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Execution - Garnishment (2)

. Benzacar v. Terk

In Benzacar v. Terk (Ont CA, 2023) the Court of Appeal considered (and allowed) a rarely-advanced appeal from a R60.08 garnishment motion.

In these quotes the court both describes the typical garnishment process (at paras 3-8, 34), and then usefully illustrates the range of garnishment events in this case (paras 9-31):
[3] Under r. 60.08 a creditor, such as Ms. Benzacar, who holds an order for the payment of money may enforce it by garnishment of debts payable to the debtor (here Mr. Terk) by other persons (“garnishees” − here, 604 and 410). Once a notice of garnishment is served, the garnishees become liable to pay the sheriff any debt they owe to the debtor (including debts owing at the time of service of the notices and those coming due for the next six years) up to the amount owing to the creditor stated on the notice of garnishment. Where debts relate to wages, exemptions in the Wages Act, R.S.O. 1990, c. W.1 apply to make a portion of the debts exempt from garnishment.

[4] A garnishee who wishes to dispute the garnishment in whole or in part must serve a garnishee’s statement in a prescribed form within 10 days after service of the notice of garnishment. The form requires the garnishee to acknowledge what debts are or will be owing, or to explain why there are and will be none. Where a garnishee fails to serve a statement, the creditor is entitled to an order for payment of the amount the court finds is payable by the debtor to the garnishee, or the amount in the notice, whichever is less. A court may treat a garnishee’s statement that is materially false without reasonable justification as the equivalent of no statement at all.


[8] The purpose of a garnishee statement is to accurately delineate the issue between the creditor and the garnishee − it is not the first step in “a catch me if you can” process. ...



[9] By a judgment dated May 24, 2011, the Quebec Superior Court ordered that Mr. Terk pay Ms. Benzacar, among other amounts, $130,000 with interest from May 1, 2004. This sum represented Ms. Benzacar’s remaining share of the proceeds of the sale of their home.

[10] Mr. Terk completely failed to honour this aspect of the Quebec judgment. Ms. Benzacar took steps to enforce the Quebec judgment in Ontario. On March 8, 2017, an Ontario Superior Court order was made directing Mr. Terk to pay the amount then outstanding under Quebec judgment − $227,097.70 − plus prejudgment interest in the sum of $8,965.70, and costs in the amount of $4,000. Post judgment interest was fixed payable at the rate of 11% per year commencing on March 8, 2017. Mr. Terk completely failed to honour the Ontario order as well.

[11] On October 10, 2017, on the requisition of Ms. Benzacar, the registrar of the Superior Court issued notices of garnishment to 604 and 410, two corporations with which Mr. Terk was associated.

[12] The notices of garnishment required each of 604 and 410 to pay to the sheriff on behalf of Ms. Benzacar: (i) all debts then payable to Mr. Terk within 10 days after service; and (ii) all debts that would become payable to Mr. Terk during the six years following service within 10 days after they become payable, subject to the exemptions provided by s. 7 of the Wages Act. The notices of garnishment stated that the total debt owed to Ms. Benzacar was $256,143.49 less $10 for the cost to 604 and 410 of making required payments.

[13] The notices of garnishment contained a direction that if the total amount of $256,143.49 less $10.00 per payment was not made within 10 days after the notices were served, then 604 and 410 were each required to file a garnishee’s statement in the prescribed form. That form is Form 60I under the Rules of Civil Procedure.

[14] Form 60I − the required form of garnishee statement − has four paragraphs.

[15] The first paragraph is applicable if the garnishee owes or will owe money to the debtor. The garnishee is to “acknowledge that I/we owe or will owe the debtor … the sum of $_____ payable on (date) because (give reasons why you owe the debtor … money”. The instructions on the form explain that in respect of this statement, if payments of less than what is owed were being made the reason is to be given and, if the debtor is owed wages, the frequency of payments and the gross and net amounts are to be provided.

[16] The second paragraph is applicable if no money is owed to the debtor. The form explains: “If you do not owe the debtor money, explain why. Give any other information that will explain your financial relationship with the debtor.”

[17] The third paragraph is applicable if the garnishee was served with other notices of garnishment or writs of execution on behalf of the debtor; the fourth if the garnishee was served outside of Ontario and contested service.

[18] Each of 604 and 410 filed a garnishee’s statement dated November 6, 2017, using the required form. They were filled in and signed by Mr. Terk as the respective companies’ representative. He was, at the time, the sole director of each.

[19] The garnishee statements of both 410 and 604 left each of paragraphs 1, 3 and 4 blank. Only paragraph 2, the one applicable if no money was owed to Mr. Terk, was filled in.

[20] On the 410 garnishee statement, paragraph 2 read: “4106971 Canada Inc. is a shell corporation with no assets, activity or employees.”

[21] On the 604 garnishee statement, paragraph 2 read: “The Company is insolvent and its bank has called in its loans. No alternate sources of funding have been found. The debtor is not taking salary.”


[22] Ms. Benzacar moved for an order declaring that 604 and 410 are liable for payment of the outstanding sum under the 2011 Quebec judgment pursuant to r. 60.08.17 (the subrule applicable when no garnishee statement is served and filed). She also moved for orders for garnishment of 60% of Mr. Terk’s wages, and of payments made to Mr. Terk directly and indirectly through Ego Capital Corp. (“Ego Capital”).

[23] The motion judge recited the history of the matter, including various obstacles Ms. Benzacar had encountered in her attempt to enforce her rights under the 2011 Quebec judgment and the 2017 Ontario order. These included: examinations in aid of execution of Mr. Terk that were met with refusals and unfulfilled undertakings requiring motions; costs orders against Mr. Terk that he failed to pay; and a settlement agreement calling for Mr. Terk to pay a reduced amount to satisfy his debt to Ms. Benzacar, that he failed to honour and then litigated about in the Quebec Superior Court in a manner that Mayer J. of that court termed “abusive” and “excessive and unreasonable”. The motion judge was satisfied that “Mr. Terk’s conduct throughout this litigation and the proceedings before Mayer J. demonstrate an intent not to pay anything further towards the 2011 [Quebec] Judgment irrespective of his personal financial circumstances”. By reason of his failure to make any effort to honour costs awards, she declined to consider any evidence he gave.

[24] The motion judge then turned to whether any wages payable by the garnishees to Mr. Terk should be subject to an exemption from seizure or garnishment less than the presumptive 80% provided for by s. 7(2) of the Wages Act. She held that it was just in the circumstances to reduce the exemption to 60% pursuant to the discretion to do so under s. 7(4) of the Wages Act.

[25] She then found that, prior to the issuance of the notices of garnishment, Mr. Terk was earning approximately $220,000 per year plus an automobile allowance. Before 2017, 604 paid 50% of this amount, with a related company paying the other 50%; after that 604 became the sole payor of his salary. She found that Mr. Terk stopped receiving the “full $220,000 plus car allowance” from 604 after Ms. Benzacar applied to enforce the Quebec judgment in Ontario, something she observed was “more than a coincidence”. She found that in 2019 he resumed receiving salary and that a portion of these payments (totalling about $30,000) was ultimately remitted to the sheriff by 604.

[26] The motion judge also found Ego Capital to be Mr. Terk’s alter ego, and that it was receiving $12,000 per year from 604 as management fees before the notices of garnishment were served. She found management fees continued to be paid by 604 to Ego Capital in 2019, 2020 and 2021, with knowledge “that [604] was really paying the fees to Mr. Terk”. No part of these payments had been remitted to the sheriff.

[27] The motion judge rejected an argument of Ms. Benzacar that a payment of $115,000 to Ego Capital by a 604 subsidiary, Canadian Business Television Inc. (“CBTI”), was subject to garnishment. Most of the funds were paid before the notices of garnishment were served, CBTI was never served with such a notice, and the payment flowed through 604 ostensibly for tax reasons.

[28] She also rejected an argument by Ms. Benzacar that she should infer other payments must have been made to Mr. Terk by the garnishees. The evidence did not establish that Mr. Terk had concealed income in the garnishees or that they “have withheld payments of income to Mr. Terk in a conspiracy to assist him in avoiding his judgment debt obligation and … to avoid payments due under the Notices of Garnishment”.

[29] The motion judge went on to consider Ms. Benzacar’s argument that the garnishee statements filed by 604 and 410 were “incomplete and therefore ought to be treated as if they were never filed, with the consequence that r. 60.08(17) should apply and 604 and 410 ordered to pay the entire judgment debt”.

[30] She rejected this submission stating:
[85] I do not find the failure to fill out Item 1 to render these Garnishee’s Statements to be null and void. The explanations provided in answer to Item 2 explains that there is no debt owed to Mr. Terk. No authority was cited by Ms. Benzacar to support her position that the failure to complete item one results in a null and void statement.


[87] The evidence is that 410 Inc. has not, and does not, owe any monies to Mr. Terk as it is not operating any business.

[88] With respect to 604 Ltd., as indicated above, it has made payments to the sheriff pursuant to the Garnishment Notice, which became due subsequent to the filing of the Garnishee’s Statement. This reflects the common practice.

[89] Accordingly, I find that there is no basis upon which to exercise the discretion I have to order that the Garnishee Companies should pay the entire outstanding judgment debt of Mr. Terk.
[31] In the result, the motion judge ordered that the wage exemption under the Wages Act be reduced to 60% (with Ms. Benzacar having the right to garnish 40% of Mr. Terk’s net income), and that 40% of the management fees paid by 604 to Ego Capital from November 6, 2017 were to be paid to the sheriff[2].


The Relevant Rules About Garnishment

[34] I set out the text of the relevant parts of r. 60.08:
Where Available

60.08 (1) A creditor under an order for the payment or recovery of money may enforce it by garnishment of debts payable to the debtor by other persons.


Obtaining Notice of Garnishment

(4) A creditor under an order for the payment or recovery of money who seeks to enforce it by garnishment shall file with the registrar where the proceeding was commenced a requisition for garnishment (Form 60G) together with a copy of the order as entered, any other evidence necessary to establish the amount awarded and the creditor’s entitlement and an affidavit [with prescribed information.]


(6) On the filing of the requisition and affidavit required by subrule (4), the registrar shall issue notices of garnishment (Form 60H) naming as garnishees the persons named in the affidavit and shall send a copy of each notice of garnishment to the sheriff of the county in which the debtor resides or, if the debtor resides outside Ontario, to the sheriff of the county in which the proceeding was commenced.

Duration and Renewal

(6.2) A notice of garnishment remains in force for six years from the date of its issue and for a further six years from each renewal.


Service of Notice of Garnishment

(7) The creditor shall serve the notice of garnishment,

(a) on the debtor, together with a copy of the affidavit required by subrule (4); and

(b) on the garnishee, with a blank garnishee’s statement (Form 60I) attached.


Garnishee Liable from Time of Service

(11) The garnishee is liable to pay to the sheriff any debt of the garnishee to the debtor, up to the amount shown in the notice of garnishment or supplementary notice of garnishment, less $10 for the cost of making each payment, within ten days after service on the garnishee or ten days after the debt becomes payable, whichever is later.

(12) For the purposes of subrule (11), 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 to Sheriff

(14) A garnishee who admits owing a debt to the debtor shall pay it to the sheriff in the manner prescribed by the notice of garnishment, subject to section 7 of the Wages Act.

When a Garnishee Must Serve Statement

(15) A garnishee who wishes for any reasons to dispute the garnishment or who pays to the sheriff less than the amount set out in the notice of garnishment because the debt is owed to the debtor and to one or more co-owners or for any other reason shall, within 10 days after service of the notice of garnishment, serve on the creditor and the debtor and file with the court a garnishee’s statement (Form 60I) setting out the particulars.

Garnishment Hearing

(16) On motion by a creditor, debtor, garnishee, co-owner of the debt or any other interested person, the court may,


(b) determine the rights and liabilities of the garnishee, the debtor, any co-owner of the debt and any assignee or encumbrancer;


(d) determine any other matter in relation to a notice of garnishment[.]


Enforcement against Garnishee

(17) Where the garnishee does not pay to the sheriff the amount set out in the notice of garnishment as owing by the garnishee to the debtor and does not serve and file a garnishee’s statement, the creditor is entitled on motion to the court, on notice to the garnishee, to an order against the garnishee for payment of the amount that the court finds is payable to the debtor by the garnishee, or the amount set out in the notice, whichever is less.


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Last modified: 21-11-23
By: admin