Part 5III

1
Part 5IIIIVUnsecured CreditorsPost-Judgment
RemediesSpecific Enforcement Procedures
2
Taxonomy of Remedies

• Against the person of the debtor
• Imprisonment for failure to pay debt
• Imprisonment in aid of examination
• Remedies against personal real property
• Passive enforcement filing notice of
  judgment/memorial of execution already
  discussed
• Order for Seizure and Sale ME Act
• Remedies against debts owing to debtor
• Attachment of debts or garnishment Garnishee
  Act
• Equitable execution fills in the cracks
• Retroactive Remedies
• Assignments And Preferences Act

3
Against the Person of the Debtor
4
Post-Judgment Arrest Imprisonment

• Failure to pay judgment as ordered by court is
  contempt of court
• But in all jurisdictions Rules of Court provide
  that imprisonment is not available for contempt
  for failure to pay a judgment debt
• Some jurisdictions retain specific statutory
  authority to imprison debtor for non-payment
• Nfld, NB, NS, BC, Yukon
• Rarely used

5
Post-Judgment Arrest Imprisonment

• NB Arrest Examinations s.36
• No person shall be arrested or imprisoned after
  judgment in any civil suit, or for making default
  in the payment of a sum of money. . .
• Abolition of common law imprisonment for failure
  to pay
• . . .except as provided and allowed by this or
  any other Act at the time in force.
• Statutory imprisonment retained
• Term of up to one year (s.38) if the debtor has
  the means to pay and refuses to do so (s.40(a)).

6
Arrest in Aid of Examination

• Can get an order for examination to discover
  assets which may satisfy the judgment.
• Persons other than the debtor may be examined
• Enforceable by contempt proceedings, which can
  include imprisonment
• Arrest and Examinations Act, ss. 30-34

7
Against Real and Personal Property of the Debtor
8
Order for Seizure Sale

• Distinguish
• Exigible property
• Exempt property
• Exigible property is not subject to seizure under
  a writ
• e.g. chose in action (subject to garnishment)
• RRSP?
• Stock in a company? Liquor licence?
• Exempt property is exigible, but is statutorily
  exempt from execution

9
Seizure

• Sheriff conducts seizure and sale
• Not JC
• Instructing creditor must pay sheriffs costs
  before seizure Sheriffs Act s.13
• Liable to third parties for seizing their goods
• Problem when ownership is in dispute
• Sheriff can ask for indemnification from
  instructing creditor
• Is liable to D for excessive seizure
• more than is reasonably needed to satisfy debt

10
Seizure

• Sheriff cannot force entry to effect seizure
• the house of every one is to him as his castle
  and fortress, as well for his defence against
  injury and violence, as for his repose. 1604
  decision
• Sheriff liable in damages for illegal entry
• Ultimately, a sheriff is a peace officer
  (Criminal Code s.2 definitions) with the right to
  possession of the property in question, and it is
  a criminal offence to hinder a peace officer

11
Seizure

• In practice, as a matter of convenience the
  sheriff does not want to take physical possession
  of the property
• Most of the issues surrounding seizure concern
  the type of symbolic possession which is
  necessary to give sufficient notice to third
  parties that a seizure has been effected.
• Once goods have been seized, sheriff has a
  special kind of property and can bring an
  action for recovery of the goods against a third
  person who carries them away.

12
Sale

• Sale is very rare since it will often result in
  an undervalue
• D is inclined to buy out if at all possible
• The Act does not even provide minimal
  specification of how sale is to be conducted in
  case of personalty.

13
Sale

• Case-law requirements
• Sheriff selling assets must conduct the sale so
  as to ensure that a fair price is received.
• The sheriff will be liable to the debtor who
  might have received any surplus
• Or to the creditor whose judgment should have
  been but was not satisfied.
• Where the sale does not result in a reasonable
  bid, the sheriff may not simply sell to the
  highest bidder.
• The sheriff may either adjourn to a named day or
  prepare a return that the goods remain in his or
  her hands for want of a buyer.

14
Sale

• Compare secured creditors duty which is only to
  take reasonable steps to secure a fair price
• Reason for the difference is that the sheriff has
  the option of a return venditioni exponas
  application to court that the goods be sold for
  the best price obtainable.
• Note that in practice there may be little
  difference btw SP duty and that of a sheriff as
  an unreasonably low price is good evidence that
  reasonable steps were not taken

15
Title of Purchaser

• Purchaser is protected if judgment is later
  reversed ME s.9
• In which case creditor is liable to debtor
• Other than that, purchaser from sheriff gets very
  tenuous title
• Recall priorities Jellett v Wilkie
• ...the sale shall convey whatever interest the
  party had in the goods and chattels at the time
  of the seizure.
• ME s.23 (similarly in the case of land, s.15)
• The sheriff offers no warranties as to title

16
Title of Purchaser

• Sale may be challenged if
• The goods were not exigible or were owned by a
  third person at the time of seizure (Jellett)
• Court issuing the writ had no jurisdiction to do
  so
• Writ was not regular on its face or had expired
• Proceedings leading to issue of the writ were
  seriously flawed (how flawed?)
• There was fraud or wilful misconduct on the
  sheriffs part
• The sale was collusive
• Result price at a sheriffs sale is usually
  very low

17
Remedies Against Debts Owing to Debtor
Garnishment
18
Garnishment

• D is owed money by third party account debtor
• Account debtor called garnishee in the
  Garnishee Act
• JC applies ex parte for attaching order
• Order may be challenged by D or AD within 20 days
  of service
• Attaching order is served on account debtor
• Not on D
• Once attaching order is served, debt is
  attached (bound)

19
Garnishment

• Once debt is bound, payment into court by AD
  discharges debt
• AD may pay JD only on order of court
• Cf PPSA right to collect on intangibles, where AD
  pays SP after notice is given
• Payment by AD to D is void does not discharge
  debt
• AD will be liable to pay the same amount to JD

20
Garnishment

• AD can raise against JD any defenses which would
  have been available against D
• There is a special process if AD disputes debt
  owing to D

21
Garnishable Debts

• Debts due or accruing due
• Usual formulation
• Debt
• Must be specific sum damages claim cannot be
  garnished
• Ie when debtor is herself a JC vis-a-vis a third
  party, the judgment debt owing to the debtor
  cannot be garnished until judgment.

22
Garnishable Debts

• Problem What debts can be garnished before they
  are actually due?
• Accruing due
• Debts which are accruing are debts which will
  become payable with certainty only with the
  passage of time e.g. a loan
• Such debts are said to be present debts payable
  in the future
• Distinguish amount owing those which are
  contingent on some uncertain future action

23
Garnishable Debts

• Examples of controversial types of debts
• Unliquidated damages cannot be attached until
  judgment is entered
• Fire insurance fire insurance policy cannot be
  garnished until insurer admits liability and
  agrees to pay rather than replace asset
• But, some policies may be garnishable
  immediately, depending on particular clause e.g.
  auto insurance policy creating a debt owing to
  insured once judgment recovered
• Life insurance garnishable on death of deceased,
  even where succession duty releases have not yet
  been filed

24
Garnishable Debts

• Examples of controversial types of debts
• Legacies where the j.d. is entitled to a
  specific bequest, and the executors have agreed
  to pay, it can be attached
• But where bequest is a distributed share, not
  garnishable until quantified
• Rent which is not yet due was at one time
  garnishable as debt accruing due, but is now
  generally not garnishable
• Successive orders are necessary to garnish rent
  as it becomes due.
• Mortgages (e.g. where debtor is mortgagee), in
  contrast, can be garnished prospectively
• RRSP generally not garnishable

25
Garnishable Debts

• Why are debts not yet accruing due not
  garnishable?

26
Wage Garnishment

• Wages are often not yet accrued
• Several orders must be issued in order to catch
  sequential pay periods.
• Some jurisdictions have specific continuting
  garnishment orders for wages
• Wages typically cannot be garnished entirely
• N.B. has abolished wage garnishment
• All provinces (incl. NB) have ongoing
  garnishment orders for family orders e.g.
  maintenance and alimony

27
Equitable Execution

• There are various forms of equitable execution
• The most important is appointment of a receiver
• One important reason for appointment of a
  receiver is to reach assets which cannot be
  reached because of gaps in other processes
• E.g. RRSP cannot be seized, nor can it be
  garnished
• It is now clear in NB that a receiver can be
  appointed to collapse and RRSP

28
Part 5.IV Exemptions
29
Exemptions

• Exempt goods ME s.33(1)
• (a) the furniture, household furnishings and
  appliances reasonably necessary for the debtor
  and his family
• (b) the necessary and ordinary wearing apparel of
  the debtor and his family
• (c) all necessary food and fuel for the debtor
  and his family for three months
• (d) two horses and sets of harness, two cows, ten
  sheep, two hogs and twenty fowl, and food
  therefor for six months

30
Exemptions

• (e) any tools, implements and necessities used by
  the debtor in the practice of his trade,
  profession or occupation having a cumulative
  market value of not more than six thousand five
  hundred dollars, and one motor vehicle having a
  market value of not more than three thousand
  dollars, if required by the debtor in the course
  of or to retain employment or in the course of
  and necessary to his trade, profession or
  occupation, but the exemptions provided in this
  paragraph do not apply to a corporate debtor

31
Exemptions

• Exempt goods ME s.33(1)
• (f) seed grain and potatoes required for seeding
  and planting purposes to the following
  quantities forty bushels of oats, ten bushels of
  barley, ten bushels of buckwheat, ten bushels of
  wheat and thirty-five barrels of potatoes
• (g) dogs, cats, and other domestic animals
  belonging to the debtor
• (h) medical or health aids reasonably necessary
  to enable the debtor or any member of his family
  to work or to sustain health.

32
Exemptions

• Note Traditionally and still in most
  jurisdictions, there are no exemptions in the
  case of secured transactions
• Atlantic PPSAs have exemptions (NB s.58)
• Exemptions do not apply to pmsi
• (a) furniture, household furnishings and
  appliances used by the debtor or a dependent to a
  realizable value of five thousand dollars or to
  any greater amount that may be prescribed
• Cf ME no limit on the value of the furniture

33
Exemptions

• NB PPSA
• (b) one motor vehicle having a realizable value
  of not more than six thousand five hundred
  dollars at the time the claim for exemption is
  made, or not more than any greater amount that
  may be prescribed, if the motor vehicle is
  required by the debtor in the course of or to
  retain employment or in the course of and
  necessary to the debtor's trade, profession or
  occupation or for transportation to a place of
  employment where public transportation facilities
  are not reasonably available
• Cf ME 3000 limit on value of vehicle

34
Exemptions

• NB PPSA
• (c) medical or health aids necessary to enable
  the debtor or a dependent to work or to sustain
  health and
• CF ME
• (h) medical or health aids reasonably necessary
  to enable the debtor or any member of his family
  to work or to sustain health.

35
Exemptions

• NB PPSA
• (d) consumer goods in the possession and use of
  the debtor or a dependent if, on application, the
  Court determines that
• (i) the loss of the consumer goods would cause
  serious hardship to the debtor or dependent, or

36
Exemptions

• NB PPSA
• (ii) the costs of seizing and selling the goods
  would be disproportionate to the value that would
  be realized.