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Legal Blog: Collections

Mar
26
2021

Judgment Debtor Examination

Hermanns v. Ingle 2020 Ont SCJ

A non-party may be examined in aid of execution of the debtor under Rule 60.18 (6), but an order to do so should not be made unless the judgment creditor has exhausted all means available before asking for an order authorising the examination. There is no time limit to attempt to satisfy a judgment if the judgment creditor has diligently been attempting to collect the judgment.

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Mar
26
2021

Lifting Executions

BMO v. Cadogan 2020 Ont SCJ

A lawyer made a statement on the electronic registry of a transfer that the execution filed against the vendor/debtor had been released. Accordingly, the debtor was able to transfer the property to purchasers without an execution binding the transfer. In fact, the execution had not been released and the lawyer was held to have known this. The execution creditor obtained a judgment against the lawyer for the amount of the debt plus punitive costs of $20,000.

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Feb
01
2021

Reasonable

Posted in Collections

Courts in British Columbia have consistently held that, to determine the start date for a limitation period, it is unreasonable to expect a claimant to commence a fraudulent conveyance action until the claimant has obtained judgment based on the underlying contract or tort action. Just because the fraudulent conveyance action is technically available before the claimant has obtained a judgment in the underlying action, does not make it a reasonable manner in which to proceed.

Three arrows on pavement pointing forward and to each side.

Jasmur Holdings Ltd. v. Callaghan, a 2019 decision of the British Columbia Supreme Court is the latest case in this line of decisions.

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Feb
01
2021

Backdate

Posted in Collections

No, we are not talking about some commercial document. We are talking about an order of the court and whether the order is to be effective on the date it is made or an earlier date. If effective as of an earlier date, it is said to be effective nunc pro tunc. This, of course, is a Latin phrase (one of the few times that Latin still rears its ugly head in legal parlance) and means “now for then.” The applicability of the use of this concept was the main issue in Thistle v. Schumilas, a 2020 decision of the Ontario Court of Appeal.

Blocks with the months and days on each side.

Bankrupt

The ability to assign into bankruptcy is wonderful for unfortunate debtors who have no way to claw themselves out of debt. But it is a double-edged sword. All of the bankrupt’s property, whether owned as of the date of the bankruptcy or subsequently acquired before the bankrupt’s discharge, passes to and vests in the bankrupt’s trustee in bankruptcy. The Bankruptcy and Insolvency Act defines property very widely. On occasion, this passing of property has unintended consequences. The Thistle case illustrates one of them.

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Dec
01
2020

Undue Influence (3)

Posted in Collections

Do not be misled by the title; we have discussed, directly or indirectly, the concept of undue influence at least five times and probably more over the years. Undue influence is typically raised as a defence to a creditor’s action, usually on a guarantee, in which the guarantor claims that she (the person is usually a wife) was unduly influenced by a debtor (usually the husband, on his own behalf or on behalf of his corporation) and therefore should not be bound by her covenant to guarantee the debt. Sometimes the defence works; usually, it does not. The defence was raised in JGB Collateral v. Rochon, a 2020 decision of the Ontario Court of Appeal, and initially was successful.

A man in a suit pointing.

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Nov
24
2020

Fraudulent Conveyance

Bank of Montreal v. Bibi 2020 Ont SCJ

Debtor transferred her residence to her mother while owing money to a financial institution. Debtor and mother had concocted, upon the transfer of the land, documentation to show that mother was actually paying for the land because she was cancelling a debt owed on another transaction. There was a complete lack of documentation regarding the debt and the other transaction and the judge simply did not believe mother and daughter. The judge concluded that mother knew exactly what daughter was doing and, after reviewing the badges of fraud, concluded that there had been a fraudulent conveyance and a fraudulent preference.

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Oct
01
2020

Evidence

Posted in Collections

Litigants sometimes forget that facts must be proven by evidence and that, more importantly, the introduction of evidence is subject to rules, both under the common law and pursuant to the Evidence Act of Ontario. This is not a new problem (see June 2008 newsletter). Litigants also sometimes forget that (i) a summary judgment motion is merely another means, rather than a formal trial, by which a decision is to be made, based on the facts and the law; and (ii) facts are still subject to the rules of evidence. It seems that the bank’s lawyer in Toronto-Dominion Bank v. PMJ Holdings Limited, a 2019 Ontario Superior Court of Justice decision, did not fully consider the rules of evidence and, at the same time, ran up against a rather formalistic judge. It did not lead to a good result for the bank.

A stack of folders filled with papers.

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Sep
25
2020

Limitation – Debt Acknowledgement

Michel v. Spirit Financial Inc. 2020 Ont CA

When a limitation period expires, it cannot be revived by an acknowledgement of the debt. The acknowledgement must be made before expiry of the limitation period.

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Aug
01
2020

Economic Duress

Posted in Collections

Two men enter into a contract. The first does what was required under the contract; the second does not. He claims that he entered into the contract under economic duress. Can the first enforce that contract? As with many legal concepts, it all depends. The defence of economic duress certainly exists; the question, as in almost all actions, is whether the facts meet the criteria necessary to sustain the defence. These criteria and the defence were discussed in Elias v. Van Zanten, a 2019 decision of the Ontario Superior Court of Justice.

Pressure

The defendant was the operating mind of a corporation, which itself was a member of a joint venture that invested in a corporation trading in oil. He and his buddies had already sunk significant amounts of money into the venture; his investment alone was $750,000. Unfortunately, the investment was a bit of sinkhole and, by 2015, his corporation needed more funds to meet its obligations to the joint venture. None of these funds was forthcoming from the defendant or his buddies.

Dice spelling out profit, loss, and risk on a newspaper displaying stock market information.

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