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5. Debtor Examination
(a) Overview
As discussed above, where a creditor wants to determine what assets a debtor might have available for collection, they can require the debtor or other person who may have knowledge of the debtor's affairs to attend and be examined by them before the court in a Debtor's Examination [R20.10(1)]. Commencing such a procedure alone may be useful to encourage payment.
(b) Notice of Debtor Examination
. Issuance of Notice of Debtor Examination
The Notice of (Debtor) Examination is issued by the court clerk on request of the creditor. The creditor's request for a Notice of Examination should be supported by an affidavit setting out [R20.10(2)]:
Form 20P: Affidavit for Enforcement Request
Form 20H: Notice of Examination
The affidavit should set out:- the date and amount of order;
- the territorial division in which the order was made;
- the rate of postjudgment interest;
- the amount received since the order was granted;
- the amount owing, including postjudgment interest.
Examination should be done through the court having territorial jurisdiction over the debtor's or witness' residence or place of business, not necessarily where the judgment was obtained [R20.10(1)]. If the court is other than where the judgment came from, the request for issuance of a Notice of Examination should also be supported by a Certificate of Judgment (see above) from the court of judgment, which in effect transfers the judgment to that local court for enforcement purposes.
The creditor must then serve the Notice of Examination on the debtor or person to be examined [[R20.10(3); R8.01(10,12)] at least 30 days before the examination date (for acceptable methods of service see Ch.6: "Service of Documents").
(c) Financial Information Form Requirements of Individuals
If it is the debtor who is to be examined and they are an individual (ie. not a corporation or a partnership), then - along with the Notice of Debtor Examination - the creditor must (along with the Notice of Debtor Examination) also serve them with a blank Form 20I: Financial Information Form [R8.01(11)]. The debtor must complete this form and serve it on the creditor, however it should not be filed with the court but instead should be provided to the judge presiding at the examination (keeping it out of the court file prevents it from being publically accessible) [R20.10(4.1)(b)]).
(d) Debtor Examination
Debtor examinations may be held all or in part either in person or by video conference [for video conferences see (d) below)] [R1.07(1.1); R20.10(5.1)]. They shall be held in private unless the court orders otherwise, conducted under oath, and recorded [R20.10(6)]. A creditor on an examination may inquire into the following [R20.10(4)]:- the reason for nonpayment;
- the debtor's income and property;
- the debts owed to and by the debtor;
- the disposal the debtor has made of any property either before or after the order was made (see the note regarding fraudulent conveyances and preferences law - s.6(j) below);
- the debtor's present, past and future means to satisfy the order;
- whether the debtor intends to obey the order or has any reason for not doing so; and
- any other matter pertinent to the enforcement of the order.
Persons who are served with a Notice of Examination are required by law to inform themselves about the above matters and be prepared to answer questions about them [R20.10(4.1)(a)]. Individuals who are also required to provide a completed Financial Information Form (see above) are required to bring with them documentation supporting what they have set out therein [R20.10(4.2)].
(e) Video Conferences
On request of a party and approval of the court, all or part of a debtor examination may be conducted by video conference [R1.07(1.1)]. Of course, this option only applies where the local court has adequate facilities [R1.07(1)].
Such requests Form 1B: Request for Telephone or Video Conference must include reasons for the request [R1.07(2)] - which logically would include such things as party inconvenience or health problems which militate against travel. The primary consideration for the court in granting the request is the balance of convenience between the requester and any party resisting the request [R1.07(3)]. The judge presiding at the electronic conference may set aside or vary any previous order granting it [R1.07(5)].
The court clerk will send out notices regarding the timing of the conference and any necessary preliminary procedures [R1.07(4)]. Once all the parties have been properly connected and can see and hear each other, the conduct of the debtor examination is usually identical in sequence to in-person conferences. The use of video conferences is a recent development in Ontario legal procedures, driven by a hope that they hold the potential for time and expense-saving.
(f) Who May Be Examined
For corporate debtors, an officer or director of the corporation may be examined. For partnerships or sole proprietorships, a partner or sole proprietor may be examined, respectively [R20.10(5)].
Note the reference to "or other person" in R20.10(1), mentioned above . It would appear that a Notice of Examination can also be issued to compel examination of non-debtor witnesses who can give information about the debtor's assets, or even against an unresponsive garnishee who by operation of R20.08(17) becomes a debtor(see the discussion of Garnishment, above). This MIGHT (I have not used this procedure myself nor heard of it being so used) make the procedure available against a bank through service on appropriate head office personnel - forcing them to disclose in which local branch the debtor holds accounts - thus facilitating garnishment (which must be conducted through the local branch) (see the section on Garnishment).
(g) Orders on Debtor Examination
After a Debtor's Examination, or on the consent of the debtor, the court may make an order as to payment [R20.10(7)]. Such orders are discussed above in the discussion of "Court-Modified Orders: Terms of Payment Orders following Debtor Examination" [section 3(c) above].Case Note:
In the case of Zeppieri & Associates v. Jabbari (Div Ct, 2014), the Divisional Court granted the creditor's judicial review application where the deputy-judge at a debtor's examination wholly prohibited examination after the debtor's declaration that she was on social assistance. (h) Contempt Proceedings for Default on Debtor Examination
. Overview
Where a person served with a Notice of Examination defaults on their responsibilities under it, the court may order them to attend a "contempt hearing", in which they must explain their default. If contempt is found then the court has a variety of punishment consequences which they can impose.Note:
Prior law drew a jurisdictional distinction between contempt related to non-attendence at a debtor's examination and contempt related to non-compliance by an attending debtor. Contempt for non-attendence then had to be heard by a Superior Court judge, while attending but still non-compliant contempt ('non-compliance') could be heard by a deputy-judge of the Small Claims Court. Amendments [CJA s.30] to the Courts of Justice Act effective on 01 January 2011 now locate full jurisdiction with deputy-judges to address both situations [R20.11(1,2); CJA s.30(3)]. Case Note:
The Small Claims Court Rules respecting contempt proceedings are well and good, but the reality of contempt proceedings in practice is that the courts will bend over backwards, practically into contortions, to avoid any serious consequences on those who disregard court Orders.
The case of Chiang (Re) (Ont CA, 2009) is salutory on the extent of effort required by creditors to achieve any significant consequences on scoff-laws, and deserves a thorough read by anyone thinking of stepping on this path as a means to enforce their judgment. . Pre-Hearing Procedures
If the court in a Debtor Examination finds that a person who has been served with a Notice of Examination has defaulted by non-attendence or by attending but refusing to answer questions or produce documents or records as required, the court may order them to attend a contempt hearing [R20.11(1)(2)].
The clerk shall send the creditor a Notice of Contempt Hearing setting out the date, time and place of the contempt hearing. The creditor must then serve the Notice of Contempt Hearing on the person ordered to attend the contempt hearing (for manner of service, see Ch.6 "Service of Documents"), and file an affidavit of service with the court at least seven days before the contempt hearing [R20.11(3)].
. Contempt Hearing for Non-Attendence
A person ordered to attend the contempt hearing for non-attendence may make a motion (see Ch.6 "Motions and Procedural Changes"), before or after receiving the Notice of Contempt Hearing, to the Small Claims Court for an order setting aside the order to attend the contempt hearing. On such a motion the court may set aside the order to attend the contempt hearing and order that the person attend another debtor examination [R20.11(4)]. There is no similar express provision in the Rules to set aside an order to attend a contempt hearing where the allegation is that of non-compliance by an attending person.
The criteria for a finding of contempt for non-attendence are that [CJA s.30(2); R20.11(6)]:- the person was required to attend the examination;
- the person was properly served with the Notice of Examination; and
- the person wilfully failed to attend the examination.
On making a finding of contempt under these provisions, the court may order that the person found in contempt [CJA 30(4); R20.11(7)]:- attend for debtor examination;
- be jailed for up to 5 days (ie. order issuance of a "warrant of committal");
- attend a further contempt hearing;
- comply with any other order the judge considers necessary or just.
. Contempt Hearing for Non-Compliance
At a contempt hearing for the refusal of an attending person to answer questions or to produce documents or records, the court may find the person to be in contempt of court if they fail to show cause why not [R20.11(5)]. This places the burden of proving their 'innocence' on the person who is alleged to be in contempt.
On making a finding of contempt under these provisions, the court may order that the person [R20.11(7)]:- attend for debtor examination;
- be jailed for up to 5 days (ie. order issuance of a "warrant of committal");
- attend a further contempt hearing;
- comply with any other order the judge considers necessary or just.
. Committal
If committal is ordered [R20.11(8)]:- the creditor may provide the court clerk with a completed Form 20K: Identification Form to assist in the person's apprehension by the police;
- the clerk shall issue a Form 20J: Warrant of Committal, accompanied by any Identification Form provided, directed to all police officers in Ontario to apprehend the person and bring them to the nearest correctional institution.
The person so apprehended shall be discharged from custody when the period of incarceration expires or on the order of the court, whichever is earlier [R20.11(9)]. Note that contempt of court is a separate legal "wrong" from non-payment and simple payment of the debt does not automatically void the arrest warrant. A motion would still have to be made for release.
A Warrant of Committal remains in force for 12 months, and may be renewed for further periods of 12 months on motion of the creditor - unless the court orders otherwise [R20.11(10)].
6. Satisfaction of Debt
An order may be issued by the court confirming that "payment has been made in full satisfaction of the order or terms of settlement" [R20.12]:- where all parties consent, by a party making a request for a clerk's order on consent to that effect under R11.2 (see Ch.11, s.11: "Motions and Procedural Changes: Procedural Changes on Consent"); or
- by the debtor making a motion for such an order (see Ch.11, s.2: "Motions and Procedural Changes: Motions With Notice").
7. Special Situations
(a) Creditor Under Disability
Some parties, such as minor children, the mentally incapable and "absentees" (missing persons) are especially vulnerable in litigation (see the Ch.4 "Parties"). For this reason the court extends extra protections to these "persons under disability" by requiring the appointment of a "litigation guardian" to look after their interests.
Any noting of default, judgment (default or otherwise) or collection proceedings (see Ch.9: "Default by Defendant") that stem from a Claim against a "person under disability" - and which has not been defended by a litigation guardian - may be set aside by the court, on such terms as are just [R4.06].
As well, any monies paid for the benefit of a "person under disability" as a result of a court order or settlement must be paid into the court, unless the court orders otherwise. The court will then convey the money to the person with disability, or to whoever the court orders may accept it on their behalf [R4.08].
(b) Enforcement Against Partnership
"Partnerships" are a unique form of business organization, involving the partnership itself (the "firm") - and each of the individual "partners" that make it up - as separate "legal entities". Partners MAY (depending on the circumstances of liability and the type of partnership) be jointly liable for the judgment debts of the partnership (ie. the creditor may be able to collect against any of them). This situation creates unique issues about naming parties, serving documents and collecting orders.
When suing a partnership special procedures should be followed (see the Ch.4: "Parties") in order to obtain a judgment enforceable against both the "firm" AND the partners individually. Basically what is required to obtain an order enforceable against the partners personally is the service - with the Claim - of a "Notice to Alleged Partner". If this is done the court may (if appropriate) add the individual partner/s who have been so served as debtors in the order.
If such an order is obtained naming the partnership AND individual partner/s as debtors, then the order is enforceable against the property (monies, goods, land) each and all of them [R5.05].
Where the "Notice of Alleged Partner" was not served with the Claim, the plaintiff/creditor may still - AFTER judgment against the partnership alone (in the firm name) - make a motion to the court for "leave" (permission) to enforce the order against individuals whom they now name as partner/s. The court may grant this permission if the motion is not disputed, or after a disputed motion is heard - if the court finds that the person was liable as a partner [R5.05(3)].
(c) Enforcement of Bonds
Sometimes courts will order that a party "post surety" as a condition of an order or continuing the proceedings, perhaps to ensure that security exists for the payment of a judgment that might go against the party. This can be done by payment of money into the court or posting a "bond". "Bonds" are usually arranged with private bond insuranced companies, who for a fee will guarantee the amount of the bond as the court order requires.
Bonds may be enforced as though they were judgments of the court by making a motion to the court seeking an order for "leave" (permission) to do so. Such an order may be filed with the sheriff for immediate enforcement, without the need for a "direction" to do so from the creditor - which would normally otherwise be required [CJA s.143].
(d) Where Creditor Foreign Resident
Monies or property paid into court for a creditor who is resident in a foreign may be paid or delivered to the consul of that country, if that consul is authorized to act as the creditor's personal representative [CJA s.145].
(e) Foreign Currency Orders
Judgments and orders for amounts of foreign currency may be obtained from the court, but will be ordered payable in an amount of Canadian currency sufficient to purchase the amount of foreign currency awarded. The rate of conversion used is that used by a Schedule I Bank Act chartered bank the day before the payment, except that the court may alter that day if it would unfair not to do so [CJA s.121].
(f) Social Assistance Recipients as Debtors
"Financial assistance" paid under the Ontario Works Act (welfare) [OWA s.23] and "income support" paid under the Ontario Disability Support Program Act (ODSP) [ODSP s.18] (ie. monies paid to a recipient) are exempt from execution under a Small Claims court judgment or order. This is so even after the money has been deposited to a financial institution.
(g) Workplace Safety and Insurance Board Payments
No garnishment may be made against WSIB payments without permission of the Workplace Safety and Insurance Board [WSIA s.64], exception for support orders [WSIA s.65].
(h) Enforcement of Foreign Judgments
The Reciprocal Enforcement of Judgments Act provides procedures for the enforcement of foreign judgments in Ontario courts, where the foreign jurisdiction is a reciprocating state.
(i) Enforcement of Tribunal Orders
Orders from many Ontario administrative tribunals are enforceable through the collection mechanisms of the civil courts. Examples include the Landlord and Tenant Board and the Human Rights Tribunal of Ontario, though it can be done with the orders of any tribunal that is subject to the Statutory Powers Procedures Act (SPPA).
The legal authority for this reads as follows:SPPA 19(1)
A certified copy of a tribunal’s decision or order in a proceeding may be filed in the Superior Court of Justice by the tribunal or by a party and on filing shall be deemed to be an order of that court and is enforceable as such. Procedures for doing this are discussed in more detail in the Isthatlegal.ca Administrative Law (Ontario)(SPPA) Legal Guide, Ch.8 Enforcement.
(j) Crown as Judgment Debtor
Courts have had a traditional reluctance to push elected governments around too much, something which sometimes rears its head under the topic of "justiciability" (ie. where the court will not rule on issues too much at the heart of executive government, such as public funding decisions like health expenditures).
One aspect of this attitude is a traditional crown immunity from collection proceedings (now embodied in legislation). With some very limited exceptions, courts will not process collection proceedings against Ontario [Proceedings Against the Crown Act, s.21]. However, to ameliorate this, the law [PACA, s.22] also provides that when a judgment is issued against the Crown (subject, of course, to any "stays" of judgment on appeal), the Crown is obliged to pay the judgment debt or settlement out of the "Consolidated Revenue Fund".
(k) Other Execution Issues
There are numerous creditor-related laws that occasionally impact on collection efforts. Some of these include:- Execution Act: exempts the following debtor properties (to a maximum value limit) from execution [Reg 657/05]:
Clothing (debtor and family) .......... $ 5,650
Household items (incl. food) .......... $11,300
Tools of Trade (non-farmer) ........... $11,300
Tools of Trade (farmer) ............... $28,300
Motor Vehicle ......................... $ 5,650
- Creditors Relief Act: requires that collection proceeds be split pro rata between creditors as opposed to first-come-first-serve; limited application to Small Claims Court judgments [CRA s.2(2)], but money and property seized through Small Claims process may be seized from Small Claims court bailiff by sheriff for pro rata distribution with creditors elsewhere [CRA s.25(1)].
- Bulk Sales Act: places restrictions and creditor notice requirements on purchasers of stock in trade of businesses; goal is to prevent business sale to avoid collection by execution on stock
- Assignment and Preferences Act and Fraudulent Conveyances Act: limits dispositions of money and assets by a debtor where done to hide or shield assets from collection
- Wages Act: limits garnishment against net employment wages of a debtor to 20% of a person's net employment (or disability wage-replacement insurance coverage) income [R20.09(5)] [Wages Act, s.7]. A creditor may make a motion to the court to increase this percentage, and a debtor may make a motion to decrease it.
- Bankruptcy and Insolvency Act:
Once an assignment in bankruptcy is made all collection procedures must be made WITHIN the bankruptcy proceedings through the bankruptcy trustee, subject to the lifting of the stay by a bankruptcy court [NOT the Small Claims Court: Associates Financial Services v Campbell (1998) CBR (4th) 187 (Ont Small Claims Court].
By law the burden of listing their creditors with the trustee resides with the debtor/bankrupt, and the trustee will then notify the creditor/s of the bankruptcy filing. Where this is not done a creditor should contact the trustee directly as soon as possible.
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