Congratulations! You were successful in court, the judge sided in your favour, and now the Defendant owes you money. When a Defendant owes a Plaintiff money, in terms of enforcing a judgment they are a Debtor to the Plaintiff (who is now a Creditor).
But how do you get paid the money you are legally entitled to receive? While some Defendants do pay their debt forthwith, others require pressure. We outline below certain options to take to enforce your judgment in Ontario.
What are the first steps to enforcing a judgment?
Typically, the first step to enforce a judgment is the same as the first step to bring a claim: you write a demand. This letter sets out what the Defendant/Debtor owes, how they are to pay, when they are to pay and what happens if they don’t pay (i.e. you will take further court proceedings, and they will continue to incur increasing debt in the form of disbursements and cost associated with those steps). A demand to pay is an effective tool to open dialogue with the Debtor and coordinate timely payment.
The Debtor may try to negotiate a payment plan. Whether such a plan is agreeable or advisable depends on the circumstances. Delayed payment can be frustrating and may interfere with your plan for the money, however, delayed payment is always better than no payment. If the payment plan is unacceptable, if they refuse to pay, or simply do not respond to the demand, further steps can be taken in the form of examinations, writs, and/or garnishment, as described briefly below.
What is an Examination in Aid of Execution?
In an Examination in Aid of Execution, you as the Creditor have the opportunity to examine the Debtor in a formal process. The rules differ between the Small Claims Court (where it is referred to as a Notice of Examination) and the Superior Court of Justice, but broadly speaking you can make formal inquiries of the Debtor with regards to:
- Their finances and ability to pay
- Why they have not paid yet
- Their assets (property, vehicles, other assets)
- Their income (i.e. employment or self employment)
- Anything else relating to the judgment or sources of funds/assets to satisfy the judgment.
An examination provides you with information on where to direct your enforcement efforts by requiring the Debtor to effectively tell you where his or her assets reside. An examination does not oblige the Debtor to pay, but such information will dictate whether you wish to proceed with garnishment (i.e. of wages, accounts and/or third parties), or seizure and sale of property, or both.
What are Garnishments?
If the Debtor is still refusing to pay despite your demands, you have options.
If the Debtor is employed and earning income, you can file for a Notice of Garnishment to garnish their wages. A Notice of Garnishment is a court order that allows a portion of the Debtors’ wages to be deducted by their employer towards satisfaction of the judgment (i.e. garnished). Generally, 20% of the Debtor’s wages can be garnished in satisfaction of a commercial dispute, whereas up to 50% of the Debtor’s wages can be garnished in satisfaction of a family dispute for spousal/child support.
If the Debtor is in extreme financial straits, they may bring a motion to the Court seeking an order to reduce the amount garnished if they are able to demonstrate that garnishing up to 20% of their income would cause them extreme hardship. The Court may subsequently order the amount garnished to be reduced. It is also important to note that some types of income such as Old Age Security, Canada Pension Plan, and received child support are exempt from garnishment.
In addition to garnishing income, a Creditor can seek to enforce it by garnishing a Debtor’s bank account. This process, known as a bank account garnishment, involves the court issuing a Notice of Garnishment to the Debtor’s financial institution, requiring it to freeze and remit funds from the account to the court, which then forwards payment to the Creditor. Unlike wage garnishment, which deducts money on an ongoing basis, a bank account garnishment is typically a one-time seizure of whatever funds are available on the day the order is served. It can capture chequing, savings, and joint accounts, provided the Debtor is a named account holder.
Lastly, Creditors can also use third-party garnishment by issuing a Notice of Garnishment and serving it on the third-party to intercept money owed to the Debtor by someone other than an employer or bank, such as rental income, accounts receivable, or contractual payments.
What are Writs?
Alternatively, you, as the Creditor, may seek a writ of seizure and sale, either for the Debtor’s land, or for their property. These writs allow the sheriff (yes, we still have sheriffs) to seize a Debtor’s land, or their property, and auction it publicly in order to pay off their debts to the Creditor.
Seizure and sale processes must adhere to strict rules, and it is not an overnight process. Land cannot be seized by the sheriff until 4 months after the writ is filed, and no sale can take place until 6 months after the filing. There are rules around property as well. For example, a debtor’s essentials (their clothes, necessary tools for their work, etc.) cannot be sold.
Writs are valid for 6 years after they are issued, and a Creditor can apply to the Court to renew a writ for 6 years following that. These are methods of last resort – it is always going to be more expedient and more logical to organize even a gradual repayment plan with a Debtor.
Final Thoughts
This is a simplified overview of a complicated enforcement process, and it is recommended to seek the guidance of knowledgeable legal counsel. As your lawyers, we are here to help obtain and enforce your judgments to ensure you get what you deserve. Contact us today to learn more about our litigation team.