Part 5III&IV Unsecured Creditors Post-Judgment Remedies Specific Enforcement Procedures

Part 5III&IVPart 5III&IVUnsecured CreditorsUnsecured Creditors

Post-Judgment RemediesPost-Judgment RemediesSpecific Enforcement Specific Enforcement

ProceduresProcedures

Taxonomy of RemediesTaxonomy of Remedies Against the person of the debtorAgainst the person of the debtor

Imprisonment for failure to pay debtImprisonment for failure to pay debt Imprisonment in aid of examinationImprisonment in aid of examination

Remedies against personal & real propertyRemedies against personal & real property Passive enforcement: filing notice of judgment/memorial Passive enforcement: filing notice of judgment/memorial

of execution – already discussedof execution – already discussed Order for Seizure and Sale – M&E ActOrder for Seizure and Sale – M&E Act

Remedies against debts owing to debtorRemedies against debts owing to debtor Attachment of debts or garnishment – Attachment of debts or garnishment – Garnishee ActGarnishee Act

Equitable execution – fills in the cracksEquitable execution – fills in the cracks Retroactive RemediesRetroactive Remedies

Assignments And Preferences ActAssignments And Preferences Act

Against the Person of Against the Person of the Debtorthe Debtor

Post-Judgment Arrest & Post-Judgment Arrest & ImprisonmentImprisonment

Failure to pay judgment as ordered by Failure to pay judgment as ordered by court is contempt of courtcourt is contempt of court But in all jurisdictions Rules of Court provide But in all jurisdictions Rules of Court provide

that imprisonment is not available for that imprisonment is not available for contempt for failure to pay a judgment debtcontempt for failure to pay a judgment debt

Some jurisdictions retain specific Some jurisdictions retain specific statutory authority to imprison debtor for statutory authority to imprison debtor for non-paymentnon-payment Nfld, NB, NS, BC, YukonNfld, NB, NS, BC, Yukon Rarely usedRarely used

Post-Judgment Arrest & Post-Judgment Arrest & ImprisonmentImprisonment

NB Arrest & Examinations s.36NB Arrest & Examinations s.36 No person shall be arrested or imprisoned after No person shall be arrested or imprisoned after

judgment in any civil suit, or for making default in judgment in any civil suit, or for making default in the payment of a sum of money. . . the payment of a sum of money. . .

Abolition of common law imprisonment for failure Abolition of common law imprisonment for failure to payto pay

. . .except as provided and allowed by this or any . . .except as provided and allowed by this or any other Act at the time in force.other Act at the time in force.

Statutory imprisonment retainedStatutory imprisonment retained Term of up to one year (s.38) if the debtor has Term of up to one year (s.38) if the debtor has

the means to pay and refuses to do so the means to pay and refuses to do so (s.40(a)).(s.40(a)).

Arrest in Aid of Arrest in Aid of ExaminationExamination

Can get an order for examination to Can get an order for examination to discover assets which may satisfy the discover assets which may satisfy the judgment.judgment. Persons other than the debtor may be Persons other than the debtor may be

examinedexamined Enforceable by contempt proceedings, Enforceable by contempt proceedings,

which can include imprisonmentwhich can include imprisonment Arrest and Examinations Act, ss. 30-34Arrest and Examinations Act, ss. 30-34

Against Real and Against Real and Personal Property of Personal Property of

the Debtorthe Debtor

Order for Seizure & SaleOrder for Seizure & Sale

Distinguish Distinguish ““Exigible property”Exigible property” ““Exempt property”Exempt property”

Exigible property is not subject to seizure Exigible property is not subject to seizure under a writunder a writ e.g. chose in action (subject to garnishment)e.g. chose in action (subject to garnishment) RRSP?RRSP? Stock in a company? Liquor licence?Stock in a company? Liquor licence?

Exempt property is exigible, but is Exempt property is exigible, but is statutorily exempt from executionstatutorily exempt from execution

SeizureSeizure

Sheriff conducts seizure and saleSheriff conducts seizure and sale Not JCNot JC Instructing creditor must pay sheriff’s costs Instructing creditor must pay sheriff’s costs

before seizure: Sheriff’s Act s.13 before seizure: Sheriff’s Act s.13 Liable to third parties for seizing their goodsLiable to third parties for seizing their goods

Problem when ownership is in disputeProblem when ownership is in dispute Sheriff can ask for indemnification from Sheriff can ask for indemnification from

instructing creditorinstructing creditor Is liable to D for excessive seizureIs liable to D for excessive seizure

more than is reasonably needed to satisfy debtmore than is reasonably needed to satisfy debt

Seizure Seizure

Sheriff cannot force entry to effect seizureSheriff cannot force entry to effect seizure ““the house of every one is to him as his castle the house of every one is to him as his castle

and fortress, as well for his defence against and fortress, as well for his defence against injury and violence, as for his repose.”injury and violence, as for his repose.” 1604 1604 decisiondecision

Sheriff liable in damages for illegal entrySheriff liable in damages for illegal entry Ultimately, a sheriff is a peace officer Ultimately, a sheriff is a peace officer

(Criminal Code s.2 definitions) with the (Criminal Code s.2 definitions) with the right to possession of the property in right to possession of the property in question, and it is a criminal offence to question, and it is a criminal offence to hinder a peace officerhinder a peace officer

SeizureSeizure

In practice, as a matter of convenience the In practice, as a matter of convenience the sheriff does not want to take physical sheriff does not want to take physical possession of the propertypossession of the property Most of the issues surrounding seizure concern Most of the issues surrounding seizure concern

the type of symbolic possession which is the type of symbolic possession which is necessary to give sufficient notice to third necessary to give sufficient notice to third parties that a seizure has been effected.parties that a seizure has been effected.

Once goods have been seized, sheriff has a Once goods have been seized, sheriff has a “special kind of property” and can bring an “special kind of property” and can bring an action for recovery of the goods against a action for recovery of the goods against a third person who carries them away.third person who carries them away.

SaleSale

Sale is very rare since it will often Sale is very rare since it will often result in an undervalueresult in an undervalue D is inclined to buy out if at all possibleD is inclined to buy out if at all possible

The Act does not even provide The Act does not even provide minimal specification of how sale is minimal specification of how sale is to be conducted in case of to be conducted in case of personalty. personalty.

SaleSale

Case-law requirementsCase-law requirements Sheriff selling assets must conduct the sale Sheriff selling assets must conduct the sale so as so as

to ensure that a fair price is receivedto ensure that a fair price is received. . The sheriff will be liable to the debtor who might have The sheriff will be liable to the debtor who might have

received any surplusreceived any surplus Or to the creditor whose judgment should have been but Or to the creditor whose judgment should have been but

was not satisfied. was not satisfied. Where the sale does not result in a reasonable bid, Where the sale does not result in a reasonable bid,

the sheriff may the sheriff may notnot simply sell to the highest simply sell to the highest bidder.bidder.

The sheriff may either adjourn to a named day or The sheriff may either adjourn to a named day or prepare a return that the goods remain in his or prepare a return that the goods remain in his or her hands for want of a buyer.her hands for want of a buyer.

SaleSale

Compare secured creditor’s duty which is Compare secured creditor’s duty which is only to take reasonable steps to secure a only to take reasonable steps to secure a fair pricefair price Reason for the difference is that the sheriff Reason for the difference is that the sheriff

has the option of a return has the option of a return venditioni exponasvenditioni exponas – – application to court that the goods be sold for application to court that the goods be sold for the best price obtainable.the best price obtainable.

Note that in practice there may be little Note that in practice there may be little difference btw SP duty and that of a sheriff as difference btw SP duty and that of a sheriff as an unreasonably low price is good evidence an unreasonably low price is good evidence that reasonable steps were not takenthat reasonable steps were not taken

Title of PurchaserTitle of Purchaser

Purchaser is protected if judgment is later Purchaser is protected if judgment is later reversed: M&E s.9reversed: M&E s.9 In which case creditor is liable to debtorIn which case creditor is liable to debtor

Other than that, purchaser from sheriff gets Other than that, purchaser from sheriff gets very tenuous titlevery tenuous title

Recall priorities Recall priorities Jellett v WilkieJellett v Wilkie ““...the sale shall convey whatever interest the ...the sale shall convey whatever interest the

party had in the goods and chattels at the time party had in the goods and chattels at the time of the seizure.”of the seizure.”

M&E s.23 (similarly in the case of land, s.15)M&E s.23 (similarly in the case of land, s.15)

The sheriff offers no warranties as to titleThe sheriff offers no warranties as to title

Title of PurchaserTitle of Purchaser

Sale may be challenged ifSale may be challenged if The goods were not exigible or were owned by a The goods were not exigible or were owned by a

third person at the time of seizure (Jellett)third person at the time of seizure (Jellett) Court issuing the writ had no jurisdiction to do soCourt issuing the writ had no jurisdiction to do so Writ was not regular on its face or had expiredWrit was not regular on its face or had expired Proceedings leading to issue of the writ were Proceedings leading to issue of the writ were

seriously flawed (how flawed?)seriously flawed (how flawed?) There was fraud or wilful misconduct on the There was fraud or wilful misconduct on the

sheriff’s partsheriff’s part The sale was collusiveThe sale was collusive

Result – price at a sheriff’s sale is usually very Result – price at a sheriff’s sale is usually very lowlow

Remedies Against Remedies Against Debts Owing to Debtor: Debts Owing to Debtor:

GarnishmentGarnishment


D is owed money by third party “account D is owed money by third party “account debtor”debtor” Account debtor called “garnishee” in the Garnishee Account debtor called “garnishee” in the Garnishee

ActAct JC applies ex parte for “attaching order”JC applies ex parte for “attaching order”

Order may be challenged by D or AD within 20 Order may be challenged by D or AD within 20 days of servicedays of service

Attaching order is served on account debtorAttaching order is served on account debtor Not on DNot on D

Once attaching order is served, debt is Once attaching order is served, debt is “attached” (bound)“attached” (bound)


Once debt is bound, payment into Once debt is bound, payment into court by AD discharges debtcourt by AD discharges debt AD may pay JD only on order of courtAD may pay JD only on order of court Cf PPSA right to collect on intangibles, Cf PPSA right to collect on intangibles,

where AD pays SP after notice is givenwhere AD pays SP after notice is given Payment by AD to D is void & does Payment by AD to D is void & does

not discharge debtnot discharge debt AD will be liable to pay the same AD will be liable to pay the same

amount to JDamount to JD


AD can raise against JD any defenses AD can raise against JD any defenses which would have been available which would have been available against Dagainst D

There is a special process if AD There is a special process if AD disputes debt owing to Ddisputes debt owing to D

Garnishable DebtsGarnishable Debts

““Debts due or accruing due” Debts due or accruing due” Usual formulationUsual formulation

““Debt”Debt” Must be specific sum – damages claim Must be specific sum – damages claim

cannot be garnishedcannot be garnished Ie when debtor is herself a JC vis-a-vis a Ie when debtor is herself a JC vis-a-vis a

third party, the judgment debt owing to third party, the judgment debt owing to the debtor cannot be garnished until the debtor cannot be garnished until judgment.judgment.


Problem: What debts can be garnished Problem: What debts can be garnished before they are actually due?before they are actually due?

““Accruing due”Accruing due” Debts which are “accruing” are debts which Debts which are “accruing” are debts which

will become payable will become payable with certaintywith certainty only only with the passage of time: e.g. a loanwith the passage of time: e.g. a loan

Such debts are said to be “present debts Such debts are said to be “present debts payable in the future”payable in the future”

Distinguish amount owing those which are Distinguish amount owing those which are contingent on some uncertain future actioncontingent on some uncertain future action


Examples of controversial types of debtsExamples of controversial types of debts Unliquidated damages – cannot be attached until Unliquidated damages – cannot be attached until

judgment is enteredjudgment is entered Fire insurance – fire insurance policy cannot be Fire insurance – fire insurance policy cannot be

garnished until insurer admits liability and agrees garnished until insurer admits liability and agrees to pay rather than replace assetto pay rather than replace asset

But, some policies may be garnishable immediately, But, some policies may be garnishable immediately, depending on particular clause e.g. auto insurance depending on particular clause e.g. auto insurance policy creating a debt owing to insured once judgment policy creating a debt owing to insured once judgment recoveredrecovered

Life insurance garnishable on death of deceased, Life insurance garnishable on death of deceased, even where succession duty releases have not yet even where succession duty releases have not yet been filedbeen filed


Examples of controversial types of debtsExamples of controversial types of debts Legacies – where the j.d. is entitled to a specific Legacies – where the j.d. is entitled to a specific

bequest, and the executors have agreed to pay, it bequest, and the executors have agreed to pay, it can be attachedcan be attached

But where bequest is a distributed share, not garnishable But where bequest is a distributed share, not garnishable until quantifieduntil quantified

Rent which is not yet due – was at one time Rent which is not yet due – was at one time garnishable as debt accruing due, but is now garnishable as debt accruing due, but is now generally not garnishablegenerally not garnishable

Successive orders are necessary to garnish rent as it becomes Successive orders are necessary to garnish rent as it becomes due.due.

Mortgages (e.g. where debtor is mortgagee), in contrast, Mortgages (e.g. where debtor is mortgagee), in contrast, can be garnished prospectivelycan be garnished prospectively

RRSP – generally not garnishableRRSP – generally not garnishable


Why are debts not yet accruing due Why are debts not yet accruing due not garnishable?not garnishable?

Wage GarnishmentWage Garnishment

Wages are often not yet accruedWages are often not yet accrued Several orders must be issued in order to catch Several orders must be issued in order to catch

sequential pay periods. sequential pay periods. Some jurisdictions have specific continuting Some jurisdictions have specific continuting

garnishment orders for wagesgarnishment orders for wages Wages typically cannot be garnished entirelyWages typically cannot be garnished entirely N.B. has abolished wage garnishmentN.B. has abolished wage garnishment All provinces (incl. NB) have ongoing All provinces (incl. NB) have ongoing

garnishment orders for family orders e.g. garnishment orders for family orders e.g. maintenance and alimonymaintenance and alimony

Equitable ExecutionEquitable Execution

There are various forms of equitable There are various forms of equitable executionexecution

The most important is appointment of a The most important is appointment of a receiverreceiver

One important reason for appointment of a One important reason for appointment of a receiver is to reach assets which cannot be receiver is to reach assets which cannot be reached because of gaps in other processesreached because of gaps in other processes E.g. RRSP cannot be seized, nor can it be E.g. RRSP cannot be seized, nor can it be

garnishedgarnished It is now clear in NB that a receiver can be It is now clear in NB that a receiver can be

appointed to collapse and RRSPappointed to collapse and RRSP

Part 5.IV: ExemptionsPart 5.IV: Exemptions

ExemptionsExemptions

Exempt goods – M&E s.33(1):Exempt goods – M&E s.33(1): (a) the furniture, household furnishings and (a) the furniture, household furnishings and

appliances reasonably necessary for the appliances reasonably necessary for the debtor and his family; debtor and his family;

(b) the necessary and ordinary wearing (b) the necessary and ordinary wearing apparel of the debtor and his family; apparel of the debtor and his family;

(c) all necessary food and fuel for the debtor (c) all necessary food and fuel for the debtor and his family for three months; and his family for three months;

(d) two horses and sets of harness, two cows, (d) two horses and sets of harness, two cows, ten sheep, two hogs and twenty fowl, and food ten sheep, two hogs and twenty fowl, and food therefor for six months;therefor for six months;


(e) any tools, implements and necessities used (e) any tools, implements and necessities used by the debtor in the practice of his trade, by the debtor in the practice of his trade, profession or occupation having a cumulative profession or occupation having a cumulative market value of not more than six thousand five market value of not more than six thousand five hundred dollars, and one motor vehicle having hundred dollars, and one motor vehicle having a market value of not more than three thousand a market value of not more than three thousand dollars, if required by the debtor in the course dollars, if required by the debtor in the course of or to retain employment or in the course of of or to retain employment or in the course of and necessary to his trade, profession or and necessary to his trade, profession or occupation, but the exemptions provided in this occupation, but the exemptions provided in this paragraph do not apply to a corporate debtor;paragraph do not apply to a corporate debtor;


Exempt goods – M&E s.33(1):Exempt goods – M&E s.33(1): (f) seed grain and potatoes required for (f) seed grain and potatoes required for

seeding and planting purposes to the following seeding and planting purposes to the following quantities: forty bushels of oats, ten bushels of quantities: forty bushels of oats, ten bushels of barley, ten bushels of buckwheat, ten bushels barley, ten bushels of buckwheat, ten bushels of wheat and thirty-five barrels of potatoes; of wheat and thirty-five barrels of potatoes;

(g) dogs, cats, and other domestic animals (g) dogs, cats, and other domestic animals belonging to the debtor; belonging to the debtor;

(h) medical or health aids reasonably (h) medical or health aids reasonably necessary to enable the debtor or any member necessary to enable the debtor or any member of his family to work or to sustain health.of his family to work or to sustain health.


Note: Traditionally and still in most Note: Traditionally and still in most jurisdictions, there are no exemptions in jurisdictions, there are no exemptions in the case of secured transactionsthe case of secured transactions

Atlantic PPSAs have exemptions (NB s.58)Atlantic PPSAs have exemptions (NB s.58) Exemptions do not apply to pmsiExemptions do not apply to pmsi (a) furniture, household furnishings and (a) furniture, household furnishings and

appliances used by the debtor or a dependent appliances used by the debtor or a dependent to a realizable value of five thousand dollars or to a realizable value of five thousand dollars or to any greater amount that may be prescribed;to any greater amount that may be prescribed;

Cf M&E – no limit on the value of the furnitureCf M&E – no limit on the value of the furniture


NB PPSANB PPSA (b) one motor vehicle having a realizable value of (b) one motor vehicle having a realizable value of

not more than six thousand five hundred dollars at not more than six thousand five hundred dollars at the time the claim for exemption is made, or not the time the claim for exemption is made, or not more than any greater amount that may be more than any greater amount that may be prescribed, if the motor vehicle is required by the prescribed, if the motor vehicle is required by the debtor in the course of or to retain employment or debtor in the course of or to retain employment or in the course of and necessary to the debtor's in the course of and necessary to the debtor's trade, profession or occupation or for trade, profession or occupation or for transportation to a place of employment where transportation to a place of employment where public transportation facilities are not reasonably public transportation facilities are not reasonably available;available;

Cf M&E – $3000 limit on value of vehicle Cf M&E – $3000 limit on value of vehicle


NB PPSANB PPSA (c) medical or health aids necessary to (c) medical or health aids necessary to

enable the debtor or a dependent to enable the debtor or a dependent to work or to sustain health; andwork or to sustain health; and

CF M&ECF M&E (h) medical or health aids reasonably (h) medical or health aids reasonably

necessary to enable the debtor or any necessary to enable the debtor or any member of his family to work or to member of his family to work or to sustain health. sustain health.


NB PPSANB PPSA (d) consumer goods in the possession (d) consumer goods in the possession

and use of the debtor or a dependent if, and use of the debtor or a dependent if, on application, the Court determines on application, the Court determines thatthat (i) the loss of the consumer goods would (i) the loss of the consumer goods would

cause serious hardship to the debtor or cause serious hardship to the debtor or dependent, ordependent, or


NB PPSANB PPSA (ii) the costs of seizing and selling (ii) the costs of seizing and selling

the goods would be disproportionate the goods would be disproportionate to the value that would be realized.to the value that would be realized.

Documents

Part 5III&IV Unsecured Creditors Post-Judgment Remedies Specific Enforcement Procedures