Legal Blog

Wrong Remedy

Creditors have various remedies in their collection arsenal. Sometimes, however, they use the wrong one and fire blanks. This was the case in Re Assaf Estate, a 2008 decision of the Ontario Superior Court of Justice. 

Garnishment 

The debtor owed her creditor $20,000 in costs. The debtor obtained an order in a companion action by which a judge ordered that the Superior Court Accountant pay $24,000 out of court to the debtor. The creditor immediately issued a notice of garnishment against the Accountant to intercept the payment of those funds. The debtor moved to set aside the notice of garnishment.

Since one can only garnish someone who owes a debt to the debtor, the issue in the motion was whether the Accountant owed a debt to the debtor. The judge concluded that the Accountant, a statutory creation, did not owe a debt and therefore set aside the garnishment.

Alternatives  

The creditor could have achieved his ends by two other means: 

1.   Rule 72.05 of the Rules of Civil Procedure allows any person entitled to money to bring a motion without notice to obtain a stop order preventing the Accountant from paying money without further order. Then, upon notice to interested parties, the creditor can bring a motion for payment of the funds stopped.

2.   Section 23 of the Creditor’s Relief Act allows a creditor to apply to have funds in court paid to the Sheriff. Once paid to the Sheriff, the funds would be paid to all execution creditors rateably.