COURT FILE NO.: 9894/98 & 51396/09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jason Parker, Creditor
AND:
Fred Parker, Debtor
AND:
Broderick and Partners, Garnishee
BEFORE: The Honourable Mr. Justice D. J. Taliano
COUNSEL: Ronald N. Brady, Counsel, for the Creditor
Zijad Saskin, Counsel, for the Garnishee
HEARD: February 12, July 8, 2013
ENDORSEMENT
1It was hoped that the civil litigation between the members of the Parker family would be put to rest by the several rulings emanating from this court over the past 5 years. Those hopes have been dashed by the present motion. Some background is necessary.
2Jason Parker suffered a serious brain injury in a motor vehicle accident at a point in time when he was estranged from his father, Fred Parker. Nevertheless, Fred intervened to ensure that his son obtained proper medical treatment and legal advice. The result was a settlement of approximately 1.3 million dollars which included a structured portion that pays Jason approximately $3,392.89 per month for the rest of his life.
3Following the settlement, Fred and his wife sold their own small home and purchased a larger home than they would have needed for their own purposes, to assist with the care of Jason and to accommodate Jason’s special needs. To secure Jason’s rights, a mortgage was given to Jason along with a life interest in the property.
4Surprisingly, Jason’s medical condition improved to a point that well surpassed his initial diagnosis of dependency for the rest of his life and in due course he was able to move out of his parents’ home and look after himself.
5Eventually, he took full control over the proceeds of his settlement and also sought an accounting from his father. As a result, a judgment was granted to Jason in 2008 in the sum of $33,885.36 against his father for monies paid to Fred at a point in time when his care for Jason no longer entitled him to compensation. (See Judgment of Walters, J. dated July 31, 2008). The loss of the future attendant care costs that had been paid to Fred combined with the expense of a much larger home, created serious financial problems for Fred and his family.
6Jason also started a separate action against his father for recovery of the amount owing under the mortgage. Although Jason claimed $31,000 as the amount due, following a contested trial, on May 3, 2012, he was awarded $7,122 after the deduction of credits owing to Fred. The mortgage bore interest at the rate of 10% per annum.
7During the mortgage trial, counsel for Jason indicated that although there was also a life interest registered on the title to the father’s home, it would be released imminently and was not an issue. The judgment in favour of Jason provided that the court could be spoken to if house-keeping matters needed to be addressed.
8Jason then sought costs in the sum of approximately $31,000. For written reasons given on August 8, 2012, no costs order was made. A reminder of Mr. Brady’s undertaking to release the life interest was given in the cost judgment.
9Fred, who is retired, has not yet paid either judgment. He would have to sell his house in order to do so. He cannot sell the house without receiving a discharge of the existing mortgage to Jason and a release of Jason’s life interest.
10He attempted to pay off the mortgage to Jason by placing his counsel, Mr Hopkins, in sufficient funds to do so on December 18, 2012. Mr. Hopkins contacted Mr. Brady, counsel for Jason, to ascertain the amount owing to discharge the mortgage and to discuss again the discharge of the life interest. Mr. Brady indicated that he would “get back” to Mr. Hopkins. However, on December 20, 2012, Mr. Hopkins, was served with a Notice of Garnishee. In response, he has brought this motion for directions.
11When this matter was first spoken to on July 8, 2013, court was told that the life interest had not yet been discharged even though at the hearing conducted in May, 2012 and once again at the costs hearing in August 2012, Mr. Brady assured the court that the life interest would be discharged and was not an issue. The life interest was only released sometime after July 8, 2013, exactly when is not clear.
12Although Mr. Hopkins has not advanced any claim to date against the funds in his trust account to cover the cost of his services, several court appearances have been made and a factum was also filed as directed by the court.
13It is clear that the service of a Notice of Garnishee at a time when the father intended to pay off the mortgage ensures that relations between father and son will continue to be strained. Jason will inevitably recover the monies owing to him by his father in due course since he has a writ of execution registered. But this oppressive action against Fred and his family is unnecessary. For Jason to take such aggressive steps against his father who is suffering financial difficulties largely because he put himself out for his son, shows filial ingratitude that is not right. The equities in this case do not favour Jason.
14It should be noted that the mortgage rate of 10% contained in the mortgage is well in excess of the rate that applies to the judgment against his father. That being the case, Fred is entitled to pay off the more expensive debt secured by the mortgage in order to rearrange his affairs, barring any other legal impediments that have not been disclosed. The issuing of Notice of Garnishment to prevent that from happening was an oppressive step that should not be condoned by the court.
15However, there is yet another reason why this garnishee should not be enforced. Pursuant to Rule 60.08(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a garnishee is a collection tool that enables an unpaid creditor to garnishee monies in the possession of a third party debtor that are owing to the judgment debtor. For garnishment to work in this case, Mr. Hopkins’ firm must be indebted to Fred, the judgment debtor. The garnishment process attaches only to a “debt” owed to the judgment debtor.
16However, in this case, Fred deposited monies with his lawyer with instructions to retire the mortgage debt owing to Jason. The law firm became a trustee of those monies and was accountable to Fred. But accountability is not the same as indebtedness. The relationship between the firm and Fred was and continues to be, one of solicitor and client, not creditor and debtor. (See Toronto Dominion Bank v. Cooper, Sandler et al, 1998 18860 (ON SC), [1998] 37 O.R. (3d) 729)
17Fred’s instructions to the firm have not changed and therefore the funds he deposited retain their identity and are not garnishable. The monies would only become a debt to Fred by the law firm if Fred demanded their return. That has not happened. For these reasons, the garnishee in question is declared invalid.
18That being the case, counsel for Fred is entitled to tender the amount owing under the mortgage to the son and Fred will be entitled to receive a discharge of the mortgage after having done so.
19If a discharge is not forthcoming, the father will be entitled to return the matter to me ex parte for an order judicially discharging the mortgage. The motion should be accompanied by a supporting affidavit confirming that payment of the amount due under the mortgage has been made. If such a step is necessary, I will consider whether an additional costs order against Jason may be appropriate.
20In view of the fact that the mortgage could have been and should have been discharged on or about December 18, 2012, I am suspending the accrual of interest on the mortgage from that date until further order of the court.
21I will receive costs submissions with respect to this matter in writing upon the terms to be set following confirmation that the mortgage has been retired.
Taliano J.
Date: November 21, 2013