The Enforcement of judgments in Ontario – An Overview [video]

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You have obtained a Judgment/Order, but the other party refuses to pay. You will now be required to engage the process that allows you to enforce your judgment. This lecture provides an overview of the enforcement process in Ontario.

This lecture is taught by Amer Mushtaq, LL.B., M. Engineering , B.Sc. (Hons.), who is the Principal and Founder of Formative LLP.   Through his YouTube channel, YouCounsel, Amer shares practical advice from his years of legal experience to help anyone access justice and achieve their goals.  Subscribe today to learn more.

Show Notes:

Link to Ministry of Attorney General guide for enforcement proceedings in small claims court:

Lecture Slides:

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Machine Transcription:

Welcome everyone this is Amer Mushtaq from You Counsel.

You have fought a case in civil court in Ontario, won a judgment against the other party that requires the other party to pay you certain amount of money... you asked the other party to give you that money and they refused to pay. What do you do next? How do you go about collecting your money? This procedure of collecting your debt, collecting your money is called the enforcement of judgments, and today we’ll talk about the process of enforcing a judgment in Ontario and we’ll give you an overview of this complicated time consuming and costly process.

We begin with our disclaimer that this course is not legal advice, so, if you have any specific questions you must contact a lawyer paralegal or the Law Society of Upper Canada for any referrals.

We’ll discuss today the applicable legislation or at least some of the applicable legislation or rules that govern the mechanism of enforcement of judgments or orders. We’ll talk about some of the types of enforcement proceedings that you can undertake. We’ll talk about examination in aid of execution what is that examination and how do you go about conducting that examination? We’ll talk about, briefly, the enforcement process in small claims court, we’ll talk about some of the potential changes that may come in force with respect to the enforcement mechanism in Ontario.

Applicable Legislations

Number one, you want to keep in mind is called Execution Act. This act provides for the appointments of sheriffs and how do they go about doing their job, what is the limit or extent of their authority... execution act talks about that. Rules of civil procedure, we have talked about it a number of times, these rules are essential with respect to any civil matters in Ontario. So, what do the rules say about the enforcement of judgment or orders. We’ll discuss that briefly. Rules of small claims court, if your matter is in small claims court. Bankruptcy Insolvency Act, that may apply in certain circumstances, so, that may be relevant legislation. Wages act may also apply especially if you’re if you’re trying to garnish someone’s wages. Personal property and Security Act is another legislation that may be applicable and there may be other legislation that are not covered in today’s discussion.

So, types of enforcement... how do you go about enforcing the judgment there are a few ways to do that the most common is garnishment. You garnish the money from a third party. Writ of seizure and sale of personal property, writ of seizure and sale of land, writ of sequestration and receivership... these are some of the ways in which you can enforce your judgement or order we’ll briefly talk about each one of these now.

So garnishment, what is garnishment? Garnishment is that you claim money that is owed to your debtor by someone else, so, let’s say you’ve got a judgment against John and someone else owes money to John. Then you actually go after that third party and basically get a court order asking the third party to give you the money that they owe to John. Not to give it to John, but give it to you. So that’s called a garnishment. What are some of the common examples of garnishment? You can garnish someones wages, so, essentially, you find out where that person work, you get a garnishment order, you you serve it on the employer, and the employer is obligated under law to give you the money... and give you the money, meaning that they will they will provide the money in court, and then you get the money from the court... but essentially, rather than employer paying that amount of money to that debtor, their employee, they paid into court and then you can get your money from that. So, it’s one of the common ways of garnishing, it’s called garnishing wages. If the person is not an employee, as a contractor, that person may still be owed money by the company that they’re working for and so you can garnish those fees for services from that company. Another debtor could be, you know, a company has accounts receivable. So, they don’t have any cash at hand but they have provided services or products to third parties and are expecting to get money... and so that accounts receivable, you get that information and then you contact those parties and require them to pay you the money as opposed to giving the money to the debtor. The money can also be garnished from a bank account, so, if you know that the person, the debtor, has a bank account and there is sufficient money, that you can have that money garnished... then you can get a garnishment order and require the bank to pay you that money. So, those are some of the common examples off garnishing the money... if you know that someone else has to pay the money to the debtor and you can go after that third party.

There are limits in garnishment you want to keep in mind and with respect to that, wages act is the one that I mentioned you may want to look at that. There are some moneys that you cannot garnish, for example someone’s pension, you cannot garnish it... if the person is receiving social assistance you cannot garnish it, if the person is receiving employment insurance benefits then you cannot garnish those and there may be others, so there are limits on garnishment and you can look at the wages act to figure out what respect to the wages what monies can be garnished and what cannot be.

Writ of seizure and sale of personal property, essentially, what it means is that the debtor, your debtor, has certain personal property. You take over that personal property. the possession of that property... as long as it’s not money or land. So, you take that over, and then that property is sold in a public auction and the monies are recovered and paid back to you. You cannot do it yourself... essentially, it’s done through local enforcement office of that county, which is the sheriff of that county. You contact them, there’s a whole process that you have to follow with respect to requiring the sheriff to go and get the possession of that property and then sell it in the public auction and then give you the money that that they recover. Keep in mind, a few things with respect to this, each sheriff’s office has their specific processes and so you want to be clear about those processes... you need to fill out the forms, give the costs, or certain fees to the sheriff’s office to proceed with the execution off the writ of seizure and sale. With respect to personal property, the requirement of sheriff’s office may be very specific. They may require you to provide the specifics of the property that you want them to take possession of. So, if there are computers at the debtor’s property, then they may ask you the, you know, the more detailed description of those computers. So, those computer can be identified correctly. If there is a sofa that you may want the the sheriff to possess... they may ask you the colour and the size of the sofa and whatnot. So, the identification of the specific item is is necessary for the sheriff’s office, so, you will be required to provide that information. It is not up to Sheriff to go inside that property, that person’s property, and pick up whatever item is there... that’s not how the writ of seizure and sale of personal property takes place. You also want to keep in mind that the items that you may have thought that this person, the debtor has, who owns those items? So, for instance, if the person has, the debtor has at his or her office certain computers or printers... does that debtor own those printers or computers or are they on lease... because if they are leased items then the sheriff will not be able to take those items and sell them because they’re not even owned by the debtor. So it is important for you to have a very clear knowledge of what items you can take from the debtor and then direct the sheriff to take those items, sell them in a public auction, and then give you your money, your debt.

The second item is writ of seizure and sale of land... which is similar to the writ of seizure and sale of personal property, except that this is for the land. Again, in this case, you filed a writ with the respective county in which the person may have land or may intend to buy land. So, you can even file a writ in a county where you believe that the person will buy a property in the future because what happens is, once you file that writ, it in encumbers that person’s property... So, what that means is even if the person buys a property in that county in the future, the person will not be able, the debtor will not be able to sell the property until your writ is clear... until your payment is made. So, just because the person does not have a property, does not mean that you can’t file the writ, you can still file the writ but then you have to figure out if the person is going to to buy a property in that specific county, because it goes county by county. You can’t fall a writ in the entire Ontario in one go. So, you file the writ, and that puts sort of a lien on that property and when the person sells that property and you get to your share... provided that there is sufficient money coming out of the equity in that land. The other thing that it is that you can also force the sale of that land and in with respect to the land, there is a certain time period for which the sheriff has to wait, so for the sheriff to take possession of the property... usually, it’s about four months after you have filed the writ that sheriff can take over the possession of the property and then I believe it’s about six months after the filing of the writ then the sheriff can actually sell the property to recover the moneys.

Now, you want to be very clear whether the debtor has sufficient equity in the land because if there’s no equity then you’re not going to get your debt regardless of the sale of the land. So, if it’s a million dollar property but it has a mortgage of, you know, $980,000 that $980,000 is the bank’s money. Or the mortgagees money and only $20,000 may be the equity for the debtor and so, if your debt is you know $200,000, you’re not going to get your money out of it just because the value of the property is a million dollars. So it is important for you to understand whether or not, whether the debtor has sufficient equity to discharge your debt. You have to consider secured creditors. And a secure creditor, an example of secure creditor, is the bank in this case, because a secured predator is the one that has some collateral over the loan or the debt that they have given to this person. So, in a common example is your house, when you mortgage your house, if you don’t pay your mortgage payment, the bank or the mortgagee can take the possession of the house and sell it to realize their debt... so, that’s a secure creditor. Another example could be when you buy or finance a car and if you don’t pick, make your payment car payments, the financing company can take over the car and realize their debt. So, where there are collaterals for the debt those are called secured creditors. So, if you are taking possession of the property or the land and they are secured creditors, they get their money first. If you are an unsecured creditor, you are further down the line, you’re at the end and if if the secured creditors are paid and there’s no money left for the unsecured creditors, you don’t get any money. You also want to consider that there may be other creditors, unsecured creditors, that this debtor owes money to and if their debt is registered, if there writ is registered, then, regardless of who forces the sale of the property everyone gets their money pro-rated. So, if there is sufficient money to discharge everyone’s debt, then that’s fine but if there is insufficient money then the sheriff will pro-rate the money and distribute the funds accordingly.

Writ of Sequestration is, again, enforced by the sheriff. It happens usually where the Sheriff takes the possession of the property and holds the property, usually where there is some rental income expected... that could be an example of a property. Writ of Sequestration is usually done when the matter is still being disputed, being resolved by the court, in the meantime, the sheriff has taken the possession, so, that the property’s in control and eventually when the matter is decided, those monies are distributed accordingly.

Appointment of a receiver. There are two kinds of receivers that could be appointed in Ontario, private and court appointed or focused in court appointed receiver. You hear this term in the newspapers a lot and you hear this with respect to companies that going into receivership... and essentially a receiver is a regulated person or a body and the purpose of the receiver is that they maximize debtor’s assets in a way to help the secured creditors. So, you take control or possession, the receiver takes control and possession of the debtors assets and then it deals with them in such a way that the secured creditors could get most of their, if not all of their loans or debts back. So, essentially it’s for the interest of secured creditors... but once the secured creditors are paid and if there is money left, then unsecured creditors are paid as well.

So, a question will come to your mind that you got through this court process and obtained a judgment, but you don’t know whether that debtor has any assets and how do you go about figuring that out? The rules allow you to examine that person and figure out what kind of assets that person may have, so, that you can go and get your judgment enforced... and that examination is called examination in aid of execution. Execution is essentially all of those enforcement processes that were talked about, they are all execution processes. So, this is an examination to help you execute your order or your judgment... and rules of civil procedure rule 60.18 to 60.20 deals with the examination and ease of execution... and rule 60 in general is the rule that talks about the entire enforcement mechanism in the Rules of Civil Procedure. So, the purpose of the examination is that you determine the debtor’s assets, so, essentially what you can require in that examination is the debtor to come and bring all the bank statements, banking information, their income statements, their tax returns, their property statements, any debts that they’re owed, anything and everything to do with their financing... you can require them to bring that information, you can review that information, and figure out where this person may have assets or money that you can go after and then materialize your collection of debt. Just, sort of a word of caution, in the examination is that obviously you have this right and if the debtor is unwilling to pay you the money, the debtor may not attend the examination, even if you have served notice on that person to come and attend the examination. So there is also a process for that. Generally, you have to serve notice a few times and if the person does not show up, you can seek a contempt order from the court... for the person failing to come to the examination and that contempt order can allow the court to then give an order, issue a warrant of arrest for that person, and the person can be arrested and forced to attend the examination. So, the examination process can be pretty helpful, especially if the person has any assets that you can find out and then and then go after.

Small claims court enforcement is not much different then the superior court process... there’s an excellent guide post by the Ministry of Attorney General, I’ve provided a link here and this link is also below in the description of this lecture. By all means review that, it’s a pretty detailed and simplified explanation of how you proceed with enforcement in small claims court. As I said, the enforcement process, the mechanism is complex... it’s complicated, it’s hard to follow, it’s costly, so, there are some potential changes the Ontario province may bring in third parties or nonprofit parties which will be regulated entities who may be given the task to enforce the judgments or orders on creditors behalf... that may happen, it already happens in British Columbia and Alberta and a recent approach that has taken place in 2016 is court supervised land sales which is already permitted in the rules but it was not utilized as much... and this is a process in which rather than using the sheriff use the court to supervise the sale of land, it is generally considered to be a bit more efficient process and less costly and that could be another way of enforcing your judgment.

So, in conclusion, what you want to keep in mind is, first of all, the caution that you don’t want to spend good money to chase the bad money and that’s the idea that even before you go after suing someone in court, you want to have some understanding of even if you’re successful would you be able to get your money back from the debtor? Does the debtor have sufficient assets or solvency, so, that you can actually go and enforce your judgment because it may not be worthwhile for you to expend the time and effort and money to just get a simple paper judgment, which you cannot go enforce and so, spending good money for bad, is never a good idea and so you should consider that even before you commence a court action. Also, keep in mind that the enforcement of judgments is a complicated process and it’s expensive and time consuming, and you can spend this time and effort and money and you still may not be able to get your judgment. So, you’ve got to be careful about the enforcement process understand it better and then, if needed, you should seek legal expertise to get your judgments enforced.

I hope this gives you a good understanding of a broader understanding of how the judgments are enforced in Ontario, love to hear from you with respect to any feedback that you may have about the process, how fair the process is, is it a fair process for people who have been harmed, have obtained a judgment and are still not able to get those judgment enforced... if you have any questions or comments, please contact us, we always love to hear from you and thank you for watching.

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