Avoiding the empty bag: How we get our clients paid

Helping clients litigate their disputes is at the heart of what we do as commercial litigators. An important aspect of how we protect our clients’ interests from the very beginning of the process is making sure that they are not chasing an empty bag. After all, what use is there in spending time and money litigating a dispute and receiving an award of damages when there are no means by which that damages award can be satisfied? Here are some of the ways we can avoid this outcome.

Fact-finding

  1. Knowing your opponent

Before commencing a proceeding on behalf of a client, it is important to ascertain the assets and liabilities of the opposing party. This provides us with a landscape of what we are working with and how likely it will be that the opposing party is in a position to satisfy a potential judgment rendered against it. A few common sources of information include credit bureau reports, land title searches, and Personal Property Security Act, RSO 1990, c P.10 searches.

2. Examination in aid of execution

An examination in aid of execution is another method of gathering information about a judgment debtor. However, an examination is only available after a judgment has been obtained rather than at the outset of the proceeding. This can be a useful way of supplementing the information gathered at the outset and learning about how the assets and liabilities of the debtor may have changed.

Methods of Enforcement

3. Writ of seizure and sale

If a judgment has been awarded against a party and it fails to satisfy that judgment, a writ of seizure and sale can be registered against the judgment debtor’s assets. The assets can then be sold, and the proceeds from the sale can be used to satisfy the judgment. This is one of the reasons why it is important to perform a search of the opposing party’s assets at the beginning of the litigation process.

4. Garnishment

Another way to enforce a judgment against a party that has not paid is to intercept the payments that flow to them from third parties. This can be an effective ways of obtaining large sums of money quickly. For example, it is possible to garnish a portion of the judgment debtor’s wages until the judgment is satisfied.

Important Considerations

5. Leave of the Court

It is important to move forward with enforcement of a judgment promptly, as leave of the court (i.e.,permission) is required to enforce a judgment where more than six years have passed. While there is no time limit imposed on the enforcement of a judgment, it is best to avoid having to seek leave by moving to enforce before the six-year mark.

The test for granting leave involves the following analysis: (1) whether the judgment creditor, by its delay, has waived its rights under the judgment or acquiesced in non-payment of the judgment; or (2) whether the judgment debtor has been prejudiced or changed its financial position as a result of the delay.

6. Preserving Rights 

Moving promptly to enforce a judgment also ensures that there is evidence of attempting to preserve the judgment creditor’s rights. Otherwise, the court may take the view that the judgment creditor has waived its rights or acquiesced to non-payment of the judgment. These steps would include sending a demand letter or filing a writ of execution or a notice of garnishment.

7. Use caution when interacting with third parties

If third parties, such as collection agencies, are involved, it is important to instruct the agent to avoid saying anything that would suggest that no further steps will be taken to enforce the judgment. This may prejudice the rights of a judgment creditor and suggest to the court that there is evidence that the judgment creditor has moved on from the debt or otherwise acquiesced in non-payment.

Please feel free to reach out to a member of our Litigation and Dispute Resolution group with any questions you may have.

The authors gratefully acknowledge the assistance of Natalie Tomaszczyk, student-at-law.

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Renée Brosseau

About Renée Brosseau

A partner in Dentons' Litigation and Dispute Resolution group in Toronto, Renée Brosseau is a high-energy senior litigator with extensive experience in managing risk and driving change in the delivery of legal services. She is recognized as one of Canada’s brightest lawyers in the areas of lending and real estate litigation.

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Ara Basmadjian

About Ara Basmadjian

Ara Basmadjian is a Senior Associate in the Litigation and Dispute Resolution group at Dentons Canada LLP. His practice involves a variety of complex corporate, commercial and civil litigation matters.

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Meredith Bacal

About Meredith Bacal

Meredith Bacal is a senior associate in the Firm’s Intellectual Property, and Litigation and Dispute Resolution groups. In her litigation practice, Meredith represents a diverse client base on matters related to media, entertainment, technology and defamation.

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