You may have heard about British Columbia’s new Money Judgment Enforcement Act in one of our previous articles, which received Royal Assent in October 2023 and is set to significantly alter the money judgment enforcement system in British Columbia.

However, as we approach three years since the date of assent without any sign of the act being brought into force, BC businesses with money judgments can’t afford to sit around and wait. They need practical and timely advice so that they can collect on their judgments and get back to the business of being in business.

This bulletin outlines key judgment enforcement tools available to judgment creditors, helping turn today’s recovery efforts into tomorrow’s results.

Garnishment, seizure, and examination: Your three tools for chasing liquid assets

One of the most direct methods of enforcing a judgment in British Columbia is through a commonly used mechanism called garnishment, which allows a creditor to seize funds owed to the debtor by a third party. For example, a plaintiff can apply for a garnishing order to intercept funds held in a debtor’s bank account or wages owed to the debtor by an employer.

In practice, bank account garnishment is often more effective than wage garnishment as it can capture a lump sum immediately. Wage garnishment is subject to much stricter limitations on the amount that can be collected. However, the creditor must have knowledge of the debtor’s bank account information in order to garnish it. Receiving payments by cheque or requesting a void cheque at the outset of business dealings can increase the chances of garnishment success later on.

In some cases creditors may also pursue a writ of seizure and sale, which authorizes a court bailiff to seize and sell the debtor’s personal property (such as equipment, vehicles, or inventory). While effective in theory, this remedy can be limited by practical challenges including the costs of seizure and competing secured creditors.

If a judgment creditor doesn’t have sufficient information to garnish or enforce against assets, another option is to conduct an examination in aid of execution. This allows creditors to question the judgment debtor under oath about their financial circumstances, including bank accounts, receivables, and other assets. This process can uncover previously unknown sources of recovery and guide further enforcement efforts.

When the debtor owns property: What you can claim and what you can’t

In addition to liquid assets, creditors can enforce judgments against a debtor’s interest in real property. A key step is filing the judgment with the Land Title Office, which creates a charge against real property owned by the debtor and prevents the debtor from refinancing or selling the property without first satisfying the judgment.

In addition, where the debtor owns real property, a judgment creditor may apply for an order for the sale of the land to satisfy the judgment. Although this can be an effective enforcement mechanism, creditors should be aware that obtaining and enforcing a sale order can be a complex and time intensive process. Before pursuing this remedy, creditors should assess whether there is sufficient equity in the property after accounting for mortgages and other registered encumbrances.

Additional complexities may arise where the property is jointly owned (for example, with a spouse or business partner).  A judgment creditor can generally only enforce against the debtor’s interest in the property, and the rights of any co-owner(s) must also be considered. As a result, the amount of equity available to satisfy a judgment may be significantly less than the property’s overall value. Creditors should therefore carefully weigh the anticipated costs and complexity of the proceeding against the likely recovery before pursuing this remedy.

Before you sue: The information you should be collecting right now

From a strategic perspective, judgment enforcement should not be an afterthought. Businesses should consider enforcement risks at the outset of a commercial relationship and continue  to evaluate the likelihood of recovery before commencing litigation as part of a broader cost-benefit analysis.

Several proactive steps can assist in this assessment:

  • Conducting asset searches: Pre-litigation searches (e.g., corporate records, land title and PPR searches) can reveal whether a debtor has realizable assets or is heavily encumbered.
  • Understanding the debtor’s financial position: If the defendant is an operating business, reviewing financial statements, credit reports, or publicly available filings may provide insight into solvency, assets, and cash flow.
  • Evaluating enforcement costs: Enforcement proceedings can be time-consuming and costly. Legal fees, bailiff costs, and competing creditor claims can significantly reduce net recovery.
  • Obtaining key information at the outset: Businesses can improve their prospects of successful enforcement by collecting key information about customers or counterparties at the beginning of the relationship, often through a credit application or a credit agreement. Depending on the nature of the business and transaction, this may include obtaining full legal names (and any aliases or operating names), current addresses, telephone numbers, email addresses, employer information, banking details, information about vehicles or other significant assets, and government-issued identification. While the information that is appropriate to request will depend on the circumstances, having accurate identifying and financial information can significantly improve the effectiveness of post-judgment enforcement efforts.

Conclusion

Ultimately, a judgment is only as valuable as the debtor’s ability to pay. By integrating enforcement considerations into the litigation strategy from the outset, plaintiffs can make more informed decisions about whether to proceed and how to maximize recovery.

When British Columbia’s Money Judgment Enforcement Act does come into force, several of these mechanics will change, including new rules around enforcement against land and expanded disclosure obligations for judgment debtors. Businesses should ensure their enforcement strategies are reviewed at that time to account for the updated regime.

If you are a BC business that has questions about enforcement options on a money judgment, is looking for guidance in weighing the cost-benefit analysis of pursuing litigation, or wants advice on shoring up their business practices to increase recovery likelihood in the future, Miller Thomson Commercial Litigation lawyers can provide the expert guidance you need to make an informed business decision.