CANADA Trends and Developments Contributed by: Kathryn Manning, John Mather and Max Libman, DMG Advocates LLP
wording of Rule 60.08 (17) does not afford a judge equitable discretion to order payment from a garnish - ee in the absence of a finding that either a Garnishee Statemen was not filed or the Garnishee Statement was false. The Ontario Court of Appeal did note that, unlike Rule 60.08 (17), Rule 60.08 (16) affords a judge broader discretion to “determine the rights and liabilities of the garnishee, the debtor, any co-owner of the debt and any assignee or encumbrancer”. The Ontario Court of Appeal further found, however, that Mr Bahaud - din would not be entitled to benefit from this judicial discretion, as he originally brought his motion under Rule 60.08 (17) and not Rule 60.08 (16). The Ontario Court of Appeal was also careful to note that, while Rule 60.18 (16) affords courts some dis - cretionary latitude, it does not entitle a judge to order that a garnishee pay funds to a judgment creditor in the absence of a valid debt owed by the garnishee to the judgment debtor. Rather, the equitable discretion contemplated in Rule 60.18 (16) can be used after a valid debt is found to: • decline to enforce a garnishment where it would be inequitable; • hold a principal liable for a corporate garnishee’s failure to make payments; or • consider the realities of the relationship between related companies and hold a garnishee liable for making payments to an entity it knew to be the debtor operating under a different name than in the notice of garnishment. Lessons learned When seeking an order forcing payment from a gar - nishee, a judgment creditor must think carefully about the facts at hand and the specific rules of civil proce - dure under which they will move to seek relief. Rule 60.18 (17) should be used in cases where a garnishee has failed to provide a Garnishee Statement or has provided a statement that is false. If a judgment credi - tor moves for payment under Rule 60.18 (17) and the garnishee has provided a Garnishee Statement that accurately asserts there is no valid debt, the court will have no discretion to order payment from the gar - nishee. In these cases, the judgment creditor would
be better served to move under Rule 60.18 (16), which offers broader equitable discretion to the courts to order payment from parties who may directly or indi - rectly owe a debt to a judgment creditor. Contempt motions can be used to preserve funds While Ontario’s Rules of Civil Procedure do not allow judgment creditors to obtain a contempt of court order to enforce a money judgment (see Rule 60.11 (1)), Per- ley - Robertson , Hill & McDougall LLP v Eureka 93 Inc . provides an interesting example of how contempt pro - ceedings can nonetheless be used to preserve funds that are subject to a judgment. In this decision, the moving party law firm, Perley- Robertson, Hill & McDougall LLP, obtained a court order for the payment of outstanding legal bills from the responding party Acenzia Inc. Meanwhile, Acenzia commenced a corresponding action against Perley- Robertson, Hill & McDougall, claiming that it owed nothing for the legal services provided due to Perley- Robertson, Hill & McDougall’s alleged negligence, breach of fiduciary duty and breach of contract in providing legal services to Acenzia. During the hearing that led to the order for payment of the legal fees, Perley-Robertson, Hill & McDougall sought and was granted an order that Acenzia’s prin - cipal attend at an examination in aid of execution and produce relevant document ahead of the examination. Acenzia’s principal failed to comply with this order. Perley-Robertson, Hill & McDougall then brought a successful contempt motion in which the court found that Acenzia was in contempt of court and ordered that Acenzia’s principal attend at the examination and produce the relevant documents. Acenzia appealed the order, arguing that adherence thereto would prejudice Acenzia in its own action against Perley- Robertson, Hill & McDougall. The appeal was denied. Acenzia went on to produce some but not all of the required documents and continued to refuse to attend the examination in aid of execution. Perley-Robertson, Hill & McDougall brought another motion seeking a further declaration that Acenzia was in contempt but Acenzia continued to refused to comply with the origi - nal order.
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