demanded the money from the Notary until she discharged the mortgages; however, this was a “debt accruing due”Kodar: key to this case was that the amount of the mortgages was known – she could calculate how much would be left over after all the mortgages were discharged in this case, 2/3 of the mortgages were already discharged

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Dissent: on these facts, no issue with majority’s decision, but this was still a conditional debt – you cannot actually ascertain what was due to Savage until she held the discharge (para. 47) – i.e. she could not know with certainty how much would be left at the time (ex. what if there was mistake in the payout figure, or what if LTO refuses to give a discharge?)

Pre-judgment Garnishment1) COEA s. 3(1) – “debt or money accruing due” def. effect = wages or salary

to be garnished must come or be payable within 7 days after the day on which an affidavit has been sworn under s. 3(2); therefore garnishing of wages must be done within 7 days after swearing the affidavita) n.b. s. 3(4) – garnishing of wages not available pre-judgmentb) s. 9(1) – service of a copy of the GO binds the debts in the garnishee’s

hands from the time of service or noticec) the debt obligation must be owing at the time the GO is issued and

when it is served (Dabrowski)2) affidavit requirements for pre-judgment garnishment: P must fulfill the

affidavit requirements (s. 3(2)(d)) for debts due from the garnishee to be attacheda) show that

i) that an action is pendingii) the time of its commencementiii) the nature of the cause of actioniv) the actual amount of the debt, claim, or demand, andv) that it is justly due and owing, after making all just discounts

b) the affidavit must state that the garnishee is indebted or liable to the D/JD/person entitled to enforce the judgment, and is in the jurisdiction of the court (s. 3(2)(e)) and must state, with reasonable certainty, the place of residence of the garnishee (s. 3(2)(f))

Post-judgment Garnishment1) affidavit requirements for post-judgment garnishment: JC or person

entitled to enforce a judgment (COEA s. 3(2)(b)) must fulfill the affidavit requirements in s. 3(2)(c) for debts due from the garnishee to be attached

2) must showa) that it has been recovered or made, andb) the amount is unsatisfied

3) the affidavit must state that the garnishee is indebted or liable to the D/JD/person entitled to enforce the judgment, and is in the jurisdiction of the court (s. 3(2)(e)) and must state, with reasonable certainty, the place of residence of the garnishee (s. 3(2)(f))

Garnishing Wages1) generally, 70% of wages exempt – COEA s. 3(5)

a) amount of the exemption cannot be <, in case of person without dependents, $100/month (s. 3(5)(a)), or in the case of person with dependents, $200/month (s. 3(5)(b)), or proportionately for a shorter period

b) if wages are attached under a court order for alimony/maintenance (s. 3(7)(a)), a duly executed separation agreement (s. 3(7)(b)), or an order under s. 18(2) of FMEA (s. 3(7)(c)), the exemption is only:i) 50% of wages due if the wages < $600/month

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ii) 33% for wages > $600/monthiii) but, the amount of the exemption must not be < $100 month, or

proportionately for a shorter period (s. 3(7))2) one may apply to vary the order – s. 4(1), however, order may not have

the effect of…a) increasing the exemption to > 90% of wages due, orb) reduce wages (i.e. reduce the exemption to...):

i) in case of person without dependents, to < $100/monthii) in case of person with dependents, < $200/monthiii) or proportionately for a shorter period

3) wages of BC gov. EMEs may be garnished – COEA s. 6(2)4) wages of fed. gov. EMEs may be garnished – s. 5 Garnishment,

Attachment and Pension Diversion Act5) an EMP must not dismiss or demote or terminate a K of employment of an

EME merely b/c of the service of a GO on the EME – s. 27(1) COEA

Effect of Garnishment Orders[COEA s. 9-11 and 21]

1) copy of GO must be served at once, or within time allowed by judge/registrar

2) GO must not be paid until service of copy has been proved by affidavit filed

3) copy of a Small Claims GO may be served by mail to last known post office address of the person

4) if prompt personal service cannot be effected, judge/registrar may make order for substituted or other service

5) in the GO, amount attached is limited to the amount due or claimed to be due by the D/JD/person liable, along with reasonable sum for costs

6) if garnishee does nota) at once pay into court the amounts and does not dispute the debts, orb) appear on notice to the garnishee…

i) then a judge may order the garnishee(1)to pay into court the amount due from the garnishee, or as much

of it as sufficient to satisfy principal judgment + costs of garnishing proceedings, or

(2)if judgment has been recovered or an order for payment of money made, to pay to the person entitled the amount appearing due, or sufficient of it to satisfy the principal judgment + costs of garnishing proceedings

7) payment into court is valid discharge (s. 21)Payment Out of Court

[COEA ss. 12-13]1) order for payment out of court must not be made without notice to

D/JD/person liable unless a judge, under special circumstances, dispenses with notice – s. 12(1)

2) if prompt personal service of notice not possible, may make order for substitute or other service – s. 12(2)

3) may be paid out without any court order if – s. 13(1)

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a) 10 days notice given and JD has not, on or before expiry, filed a notice of intention to dispute the payment out, ori) notice of intended payment must be served personally, or

substituted service if appropriate – s. 13(2)ii) if Small Claims, may be served by mail – s. 13(3)

b) judgment was obtained by default and 3 months have expired from day on which money was paid into court

4) money paid into court under garnishing proceedings may be paid out to P or P’s solicitor without any order if the consent in writing of the D is filed with the registrar/judge, setting out the exact amount to be paid out – s. 13(4)

5) payment must not be paid if there is a suggestion that the money belongs to/claimed by a 3P, or that any 3P has a lien/charge on it – s. 13(5)

Setting Aside Garnishing Orders1) pre-judgment

a) pre-judgment GO is an “extraordinary remedy” and so can be easily set aside – 2 ways to do so

b) option #1 = attack the contents of the affidavits by alleging they do not meet the requirements in s. 3(2)(d)-(f) (AL Sims & Sons)i) cause of action was not a claim for debt (s. 3(2)(d)(iii))

(1)no need to specify “debt” (AL Sims and Sons)ii) actual amount of the debt/claim/demand cannot be ascertained (s.

3(2)(d)(iv))(1)can claim for the liquidated amount when the claim includes both

liquidated and unliquidated amounts, so long as they are clearly separated in the statement of claim and the affidavit (AL Sims and Sons)

iii) the amount is justly due and owing, after making all just discounts (s. 3(2)(d)(v))

c) option #2 = apply to the court to have the pre-judgment GO set aside in whole or in part as “just in all the circumstances” under s. 5(2)i) each decision is decided on its merits, and cases are context specific

(Wake)ii) leading test is from Webster – applicant must show, when relying on

s. 5(2), that GO(1)is unnecessary, or(2)an abusive process took place, or(3)the order creates undue hardship

(a) ex. in Webster there was undue hardship b/c Webster was supporting children in the family and the maintenance issue was not resolved, abuse of process was also met, and there were other assets available, making the GO unnecessary

2) post-judgmenta) apply to registrar/court for a payment of the judgment by installments

(COEA s. 5(1))b) if registrar/judge considers it “just in all the circumstances,” must set

the amounts and terms of payment of the judgment by installments (COEA s. 5(2))

AL Sims and Son v Sable Resources Ltd, BCSC 2009 – the claim for debt in the statement of

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claim does not have to be separately set out from any claim for unliquidated amountsFacts: P’s GO before judgment was set aside on the basis that a failure to plead debt in the statement of claim as well as inconsistencies between the statement of claim and the affidavit sworn in support of the GO resulted in the conclusion that P had failed to meet the strict requirements of the COEA; P entered into an agreement in writing allowing D to rent a piece of mining machinery on a month to month rental basis; s. 3(2)(d) COEA is at play; P argues that it is not required to use the word “debt” in its statement of claim in order to be claiming debt as long as a claim is made for debtHeld: P has met the requirement of the COEA – P does not need to use the word “debt” in their claim in order to include a claim for debt; it is also possible to have a claim that includes both a liquidated debt claim and damages (un-liquidated damages)Webster v Webster, BCSC 1978 – “unjust” in COEA s. 5(2) = creating undue hardship, abuse or if the order was unnecessaryFacts: husband, P, garnishes wife’ s bank accounts, seeking to enforce 4 promissory notesHeld: H commenced action 7 days after divorce went through – abusive process; once divorce proceedings were settled, there would be amply money to fulfill the debt – unnecessary; the wife needed the money to pay maintenance for the children and was in financial difficulty – undue hardshipWake v Habitat for Humanity Society of Greater Vancouver, BCSC 2014Facts: P is the former CEO of D, Habitat for Humanity Society of Greater Vancouver; P was hired by D through employment K; K said Board of Directors may terminate employment without cause prior to the end of the Term, by providing 3 months notice of termination or pay in lieu of such notice; or may terminate employment without notice for just cause immediately without any notice of termination or pay in lieu; P was dismissed without any notice or payHeld: GO upheld b/c it did not create hardship and P had complied with all the technical requirements under s. 3(2)-(3) COEA; when deciding if there are deficiencies in the application the affidavit must be read in conjunction with the notice of claim that was attached as an exhibit; in this case when read as a whole it is clear that the K stipulates that in the event of a termination without notice or cause 3 months severance is to be paid; a pre-judgment GO is an extraordinary remedy which creates an exception to the normal rule that there is to be no execution before judgment; main object of the remedy is to provide P with security for the claim being advanced; there are 2 kinds of deficiencies in the affidavit: the failure to adequately describe the nature of the claim and errors in the calculation of the amount said to be due and owing

Specific Issues (relating to 3Ps and debt dispute)[COEA ss. 16-20]

1) if garnishee disputes debt, issue may be tried – s. 162) if suggested that the debt/liability/obligation belongs to/is claimed by a 3P,

a judge may order that 3P appear and state the nature of his/her claim to it – s. 17

3) after hearing from 3P, judge may order payment by the garnishee, or order issues to be tried, may bar claim of 3P or make any order judge sees fit – s. 18

4) judge entitled to take evidence in chambers without directing a formal trial – s. 19

5) garnishee is entitled to costs on complying with order – the costs, if not satisfied in another way, must be paid by the garnishing P – s. 20

Execution Proceedings1) time calculation: exclusive of the first and inclusive of the last day – COEA

s. 482) no imprisonment for debt – COEA s. 51

Execution Against Land[s. 82-116 COEA – this all takes place in the BCSC; if Small Claims judgment,

still bring application to have the property sold in BCSC]1) defs. – s. 81

a) land = every estate, right, title and interest in land, and all real

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property, both legal and equitable, and of every nature and kind + includes the interest in land of a JT, whether or not subject to a mortgage, and the interests of a TIC

b) judgment = judgment, decree or order of FCC, CA, SC or PC, or a judge of any of those courts, or a claim established under CAA

2) register judgment in LTO by applying under LTA, if that judgment was entered or obtained in BC after Oct. 30 1979 – ss. 86, 88-89, 91 COEAa) registered by delivering the registrar a certificate of judgment or, if

permitted by enactment, a copy of an orderb) if the judgment is against an interest in land, and the JD subsequently

gains more interest or estate in that same land, the judgment/registration is deemed to be enlarged to include that additional interest/estate (s. 86(5))

c) if JC has knowledge that JD has interest in land/estate that JD has not registered title in, JC may, on proof satisfactory to the registrar, apply to register judgment against that estate/land (s. 86(9))

d) certificate of judgment must be sealed with the seal of the court in which the judgment was entered/recovered, and signed by the court registrar (s. 88(2))i) a judgment entered or obtained in the PC is sufficient for registration

purposes if certified to be a true copy by the clerk or judge of that court (s. 88(4))

ii) a photocopy is sufficient (s. 88(5))e) the registrar, on completion of registration under s. 88, give notice to

the owner (s. 89(1)) in prescribed form together with a copy of the certificate of judgment by registered mail (s. 89(2))i) n.b. notice only needed for registration, but not renewal (s. 89(3))ii) if owner does not reply to notice, no further act by registrar needed

(s. 89(4))iii) if owner replies and alleges he/she is not the JD referred to in the

certificate, registrar must make further inquiry or investigation necessary to decide who the JD is and whether the judgment does/does not affect the land described (s. 89(5))

iv) if registrar cancels judgment b/c wrong person registered against, JC must pay the owner $25 as compensation for the expenses incurred as result of the wrongful registration of certificate of judgment (s. 89(11))

f) damages may be awarded if registrar cancels the registration of a judgment under s. 89 and the owner has sustained damage/incurred costs b/c JC registered judgment without reasonable cause (s. 90(1))i) court may award a sum it considers just (s. 90(2))ii) court may consider that all proper and necessary steps were not

taken by the JC to ensure the person registered against is, in fact, the JD (s. 90(3))

iii) if JC registered against wrong person, that person may make a claim against the JC (s. 90(4))

3) 3 hearings [and at the end of 3rd hearing judge makes order for sale]a) “show cause” hearing – s. 92

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i) once judgment registered, JC makes motion in SC Chambers calling on JD to show cause why any land that is registered or the JD’s interest in it, or a part of it should not be sold to realize the amount payable under the judgment (s. 92(1))(1)n.b. generally speaking, court will refer to registrar or make

summary judgmentii) on application, the proceedings are heard summarily or by trial of

issue or by inquiry before court officer as necessary orconvenient for the purpose of ascertaining the truth of the matters and whether the interest in land is liable (s. 93)

b) registrar’s hearing – s. 94i) will determine

(1)which land is liable(2)what the JD’s interests in it are(3)what, if any other judgments, have been charged(4)the priorities – if there are more than one charges on the land

c) confirmation hearing and order for sale – s. 96i) JC has to file a notice seeking the confirmationii) all buyers that will be affected by the order for sale must be given

noticeiii) issues that may be raised

(1)is the property the JD’s home? if yes, the court may defer the sale, subject to the performance by the JD of terms and conditions of payment or otherwise as the court imposes (s. 96(2)) [see s. 71.1 below]

(2)did the JD receive proper notice? if substituted service has been ordered by the court on the JD, the land must not be sold by the sheriff until it has been advertised as provided in s. 97 for 6 months after the order for sale (s. 96(3)); despite (3), on application by JC to SC, the court may short the period of 6 months or make any other order it thinks fit (s. 96(4))

iv) once they’ve confirmed the registrar’s report, they will make an order that the land be sold by the sheriff – s. 96(1)(1)n.b. the legislation refers to a “sheriff” but really it is a court

bailiff that sells it [court bailiff = someone enforcing COEA; regular bailiff = someone doing repossession under a security agreement]

4) sheriff advertises property and effects sale – ss. 100-110a) 1 month to advertise s. 101 – must advertise in BC Gazette or local

newspaper, unless the requirement is dispensed withi) in the ad, must specify: (a) the particular property to be sold, (b) the

name or names of the Ps and Ds in every proceeding, (c) the charges, if any, appearing on the register against the land, (d) the date of the registration of encumbrances or charges, (e) the time and place of the intended sale, (f) the amount of the judgment

b) sheriff can postpone the sale if they think the offer is too low – s. 104i) n.b. the Court may impose conditions on the sale of property ,

including the deferral of its sale (if the property is likely to increase

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in value) or ordering the sale to be conducted by a real estate agent instead of a court bailiff (Topouzis v Abboud, BCSC 2012)

c) if accept sale, then proceeds – (bailiff fees + other expenses) are deducted, and paid out in accordance with the registrar’s report

5) registrar distributes proceeds – s. 111a) there is a new process by which the court can order sale by the JC,

which makes the sale process more efficient court relies on SCCR 13-5 and COEA s. 96 for this power [see LS pp. 216-217]

6) s. 71.1 – principal residence of D is exempt from forced seizure or sale if the value of D’s equity in the principal residence does not exceed a prescribed amounta) principal residence is not defined in statute Thow (Re): occupancy is

not necessary, but it is indicative; onus is on the D claiming the exemption to show that he had a realistic expectation of returning to the residence, or that his absence was only of a temporary nature, or that he had not abandoned the residence as his principal residence, or that the residence remained his “home base”

b) this exemption does not apply to (a) corporate D, (b) a D who is party to a proceeding in respect of a mortgage (s 71.1(2))

c) if value > “prescribed amount”, subject to seizure and sale (s. 71.2(1))i) COE Exemption Regulation s. 3 sets out “prescribed amounts”

(1)$12k if D is a person whose principal residence is located within the boundaries of the Capital Regional District or the Greater Vancouver Regional District

(2)$9k if elsewhered) proceeds distributed, after secured Cs, to D an amount not exceeding

the prescribed amount of the exemption (s. 71.2(1)(b))e) the sum received by the D is exempt from attachment (s. 71.2(3))f) this section does not affect priority of FMO under FMEA (s. 71.2(4))g) if it is home of JD, court has discretion to defer sale, subject to the

performance by the JD of terms and conditions of payment or otherwise as the court imposes (s. 96(2))

h) JC’s registration is subject to the rights of BFPFVWN who obtained the interest in the land before registration (Fulthorp; COEA s. 86(3))

7) joint tenancy : where JD does not have full interest, the JC can only obtain a judgment on that half; registration of a judgment does not sever a JT; JC can register the judgment, but if the JD dies, the interest vanishes

8) tenancy in common : can only sell the 1/2 interest owned by JD, which is difficult and will likely get < 50% of FMV; if tenant dies, judgment continues as a charge

Bank of Montreal v Fulthorp, BCSC 2004 – a JC’s registration is subject to the rights of BFPFVWN who obtained the interest in the land before the judgment was registeredFacts: BMO had a judgment against the former half owner of F’s property; order dated Oct. 21, 2003; on Oct. 24, there was an agreement for purchase and sale for the whole of the property by F; Nov. 12, BMO registered their judgment; Nov. 27, the transfer to F was registered; F’s notary didn’t search the title before or after, and registers his title subject to the judgmentIssue: is F’s interest subject to the judgment?Held: JC’s judgment is subject to the F’s interest; BMO asks for court to get the land sold to satisfy the judgment – argue there an undivided half-interest that should be sold to satisfy the judgment; court finds JC is registered subject to rights of purchaser who entered into the agreement, and who got their interest before the registration of the judgment in good faith and for valuable consideration; in this

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particular case, JC’s rights are subject to BFPFV (COEA s. 86(3) ); rationale = do not want to impede transactions, and JC can still go after JD for the proceeds of the saleKodar: what is problem with trying to sell a half-interest? the value is going to be less – ex. a property valued at $100k cannot be sold for half interest at $50k; no one is going to want to buy it b/c they will have to negotiate with the other owners; what often happens is JC will need to buy everybody out

Execution Against Personal Property1) writ of execution for seizure or sale = direction to court bailiff to seize the

portion of JD’s property, that when it is sold, will satisfy the judgment (not a separate order for each piece of property)

2) advantages: getting a writ can assist in recovering the judgment b/c JD may prefer to pay than have their property seized and sold; works relatively well for goods and chattels; is the most common way of recovering a judgment b/c merely issuing a writ can speed up payment and recovery, without actually having to seize

3) disadvantages: works less well for intangibles, like IP rights, shares, negotiable instruments

4) a person must not be jailed for execution on a judgment – COEA s. 515) s. 47 COEA def. “writ of execution” includes both Small Claims and BCSC

orders6) procedure at BCSC – SCCR R 13-2(11), (12) (15)-(22) [see LS p. 208-209]

a) order for payment may be enforced by writ of seizure or sale, using Form 50

b) writ of execution, if unexecuted, remains in force for 1 year, unless renewed

c) once writ issued, it is given to a sheriff/court bailiff who will seize enough goods to satisfy:i) amount owing on the judgmentii) interest on the judgmentiii) sheriff’ s costsiv) JC’s costs, andv) costs of execution

d) any goods seized are sold at public auctione) unless the court orders otherwise, a party who is entitled to enforce an

order is entitled to the costs, fees and expenses of enforcement including proceedings under COEA

7) procedure at Small Claims – SCR R 11(11)-(13)a) JC can ask the registrar to issue an order for seizure and saleb) registrar may issue an order for seizure and sale if a JC completes the

form following the instructions and files it at the registryc) if the order has not been enforced within 1 year after issued, it expires,

but JC may ask registrar to issue anotherGoods, Chattels, & Effects

1) all goods/chattels liable to seizure and sale under a writ of execution against goods and chattels, subject to ss. 70-79 exemptions (COEA s. 55)a) cannot execute judgment against property that meets the def. of

“land” using writ of execution under s. 55 (COEA s. 56) [see p. 31 or LS p. 114 for “land”]

b) included property : interest that a person has in any of the following

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may be seized and sold by the sheriff: (a) mineral title in Mineral Tenure Act, permit, license, lease in (b) Coal Act, (c) Petroleum and Natural Gas Act, (d) Geothermal Resources Act, or any plant, machinery, personal property or other material placed on location by holder/permittee/licensee/lessee

c) sheriff or other officer may seize/sell the interest or equity of redemption in any goods/chattels of the JD under a writ of execution (s. 62)

2) intangible property – not executable under s. 55; Mortil and Wira confirm this, so unless we have legislative amendment, IPs will continue to be exempta) n.b. in Mortil, TM software could be seized, subject to a trust agreement

with the D concerning nondisclosure and prohibition of unauthorized use

3) ss. 70-79 exemptions a) s. 71(1) – the following goods/chattels of JD, at the option of JD, are

exempt from forced seizure or sale, with amounts prescribed in COEE Regulation s. 3 [n.b. CL says if executing judgment against 2 JDs, the amount doubles]i) necessary clothing of the JD and JD’s dependentsii) household furnishings and appliances that are of a value not

exceeding $4kiii) one MV that is of a value not exceeding $5k if JD is not a

maintenance JD and $2k if JD is a maintenance JDiv) tools and other personal property of the JD, not exceeding $10k,

that are used by JD to earn income from JD’s occupationv) medical and dental aids that are required by JD and dependentsvi) any personal property prescribed by the regulations that is of a

value not exceeding a prescribed amountb) s. 72 – works of art or other objects of cultural/historical significance

brought into BC for temporary public exhibiti) this exemption does not apply (s. 72(2))

(1)to an execution on judgment respecting K for transportation or warehousing or exhibition in BC of the work/object or

(2)to a work or object offered for salec) s. 71.3 – RRSPsd) process for determining exempt goods – ss. 73-78 [see LS p. 112-113]

i) once assets are seized, JD can choose which they want to keep under the exemptions – must do so within 2 days of seizure or notice of it, whichever is later

ii) an appraiser may be appointed if JC thinks JD is trying to cheat and keep more property than the exemption allows

iii) if the goods are appraised at more than the amount of the exemption under s. 71(1), the remainder is exempt

iv) bailiff may not force entry, and if permitted to enter, can only seize permitted items; can generally take things outside the home, such as on the driveway

v) appraiser’s oath needed, if used

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vi) JD may appeal an appraisalMortil v International Phasor Telcom Ltd, BC Country Court 1988 – IP can be seized [n.b. later overruled]Facts: P obtained judgment against D; got writ of seizure and sale for computer software program developed by D; software seized by sheriff; D argued software was trade secret and therefore sought to quash writIssue: whether computer program with trade secret was exigible for execution purposes (seizure and sale)?Held: court ordered the seizure and sale; the computer was tangible property under s. 55 COEA; therefore allowed to seize software program, but non-disclosure agreement had to be entered into between JD and JC not to disclose trade secretsWira v Jubilee Enterprises Ltd, SKQB 2010 – CRs and TMs cannot be seized under CLFacts: Wira obtained consent judgment against JD, filed writ of execution, sheriff seized TMs registered in name of JD and CRs for the TM’ed board gameHeld: not exigible; “chose in action” is not broad enough to include IP

Monies & Securities for Money1) a sheriff/other officer to whom writ directed must seize and take any

money, bank notes, cheques, bills of exchange, promissory notes, bonds, specialties, or other securities for money, belonging to JD – COEA s. 58a) money & bank notes – given directly to JCb) cheques, bills of exchange, etc. are subject to CAA – seized and held to

maturity then sue for recoveryc) there has been litigation over what is included in “other securities for

money” – includes insurance if premium fully paid (Nisbett)2) payment to or recovery by sheriff is valid discharge – COEA s. 593) sheriff to pay JC amount claimed and pay surplus to JD – COEA s. 604) sheriff does not have to commence an action on maturity of a security for

money unless JC has agreed to indemnify the sheriff from and against all costs and expenses – COEA s. 61(1)

5) RRSPs are exempt (COEA s. 71.3), but this exemption does not apply toa) property contributed to registered plan after or within 12 months

before date on which debt being enforced came due, orb) to enforcement process that is being effected in support of

enforcement of FMO under FMEA (s. 71.3(3))c) to property that has been or is being paid out of a registered plan

i) if an enforcement process is pursued against property being paid out that property is deemed, for the purposes of this Act, to be a debt due to the planholder for or with respect to the salary or wages (s. 71.3(4)) – treats money withdrawn from RRSP as wages – can garnish 30%

ii) n.b. Tax Free Savings Accounts do not fall under the protection of this provision, even though they are touted by the gov. as a retirement vehicle

Shares1) COEA works in conjunction with the STA

a) terms relating to securities have the same meanings as in the STA – COEA s. 63.1

b) securities may be seized by the sheriff in accordance with ss. 47-51 STA (COEA s 63.1(2))

2) def. of “security”a) mutual fund security is a security (STA s. 11(1))

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b) “mutual fund security” = a share, unit or similar equity interest issued by an open-end mutual fund, but does not include an insurance policy, endowment policy or annuity K issued by insurance company (s. 11(2))

c) “open-ended mutual fund” = an entity that makes a distribution to the public of its shares, units, or similar equity interests and that carries on business of investing consideration it receives for the shares, units, etc. all/substantially all of which are redeemable on demand of holders/owners (s. 11(2))

d) a share or similar equity interest issued by a corp., business trust or similar entity is a security

3) 3 ways to seize securities based on who holds the proof of security entitlementa) if D has it certificated security s. 48 STAb) if an issuer has it uncertificated security s. 49 STAc) if an intermediary (i.e. broker) has it security entitlement s. 50

STA4) certificated securities – s. 48 STA

a) “certificated security” = a security that is represented by a certificateb) seizure can occur, subject to ss. 48(2) & 51, only through actual

(physical) seizure of the security certificate by a sheriff (s. 48(1)), or…i) if the certificate is surrendered to the issuer by the JD, by sheriff

serving notice of the seizure on the issuer at the issuers CEO (s. 48(2)) or

ii) if the certificate is held by a secured party , by sheriff serving notice of the seizure on the secured party (s. 51)

c) seizure by notice takes effect once the issuer (or intermediary) has had a reasonable opportunity to act on the notice (COEA 63.1(3))

5) uncertificated securities – s. 49 STAa) “uncertificated security” = a security not represented by a certificateb) seizure can occur, subject to s. 51, only through notice of the seizure

by the sheriff to the issuer at their CEO (s. 49)i) exception : if the uncertificated security is registered in the name of

a secured party, by sheriff serving notice of the seizure on the secured party (s. 51)

ii) seizure by notice takes effect once the issuer (or intermediary) has had a reasonable opportunity to act on the notice (s. 63.1(3))

iii) n.b. since must serve on issuer at issuer’s CEO, many offices will not be in BC and must register judgment in another prov. (ex. Ont.)

6) securities entitlements – s. 50 STAa) “security entitlement” = the rights and property interest of an

entitlement holder with respect to afinancial asset specified in Part 6 (s. 1(1))

b) “entitlement holder” = a person identified in the records of a securities intermediary as the personhaving a security entitlement against the securities intermediary and includes a person who acquired a security by virtue of s. 95(1)(b) or (c) (1(1)

c) JD’s interest in security entitlement may be seized by sheriff serving notice of seizure on securities intermediary that maintains JD’s

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securities account7) disposition – ss. 64.1-65.1 COEA

a) sheriff is deemed to be the appropriate person under the STA to deal with or dispose of the seizedproperty and the JD is not the appropriate person

b) on seizure of JD’s interest in security/entitlement, sheriff mayi) do anything that would otherwise have to be done by JD, orii) execute or endorse any document that would otherwise have to be

executed or endorsed by the JD(1)sheriff must provide issuer/intermediary with certificate of sheriff

stating sheriff has authority under this Act (s. 64.1(3))c) sheriff has duty to the JD and JC to get best price

i) if on public exchange, easy – give instructions to brokerage to sellii) if privately held, issues with realizing value and may also be

restrictions on share transfers (more onerous for private companies)(1)most obvious market is other shareholders – often family

membersd) share transfer restrictions

i) sheriff is bound to transfer restrictions where transfer is restricted by terms of security, restriction imposed by issuer, or USA governed by law of BC (s. 65.1(3))

ii) sheriff can apply to court for declaration that the share transfer was put in place to defeat, hinder, delay or defraud Cs and court can make any order it considers appropriate regarding the seized security (s. 65.1(5)) – ex. if the STR put in place immediately after the judgment issued STR was put in place to hinder JCs(1)directing method or terms of sale of security or realizing the

value other than through a sale(2)directing issuer to pay dividends, distributions, or interest to

sheriff(3)directing issuer to register transfer to a person despite a

restriction on the transfer or(4)entitlement of another person to acquire or redeem the security(5)directing that all/part USA does not apply to a person who

acquires security(6)directing issuer be dissolved and proceeds disposed of

Equitable Execution1) an equitable remedy can be applied for in 2 cases

a) seeking to execute a judgment against equitable interests (ex. money is in court or the Crown owes money)

b) where the court deems there to be special circumstances (Warren) – do the special circumstances outweigh the cost of appointing a receiver?i) cannot find Dii) legal impediment to access traditional methods of execution (ex.

money in court, money in trust account; exhausted all other legal remedies)iii) D acted in contravention of original order not to dispose of propertyiv) inconvenience – must be something more than mere inconvenience,

a practical problem (ex. multiple orders needed)

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2) equitable receiver = a person who complies and sells the assets of a JD, giving proceeds to JCa) a post-judgment remedy only b) not meant to be put over all the Ds assets – this would be ultra vires

the prov. b/c it looks too much like bankruptcy receivershipc) receiver stands in place of JD, and can collect debts owing to JD or

commence legal actions on his/her behalfd) once receiver appointed, JD can no longer receive assets, and is

prohibited from interfering, lest the JD be found in contempt of courte) once JC has recovered money, receiver files application with court to be

discharged of their duties, and settles all payment for servicef) authority to appoint equitable receiver

i) may be appointed by interlocutory order of the court in all cases which it appears just and convenient that the order be made (LEA s. 39(1))

ii) court may appoint a receiver in any proceeding either unconditionally or on terms, whether or not included in relief claimed by JD, as the court sees fit (SCCR 10-2(1) & LEA s. 39(2))

iii) order may be enforced by appointment of receiver under Rule 10-1 (SCCR 13-2(5))

3) equitable charging order = order obtained by JC placed on JD’s property for monies oweda) main purpose = attach funds that are already in court in favour of an

existing JC (ex. Millar – CRA could not get funds b/c they were in court)b) CAA does not apply to charging orders b/c they are an equitable

remedy4) these orders can be defeated (b/c they are equitable) by:

a) lack of clean hands (ex. this argument tried in Millar, but not successful as it was the police who did not have clean hand, not the CRA, who was trying to get the money)

b) if the claimant has delayed unduly in seeking themc) a person cannot litigate against a settlor without providing the

appropriate considerationd) cannot be used against a BFPFVWN

Warren v Warren, BCSC 2008 - special circumstances justifying equitable receivershipFacts: judgment issued in Jan. 2008, which gave P $1000, and ordered restrained D from disposing any

assets we do not know where D is (D has serious drug addiction) in May, court orders appointment of equitable receiver terms of the order

receive all property + assets of D, including all D’s shares the receiver has exclusive conduct of the sales of the assets the money received from proceeds of sale are to be paid to P

reasons the order was issued D acted against the original order, which said he was not to do anything with the property – he

accessed his RRSPs and a jointly held LOC P had proceeded to execute her judgment against other RRSPs – so she has used the remedies

available to her – she recovered $25k, and so that leaves $75k outstanding D is the sole shareholder and director of a company, with property valued close to $200k P is trying to access the shares (again, she has tried another remedy), but she cannot – even if

she could, it may be hard to know how to value the shares, since it is a private corporations in any event, D has a lot of other debts that would have to be paid off

CRA is doing an audit, and there is an indication that D owes wages to his EMEs wages of

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EMEs rank above other JCsHeld: equitable receivership granted there is no limit on discretion of court to appoint receivers it is not cheap to appoint a receiver, and so JC has to show the benefit of appointment > costs here, D cannot be found and is outside the reach of usual remedies only property D has is with the company there are special circumstances that exist to allow the appointment of the receiver

Mr. Warren is outside the reach of the usual remedies – he cannot be found to be served with a subpoena, or to deliver up the shares, books and records of the corp.

only assets available to P are held by the company controlled by Mr. Warren – receivership is certainly a more convenient mode than garnishing proceedings, as the latter are impossible in the circumstances

overall, P demonstrated circumstances which make it extremely difficult, if not impossible, for judgment to be realized if the appointment of a receiver is not granted

Canada (MNR) v Millar, BCCA 2007Facts: Millar has $200k in car, and is charged with making illegal TV converters; police tries to use the seized money as evidence; however, the search and seizure of his car and money was illegal; thus, that money not allowed to be used as evidence; Millar also owes over $2M to gov.; CRA serves a notice on the police (who has the money) to pay that money to CRA; there is a dispute over the money – CRA, Millar, Millar’s brother all want that money; police applies to court to ask for directions on who gets that money – “interpleader proceedings”Held: chambers judge grants an absolute order so that CRA can get it right away; CRA has judgments against Millar, and there is a legal hindrance at CRA getting at money in any other way, since it is in court; thus, CRA can appoint an equitable receiver; CRA could not garnish money when at hands of police, since police is part of gov.; Millar argues that CRA did not come with “clean hands” and so cannot get the equitable order – the seizure was illegal; however, court says CRA ≠police – they are 2 separate entities, even though both are gov.

Exemptions, Immunities and PrioritiesPriorities

1) generally speaking, secured Cs always rank ahead of unsecured Cs2) for unsecured, the rankings is usually as follows

a) certificate for unpaid wages issued under Employment Standards Actb) statutory lien under WCA (priority over everything except liens for

wages due to workers by their EMP)c) FMO (priority over unsecured judgment debt only)

3) ratable sharing provisionsa) distribution: proceeds are distributed ratably among JCs % of the

total based on proportion of the claim; applies to real and personal property (s. 3 CAA)

b) if a JC forces a sale, it must be paid into court and distributed in accordance with the CAA (ss.110-111 COEA)

c) sheriff’s notice of levy: when a sheriff levies money on an execution against the property of D, the sheriff must enter promptly in a book of notice stating the levy has been made, its amount, and date of entry (s. 2(1) CAA); book must be kept in sheriff’s office and open to public without charge (s. 2(2) CAA)

d) deficiency in levy: if the amount levied by the sheriff is not sufficient to pay the execution debts and other claims, money applied ratably to pay debts and costs of Cs, after paying sheriff’s fees, taxed costs andcosts of execution to C who instigated the levy (s. 27 CAA)

e) distribution to established claimants only: if debt claim, may get certificate of claim to share in distribution, even if no judgment (s. 37 CAA)

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f) CAA does not apply to the fed. gov., but it applies to the prov. gov. (Rutherford)

4) mortgages and judgmentsa) charges have priority according to the date of registration (LTA s. 28)b) if judgment mortgage more judgments, all the judgments will

share ratably and rank ahead of the mortgage b/c LTA s. 28 cannot be read in consistent manner with CAA s. 3 (Hankin)

5) family support ordersa) despite any other Act, a FMO has priority over unsecured judgments (s.

28(1) FMEA) (Leontowicz)b) this priority only applies to arrears owing back 1 year from the time JC

initiated proceedings to enforce the FMO (s. 28(2) FMEA) i.e. for remaining years, must share equally

c) all FMOs rank equally, and if not enough money, than share ratably (s. 28(3) FMEA)

d) where property (real or personal) has been seized and sold pursuant to the COEA, FMOs will bepaid out from the funds ahead of ordinary Cs; any funds remaining will be distributed ratably (if morethan 1 C, entitled to share under CAA)i) the sharing provision under COEA does not apply to a FMO (s. 26(5)

FMEA + COEA s. 95 on the sharing provisions in CAA)e) payments received on behalf of a C are not garnishable by another C or

maintenance D (s. 28(4) FMEA)6) wages – may pursue an action through any of the 3 Acts and will have

priority in all cases (ESA strongest) (MacMillan Bloedel)a) COEA s. 52

i) where there has been a seizure of goods under a writ of execution or an order for the sale of land (or a sale of these forms of property by a receiver), an EME of the JD may apply to the court for an order that the sheriff (or receiver) keep up to 3 months of wages owing at time of seizure/order/sale

ii) will have priority over execution C’s claim (after the costs of the execution proceedings) (s. 52(2) COEA)

iii) this is a discretionary remedy (s. 52(2) COEA) – EMEs of execution D may apply for order with propriety for 3 months arrears

b) CAA s. 36i) claims for wages and salaries of EMEs who were employed by D at

the time of the levy or within 1 month before the levy have a priority over other claimants to the extent of 3 months wages or salary (s. 36(1) CAA)

ii) if their claim is in excess of 3 months wages portion in excess share ratably with other Cs

iii) to participate, EMEs must file writ of execution or a certificate of claim in accordance with the CAA procedures that other Cs follow

iv) in practice, most EMEs use remedies in ESA to pursue unpaid wage claim

c) ESA – s. 87(1)i) Director of Employment Standards can make a determination that

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an EMP pay wages owing for up to6 months (s. 80 ESA)ii) unpaid wages are a lien, charge and secured debt in favour of

director for up to 6 months unpaid wages or salary (s. 87(1) ESA)iii) the lien/charge has priority over all other claims except money

advanced under a mortgage or debenture registered against land (s. 87(3) ESA)

d) n.b. priority is given to amounts due to WCB (WCA s. 52(1))i) WCA applies to both property and proceeds of property (WCB #1)ii) fed. Crown prerogative not extinguished, but BC hasextinguished

theirs; thus priority = WCB statutory lien> AG Canada> remaining Cs share ratably (including BC gov.) (WCB #2)

Rutherford, Bazett & Co v Penticton Pub Ltd, BCSC 1983 – on Crown PrerogativesFacts: Rutherford wants their judgment paid out first – they are asking that everything be paid out in order; gov. argues that they have a right to have their judgments paid out first, then the others can share ratablyHeld: the court essentially confirms registrar’s report, but suggests that they have to have a hearing wrt distribution of proceeds b/c of this objection; unless it specifically provides otherwise, an enactment is binding on the gov. (BC) (s. 14(1) IA); priority = sheriff’s costs> municipality for taxes> payment of petitioner’s costs> Queen in right of Canada> balance to be paid out to other JCs in proportion to judgments (including prov. Crown) b/c the prov. by virtue of s. 47 CAA , and s. 14 IA, has wiped out any prerogative right to priority which Queen in right of BC may have had; however, feds. still have their royal prerogativeHankin Furniture Industries Ltd v Gill, BCSC 1979Facts: 3 judgments before a mortgage, and 8 more judgments on a piece of land; Hankin is one of the JCs; have proceedings to have the land sold under COEA – CCA will apply b/c ss. 110-111 work together to say that proceeds of sale are monies that should be distributed pursuant to ss. 2-3 of CCA; s. 28 LTA establishes a first in time registration ruleHeld: all JCs share, taking priority to the mortgage; statutory provisions (s. 3 CAA) support a finding that JC’s registered prior to mortgages rank ahead, and further, this means that all JC’s, even those that might come after, may take priority over the mortgage; s. 28 LTA and s. 3 CAA are inconsistent and cannot be applied together; this means even when a mortgage is registered before the judgments, JCs will share ratably and the remainder is distributed to the mortgagorKodar: this discourages lendingReitmeier v Leontowicz, BCSC 1999 – s. 28 FMEA gives FMOs priority over other unsecured judgmentsFacts: property is sold under execution proceedings brought by FMEA, proceeds of sale was $28k; Leontowicz owes additional money aside from the FMOHeld: ordinarily, all 6 share ratably; but here, FMEA makes the FMOs have priority over the other 3 judgments; thus order = taxes water/sewage payments owed the 3 FMOs share priority – but if not enough, they will get paid ratably if there is anything left over, the rest of the 3 judgmentsKodar: water/sewage payments and taxes given priority according to other Acts – do not need to know them for this courseWorkers’ Compensation Board v Canada (AG) #1 – WCA applies to both property and proceeds of propertyFacts: CAA says everyone shares ratably; WCB says notwithstanding any other legislation, they rank aheadHeld: WCB ranks ahead b/c they’re both legislation at the same level; WCA was passed later than CAA assume legislature knows about the other legislation; also, s. 52 specifically refers to property and proceeds of propertyWorkers’ Compensation Board v Canada (AG) #2 – Federal Crown prerogative not extinguished, but BC has extinguished theirs; WCB statutory lien> AG Canada> remaining Cs share ratably (including BC gov.)Issue: does the Crown priority over regular Cs extend to the proceeds of sale?Held: the funds are un-crystallized until distribution has been determined so the Crown prerogative applies; extinguished its right using s. 46 CAA & s. 14 IA

Exemptions1) income assistance, hardship assistance, and supplements exempt

(Employment and Assistance Act s. 29(1)),but does not prevent income

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assistance being retained by way of a deduction or set off under this Act, FAA or a prescribed enactment (s. 29(2))

2) workers compensation payments exempt, except for money advanced by way of financial or other social welfare assistance owing to the prov. or to a municipality (s. 15 WCA)

3) CPP payments exempt (Canada Pension Plan Act s. 65(1.1)), except if person applying for CPP has been given “any advance or assistance or welfare payment” (s. 65(2))

4) old age security benefits exempt from seizure and execution (Old Age Security Act s. 36(1.1))

5) provincial pension benefits exempt (Pension Benefits Standards Act s. 63(1)), except does not apply to additional voluntary contributions (s. 63(3)(a)) or pension entitlements that relate to a family law proceeding (s. 63(3)(b))a) as per s. 63(3)(a), additional voluntary contributions made

before/on/after November 1, 2008 are exempt (s. 63(3.2)), unlessi) the additional voluntary contributions were made after/within 12

months before the date on which a debt came due and the execution, seizure or attachment is to enforce payment of that debt,

ii) the additional voluntary contributions have been or are being withdrawn from a pension plan,

iii) the execution/seizure/attachment is by(1)a notice of attachment, order of garnishment or attachment order

referred to in (3.1) or(2)any other process to enforce a FMO as defined in FMEA, or

iv) the execution/seizure/attachment was initiated against the additional voluntary contributions before Nov. 1, 2008

6) if federally regulated, the exemptions in the prov. will apply (Pension Benefits Standards Act, 1985, s. 31)

7) insurance money (or rights or interest in it) exempt if beneficiary is designated, from the date of the event (Insurance Act s. 65(1))a) designation = designation in favour of any one or more of a spouse,

child, grandchild or parent of a person whose life is insured (s. 65(2))b) “life insurance” = insurance that is payable…(Insurance Regulation)

(a) on the death of the person whose life is insured,(b) on the happening of an event or contingency dependent on human life,(c) at a fixed or determinable future time, or(d) for a term dependent on human life, including, …insurance under which the insurer(e) undertakes to pay an additional sum of insurance money in the event of the death by accident of the person whose life is insured,(f) undertakes to pay a sum of insurance money or to provide other benefits in the event that the person whose life is insured becomes disabled as a result of bodily injury or disease, or(g) undertakes to provide an annuity, … for a term dependent solely or partly on a human life

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Immunities (Gov.)1) prov. – courts may not issue execution/attachment on a judgment against

the prov. Crown (Crown Proceeding Act s. 13(6))2) feds – courts may not issue execution or attachment on a judgment

against the fed. Crown (Crown Liability and Proceedings Act s. 29)a) Minister shall authorize payment out of the Consolidated Revenue Fund

of any money awarded to any person against the Crown (s. 30(1))3) n.b. in theory can use equitable execution against Crown, but Crown

always pays anywaysFirst Nations Land [Indian Act]

1) real and personal property of a status Indian or band situated “on reserve” is not subject to any kind of execution proceedings by anyone other than an Indian or a band (s. 89(1) IA)a) Indian = someone who is registered or entitled to be registered under

IAb) this provision makes it more difficult for a C to recover a judgmentc) also creates a problem for First Nations – hard to raise money/access

credit if they cannot give their property as security2) personal property is deemed to be situated on reserve if (s. 90(1) IA)

a) purchased by the Crown with Indian money,b) purchased with money appropriated by the Crown for Indian use, orc) if given to status Indian or band pursuant to a treaty or agreement

i) for this deeming provision in to apply, the agreements must be related to a treaty agreement – ancillary to a treaty agreement (God’s Lake)

ii) n.b. God’s Lake creates uncertainty for Cs – C must do a case-by-case analysis of anything offered as collateral to determine if protected by these sections or not; depending on the content of a treaty in a particular area, funds for the same purpose of a Band in Ont. and MB may be protected in one but not the other, depending on what the treaty holds

God’s Lake First Nations v McDiarmid Lumber, SCC 2006 – for “deeming” provision in s. 90 to apply, the agreements must be related/ancillary to a treaty agreementFacts: M has K to provide construction and various materials; not paid by Band for the services; M initiates proceedings; Band entered into consolidated fund agreement (CFA) with gov.; Bands consents to a judgment saying they owe money to M, and M agrees they will not act on the judgment for 11 months; but after 11 months, still not paid, so M gets a GO; CFA money is in a bank off-reserveHeld: M gets money as CFA money not protected from seizure b/c CFA not an “agreement” or “treaty” “on reserve” should be given its plain ordinary meaning deeming provision in s. 90 does not apply its not an agreement – an agreement has to be ancillary to or flesh out the meaning of the treaty principle of associated meaning since “agreement” is linked to “treaty” by “and” – the two

should have a linked meaning also, “treaty” cannot mean same thing as “agreement” protecting property on reserve from Cs is an exception to the general rule that Cs should be able to

access a D’s property – b/c it is an exemption, it should be construed narrowly particularly b/c we want the D/C regime to be predictable and certain

the majority’s interpretation is responding to the Royal Commission’s concern that s. 89 hinders economic development and ability of Indians to access credit

history of the exemption = the protection was narrowed over time this interpretation is also consistent with self-sufficiency so b/c GL could not show the CFA was related to the Crown’s treaty obligation, the funds were not

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protected from seizure – M got their money in sum, ss. 89-90 will be interpreted narrowlyDissent: CFA money is protected b/c “agreement” includes agreement to provide essential public services s. 90(1)(b) – covers agreements to provide essential public services (ex. housing, welfare) thus,

the exception is interpreted to protect funds for essential public services thus, “agreement” covers agreements to provide essential public services also, the CFA was provided for housing, health, infrastructure, education and welfare – now all the

money will go to M so either feds have to provide the money again, or the Band will have to go without these

services so, this decision would give more weight to M – Lumbar company could have protected

themselves in other ways ex. Lumbar company could have gotten their money up front, or require the Band to get a ministerial approval (s. 92(2)) – minister can approve a waiver of the ss. 89-90 protection as a condition of providing the service

Kodar: problem with accepting dissent’s argument that as long as money is for public services, the money is protected = how to determine what is public service?; also, if that money is protected, companies may be reluctant to K to provide those services

Debts to Government1) limitation periods in s. 6 LA, when applied to a gov. claim, are deemed to

be 6 years (s. 86.1(2)(b) FAA) [see pp. 16-17 for def. of “gov. claim”]2) special power for gov. = if D owes money to the gov., and the Minister of

Finance receives info that a 3P is/is about to become indebted to D, the MF may demand 3P to pay that money to MF on account of D’s liability to gov. (s. 83(1) FAA)a) the 3P must pay to MF promptly after (s. 83(2) FAA)

i) receipt of the demand, orii) the due date of the liability to D, and the receipt by the MF for

money paid discharges the liability of 3P to D to extent of the amount

3) MVs – ICBC may refuse to issue a drivers license to a person who:a) is indebted to ICBC (s. 26(1)(b) MVA)b) is indebted to gov. b/c of failure to pay fine imposed due to conviction

under: (s. 26(1)(b) MVA)i) a MV related CC offence,ii) the MVA,iii) the Commercial Transport Act,iv) the Motor Fuel Tax Act,v) the Highway Act or the Transportation Act,vi) the Liquor Control and Licensing Act, whether the indebtedness

arose before/after this subparagraph comes into forcevii) the Motor Carrier Act or the Passenger Transportation Act, orviii) the Motor Vehicle (All Terrain) Act,ix) the South Coast British Columbia Transportation Authority Act,

whether the indebtedness arose before or after this subparagraph comes into force, or

x) the British Columbia Transit Act, whether the indebtedness arose before/after this subparagraph comes intoforce

c) is indebted to a concessionaire/billing org. for excessive toll debt, as defined in Transportation Investment Act (s. 26(1)(e) MVA)

d) is indebted to authority/subsidiary/billing org. for excessive toll debt, as defined in South Coast BC Transportation Act (s. 26(1)(f) MVA)

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i) excessive toll debt = a toll debt of not less than the amount established by bylaw of the authority (SCBCTA s. 1) = a toll debt that exceeds $25 (SCBCT Authority Bylaw Number 96-2014)

4) FMEP (Family Maintenance Enforcement Program) – GOsa) s. 18(2) FMEA allows for continuing GOs when it is a FMOb) order remains in force for 12 months unless discharged by the court (s.

18(3))c) if garnishee admits a debt, they must promptly pay it to the court and

amount forwarded to director (s. 18(4))5) income tax

a) garnishment: where Minister has knowledge or suspects 3P is/will be within 1 year liable to make payment to D, Minister may in writing require 3P to pay money otherwise payable to the tax D to the Receiver General on account of the tax D’s liability (ITA s. 224(1))

b) collection restrictions: if TP liable for amount assessed, Minister shall not do any of the following to collect the amount (s. 225.1(1)):i) commence legal proceedings in a courtii) certify the amount under s. 223iii) require a person to make a payment under s. 224(1)iv) require an institution or a person to make a payment under s.

224(1.1)v) require a person to turn over moneys under s. 224.3(1), orvi) give a notice, issue a certificate or make a direction under s. 225(1)

c) collection commencement: collection commencement day is (s. 225.1(1.1))i) in the case of an amount assessed under s. 188(1.1) in respect of a

notice of intention to revoke given under s. 168(1) or any of ss. 149.1(2) to (4.1), 1 year after the day on which the notice was mailed

ii) in the case of an amount assessed under s. 188.1, 1 year after the day on which the notice of assessment was sent; and

iii) in any other case, 90 days after the day on which the notice of assessment was sent

d) rationale = this money owed to the gov. is public moneyFraudulent Conveyances

1) the following are void and of no effect if made to delay, defraud, or hinder Cs and others of their just and lawful remedies (s. 1 FCA), with burden on P to prove “disposition” and “intent”a) a disposition of property, by writing or otherwiseb) a bondc) a proceedingd) an order

2) does not apply to a disposition of property to BFPFVWN of collusion/fraud (s. 2)a) burden on D to prove good consideration + good faith

3) “disposition of property”a) property = any beneficial interest in real or personal property –

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property that is exempt from execution proceedings is not within the scope of the Act

b) so long as property is transferred, there is a dispositioni) dispose = to transfer by any method and includes assign, give, sell,

grant, charge, convey, bequeath, devise, divest, release, and agree to do any of those things (s. 29 IA)

ii) other grammatical forms of the word have the same meaning (s. 24(1) IA) therefore “dispose” def. applies to “disposition” etc.

4) “others” includes future Cs who are foreseeable (those who extend credit to D after FC takes place) (Abakhan)a) n.b. commentary post-Abakhan indicates courts should recognize a

future C as someone D has some sense of at the time of the transaction; a speculative future C should not be caught

5) “intent”a) there is no need to prove dishonest intent for a FC, only intent to move

property out of the reach of Cs (Abakhan)i) the transaction may be fraudulent even if it was carried out with

other intentions, so long as one of the intentions was to move property out of reach (Abakhan)

b) the legislation is remedial, but must be given a broad, fair, liberal construction that best meets the aims of Cs (Royal Bank of Canada, cited in Abakhan at para. 62)

c) essentially, there are 2 possible scenariosi) if no consideration or consideration is not good look at intent of JD

+ effect of transaction, and if it hinders Cs fraudulentii) if good consideration to take the transaction outside of s. 2, must

show an intent to delay, hinder,defraud Cs and collusion/fraud on both transferee and transferor such that the transaction was not in good faith

6) badges of fraud – used as circumstantial evidence to prove intention for frauda) transferring for little or no considerationb) failure to register the transaction or delay in registrationc) transferee’s relationship with transferor – does the transferor continue

to use/benefit from the property?d) is the exchange one of real and personal property (easy to execute) for

preferred shares of the same value (very difficult to execute against)?e) was it transferred on the day a writ of execution was received?f) did the person convey most/all of assets?g) transferred interest in JT, which would have transferred to his wife on

death anywaysh) when interest conveyed, D did not have substantial assets other than

what was transferred7) n.b. if JD subsequently becomes bankrupt, TIB may use provision of BIA to

attack the transactionAbakhan Associates v Braydon Investments, BCCA 2009 – it is the effect of the transfer, not the dishonest intent of the transferor that is operativeFacts: Abakhan & Associates Inc. was the TIB for Botham Holdings Ltd; assets were transferred from Botham to Braydon Investments Ltd. prior to bankruptcy; an application was made for a declaration

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that the transfer of assets was of no force or effect as against the TIBTJ: since one purpose of the asset transfer was to put Botham’s assets out of reach of its Cs, the transfer met the test for a “fraudulent conveyance”; this was the case, despite the fact that the principal of Botham had no dishonest intent and acted on the advice of professionals to effect a legitimate business purpose with the transferAppeal: TJ’s decision upheld; Botham was trying to obtain the tax advantages associated with a s. 85 rollover of assets (ITA) while limiting liability for the business venture by stripping out all of the assets

Professional Obligations – Lawyers (LSBC Code of Professional Conduct)1) a lawyer must not engage in any activity that the lawyer knows or ought

to know assists in or encourages any dishonesty, crime or fraud (3.2-7)a) the lawyer must be on their guardb) must make reasonable inquiries to get info about the client, subject

matter, objects of the retainer, and make records of these inquiriesc) if the lawyer thinks the transaction runs the risk of fraud, advise the

client not to do it and refuse to do itd) if you give them advice and they want to risk it, it is foolish of the

lawyer to assist them2) facts that should put the lawyer on notice :

a) client promising unrealistic investment return to 3Psb) client wants to put money in lawyer’s trust account when no services

provided3) lawyer who is employed or retained by an org. to act in a matter in which

the lawyer knows or ought to know that the org. has acted, is acting or intends to act dishonestly, criminally or fraudulently, must do the following, in addition to his/her obligations under Rule 3.2-7 (3.2-8)a) advise the person from whom the lawyer takes instructions and the

chief legal officer, or both the CLO and the CEO, that the proposed conduct is, was or would be dishonest, criminal or fraudulent and should be stopped

b) if the above group of people refuse to cause the proposed conduct to be stopped, advise progressively the next highest persons/groups, including ultimately, the board of directors, the board of trustees, or the appropriate committee of the board; and

c) if the org., despite the lawyer’s advice, continues with or intends to pursue the proposed wrongful conduct, withdraw from acting in the matter in accordance with s. 3.7

Consumer Bankruptcy and Insolvency1) purposes of bankruptcy and insolvency regime

a) rehabilitation – want and honest and unfortunate Ds to get discharged from debts under reasonable conditions so they can become productive and useful citizens again

b) realization – bankruptcy provides an inexpensive and efficient way for Ds to turn over their assets to a trustee, who then distributes them

c) distributiond) investigation – the bankrupt has to report transactions over past years;

fraudulent transactions can be reversede) reorganization – provides a way for both consumer Ds and corporate Ds

to reorganize their affairs in a way to avoid bankruptcy

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2) 4 relevant pieces of legislationa) Bankruptcy and Insolvency Act (federal) [we only focus on this Act]b) Companies’ Creditors Arrangement Act – short term protection while Ds

prepare offer to Csc) Winding-up and Restructuring Act – applies to financial institutionsd) Farm Debt Mediation Act – applies to insolvent farmers

3) main requirement to initiate bankruptcy = must be an “insolvent person” under BIA s. 2, meaning person who is not bankrupt, resides/carries on business/property in Canada, liabilities provable amount to $1,000, anda) for any reason unable to meet obligations as they generally become

dueb) ceased paying current obligations in OCB as they generally become

due, orc) aggregate FMV of property not sufficient to enable payment of all

obligations due and accruing4) consumer insolvency options

a) option #1 : assignment in bankruptcy – an insolvent person may, with leave of court, make assignment of all insolvent person’s property for general benefit of their Cs (BIA s. 49)

b) option #2 : petitions in bankruptcy – Cs may file in court application for bankruptcy order against D if alleged inapplication thati) debts owing amount to $1,000, andii) D has committed act of bankruptcy within 6 months preceding filing

(1)act of bankruptcy means…(a)default in any proposal made under this Act – s. 42(1)(i)(b)ceases to meet obligations generally as they become due – s.

42(1)(j)c) option #3 : proposals

i) corporate = “reorganization” – BIA if debts less than $5M, BIA or CCAA if more than $5M

ii) consumers = “consumer proposal”(1)consumer D = an individual who is bankrupt or insolvent and

whose aggregate debts, excluding any debts secured by principal residence, are not more than $250,000 (s. 66.11)

(2)a consumer proposal must provide that its performance is to be completed within 5 years (s. 66.12(5))

iii) key advantage = keep surplus income earned & avoid stigma of bankruptcy

iv) D will have to convince Cs it is more advantageous than bankruptcy; will involve paying debts off over longer time period, but Cs will get more

5) effects of bankruptcya) all unsecured property vests in TIB to be distributed to Csb) TIB liquidates all assetsc) TIB entitled to any property D accrues until discharged) stay of proceedings for unsecured Cs – rationale = allows for orderly

and fair distribution of bankrupt’s propertye) lose credit cards

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f) poor credit rating for 6 yearsg) surplus income payment during bankruptcyh) restrictions and disclosure requirements

i) disclose bankrupt status to anyone giving you credit over $1000, or anyone you want to do business with

ii) cannot act as director for a corp.iii) vacate seat on the Senate

6) duties of bankrupta) make discovery of and deliver all property under his/her

possession/control to TIB/authorized person (s. 158(a))b) in circumstances specified in Directives of Superintendent, deliver to

TIB all credit cards in possession/control to TIB for cancellation (s. 158(a.1))

c) deliver to the TIB all books, records, documents, writings and papers including, title papers,insurance policies and tax records and returns and copies thereof in any way relating to his/her property or affairs (s. 158(b))

d) make disclosure to the TIB of all property disposed of within 1 year before the date of the initial bankruptcy event and how and to whom and for what consideration any part thereof was disposed of (s. 158(f))

e) make disclosure to the TIB of all property disposed of by gift or settlement without adequate valuable consideration within the period beginning on the day that is 5 years before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included (s. 158(g))

f) inform the TIB of any material change in the bankrupt’s financial situation (s. 158(n.1))

Insolvent Lawyers (LSBC Rules)1) Rule 3-43 these rules apply to the following:

a) a non-practising member;b) a retired member;c) an articled student;d) a practitioner of foreign law;e) a visiting lawyer permitted to practise law in BC under 2-10.2 to 2-12;f) a law corporation

2) insolvent lawyer = a lawyer who (Rule 1)a) is the respondent of a petition for a receiving order under s. 43,b) has made an assignment of all his/her property for the general benefit

of the lawyer’s Cs under ss. 49c) has made a proposal under ss. 50 or 66.11d) has filed a notice of intention to make a proposal under s. 50.4, ore) has applied for a consolidation order under s. 219 BIA

3) instances in which a lawyer has failed to meet a minimum standard of financial responsibility include becoming an insolvent lawyer (3-43.1(b))

4) a lawyer who becomes an insolvent lawyer must immediately notify the Executive Director in writing that he/she has become an insolvent lawyer (3-45 (2(a)))

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5) an insolvent lawyer who becomes bankrupt has conducted himself/herself in a manner unbecoming a lawyer in either of the following circumstances: (3-45(3))a) the lawyer’s wilful neglect of Cs, financial irresponsibility or personal

extravagance contributed to the bankruptcyb) the lawyer fails or refuses to take reasonable steps to obtain a

discharge from the bankruptcy within a reasonable time6) insolvent lawyer must not operate a trust account except with…(3-45(4))

a) the permission of the Executive Director, andb) a 2nd signatory who is a practising lawyer, not insolvent, and approved

by the Executive Director7) any lawyer who becomes an undischarged bankrupt must resign any

directorships in corporations, including law corporations, in accordance with s. 124 Business Corporations Act (3-45(5))

Exemptions1) all property of the bankrupt at the date of bankruptcy will become

property available to be distributed to Csa) property = any type of property, whether situated in Canada or

elsewhere, and includes money, goods, things in action (includes action for damages in K/tort claim but does not include reputation/personal injury), land and every description of property, whether real or person, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent (s. 2)

2) exclusions – s. 67(1)(a) property held in trust for another person(b) exempt assets under COEA: property that is exempt from execution or seizure under any laws applicable in the prov. where property situated/bankrupt resides(b.1) goods and services tax credit payments(b.2) prescribed payments relating to essential needs of individual(b.3) without restricting generality of (b), property in RRSP/RRIF/any prescribed plan other than property contributed in the 12 months before date of bankruptcy

3) inclusions – property at date of bankruptcy including refund owing under ITA for calendar year – s. 67(1)(c)

Surplus Income[Surplus Income Directive]

1) “total income” includes a bankrupt’s revenues earned/received by bankrupt between date of bankruptcy and date of discharge (including damages for wrongful dismissal that relates to workers’ compensation) (BIA s. 68(2)(a))a) does not include amounts received as a gift/legacy/inheritance or as

any other windfall (BIA s. 68(2)(b))2) the Superintendent, shall by directive establish standards for determining

the surplus income of an individual bankrupt and the amount required to be paid to the estate (BIA s. 68(1))

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a) Superintendent’s Standards are derived from the Low Income Cut Off (LICO) released by Statistics Canada

3) family unit includes, in addition to the bankrupt, any persons who reside in same household and who benefit from either expenses incurred or income earned, or who contribute to expenses/earnings; person who does not reside is a member if he/she benefits from or contributes to expenses/income (SID s. 4)

4) calculation according to SID s. 5a) family unit’s total monthly income is determined by subtracting from

the total of all of its members’ monthly incomes the following amounts as applicable: (s. 5(2))i) in the case of a salaried EME, minimum statutory remittances

(income tax, pension and employment insurance deductions) and other mandatory deductions

ii) in the case of a person who is self-employed, business expenses and deductions as permitted by the ITA or similar prov. legislation, minimum statutory remittances and installment tax payments

b) the family unit’s available monthly income = family unit’s total monthly income −¿ monthly no-discretionary expenses applicable to the personal and family situations of both the bankrupt and bankrupt’s family unit: (s. 5(3))i) child support payments;ii) spousal support payments;iii) child care expenses;iv) expenses associated with a medical condition;v) court-imposed fines or penalties that are in the process of being

paid;vi) expenses permitted by ITA (or similar prov. legislation) that are a

condition of employment;vii) any other debt where a stay of proceedings has been lifted by

the court, and a recourse authorized; andviii) interest paid on debts that are not dischargeable in bankruptcy

under s. 178(1)(g) BIAc) TIB shall verify accuracy of income and expense statement submitted

by bankrupt by requiring bankrupt provide: (s. 5(3))i) proof of income; andii) proof of payments made pursuant to ss. 5(2)-(3)

d) for the purposes of s. 68(3) BIA, TIB determines whether bankrupt has surplus income by subtracting from family unit’s available monthly income the amount that, according to the Superintendent’s Standards (Appendix A), corresponds to the number of persons in the family unit (SID s. 5(5))i) the Superintendent’s Standards for 2014 are:

(1)family of 1 = 2014(2)family of 2 = 2508(3)family of 3 = 3083(4)family of 4 = 3743(5)family of 5 = 4245

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(6)family of 6 = 4788(7)family of 7+ = 5331

e) where the bankrupt has monthly surplus income < $200, bankrupt is not required to pay any amount to the bankrupt’s estate under this Directive (s. 5(6))

f) subject to the family situation described in s. 6(1) and an adjustment to surplus income calculation under 7 or 8, where bankrupt has monthly surplus income = or > $200, the bankrupt is required to pay 50% of the monthly surplus income to the bankrupt’s estate (s. 5(7))

5) family situation adjustmenta) the amount that the bankrupt is required to pay to the bankrupt’s

estate as determined in ss. 5(6) or (7) shall be adjusted to the same % as the bankrupt’s portion of the family unit’s available monthly income (s. 6(1))

b) where non-bankrupt spouse refuses/neglects to divulge income/expenses, TIB shall, apply 50% of Superintendent’s standards (Appendix A) corresponding to number of persons in family unit (s. 6(2))

c) where person considered to be member of family unit as described in 4 (other than a spouse), who is not bankrupt, refuses or neglects to divulge his/her income and expenses, this person is deemed not to be a member of the family unit (s. 6(3))

6) TIB shall review the financial circumstances of the bankrupt on at least the following 2 occasions (s. 7(1))a) outset of the fileb) during the

i) 8th month in the case of a first-time bankrupt andii) 23rd month in the case of a 2nd time bankrupt

7) average monthly surplus income – where bankrupt eligible for automatic dischargea) when reviewing the bankrupt’s financial status, the TIB shall calculate

the bankrupt’s average monthly income, which is used to determine the amount the bankrupt is required to pay to the bankrupt’s estate (s. 7(2))

b) if, based on the average monthly income, there is a requirement to make payments bankrupt required to continue to make payments for an additional 12 months before automatic discharge; if there is a further material change, TIB shall re-determine whether the bankrupt has surplus income, but the bankrupt is not eligible for an earlier discharge, subject to an application under s. 168.1(2) BIA (s. 7(3))

c) if, however, based on average monthly income there is no requirement to make payments bankrupt eligible for automatic discharge at 9th/24th month, as the case may be (s. 7(4))

d) if bankrupt eligible for automatic discharge on date different than the dates indicated, TIB shall immediately send an amended Form 68 or 69 with the new date (s. 7(5))

e) if bankrupt fails to provide TIB with info needed to determine average monthly income, TIB shall oppose the discharge of the bankrupt (s.

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7(6))f) if a bankrupt has not paid the required amount to the bankrupt’s

estate, TIB shall oppose discharge (s. 7(7))g) TIB is not required to return to the bankrupt any payments that are

made to the estate under s. 68 where it is determined, based on the average monthly income, that the bankrupt was required to make payments of a lesser amount or no payments under s. 68 (s. 7(8))

8) average monthly surplus income – where bankrupt not eligible for automatic dischargea) TIB shall review the financial circumstances of a bankrupt who is not

eligible for automatic discharge on at least the following 2 occasions (s. 8(1))i) at the outsetii) when completing Form 82

b) TIB shall calculate the bankrupt’s average monthly income based on the income and expense statements (s. 8(2))

c) if bankrupt fails to provide the TIB with the info needed to determine average monthly income, TIB shall oppose the discharge of the bankrupt (s. 8(3))

d) if bankrupt has not paid the required amount to the bankrupt’s estate, the TIB shall oppose the discharge of the bankrupt (s. 8(4))

e) TIB is not required to return to the bankrupt any payments made where it is later determined, based on average monthly income, that the bankrupt was required to make payments of a lesser amount or no payments at all (s. 8(5))

9) discontinuation of payments – s. 9a) bankrupt’s requirement to make payments cease when bankrupt is

dischargedb) but if opposition to discharge filed, bankrupt’s requirement to make

payments ceases on the day on which bankrupt would have been automatically discharged had the opposition not been filed, or as otherwise ordered by the court

Provable Claims1) C must prove claim to be entitled to share in distribution (BIA s. 124(1))2) all questions at meetings of Cs decided by majority resolution at 1 vote for

each $ of every claim of the C – i.e. votes proportionate to claim (s. 115)3) order for discharge releases bankrupt from all claims provable in

bankruptcy (s. 178(2))4) all debts and liabilities, present or future, to which bankrupt is subject to

on date of bankruptcy/to which bankrupt may become subject to before discharge due to pre-existing obligation, shall be deemed to be provable claims (s. 121(1)), however…a) claim/proposal for costs of remedying any environmental

condition/damage affecting real property/immovable are a provable claim, whether condition arose/damage occurred before/after date of bankruptcy (s. 14.06(8))

5) contingent and unliquidated claims

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a) whether contingent or unliquidated is provable and how it should be valued is made in accordance with s. 135 (s. 121(2))

b) TIB shall determine whether provable and, if provable, TIB shall value it and the claim is thereafter deemed provable (s.135 (1.1))

Distribution of Property (in order)1) special claims with superpriority

a) unpaid suppliers (ss. 81.1-81.2)b) unpaid EMEs (s. 81.3)

i) for wages/salaries/commissions/compensation by bankrupt for services rendered during period of 6 months before date of initial bankruptcy to date of bankruptcy – secured, as of date of bankruptcy, to $2,000 – less amount paid for receiver/trustee services – by security on bankrupt’s current assets

c) unpaid pension contributions (s. 81.5)d) environmental claims (s. 14.06(7)) – for costs of remedying

environmental condition/damage2) secured Cs3) preferred Cs s. 136 – subject to rights of secured Cs, property/proceeds

to be distributed to the following in order(a) funeral & testamentary expenses(b)(ii) trustee costs & fees(b)(iii) legal administration costs(d) unpaid wages (6 months or $2,000)(d.1) certain pre-bankruptcy support arrears(d.01 & d.02) the amount equal to the difference a secured C would have received but for other claims that have super-priority [n.b. “secured Cs” appear twice in s. 136 – this is saying that usually secured Cs have their security over an asset, but once bankruptcy proceedings begin, if the secured Cs have not realized on their security, they will be forced into the s. 136 list (or if the money they realized on their security is not enough)](e) municipal taxes assessed or levied against the bankrupt, within the 2 years immediately preceding the bankruptcy(f) particular rent expenses

4) ordinary unsecured Cs – all claims proved in bankruptcy shared rateably (s. 141)

5) postponed Cs (ss. 137, 139, 140)a) s. 137(1) – if not at arm’s length, not entitled to claim dividend until all

other creditor claims satisfiedb) s. 139 – where lender advances money engaged in business under K

with borrower that lender shall receive interest varying with profits and borrower then becomes bankrupt, lender not entitled to recover anything in respect of loan until claims of all other Cs satisfied

c) s. 140 – where a corp. becomes bankrupt, no officer/director thereof is entitled to have his/her claim preferred in respect of wages, salary, commission or compensation for work/services rendered to the corp. in any capacity

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Discharge1) 2 situations of bankrupt

a) never been bankrupt automatically discharged… (s. 168.1(1)(a))i) after 9 months, unless opposition to discharge filed before discharge

takes effect within that 9 months or bankrupt required to make surplus income payments, or

ii) on expiry of 21 months...unless opposition has been filed before discharge takes effect – i.e. if you have surplus income payment, make a proposal!

b) been bankrupt before automatically discharged…(s. 168.1(1)(b))i) after 24 months, unless opposition to discharge or surplus income

payments required, orii) after 36 months, unless opposition filed before discharge takes

effect2) effect of discharge = release bankrupt from all claims provable in

bankruptcy (s. 178(2)); however, bankrupt not released from…a) court imposed fines (s. 178(1)(a))b) damage awards for intentionally inflicted bodily harm or sexual assault

(s. 178(1)(a.1))c) support obligations (s. 178(1)(b)&(c))d) debts created through fraud (s. 178(1)(d)&(e))e) student loan debt (under certain conditions) (s. 178(1)(g))f) any debt for interest owed in relation to an amount referred to above

(s. 178(1)(h))3) on hearing for discharge, court may, other than a bankrupt referred to in

s. 172.1: (s. 172(1))a) grant or refuse absolute order of dischargeb) suspend operation of absolute order of discharge for specified time, orc) grant discharge subject to terms and conditions wrt post-bankruptcy

earnings/property4) no discretion on court to make the above orders b/c they must make the

order based on facts (s. 172(2)); the s. 173 facts are…[see s. 173 for complete list]a) assets of bankrupt are not of value = 50 cents on the dollar, unless

bankrupt proves this is due to circumstances for which the bankrupt cannot justly be held responsible (ex. Wilkshire)

b) bankrupt has continued to trade after becoming aware of being insolvent (ex. Wilkshire)[ n.b. if you are lawyer, this constitutes “conduct unbecoming”]

c) bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities

d) bankrupt has brought on/contributed to bankruptcy by rash/hazardous speculations, unjustifiable extravagance in living, gambling or culpable neglect of bankrupt’s business affairs

e) bankrupt has put any of the bankrupt’s Cs to unnecessary expense by a frivolous/vexatious defence to any action properly brought against the bankrupt

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f) bankrupt has failed to comply with a requirement to pay surplus income

g) bankrupt could have made a viable proposal, and chose bankruptcy rather than a proposal to Cs as the means to resolve the indebtedness – b/c they would pay off more debt in proposal than bankruptcyi) n.b. the assets of a bankrupt shall be deemed of a value equal to 50

cents on the dollar on the amount of his unsecured liabilities when the court is satisfied that the property of the bankrupt has realized/likely to realize/might have realized an amount equal to 50 cents on the dollar on his unsecured liabilities – s. 174

5) the s. 172.1 exception = person income tax Dsa) if the case of a bankrupt who has $200,000 or more of personal income

tax debt and whose personal income tax debt represents 75% or more of the bankrupt’s total unsecured proven claims, the hearing of an application for a discharge may not be held before the expiry ofi) if the bankrupt has never been bankrupt before

(1)9 months after the date of bankruptcy if the bankrupt has not been required to make payments under s. 68 to the estate of the bankrupt at any time during those 9 months, or

(2)21 months after the date of bankruptcy, in any other caseii) if the bankrupt has been bankrupt before

(1)24 months after the date of bankruptcy if the bankrupt has not been required to make payments under s. 68 to the estate of the bankrupt at any time during those 24 months, or

(2)36 months after the date of bankruptcy, in any other caseiii) in the case of any other bankrupt, 36 months after the date of the

bankruptcy6) the following general principles must guide determinations of whether to

grant discharge (Re Wilkshire, at para. 26):a) the interests of the bankrupt and Cs, and interests of the publicb) legislature has recognized that a citizen should not be so overwhelmed

by his debts as to be incapable of performing the ordinary duties of citizenship thus there is a state interest in D being released from the overwhelming pressure of debts

c) one purpose of act is to allow honest but unfortunate D to be discharged and have a fresh start on the other hand...

d) bankruptcy should not be a clearinghouse for all debts, nor is it a charity

e) need to “guard against laxity in granting discharges”f) success or failure of any bankruptcy system depends upon the

administration of the discharge provisions of the Actg) “discharge is not a matter of right”

7) automatic dischargea) TIB shall, not less than 15 days before the date of a bankrupt’s

automatic discharge, give notice of the impending discharge to the Superintendent, the bankrupt and every C who has proved a claim (s. 168.1(4))

b) automatic discharge is deemed to be an absolute and immediate order

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of discharge (s. 168.1(5))c) after a bankrupt has been automatically discharged, TIB shall issue a

certificate to the discharged bankrupt declaring that the bankrupt is discharged and is released from all debts except those matters referred to in s. 178(1); TIB shall send a copy of the certificate to the Superintendent (s. 168.1(6))

8) opposition to automatic dischargea) if C, Superintendent, or TIB opposes discharge, must give notice to

each other and to the bankrupt before the automatic discharge would otherwise take effect – s. 168.2(1)

b) if there is opposition, TIB must, unless the matter is to be dealt with by mediation under s. 170.1, apply without delay to the court for an appointment for the hearing of the opposition in the manner referred to in ss. 169 to 176, and the hearing must be held – s. 168.2(2)i) within 30 days after the day on which the appointment is made, orii) at any later time that may be fixed by the court at the bankrupt’s or

TIB’s requestRe Wilkshire, ONSC 2004Facts: lawyer of DOJ asking for discharge, CIBC opposing for s. 173 grounds; he had tried to move for a job, but mis-anticipated the consequences of the move, he had a 3rd child, and had relied on credit cards to meet these expensesHeld: he cannot be justly held responsible that his assets are not worth 50 cents on the dollar; however, he had continued to trade after becoming insolvent (ex. continued to use credit card, purchased more assets); he had previously made a proposal, so absolute discharge was not an option; court orders conditional discharge – pay $400/month for extra few months before being discharged

Student Loans1) discharge: an order of discharge does not release the bankrupt from a

student loan where the date of bankruptcy occurred (s. 178(1)(g))a) before the date on which the bankrupt ceased to be a full or part time

student under the legislation, orb) within 7 years after which the bankrupt ceased to be a full or part-time

student2) non-application by court order (s. 178(1.1)): at any time after 5 years after

bankrupt referred to in 1(g) ceases to be full/part time student, court may order s. 178(1) does not apply if satisfied:a) bankrupt has acted in good faith in connection with their liabilities

under the debt, andi) good faith evaluated on reasonable person standard (Phillips)ii) did applicant seek available relief and attempt to negotiate

payments? (Philips)b) bankrupt has and will continue to experience financial difficulties to

such an extent that the bankrupt will be unable to pay the debti) i.e. hardship test – ex. Phillips: if to deny the application would place bankrupt who is

not emotionally robust in a position where her mental health could be undermined and progress towards financial rehabilitation halted

3) proposal: a consumer proposal does not release the consumer D from any particular debt referred to in 178(1) unless the consumer proposal explicitly provides for the compromise of that debt and the C voted for the acceptance of the consumer proposal

Re Phillips

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Facts: P filed for bankruptcy, met conditions and was discharged; her student loan debt was not discharged pursuant to s. 178(1)(g) BIAHeld: her student loans should be discharged as s. 178(1)(g) does not apply to this student loan debt; court applied 178(1.1) b/c of undue hardship: she has no equity to get a 2nd mortgage on her home to pay debt, she has poor health, financial solvency will be a very slow process for her, and she will not be able to pay the debt within a reasonable timeRe Abdo, NBQB 2009 – quasi-student loan debtFacts: $20k borrowed money from RBC in relation to student LOC; he also has a student loan; he poorly invests the money, so RBC lends him more money so he can buy more stocks now up to $50k; RBC opposes the discharge on several s. 173 ground: 1) his assets are not 50 cents on the dollar, 2) he was extravagant – continued trading when he was insolvent, and 3) he could have made a proposal to deal with the debtsHeld: court allows discharge of the debt; this debt did not even relate to student loans – even though it was student LOC, he did not use it for his studies; also, RBC took advantage of this immature 19 year old, knowing that he was spending the money on stocks; as to the 50 cents on the dollar argument, his health indicates that he cannot be held responsible

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