SMALL CLAIMS COURT: ENFORCEMENT OF JUDGMENT
Congratulations! You’ve won the case! But it is a little bit too early to celebrate: to have a promissory note for $10,000 and actually have $10,000 in your bank account are two different things. Obtaining a judgment may be just the beginning. A judgment is an order of the court; it is not a guarantee of payment. Most of us think that when the trial is over and the judge’s decision is made or a default judgment is obtained, the successful party will automatically be paid by the debtor and that is the end of the matter. Sorry, we have to disappoint you.
Although, as a creditor you have many different tools available to help you collect the money you are owed under the order, the process is not that simple. Here, we will give you general information about what you may have to do after you have your judgment in order to enforce it.
If you are a debtor who has lost your case and now has to pay, we will provide you with some information of the options you have. For example, if you do not have money or assets available with which to pay the judgment, or if you disagree with the judgment made, you may wish to take some of the steps outlined below.
There might be a few enforcement options:
- Examination Hearing
- Garnishment Process
- Writ of Seizure and Sale of Personal Property
- Writ of Seizure and Sale of Land
- Writ of Delivery
- Consolidation Order (a debtor who has more than one Small Claims Court judgment being enforced against them will find information about the process to follow to get a Consolidation Order)
If you are a creditor
You can start taking enforcement steps immediately after judgment is given. However, whether your judgment was made by a judge after a trial or settlement conference, or whether it was obtained by default, the best place to start is often with a simple written request for payment. If the letter asking for payment is unsuccessful and/or you are unable to reach a mutually satisfactory agreement with the debtor, you will have to take other steps to enforce your judgment. Generally, the faster you act, the better the results will be.
The next step you take will depend on the information you have about the debtor’s assets and ability to pay. If you have sufficient information, you can take an enforcement step immediately. If you do not know where the debtor banks, what assets they have, or where they may work, you could begin the enforcement process by requesting an examination hearing.
As a creditor, you may have to enforce the judgment. In order for you to collect, the debtor must have one of the following:
- assets that can be seized and sold; or
- debt owing to the debtor by a third party (e.g. bank account, employment income) that can be garnished.
If the debtor does not have the ability to pay immediately, you may choose to wait. The person may get a job in a few months, for example. You will still have your judgment and you can attempt to collect it then through a notice of garnishment. If the judgment debtor goes bankrupt, the rules change completely. You will not be able to continue with enforcement proceedings. Many potential complications may arise during the enforcement process. For example, there may be a dispute about who really owns the property, property may be jointly owned, or there may be security interests.
If you are a debtor
You may receive a letter from the creditor asking for prompt payment after judgment has been given at trial, at the settlement conference, or by default. Once you are aware of the judgment, you should contact the creditor immediately. If you are able to pay the full amount of the judgment, send your payment to the creditor at the address provided in the claim or letter. If you are unable to pay the judgment in full, you should still contact the creditor to make arrangements for payment. Be sure to let the creditor know if there are any circumstances which affect your ability to pay right away, and make a proposal for paying the judgment within a reasonable timeframe. If you are unable to continue meeting payment arrangements that you have agreed to, you should notify the creditor and try to make other mutually satisfactory arrangements.
The Notice of (Debtor) Examination is issued by the court clerk on request of the creditor. Before the court office can issue a notice requiring the debtor to come to Small Claims Court for an examination of the debtor, the creditor must complete a sworn statement – affidavit for examination. After that the court office will issue the notice of examination requiring the debtor to come to court. At this hearing, the debtor’s financial status will be reviewed to determine their ability to pay. After the hearing, the court may order the debtor to pay the judgment in full or by installments, or may delay the payment for a period of time if the court believes the debtor is unable to pay at that time. As the creditor, you are entitled to ask questions of the debtor at an examination hearing. The questions should be about the debtor’s financial status and the debtor’s ability to pay the judgment. The judge may also ask questions at this hearing. The judge will also rule if a question is improper or needs to be answered.
Commencing such an examination procedure alone may be useful to encourage payment. Where a person is found in contempt of court for refusing to answer questions or provide records at an examination hearing, the maximum penalty has been is 5 days in jail, effective January 1, 2011.
Garnishment is a court order demanding that a third party who owes money to a judgment debtor pay the judgment creditor instead. For example, if the judgment debtor has a bank account with money in it, the court can require the bank to pay you. The most common type of garnishment is wage garnishment. It is the process of deducting money from an employee’s monetary compensation (including salary), as a result of a court order. Wage garnishments continue until the entire debt is paid or arrangements are made to pay off the debt. Garnishments can be taken for any type of debt. Garnishment of wages is restricted to 20%. To get a garnishment order, you must apply to the court.
Writ of Seizure and Sale of Land
A creditor can file a writ of seizure and sale of land against a debtor. The writ would encumber any land presently owned or land which may be purchased in the future by the debtor. The writ of seizure and sale of land can be very effective in the long run since it will be difficult for the debtor to sell or mortgage the land until the debt is paid.
The writ can be filed whether or not the debtor owns land at the time of filing. However, if you prefer not to file until you are certain the debtor owns land, for a fee you can do a name search at the land registry or land titles office (Ministry of Government Services, Registration Division) located in the area where you think the debtor may own property.
The enforcement office has a general duty to act reasonably and in good faith towards all parties. The enforcement office can refuse to act if the estimated costs of executing the writ of seizure and sale are greater than the debtor’s equity in the property to be seized.
The writ will expire six years from the date it is issued, unless you renew it for an additional six-year period. A writ may be renewed before it expires by filing a Request to Renew a Writ of Seizure and Sale with the enforcement office. Each renewal is valid for six years from the previous expiry date. There is a fee to file and renew a writ.
To start the writ of seizure and sale of land procedure you have to:
- fill out an Affidavit for Writ of Seizure and Sale of Land
- fill out a Writ of Seizure and Sale of Land
- file the affidavit and writ in the Small Claims Court where you obtained judgment.
Court staff will issue the writ and return the original to you to file in the enforcement office. There is a fee for issuing the writ in the Small Claims Court and a fee for filing it in the enforcement office.
The writ of seizure and sale of land process is very complicated. Any party involved in a seizure and sale of land may choose to get legal advice from CP Paralegal Services.
Writ of Seizure and Sale of Personal Property
If the debtor has been ordered by the court to pay the creditor money but they have not paid, the creditor can ask the enforcement office to take specific personal possessions belonging to the debtor and sell them at public auction so that the money can be used to pay the judgment debt.
To start the writ of seizure and sale of property procedure you have to:
- fill out an Affidavit for Writ of Seizure and Sale of property
- fill out a Writ of Seizure and Sale of property
- file the affidavit and writ in the Small Claims Court where you obtained judgment.
Court staff will issue the writ and return the original to you to file in the enforcement office. There is a fee for issuing the writ in the Small Claims Court and a fee for filing it in the enforcement office. The goods will be sold at the public auction.
The writ will expire six years from the date it is issued, unless you renew it for an additional six-year period. A writ may be renewed before it expires by filing a Request to Renew a Writ of Seizure and Sale with the Small Claims Court office. Each renewal is valid for 6 years from the previous expiry date. There is a fee to file a writ.
Under the Execution Act, a debtor has a right to choose the goods that make up the exemptions and is entitled to certain exemptions from seizure of personal property such as:
- household furniture, utensils, equipment, food and fuel
- tools and instruments used in the debtor’s business (other than tillage of the soil or farming)
- tools, books and instruments used for the tillage of the soil or farming and livestock, fowl, bees and seed
- one motor vehicle worth less than the specified amount
At any time up to the sale of the seized items, the debtor can prevent the sale by paying the amount of the judgment, plus costs and interest. The debtor can also ask the court to have the seizure postponed or to pay the judgment in installments.
If the creditor is requesting that a motor vehicle, snowmobile or boat be seized, they must provide the court with proof that the Personal Property Security Act search and Repair and Storage Liens Act searches have been made to show whether there are any liens or other securities registered against the vehicle; the amounts of the liens or securities; and whether there is enough equity in the vehicle for it to be seized and sold. Also, Ministry of Transportation search to prove that the vehicle is owned by the debtor. For a motor vehicle only: An up-to-date copy of a used vehicle information package, which can be obtained from the Ministry of Transportation, has to be attached. (This should not be more than one week old.)
It is a good idea to confirm beforehand whether this procedure will be worthwhile because the costs of it are relatively high. The creditor risks paying high fee with no chance of recovery if the debtor does not have any goods worth seizing and selling.
For information about where searches can be conducted, you can contact the Ministry of Government Services Helpline at (416) 314-8880 or toll free in Ontario at 1(800) 361-3223.There is a fee payable to that Ministry for the search and the search will not be conducted over the phone.
The writ of seizure and sale of property process is very complicated. Any party involved in a seizure and sale of property may choose to get legal advice and help from CP Paralegal Services.
Writ of Delivery
When a person or business has personal property that does not belong to them and refuses to return it to the rightful owner, the owner can request a court order for a writ of delivery. This writ authorizes enforcement staff to take the specific items and return them.
You must provide the court with a full description of the personal property (i.e. serial numbers, make, model, photographs, and the exact location where the items can be found and proof of ownership, where applicable).
If the personal property referred to in a writ of delivery cannot be found or taken by enforcement staff, you can ask the court, by filing a notice of motion, for an order directing enforcement staff to seize any other personal property owned by the debtor.
If you obtain this type of order, enforcement staff will keep the personal property until the judge makes an order for its disposition (e.g. orders the sale of the property). You must pay any additional costs to execute the order or store the personal property during this time.
If you are served with an order for a writ of delivery, you may make a motion to the court in relation to the order. However, the goods may still be seized unless you have a court order rescinding the writ of delivery.
Once a judge grants the order for a writ of delivery, you fill out an Affidavit for Enforcement Request and Writ of Delivery. The court office will sign the writ and return the writ and affidavit to you to take to the enforcement office. Then you have to file the original writ and a copy of the affidavit with the enforcement office. The enforcement office will contact you with a date and time when the writ will be executed. You will need to coordinate any necessary arrangements for that date and time. Depending on the size of the items, you may wish to hire professional movers or rent a vehicle large enough to transport them. You may also need to hire a locksmith to get access to them. You must also ensure that enough resources are available to conduct retrieval of your property in an efficient and timely way. For example, if property to be seized must be dismantled prior to removal from a person’s possession, you should hire enough people to dismantle it quickly. You are responsible for making and paying the costs of these arrangements and you must pay enforcement staff’s anticipated mileage expenses. Enforcement staff will carry out the seizure of goods in accordance with the order and return them to you, if possible.
If you are a debtor and you have more than one outstanding Small Claims Court judgment against you, you can apply to the Small Claims Court where you live for a consolidation order. If granted, this order would combine the judgment debts and set up a schedule of repayments for all creditors named in the order. As long as you make the payments as ordered, no other enforcement measures can be taken against you to collect the debts included in the order, except each creditor could seek issuance of a writ of seizure and sale of land and file it with the enforcement office (sheriff).
To ask for a consolidation order, you have to file a Notice of Motion and Affidavit listing the judgments against you, your debts, your income from all sources and any family support obligations. The notice of motion and affidavit must be served on each creditor at least seven days before the scheduled motion date. At the hearing, a judge will hear evidence about your income and expenses and may make an order combining your debts and order payments to be made in installments. If the order is terminated, no further consolidation order can be made until a year has passed from the date of the termination.
Do not make a mistake trying to go through the enforcement of the judgment process alone!
Let CP Paralegal Services do their job while you are doing yours!
The particular details and proceedings for enforcement of judgment are very technical, tricky and complicated and, more likely, you will need professional assistance.