The debtor executed an irrevocable direction instructing its law firm to disburse an anticipated tax refund to three creditors, including the law firm itself.
A judgment creditor subsequently served a notice of garnishment on the law firm in respect of the tax refund.
The law firm disbursed the funds according to the irrevocable direction rather than paying the judgment creditor.
The motion judge found the law firm should have followed the garnishment procedure.
The Court of Appeal allowed the appeal, holding that the tax refund was not a garnishable debt owed by the law firm to the debtor, and therefore the notice of garnishment had no effect.
