Q: I had to sue to recover money I loaned to a friend. I won, and got a judgment. He hasn’t paid. How do I collect?
A: The civil justice system does not collect judgments for you. A judgment is really a declaration by the court that your friend owes you money. It is up to you to ensure it is collected.
In most provinces, only a sheriff can collect by seizure. This means you cannot hire a private bailiff to go and get stuff, sell it to pay the bailiff fees and give you the rest. You must proceed through the sheriff’s office.
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You say you already have a judgment. There were some techniques available to you in most provinces before going to court.
If your lawsuit was to collect a debt of a precise amount, you could have garnisheed their money. If you know where someone banks, or if you know who owes that person money, you can serve a pre-judgment garnishee. This is basically an order that intercepts money owed to your debtor. The money gets paid into court and sits there until you get a favourable judgment. You cannot intercept the debtor’s wages before a judgment.
The pre-judgment garnishee is an extraordinary remedy and there are many strict rules with which you must comply in order to get it. However, it can certainly get the attention of your debtor and, if successful, can put some funds into court to argue about later.
Having already obtained a judgment, you can do a post-judgment garnishee. This is a simpler process. Again, funds are intercepted and paid into court. Each province has a time limit, and if no one makes any claim to those funds in court within that time, you can apply and get the money paid to you and applied against the judgment.
Also with garnishment after judgment, you are allowed to intercept wages. The debtor gets to keep a certain base amount, with the excess paid to the court. This is a powerful collection tool, but you need information to make it work for you.
That leads to another enforcement mechanism, the examination in aid of execution. Again, most provinces allow this. What this means is that you get to put the debtor under oath and question him about what he owns, what he owes and where assets are located.
I once had a debtor admit he owned two vehicles, a truck for work and a car for personal use. He had driven the car to the examination, and I found out where he’d parked. On a break I phoned the sheriff and he seized the car while we were in court. As stated at the beginning, you can also enlist the sheriff’s aid in seizing goods. The sheriff can seize vehicles, equipment, shares and investments.
The problem is you need to locate these items and identify them. You then need to ensure that the debtor does not have an exemption, which is a legal ability to keep those items free from seizure.
You also have to search for liens. For example, you can seize someone’s vehicle but if the bank has first charge on it, there may be no cash in it for you.
You can also try to seize and sell land. In most provinces that is a tough process. Usually nothing else is available. The debtor gets additional notice regarding any attempt to seize land and usually another hearing is held.
It’s tough to do, but the beauty of trying to collect from land is that the debtor can’t move it or hide it.
Two other points: don’t forget about interest. There is a federal Interest Act that sets a five percent annual interest rate, but most courts have the power to set a different rate. When collecting, don’t neglect to calculate and collect this interest.
Also, don’t forget about your court costs. They should be in your judgment, but the extra costs of collection can be added.
It can be frustrating to win in court, get judgment and not get paid. Winning a lawsuit does not mean you will collect every penny. You need to be innovative to find and cash in a debtor’s assets.
Rick Danyliuk is a practising lawyer in Saskatoon with McDougall Gauley LLP. He also has experience in teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
