Winning in court and getting paid are two separate events. A judge can decide entirely in your favour, and still the money may never arrive unless you do something about it. The court does not send someone to collect on its own. It is up to the person holding the judgment, called the creditor, to take the next steps against the person who owes, called the debtor.
Ontario offers creditors a real set of tools, and the choice depends on what the debtor has. A wage earner with an employer calls for one approach. A homeowner with equity in a Brampton house calls for another. A business with receivables may call for a third. Used in the right order, these tools can work well. Used blindly, they can mean spending more good money after a judgment that was already difficult to collect.
This post is general information, not legal advice. The rules differ somewhat between the Small Claims Court and the Superior Court of Justice, and your best route will depend on your judgment and the debtor’s circumstances.
Start Here: Is the Debt Still Being Stayed, and What Is Owed?
Before enforcing, confirm that the order is actually enforceable. Check whether the judgment gives the debtor time to pay, sets instalments or includes a stay. An appeal may also affect enforcement. If a Small Claims judgment has payment terms and the debtor is complying with them, enforcement could be limited.
Next, work out the amount owing, and keep a running statement. It should include the judgment amount, costs that were awarded, postjudgment interest (the order will usually state the rate), any payments received, and your allowable enforcement costs. Most enforcement forms ask you to swear to these numbers, so they must be accurate.
Consider sending a brief letter first. Sometimes a debtor pays once they see a formal demand referring to the order, particularly a business that has a reason to avoid trouble with a bank or a land transaction. Make the deadline short and specific. It is entirely optional, however, and if you think assets might disappear, you should get advice before giving any warning.
There is no limitation period for a proceeding to enforce a court order. That said, individual tools have time limits and renewal rules. Permission from a court is generally required to issue some enforcement documents more than six years after the order, so an old judgment should be reviewed instead of assumed to be either dead or fully available.
Find Out What They Have
You cannot garnish an account you do not know about. Your own file may hold clues: old cheques showing a bank branch, invoices naming a customer, emails with an employer’s signature, or a vehicle you have seen. Search public records too. A title search will show whether the debtor owns land in Peel, and a corporate profile will show the company’s address and officers.
The formal tool is an examination. In Small Claims Court, the creditor asks the clerk to issue a notice of examination, Form 20H, and the debtor must attend and answer questions under oath about their income, assets, debts and ability to pay. A person other than the debtor can also sometimes be examined, as may an officer of a debtor corporation. In the Superior Court, a similar examination in aid of execution is available.
Prepare specific questions. You want the name of their employer and rate of pay, bank and account details, whether they have a home or vehicle, whether they have a spouse who holds property jointly with them, their RRSPs or investments, and what is owed to them by others. In Small Claims Court, the debtor may also be required to bring a financial information form with supporting documents. A debtor who ignores a properly served notice can be ordered to attend a contempt hearing, and a judge can make further orders. In rare circumstances that may involve a short jail term. However, the purpose is information, and these hearings are about getting answers.
Garnishment: Reaching Money Held by Others
Garnishment directs someone who owes money to the debtor, known as the garnishee, to pay it to the court or sheriff instead. It works especially well with these two targets:
Wages. Under the Wages Act, 80 per cent of a person’s wages after legally required deductions are generally exempt from seizure or garnishment. This means that a typical creditor can reach up to 20 per cent. For support orders, the exemption is 50 per cent. A judge can change those figures in appropriate cases, on a motion. Employers must comply with a properly served notice, and a notice can stay in effect for some time, so garnishment can produce a steady, if slow, stream of money.
Bank accounts. A notice served on a bank can capture what is in the debtor’s account at the time and, depending on the wording, certain other money that becomes payable. Knowing the right bank and branch can matter. Because it is a snapshot, the timing can make a real difference. If the account is jointly owned, co-owners have rights, and often only half the money is available unless the court orders otherwise.
Other debts can be garnished too, such as money owed to a debtor’s business by a customer, rent paid to a landlord-debtor, or a contractor’s receivable.
In Small Claims Court, a creditor generally files an affidavit for enforcement request, Form 20P, naming one debtor and one garnishee, and the clerk issues a notice of garnishment. The published clerk’s fee for issuing or renewing a notice of garnishment is $144, at the time of writing. A separate notice is needed for each garnishee. The notice remains in force for six years from issue, and may be renewed. In the Superior Court, the notice is issued by the registrar and filed with the sheriff.
Service rules are strict. The debtor and the garnishee must both be served in the required manner, and a garnishee can dispute the debt by filing a statement. A garnishment hearing can then be scheduled to sort out any disagreement. Money paid into court under a Small Claims garnishment may be held for a time before distribution, so do not expect instant results.
A debtor may also ask the court to vary the terms. In Small Claims Court, a debtor with several unpaid Small Claims orders can seek a consolidation order, which, if granted, has its own effect on payments and creditors’ rights. Note that Ontario’s Creditors’ Relief Act may require certain money to be shared among several creditors with enforcement on file.
Writs of Seizure and Sale: Land
A writ of seizure and sale of land is often called “putting a lien on the house” in everyday conversation, though it is technically not a construction lien or a mortgage. You obtain the writ, which is then filed with the sheriff for the county or region where the debtor may own land. In Peel, that would be the sheriff’s office serving the Region. The writ is entered into the electronic system that lawyers and lenders search when land is sold or refinanced.
The practical effect is often the most valuable part. When the debtor attempts to sell or refinance, the writ turns up, and a buyer’s or lender’s lawyer will usually require it to be dealt with before the deal can close. That may mean payment from the proceeds. Filing a writ is often inexpensive, and it can sit in the background for years, so many creditors file one early, even without immediately knowing of any land.
In Small Claims Court, the clerk can issue a writ of seizure and sale of land, Form 20D, directed to the sheriff you specify, based on an affidavit for enforcement request. The published fee for issuing a writ is $68, and the sheriff charges a separate filing fee. A writ issued more than six years after the order generally requires leave of the court. A Superior Court writ expires after six years unless it is renewed, so diarize that date. Letting it lapse could mean losing your place behind other creditors, or an opportunity at a sale.
An actual forced sale of land is possible but is much more complicated. There are procedures and waiting periods, mortgages and other prior claims have to be considered, and the costs can be significant. If the debtor’s home is heavily mortgaged, a forced sale might yield little or nothing. A principal residence also has a prescribed exemption under the Execution Act that may affect a sale where the debtor’s equity is below that amount. So most creditors use the writ as security unless the equity clearly justifies more. Get advice before moving down this road.
Writs of Seizure and Sale: Personal Property
For personal property, a Small Claims writ, Form 20C, is issued to a bailiff, and a Superior Court writ goes to the sheriff. The officer may seize and sell items that belong to the debtor to pay the debt, after notice requirements are met. This could include a vehicle, equipment, inventory or other valuables.
Many items are exempt from seizure if the debtor is an individual, up to prescribed amounts. These are set by the Execution Act and its regulation, and they are adjusted from time to time. As of the current regulation:
- necessary clothing for the debtor and dependants is exempt;
- household furnishings and appliances are exempt up to $17,091;
- tools and other personal property used to earn income are exempt up to $17,362 for most debtors, with a higher amount for farmers;
- one motor vehicle is exempt up to $8,578.
Those limits apply differently where a value is over the exempt amount, and a corporation cannot claim these personal exemptions. A vehicle worth $9,000 with a $9,000 car loan may give you nothing after the lender and the exemption are taken into account, since a secured lender usually comes first. Before paying for a bailiff or sheriff to seize, check for registered security interests through a personal property security search, and be realistic about the resale value. Bailiffs and sheriffs often charge for attempts, moving, storage and sale, and fees are usually payable even if an attempt fails, though many of them can later be added to the debt if collected.
When the Debtor Is a Corporation
A company judgment can be collected only from the company’s assets, unless a director or owner is personally liable in some other way. If the company still operates, look at its receivables, bank accounts, equipment and any commercial property it owns. Search its registered security: a bank might already hold a general security agreement over everything.
If it has been dissolved or has stopped trading, your options narrow significantly. In some circumstances, there may be claims against people who received its assets, or under fraudulent conveyance rules, but this would involve a new step, and it usually needs a lawyer. A similar issue may come up where an individual has moved property into a spouse’s name around the time of a lawsuit.
Bankruptcy and Consumer Proposals
If a debtor files for bankruptcy or makes a consumer proposal, the Bankruptcy and Insolvency Act generally stays most enforcement by unsecured creditors. Your claim will usually be dealt with through that process, by filing a proof of claim with the licensed insolvency trustee. Don’t ignore notices from a trustee. Certain debts, including some that arise from fraud, may survive a bankruptcy, but that is a question for specific advice.
Choosing the Order of Attack
In most cases, it helps to think in terms of cost and likely return:
- Prepare an accurate statement of what is owed.
- File a writ against land, particularly if there is any chance the debtor owns property or might acquire it.
- Hold an examination if you do not know where the assets are.
- Garnish wages or bank accounts once you have the right information.
- Consider seizure of personal property only where the value clearly exceeds the exemptions, liens and costs.
- Keep track of expiry dates for writs and notices, and renew them on time.
- Review your file every few months, as debtors change jobs and acquire property.
Be prepared for this to take time. A debtor with limited income may only pay a little at a time, if at all. Equally, keep your conduct within the law: do not harass the debtor, contact their family or employer about the debt informally, or take property on your own.
When the debt is finally paid, you should give the debtor proper confirmation and have the writ or garnishment withdrawn. In Small Claims Court, there is a process for a clerk’s order confirming payment in full, and a debtor can bring a motion if a creditor refuses to cooperate.
When to Ask for Help
Simple enforcement can often be handled by a self-represented creditor in Small Claims Court, and the court’s guide to what happens after judgment is a good starting point. Advice can be useful if the amount is significant, property is involved, there are other creditors, there may be transfers to relatives, or a bankruptcy has been filed. The firm’s small claim matters and real estate and mortgage litigation pages touch on some of these areas, and you can contact Sawan Law House LLP to discuss the details of your judgment. Bring the order, your payment record and whatever you know about the debtor’s job, bank and property. With that information in hand, a realistic collection plan can usually start to take shape.