Judgment Against Me in Ontario: What Happens, Including Garnishment

If you are searching "judgment against me Ontario what happens garnishment", a court order may be in hand, or expected. This guide explains in plain language what the rules say about collecting a judgment. It is general information, not advice about any situation.

What is a money judgment, and who is the creditor?

A money judgment is a court order that one side pay an amount to the other. The Rules of Civil Procedure call the person who is owed the money the "creditor" and the person who owes it the "debtor". Money owing under an order, including costs, generally bears interest from the date of the order at the postjudgment rate under the Courts of Justice Act (s. 129). The court has discretion to change interest in some cases (s. 130).

What happens with a judgment against me in Ontario: garnishment and other enforcement

The Rules of Civil Procedure list main ways to enforce an order for money. Small Claims Court has parallel rules.

Rule 60.02 says these methods are available in addition to any other method the law provides.

What is a writ of seizure and sale?

A writ of seizure and sale is issued by the court registrar on the creditor's request and can then be filed with the sheriff. Under the Execution Act, a writ against personal property binds that property once the writ is on file with the sheriff and recorded in the sheriff's index. A writ issued out of Small Claims Court for personal property works differently: it is not entered into the index and binds personal property only from the time that property is seized.

Key features set out in the Rules:

• A writ expires on the sixth anniversary of its issue and can be renewed before then (Rule 60.07).
• If six years or more have passed since the order, the creditor needs the court's permission to issue a writ.
• A sale of land cannot take place until six months have passed since the writ went on file with the sheriff.

What can and cannot be seized?

The Execution Act protects certain things from forced seizure. For a debtor that is not a corporation, these include necessary clothing, household furnishings and appliances up to a prescribed value, tools used to earn income from an occupation up to a prescribed value, and one motor vehicle up to a prescribed value. Aids and devices that a debtor or dependant needs because of a disability, or a medical or dental need, are also exempt. A principal residence is exempt only if the debtor's equity does not exceed a prescribed amount.

The dollar limits are set by regulation and can change, so this guide does not list them; a lawyer can confirm the current amounts. The Act also says the debtor is entitled to select which personal property they claim as exempt (section 5). The exemptions have exceptions: they do not apply to a debt for maintenance of a spouse, former spouse or child (except business tools), to chattels bought to defeat creditors' claims, or to some items where the debt is the purchase price (section 7). Either side can ask the Superior Court of Justice to decide a dispute about whether an item is exempt (section 8).

How does garnishment work?

Garnishment lets a creditor collect from money that a third party (the "garnishee") owes to the debtor. The process in Rule 60.08 looks like this:

1. The creditor files a request and an affidavit with the court, including why the creditor believes the garnishee owes the debtor money.
2. The court registrar issues a notice of garnishment.
3. The creditor serves the notice on the debtor and on the garnishee.
4. The garnishee pays what it owes to the sheriff, or serves a statement explaining why it disputes the garnishment or is paying less.

A notice of garnishment stays in force for six years and can be renewed. The Rule excludes money in a bank account opened after service and wages from employment that starts after service. Payments are also made subject to the Wages Act (s. 7 of that Act).

Wages have their own protection. Under the Wages Act, 80 per cent of a person's wages are exempt from seizure or garnishment (s. 7(2)), and 50 per cent when the debt is an order for support or maintenance (s. 7(3)). "Wages" leaves out amounts an employer must deduct by law, while disability income-replacement payments are treated as wages (s. 7(1), (1.1)). A judge may decrease the exempt share on the creditor's motion if just (s. 7(4)), or increase it on the person's motion (s. 7(5)). An assignment of wages to secure a debt is invalid, with an exception for credit unions (s. 7(7), (8)).

For a joint account, one-half of the debt may be garnished unless a court orders a different amount. A debtor, garnishee, co-owner or other interested person can bring a motion for a garnishment hearing, and the sheriff suspends payments to the creditor while that motion is pending.

What is an examination in aid of execution?

The creditor may ask about the reason for non-payment, income, property, debts, what the debtor has done with property, and the means to pay (Rule 60.18). In the same proceeding, the Rule allows only one such examination per twelve months unless a court orders more.

The Rule also lets a judge make a contempt order if the examination shows the debtor concealed or made away with property in order to defeat creditors.

Can my licence be suspended for an unpaid judgment?

The Highway Traffic Act deals with this for judgments arising from motor vehicles (other licence suspensions, such as for support arrears, are separate matters). Section 198 covers money judgments for personal injury, a death or property damage arising from a motor vehicle. In outline:

1. The judgment must be final, meaning appeals are finished or the time to appeal has passed.
2. If it stays unpaid for fifteen days after becoming final, the Registrar suspends the licence after receiving the court's certificate and after sending fifteen days' notice of the intended suspension.
3. The licence stays suspended and cannot be renewed, and no new licence is issued, until the judgment is satisfied or discharged to the extent of the minimum liability limits required by the Insurance Act.
4. The section refers to discharge "otherwise than by a discharge in bankruptcy". How bankruptcy interacts with a particular suspension should be confirmed with a lawyer or a licensed insolvency trustee.

Two other points appear in the section. A person who owes money to the Motor Vehicle Accident Claims Fund is not suspended under this provision (s. 198(2)). And a judgment debtor can ask the trial court to allow payment by instalments; the court may order this in its discretion, and while the debtor is not in default the Minister may restore the licence, though it can be suspended again on default (s. 198(3)).

For background on the Fund, see our guide on the Motor Vehicle Accident Claims Fund in Ontario.

Can a judgment be paid in instalments or paused?

In Small Claims Court the judge may pause (stay) enforcement on just terms, and may vary the times and proportions of payment if the debtor's circumstances have changed (Rule 20.02). While a periodic payment order is in effect, the named creditor generally cannot take other enforcement steps, apart from filing a writ against land. After an examination, the court may also make an order as to payment (Rule 20.10). Whether any option fits a particular case is a question for a lawyer.

How long can a judgment be enforced?

The Limitations Act, 2002 says there is no limitation period for a proceeding to enforce a court order (section 16). Writs and garnishment notices have six-year terms that can be renewed, and where six years or more have passed since the order, the Rules require the court's leave before a new writ or notice of garnishment is issued (Rules 60.07 and 60.08). We explain this more in our guide on bankruptcy, consumer proposals and how long a judgment lasts.

When it is worth talking to a lawyer

People in this position typically seek legal advice when:

• a notice of garnishment, a writ, or a notice of examination has been served;
• a notice says a licence suspension is intended;
• there is a deadline in a court document, or it is unclear whether the judgment is final;
• the creditor's calculation of the amount owing looks wrong;
• the person wants to propose instalments or ask the court to pause enforcement;
• an insolvency option, such as a consumer proposal or bankruptcy, is being considered. A licensed insolvency trustee can advise on that part.

What to gather

• The judgment or order and any reasons for it
• Every document served, including garnishment notices and notices of examination
• Proof of any payments already made, with dates
• Recent income and expense records and a list of debts
• Any letters about licence suspension, and any from the sheriff