Court File and Parties
COURT FILE NO.: CV-13-2483-00 DATE: 2019 06 21 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: RZCD LAW FIRM LLP (Creditor) - and - VICTOR BRIAN CHOO-SHEE-NAM (Debtor) - and - IBM CANADA LTD (Garnishee)
BEFORE: Kumaranayake J.
COUNSEL: Peter M. Callahan, Counsel for RZCD Law Firm LLP John MacDonald, Counsel for IBM Canada Ltd. No one appearing for Victor Brian Choo-Shee-Nam
HEARD: February 27, 2019
ENDORSEMENT
BRIEF BACKGROUND
1The creditor is a law firm that represented Victor Brian Choo-Shee-Nam in matrimonial proceedings. On June 10, 2013, the creditor obtained an Order for assessment for the amount owing to the law firm due to an unpaid account. Mr. Choo-Shee-Nam did not attend on July 17, 2013, for an Appointment for Assessment and on that date, the creditor obtained a Report and Certificate in the amount of $112,876.81.
2On September 26, 2013, a notice of garnishment was issued. On October 10, 2013, the creditor served the garnishee, IBM Canada Ltd., who was Mr. Choo-Shee-Nam’s employer, with the notice of garnishment. The notice of garnishment directed the garnishee to pay to the Sherriff the amount of $113,090.53, less $10.00 for costs of making each payment, within ten days of being served with the notice of garnishment.
3Between June 5, 2014, and November 14, 2014, the creditor received five payments, for a total of $4,487.61, pursuant to the notice of garnishment. On March 24, 2015, the creditor made inquiries with the Sheriff’s office and was informed that the garnishee had stopped remitting payments.
4The creditor has brought a motion pursuant to Rule 60.08(16) of the Rules of Civil Procedure (“Rules”). It seeks enforcement against the garnishee, pursuant to Rule 60.08(17), asserting that the garnishee did not make payment as directed and did not serve and file a garnishee’s statement.
SUMMARY OF THE PARTIES’ POSITIONS
5The creditor requests an Order that the garnishee is liable for $113,090.53, the amount set out in the notice of garnishment and costs of the motion on a full indemnity basis. The creditor maintains that the debtor is an employee of the garnishee and that the garnishee is liable for this amount, as it did not serve a garnishee’s statement to dispute the notice of garnishment. The creditor also asserts that the garnishee should have provided notification that it would no longer be remitting payment. In support of its position, the creditor filed the following: Affidavit of Debbie James, sworn on May 10, 2017 (in motion record); Affidavit of Debbie James, sworn on July 11, 2017; and a factum. The creditor did not file a book of authorities.
6The garnishee asserts that it is not liable for the amount set out in the notice of garnishment for the following reasons:
a. The debtor was employed from November 10, 1997, to August 28, 2014, when he resigned from his employment with the garnishee;
b. On December 6, 2013, it sent a letter to the creditor to inform the creditor that there were two other garnishments which took priority over this garnishment and there would not be enough disposable wages to withhold. However, it did not take the position that it would not remit payment.
c. It remitted payments to the Sheriff in the amount of $4,487.61.
d. The debtor became re-employed with the garnishee on July 16, 2015. After the debtor became re-employed, the creditor did not serve a new notice of garnishment and therefore, the garnishee asserts that it had no obligation to make any further payments to the Sheriff.
e. The garnishee was served with the motion before the court on May 12, 2017. On May 26, 2017, the debtor made a consumer proposal under the Bankruptcy and Insolvency Act and therefore the garnishment proceedings are stayed.
7In support of its position, the garnishee filed the following: Affidavit of Angela Gavin, sworn June 6, 2017; Affidavit of Angela Gavin, sworn July 11, 2017, (in supplementary motion record); a further supplementary motion record containing transcripts of cross-examinations of Debbie James and Angela Gavin, as well as the answers to undertakings given by Angela Gavin; a factum; and book of authorities.
8The debtor was not present for the motion, although he was served. Further he did not file any materials for the motion.
LAW AND ANALYSIS
9Rule 60.08 sets out the procedure for all aspects of garnishments.
10The creditor maintains that the notice of garnishment, issued on September 26, 2013, was properly served and is valid for six years. It relies on Rules 60.08(6.2) and 60.08(6.3), which read:
Duration and Renewal
(6.2) A notice of garnishment remains in force for six years from the date of its issue and for a further six years from each renewal.
(6.3) A notice of garnishment may be renewed before its expiration by filing with the registrar where the proceeding was commenced a requisition for renewal of garnishment (Form 60G.1) together with the affidavit required by subrule (4).
11Further, the creditor relies on Rule 60.08(16) and 60.08(17) in support of its position that the garnishee is liable for the amount set out in the notice of garnishment:
(16) On motion by a creditor, debtor, garnishee, co-owner of the debt or any other interested person, the court may,
(a) where it is alleged that the debt of the garnishee to the debtor has been assigned or encumbered, order the assignee or encumbrancer to appear and state the nature and particulars of the claim;
(b) determine the rights and liabilities of the garnishee, the debtor, any co-owner of the debt and any assignee or encumbrancer;
(c) vary or suspend periodic payments under a notice of garnishment; or
(d) determine any other matter in relation to a notice of garnishment,
and the court may proceed in a summary manner, but where the motion is made to a master and raises a genuine issue of fact or of law, it shall be adjourned to be heard by a judge.
(16.1) A copy of a notice of motion for a garnishment hearing shall be served on the Sheriff by ordinary mail, or by personal service or an alternative to personal service under rule 16.03.
Time for Motion
(16.2) A person who has been served with a notice to co-owner is not entitled to dispute the enforcement of the creditor’s order for the payment or recovery of money or a payment made in accordance with the Creditors’ Relief Act, 2010 unless the person moves for a garnishment hearing within 30 days after being served with the notice.
Enforcement against Garnishee
(17) Where the garnishee does not pay to the Sheriff the amount set out in the notice of garnishment as owing by the garnishee to the debtor and does not serve and file a garnishee’s statement, the creditor is entitled on motion to the court, on notice to the garnishee, to an order against the garnishee for payment of the amount that the court finds is payable to the debtor by the garnishee, or the amount set out in the notice, whichever is less.
Is the garnishee liable as it did not serve a garnishee’s statement?
12It is not disputed that the garnishee made five payments totalling $4,487.61.
13It is also not disputed that by its letter, dated December 6, 2013, the garnishee informed the creditor that it has received two previous garnishments for the debtor and “there will not be enough disposable wages to withhold towards your garnishment order.” In that letter, the garnishee provided the court files numbers for the two other matters, one was for child support enforced by the Family Responsibility Office and the other for another civil matter where payment was to be remitted to the Sheriff’s Office of the City of Toronto.
14The creditor submits that the letter, dated December 6, 2013, is not an equivalent to a garnishee’s statement. It asserts that the creditor should have served a garnishee’s statement or provided notification when the debtor resigned in August 2014. However, the creditor acknowledges that it received payment of funds in the amount of $4,487.61 which were remitted to the Sherriff.
15Rule 60.08(15) stipulates when a garnishee must serve a garnishee’s statement:
When Garnishee Must Serve Statement
(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.
16A garnishee is only required to serve a garnishee’s statement within ten days of being served with the notice of garnishment if it is disputing the garnishment or pays less than the amount set out in the notice of garnishment.
17However, when this garnishee was served with the notice of garnishment on October 10, 2013, there was no need for it to serve a garnishee’s statement within ten days of being served. At that time, the debtor was employed by the garnishee and therefore, there was a debt owing for his wages. The garnishee was not disputing a debt owed to the debtor by virtue of his employment. The garnishee remitted payments in the amount of $4,487.61. Therefore, I find that the garnishee was not required to serve a garnishee’s statement within ten days of being served.
18The creditor also asserts that the garnishee was obligated to serve a garnishee’s statement once it was no longer going to remit payment. Further, it asserts that the garnishee was obligated to provide notification when the debtor ended his employment.
19The garnishee submits that when the debtor’s employment ended, the garnishee’s obligation ended. As a result, it submits that there was no further obligation to provide the creditor with information. The garnishee submits that once payment to the Sheriff stopped, the remedy available to the creditor was to bring a motion. Payment to the Sheriff stopped in November 2014. The creditor did not bring this motion until 2017.
20I note that there is no provision in the Rules that requires a garnishee to serve a garnishee’s statement after the ten day period prescribed in Rule 60.08(15). Further, there is no provision in the Rules that requires a garnishee to serve a garnishee’s statement when it no longer owes a debt to the debtor.
21Therefore, I find that there was no obligation on the garnishee to serve a garnishee’s statement or provide notification in August 2014 when the debtor ended his employment with the garnishee.
Is the garnishee liable during the second period of employment if a second notice of garnishment was not issued and served?
22As stated above, the creditor submits that the notice of garnishment which it served on October 10, 2013, is valid for six years and therefore, the garnishee was obligated to remit payment for the garnishment once the debtor became re-employed by the garnishee in July 2015.
23However, Rule 60.08(13)(b) states:
For the purposes of subrule (11), a debt of the garnishee to the debtor does not include,
(a) if the garnishee is a financial institution, money in an account opened after the notice of garnishment is served;
(b) if the garnishee is an employer, a debt arising out of employment that commences after the notice is served; or
(c) if the garnishee is an insurer, a debt payable under an insurance policy that is entered into after the notice is served. [Emphasis added.]
24I find that from a plain reading of the Rules, the notice of garnishment served on October 10, 2013, does not apply to the second period of employment by virtue of Rule 60.08(13)(b). The debt owed to the debtor as a result of the second period of employment is “a debt arising out of employment that commences after the notice is served”.
25Had the creditor served a second notice of garnishment after the second period of employment started, then the garnishee would have been liable to remit payment in accordance with the second notice of garnishment or serve a garnishee’s statement within ten days of being served with the second notice of garnishment. However, there is no dispute that the creditor did not serve a second notice of garnishment. Therefore, I find that the notice of garnishment served on October 10, 2013, did not apply to the debts owing to the debtor by his employer after he became re-employed in July 2015.
26The creditor also submitted that for the period of time between August 2014 and July 2015, the debtor should be found to have been on a sabbatical, but still in the employment of the garnishee. I cannot accept this submission as there is no evidentiary basis upon which this finding can be made.
What is the effect of the consumer proposal?
27The garnishee also submits that even if the notice of garnishment applied to July 2015 onwards (after the debtor became re-employed by the garnishee), the garnishee would only be liable from the time that the debtor became re-employed to when he made a consumer proposal (July 2015 to May 26, 2017). The garnishee submits that the garnishment proceedings are stayed upon the debtor making a consumer proposal and relies upon section 69.2 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3:
Stay of proceedings — consumer proposals
69.2 (1) Subject to subsections (2) to (4) and sections 69.4 and 69.5, on the filing of a consumer proposal under subsection 66.13(2) or of an amendment to a consumer proposal under subsection 66.37(1) in respect of a consumer debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy until
(a) the consumer proposal or the amended consumer proposal, as the case may be, has been withdrawn, refused, annulled or deemed annulled; or
(b) the administrator has been discharged.
Exception
(2) Subsection (1) does not apply where the consumer proposal, other than an amendment to a consumer proposal referred to in section 66.37, is filed within six months after the filing of a previous consumer proposal in respect of the same debtor.
Idem
(3) Subsection (1) does not apply where an amendment to a consumer proposal is filed within six months after the filing of a previous amendment to the same consumer proposal.
28The garnishee relies on Toronto-Dominion Bank v. Phillips, 2014 ONCA 613, where the Court of Appeal for Ontario states, at para. 24:
Section 69.2(1) therefore imposes a comprehensive prohibition on remedies against the debtor or the debtor’s property once a consumer proposal has been filed. The stay includes a prohibition against the commencement or continuation of any action, execution or other proceeding for the recovery of a claim.
29However, as I have found that the notice of garnishment served on October 10, 2013, does not apply to the re-employment of the debtor, it is not necessary for me to determine what amount, if any, the garnishee is liable for in relation to the period from July 2015 to the May 26, 2017.
30As the notice of garnishment served on October 10, 2013, does not attach to the July 2015 re-employment, I find that the garnishee is not liable for any further payments other than what has already been remitted during the debtor’s first period of employment.
ORDER
31After carefully reviewing the material filed and considering the submissions of counsel, for the reasons outlined above, I dismiss the creditor’s motion.
32The garnishee has been wholly successful and presumptively is entitled to costs. If the parties cannot agree on the issue of costs, then
a. On or before July 26, 2019, the garnishee shall serve written submissions, in 12-point font, and no more than two pages.
b. On or before August 9, 2019, the creditor shall serve and file its responding written submissions, in 12-point font, and no more than two pages.
c. There shall be no written reply submissions.
d. The parties do not need to file their respective Bills of Costs as those were filed at the hearing of the motion.
e. Any offers to settle that were served should be filed with the written submissions.
Kumaranayake J.
DATE: June 21, 2019