Enforcing Against Garnishee: a Process Known as Garnishment Absolute

Enforcement Against Garnishee

20.08 (17) If the garnishee does not pay to the clerk the amount set out in the notice of garnishment and does not send a garnishee’s statement, the creditor is entitled to an order against the garnishee for payment of the amount set out in the notice, unless the court orders otherwise.

54.  The Notice of Garnishment contains a clearly identified CAUTION TO GARNISHEE.  The caution states:

IF YOU FAIL TO PAY to the clerk the amount set our in this notice and do not file a Garnishee’s Statement (Form 20F) disputing garnishment, JUDGMENT MAY BE OBTAINED AGAINST YOU BY THE CREDITOR for payment of the amount set our above, plus costs.

55.  Small Claims Court Rule 20.08(17) provides:

If the garnishee does not pay to the clerk the amount set out in the notice of garnishment and does not send a garnishee’s statement, the creditor is entitled to an order against the garnishee for payment of the amount set our in the notice, unless the court orders otherwise. (emphasis added)

56.  Application of the Rule and corresponding caution is not absolute.  It is expressly subject to the discretion of the Court which is able to order otherwise.  In exercising such discretion, the Court can and should look at the conduct of the parties and make such order as is considered just and agreeable to good conscience.

57.  In doing so, I have particular regard to the 3 letters from the Garnishee which I have included as Appendices to these Reasons.  The Garnishee submits that the letter dated September 4, 2013 is a substitute for or constitutes sufficient and substantial compliance with the requirement to provide a Garnishee’s Statement after being served the Notice of Garnishment dated August 16, 2013.  I simply cannot agree with this position.

58.  The letter is nothing more than a form letter.  It does not specifically address, in any meaningful way, the subject matter of the Notice of Garnishment that it is intended to deal with.

59.  If the letter was to in any way meaningfully address the issues raised by the Notice of Garnishment; if the letter was to in any way provide the type of response that is expected to be found in a Garnishee’s Statement; then a finding that it constituted substantial compliance with the requirement to file a Garnishee’s Statement might be warranted and the exercise of discretion to “order otherwise” might be appropriate.

60.  But none of those features exist here.  Scotia Securities Inc.  did absolutely nothing to look into the matter and provide a meaningful or substantive response, either by letter or by the preferred Garnishee’s Statement.  Instead, it issued a form letter in the same form and content as a letter it sent 4 months earlier in response to a April 19, 2013 Notice of Garnishment.  The same letter was sent 1 year later on September 15, 2014, not in response to a Notice of Garnishment, but in response to a letter from Mr.  Lammers dated September 10, 2014 seeking an explanation for the non-payment pursuant to either of the garnishments.  This response starts, “We are in receipt of your Notice of Garnishment, dated September 10, 2014 naming The Bank of Nova Scotia as Garnishee.”, but there was no such Notice of Garnishment.  The 3 letters were signed by different individuals and each contains 3 references to “the tax debtor” when the matter has absolutely nothing to do with a tax debt.  It is obvious that the Garnishee did not respect or take the Court process and Notices of Garnishment seriously.  I find that the Garnishee considered it satisfactory to simply issue a form letter when the Garnishee’s Statement contemplates so much more.  The Garnishee simply did not give such matters the attention they deserve and require under the Court Rules.

61.  Oddly enough, the Garnishee relies on the procedural technicality of the Creditor’s improper attempt to seize the RRSP by garnishment rather than by writ of execution, but then asks the Court to overlook its procedural shortcoming in failing to file a Garnishee’s Statement pursuant to the Rules.

62.  It is not as if the Garnishee did not know better, it is a financial institution.  Garnishee’s Statements were filed in response to 2 out of 3 Notices of Garnishment.  While it may not be the place or obligation of the Garnishee to advise or assist a Creditor with how to effect a seizure, a proper and meaningful Garnishee’s Statement may have alerted the Creditor of the ineffectiveness or inappropriateness of the Notice of Garnishment which may have prompted the Creditor to issue and execute a Writ of Seizure and Sale of Personal Property prior to the bankruptcy of the Judgment Debtor which occurred 6 months later.  The failure to file a meaningful Garnishee’s Statement therefore may have prejudiced the Creditor in its efforts to collect on the Judgment.

63.  I find that the form letter dated September 4, 2013 (Appendix B) was woefully inadequate and does not represent a substitute for, or constitute substantial or sufficient compliance with, the requirement to file a Garnishee’s Statement.  I further find that the provisions and consequences of Rule 20.08(17) apply and that there is no justification or reason to exercise my discretion to order otherwise.  The Garnishee, Scotia Securities Inc., failed to file the required Garnishee’s Statement to the Notice of Garnishment issued on August 16, 2013 and served by registered mail on August 28, 2013.

64.  For the foregoing reasons, in accordance with Rule 20.08(17), the Creditor is entitled to and shall have Judgment against Scotia Securities Inc.  in the sum of $6,090.22.  This Judgment shall bear post judgment interest from November 19, 2014 at the rate of 3% per year.

9.   There are three reasons why the plaintiffs’ request for judgment against the garnishee must be denied.

10.  First, the plaintiffs’ Notice of Garnishment is fatally flawed because it fails to provide evidence that the garnishee was or would become indebted to the defendant as at October 30, 2018.  While the forms are intended to be simple and easy to complete, the omission of that basic information means there is no evidence to support the Notice of Garnishment, and therefore no evidence to support a judgment against the garnishee: Thompson v. Reitkerk, [2008] O.J.  No. 5167 (Sm.  Cl.  Ct.), at paras. 5-12.

11.  Second, whether the plaintiffs knew about the bankruptcy when they issued the Notice of Garnishment Hearing on November 22, 2018, the fact is that the automatic stay of proceedings under the Bankruptcy and Insolvency Act was triggered when the defendant filed her assignment in bankruptcy the day before.  In my view the notice was a nullity when it was issued and cannot support a judgment against the garnishee for that reason.

12.  Third, and despite the first and second problems, the Notice of Garnishment was served on October 30, 2018 and therefore the garnishee’s default in responding occurred after Friday, November 9, 2018.  The defendant’s bankruptcy occurred just 12 days later.  Therefore if the garnishee did not owe any money within that three-week timeframe its failure was only to file a Garnishee’s Statement stating that fact.  If it did owe money within that timeframe there is no evidence as to the amount owed, nor as to how much ought to have been remitted in response to the Notice of Garnishment.  In the normal course only 20% of net employment income would be garnisheed, by virtue of section 7 of the Wages Act, R.S.O. 1990, c.  W.1.

13.  The plaintiffs advised the court of their belief that the defendant was earning about $2,500 per month from the garnishee.  Putting aside the fact that there is no formal or specific evidence on that issue, I assume that is the gross income figure.  Adjusting for withholding amounts and reducing to three-quarters of a month, the 20% which possibly the garnishee should have remitted could be estimated at under $300.  Yet the plaintiffs want a judgment against the garnishee for over $4,000.

14.  The court’s power to enforce a garnishment is discretionary: Abazour v. Heydary, 2015 ONCA 565 at para. 10.  Rule 20.08(17) of the Small Claims Court Rules, O.Reg. 258/98, provides that where a garnishee fails to comply with one of the two options under a Notice of Garnishment, “the creditor is entitled to an order against the garnishee for payment of the amount set out in the notice, unless the court orders otherwise.”  The rule does not define or limit the court’s discretion to other otherwise.

15.  Even if the court were to disregard the first and second issues set out above for the sake of argument, in the circumstances of this matter I would order otherwise under rule 20.08(17) on the basis of the third issue.  There is no evidence that any amount was payable by the garnishee to the defendant during the relevant window of approximately three weeks.  Granting a judgment for the full amount would be a disproportionate and unjust remedy in my opinion.  The fact is that bankruptcy intervened as of November 21, 2018 and that is the fault of neither the garnishee nor the plaintiffs.

16.  I considered granting a judgment for an estimate of 20% of the defendant’s income for those three weeks.  But without a valid Notice of Garnishment, no evidence of an employment relationship or of any amount payable within that period, I declined to make such an order.  That would have amounted to pure speculation by the court, to the detriment of a non-party.

17.  It appears to me that the plaintiffs’ remedy is to pursue their claim through the defendant’s trustee in bankruptcy.

18.  For those reasons the request for judgment against the garnishee is denied.