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Mandates Upon Garnishee: Requirements to Participate Within the Process
Question: What are the responsibilities of a garnishee upon receiving a Notice of Garnishment in Ontario?
Answer: Upon receiving a Notice of Garnishment, a garnishee in Ontario must complete, serve, and file a Garnishee Statement within the prescribed period, following Rule 20.08 of the Rules of the Small Claims Court, O. Reg. 258/98. The garnishee is obliged to pay any owed debts to the debtor into the court clerk within 10 days to avoid becoming liable for the debtor's financial responsibilities. Exemptions apply, such as legally required source deductions. Need assistance with garnishment issues?
Answer: Contact Caruso Legal Services and ensure compliance with statutory obligations.
Garnishees Must Participate With Timeliness
The garnishment process involves a Notice of Garnishment (Form 20E) being served upon the third party who owes money to the Judgment Debtor. This third party is known as a garnishee. Upon receiving a Notice of Garnishment, the garnishee is required to complete, serve, and file, a Garnishee Statement (Form 20F) within the prescribed period. A garnishee that fails to properly adhere with the requirements of the garnishment process may become obliged to pay the debt of the Judgment Debtor.
Response Is Required
After the Garnishee receives the garnishment documentation as required served upon the Garnishee, being the Notice of Garnishment (Form 20E) with a Garnishee’s Statement (Form 20F), the Garnishee must then make proper payment to the Court Clerk within ten (10) days as per Rule 20.08(7) of the Rules of the Small Claims Court, O. Reg. 258/98, which states:
Garnishee Liable From Time of Service
20.08 (7) The garnishee is liable to pay to the clerk any debt of the garnishee to the debtor, up to the amount shown in the notice of garnishment, within 10 days after service of the notice on the garnishee or 10 days after the debt becomes payable, whichever is later.
(8) For the purpose of subrule (7), a debt of the garnishee to the debtor includes,
(a) a debt payable at the time the notice of garnishment is served; and
(b) a debt payable (whether absolutely or on the fulfilment of a condition) after the notice is served and within six years after it is issued.
Payment by Garnishee
(9) A garnishee who admits owing a debt to the debtor shall pay it to the clerk in the manner prescribed by the notice of garnishment, and the amounts paid into court shall not exceed the portion of the debtor’s wages that are subject to seizure or garnishment under section 7 of the Wages Act.
All Means All
Immediately upon receipt of a Notice of Garnishment, a Garnishee becomes obligated to pay all sums of money to the Court Clerk which the Garnishee owes to the debtor. It is noted that the reference to “… 10 days after service of the notice …” as within Rule 20.08(7) is in regard to when the sum must be remitted rather than when the sum must be accounted. Accordingly, the moment the Garnishee receives the Notice of Garnishment (Form 20E), the debt due at that moment to the Debtor instead becomes the sum payable by the Garnishee to the Court Clerk and the Garnishee must make that payment within ten (10) days to the Court Clerk.
Exceptions
Legally Required Source Deductions
An exception to the sum payable to the Court Clerk are those sums that are prescribed as exempt per the Wages Act, R.S.O. 1990, c. W.1, whereas a debt due as wages and thus a sum that may be garnished is based upon a net wage rather than a gross wage; and accordingly, source deductions such as income tax, CPP contributions, and any other sum that an employer is required to deduct is exempt from garnishment. As such, the employer is required to process and remit source deductions in the usual fashion regardless of receipt of a Notice of Garnishment (Form 20E). The requirement to set aside source deductions and to remit only such monies as related to net income is prescribed at section 7(1) of the Wages Act, which states:
Net wages subject to garnishment
7 (1) For the purposes of this section,
“wages” does not include an amount that an employer is required by law to deduct from wages.
Maximum Wages Deduction
A Creditor may seek to garnish twenty (20%) percent of a debt for wages as owed by a Garnishee to the Debtor. This sum may be varied, higher or lower, via an Order of the Court whereas such a variance would be sought at a Motion and would, presumably, involve a Creditor seeking more than twenty (20%) percent or involve a Debtor seeking less than twenty (20%) percent. The rules specific to the garnishment limit applicable to wages is found at section 7(2) through section 7(5) of the Wages Act, where it is said:
Exemption from seizure or garnishment
(2) Subject to subsection (3), 80 per cent of a person’s wages are exempt from seizure or garnishment.
Idem, support or maintenance
(3) Fifty per cent of a person’s wages are exempt from seizure or garnishment in the enforcement of an order for support or maintenance enforceable in Ontario.
Judge may decrease exemption
(4) A judge of the court in which a writ of execution or notice of garnishment enforceable against a person’s wages is issued may, on motion by the creditor on notice to the person, order that the exemption set out in subsection (2) or (3) be decreased, if the judge is satisfied that it is just to do so, having regard to the nature of the debt owed to the creditor, the person’s financial circumstances and any other matter the judge considers relevant.
Judge may increase exemption
(5) A judge of the court in which a writ of execution or notice of garnishment enforceable against a person’s wages is issued may, on motion by the person on notice to the creditor, order that the exemption set out in subsection (2) or (3) be increased, if the judge is satisfied that it is just to do so, having regard to the person’s financial circumstances and any other matter the judge considers relevant.
Questions also often arise as to whether the twenty (20) percent of wages that may be garnished should be calculated from gross pay or net pay; however, that question was indirectly answered earlier whereas section 7(1) of the Wages Act exempted sums owed as a legally required source deductions are excluded from the definition of wage; and accordingly, when calculating the twenty (20) percent of a wage that must be garnished, such calculation can only be based upon what is defined as a wage.
Conclusion
A Garnishee, although merely a third party to the relevant legal matters, is mandated to act with prudence and integrity. The Garnishee must respond promptly and must participate in the process despite the administrative imposition upon the Garnishee. Accordingly, the Garnishee must become familiar with the law, documents, among other things, as relevant to the Garnishee.
