Court File and Parties

CITATION: Mark Couper v. Vitaquest International, 2017 ONSC 7679

COURT FILE NO.: CV-06-305132

MOTION HEARD: 20171221

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mark Couper, Creditor

AND:

Vitaquest International LLC, Debtor

AND:

Lifeagen Biosciences, Inc., Nu-Life North America and Hyper Network Solutions Inc.

BEFORE: Master Jolley

COUNSEL: Megan Hodges, Counsel for the Creditor

HEARD: 21 December 2017

REASONS FOR DECISION

[1] The creditor Mark Couper (the “Creditor”) seeks an order against each of the garnishees Lifeagen Biosciences, Inc., Nu-Life North America and Hyper Network Solutions Inc. (the “Garnishees”) requiring each of them to pay the debt of $1,704,228.61 set out in the notices of garnishment that were served on them on 18 October 2017. The debt owing by the debtor to the Creditor is the result of a Judgment of Justice MacDonald rendered against the debtor in favour of the Creditor and upheld by the Court of Appeal by reasons given 5 July 2017.

[2] While this motion was heard on the Duty Master List, the Garnishees were served with the materials on 12 December 2017 and were aware that the motion was being brought today. The representative of the garnishees spoke to counsel for the Creditor last evening and was aware that the matter was proceeding. The Garnishees had the contact information for counsel and did not contact her or attend today in the courtroom.

[3] Rule 60.08 sets out the obligations of a garnishee upon receipt of a notice of garnishment, as follows:

60.08(11) The garnishee is liable to pay to the sheriff any debt of the garnishee to the debtor, up to the amount shown in the notice of garnishment or supplementary notice of garnishment, less $10 for the cost of making each payment, within ten days after service on the garnishee or ten days after the debt becomes payable, whichever is later.

60.08(15) A garnishee who wishes for any reason to dispute the garnishment or who pays to the sheriff less than the amount set out in the notice of garnishment because the debt is owed to the debtor and to one or more co-owners or for any other reason shall, within 10 days after service of the notice of garnishment, serve on the creditor and the debtor and file with the court a garnishee’s statement (Form 60I) setting out the particulars.

[4] The notice of garnishment served on the garnishees stated that the garnishee was required to pay the sum of $1,704,228.61 to the Sheriff of the City of Toronto within 10 days of service of the notice. It further stated: “IF YOU DO NOT PAY THE TOTAL OWING OF $[sic] LESS $10 FOR YOUR COSTS OF MAKING EACH PAYMENT WITHIN 10 DAYS after this notice is served on you, because the debt is owed to the debtor and to one or more co-owners or for any other reason, you must within that time serve on the creditor and the debtor and file with the court a garnishee’s statement in Form 60I attached to this notice. IF YOU FAIL TO OBEY THIS NOTICE, THE COURT MAY MAKE AND ENFORCE AN ORDER AGAINST YOU for payment of the amount set out above and the costs of the creditor.”

[5] The garnishee’s statement that was attached to the notice of garnishment allows a garnishee to acknowledge the debt or to explain why it does not owe the debtor money.

[6] None of the Garnishees has either paid money into court or completed the garnishee’s statement setting out why it does not owe the debtor money.

[7] There is evidence before the court by way of two affidavits from the creditor, one of which was sworn 1 December 2017 and one which I am advised was sworn 16 October 2017, that each of the garnishees purchases product from the debtor and that those purchases are estimated to be in the order of $300,000 to $600,000 collectively per month. For instance, the evidence states that the garnishee Lifeagen Biosciences purchases inventory from the debtor and its division Garden State Nutritionals on an ongoing basis and pays the debtor for it and is continuously indebted to the debtor

[8] After delivery of the notices of garnishment, the garnishees were also sent demand letters dated 27 November 2017 advising them that if they continued to refuse to comply with their obligations to either pay funds owing into court or file a garnishee’s statement, a motion would be brought against them in which they could face liability for the full amount of the debt. The garnishees refused the letters when sent by courier. They did receive them from a process server on 29 November 2017 but then the principal ran back outside with the letters and threw them into the air.

[9] Where a garnishee has been given fair warning of the possible consequences of failing to pay funds owing into court or to file a garnishee’s statement and where the garnishee has been unresponsive, it may appropriate that the creditor obtain an order against the garnishee for the outstanding amount of the judgment. Here not only have the garnishees not complied with the Rules they have actively attempted to evade service.

[10] While they had notice of this motion, they did not file a garnishee’s statement in the face of it. Nor did they file responding materials in this court providing some evidence that they are not indebted to the debtor.

[11] If garnishees refuse to comply with their obligations under notices of garnishment, they can render a judgment futile. This is particularly so here where the debtor is located in New Jersey and has not paid the judgment. The purpose of garnishment proceedings is to put the garnishee on notice that debts that it owes to the debtor are to be paid instead to the creditor through the Sheriff.

[12] I hereby find each Garnishee liable to pay jointly and severally the amount of the debt owing by the debtor to the Creditor, being $1,704,228.61 and direct that those funds to be paid to the Sheriff in compliance with the notice of garnishment pursuant to the provisions of Rule 60.08(17).

Master Jolley

Date: 21 December 2017