Superior Court of Justice – Ontario

491 Steeles Avenue East, Milton ON L9T 1Y6

RE: Canadian Imperial Bank of Commerce, Plaintiff

AND: Samuel J. Berkovits also known as Samuel Jacob Berkovits also known as Samuel Berkovits also known as Jack Berkovits, Defendant 1539058 Ontario Inc., Garnishee

BEFORE: Justice Yamashita

COUNSEL: Ron Aisenberg, for the Plaintiff Howard Manis, for the Defendant and Garnishee

HEARD: November 26, 2024

ENDORSEMENT

[1] This motion is brought by the creditor, Canadian Imperial Bank of Commerce (“CIBC”), for an order against the garnishee, 1530958 Ontario Inc. (“153”), pursuant to Rule 60.08(17) of the Rules of Civil Procedure.

Background Facts

[2] On June 13, 2022, CIBC obtained Judgment against the defendant, Samuel J. Berkovits (“Mr. Berkovits”), in the sum of $308,560.23 plus costs of $23,475.06 and bearing interest at an annual rate of 19.99%. No amount has been paid by Mr. Berkovits on account of the Judgment. The Judgment remains unpaid in its entirety.

[3] A Notice of Garnishment to 153, as garnishee, was issued on August 9, 2022 for the Judgment debt balance of $342,092.14.

[4] 153 operates Omni Jewel Crafters (“Omni”) which is a jewelry business and restaurant located at 2793 Bathurst Street, Toronto. Mr. Berkovits is a director of 153, but he denies being a shareholder or officer.

[5] On or about August 25, 2022, 153 was served with the Notice of Garnishment by mail to 153’s registered head office at 2793 Bathurst Street, Toronto. Mr. Berkovits was served by mail on or about the same time at his personal residence located at 136 Dalemount Avenue, North York (the “Dalemount Property”).

[6] On March 28, 2022, CIBC’s lawyer sent a letter to 153 following up on Notice of Garnishment and advising that if no completed garnishee statement was received within 10 days, CIBC would bring a motion seeking to enforce the Judgment against 153. 153 did not respond.

[7] When no response was received from 153, CIBC served this motion on 153 and Mr. Berkovits on July 21, 2023.

[8] On October 4, 2023, some 13 months following the date of the Notice of Garnishment, 153 delivered to CIBC a garnishee’s statement, signed by Mr. Berkovits on behalf of 153 (the “Garnishee’s Statement”), which states in paragraph 2 the following: “Debtor is Director of Company, not shareholder or officer. Debtor not entitled to salary.” No other paragraph in the Garnishee’s Statement was filled out.

[9] CIBC conducted an examination in aid of execution of Mr. Berkovits on June 28, 2023 (the “Examination”). During the Examination, Mr. Berkovits gave the following testimony:

a. 153 is owned by his wife, Mrs. Sheba Berkovits (“Mrs. Berkovits”);

b. He has resided at the Dalemount Property, which is owned by Mrs. Berkovits, for the past thirty years;

c. Payment of household expenses and property maintenance expenses for the Dalemount Property are paid from the cash flow generated from 153’s business and loans;

d. In the time period from at least June 2022 to June 2023, he worked for Omni “24 hours a day, six days a week”;

e. When asked whether 153 owed him any money, his counsel advised as to the following: “I’m going to take the liberty; it goes in and out. Sometimes Jack pays bills for that company, and then the company reimburses him. It’s neve [sic] significant, I don’t believe, but maybe it is, but it’s really a fluctuating amount”;

f. He receives reimbursements from 153 for expenses such as “gas, dining and interest”; and,

g. 153 pays for the lease payments for the 2023 Lexus he drives (the “Lexus Lease”).

[10] In terms of salary, Mr. Berkovits states in his affidavit, sworn June 10, 2024, at paragraphs 4-6 that:

a. Prior to August 2022, he received remuneration for his role as director of 153 (but has not received a salary since then);

b. For the year 2021, 153 paid him a salary of $59,999.94, and for 2022, 153 paid him a salary of $39,230.73;

c. The reason he drew a salary up to August 2022 was so he could qualify for Covid-19 relief programs, on the advice of their accountant;

d. By August 2022, he no longer qualified for Covid-19 relief, so he ceased drawing a salary from 153; and,

e. Since August 2022, he has carried out his director duties on an unpaid, volunteer basis.

Position of the Creditor CIBC:

[11] It is the position of CIBC that Mr. Berkovits, as director of 153, uses 153 for cash flow to live on. He admitted during his Examination that he expends money on behalf of 153 and gets reimbursed. Consequently, CIBC submits that every time Mr. Berkovits expends money to be reimbursed by 153, there is a debt owed to him.

[12] CIBC submits that the Garnishee’s Statement delivered by 153, as signed by Mr. Berkovits, is materially false and misleading because:

a. the Garnishee’s Statement was delivered 13 months after the Notice of Garnishment was served and there is no statement or information at all reflecting the first 13 months predating its delivery;

b. the first paragraph of the Garnishee’s Statement is completely blank, which is improper because it does not address the payments that Mr. Berkovits received or receives for the reimbursement of his expenses from 153; and,

c. 153 ought to have estimated what future payments Mr. Berkovits would be receiving on account of the reimbursements he historically has received, but it failed to do so.

[13] Based on the foregoing, CIBC submits that 153’s Garnishee’s Statement is the equivalent of no statement at all.

[14] As Rule 60.08(17) provides that, where a garnishee does not serve and file a garnishee’s statement, a creditor is entitled 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, CIBC argues that it is entitled to such an order against 153.

[15] With respect to quantum, CIBC submits that the burden is on 153, as garnishee, to disclose what reimbursements were paid to Mr. Berkovits since the date of service of the Notice of Garnishment. As Mr. Berkovits and 153 have not filed any such evidence, CIBC argues that 153 should be ordered to pay the full amount of the Judgment. Alternatively, CIBC argues that the court should order an amount that is just.

The Position of the Garnishee 153

[16] 153 submits that it did not serve the Garnishee’s Statement within the time stipulated by the Rules because its operations manager, Robert Raphael, received the Notice of Garnishment and did not forward it to Mr. Berkovits because he either did not understand its importance or did not believe that 153 was properly named as a garnishee.

[17] When the Notice of Garnishment did eventually come to the attention of Mr. Berkovits in or around October 4, 2023, the Garnishee’s Statement was completed, indicating that 153 did not owe any money to Mr. Berkovits.

[18] 153 submits that Mr. Berkovits is the sole director of 153 but is not an officer, shareholder or employee of same and has not received any compensation from 153 since in or around August of 2022. His last payment predated the service of the Notice of Garnishment. Consequently, 153 is not a “garnishee” contemplated by Rule 60.08(2) in that 153 does not have any debts payable to Mr. Berkovits nor will there be any in the future.

[19] 153 contends that Mr. Berkovits volunteers his time as a director now out of love and affection for his wife and receives no compensation for his services.

[20] In terms of the reimbursements that Mr. Berkovits receives from 153 as compensation for expenses he incurs, 153 argues that these reimbursements are not “debts payable” and therefore ought not to be included in the Garnishee’s Statement. In support of this argument, 153 submits that the Supreme Court of Canada has defined a debt as “sum payable in respect of a liquidated money demand, recoverable by action” (see Diewold v. Diewold, [1941] S.C.R. 25 at page 39), which has been adopted by the courts in the context of garnishments (see Alharayeri v. Wilson, 2018 ONSC 6309).

[21] In terms of payments received from the Omni business, 153 submits that Mr. Berkovits and Mrs. Berkovits hold a joint bank account (the “Joint Account”) and, from time to time, Mrs. Berkovits receives monies from 153 which she deposits into the Joint Account. According to 153, the monies Mrs. Berkovits receives from 153 are loan repayments (the “Loan Repayments”) as Mrs. Berkovits loans significant sums of money to 153 on a revolving basis. For the five-month time period from October 26, 2023 to March 14, 2024, Mrs. Berkovits received Loan Repayments from 153 of approximately $105,821 that were deposited into the Joint Account.

[22] In support of the Loan Repayments, 153 has produced a summary from its QuickBooks account software of all the Loan Repayments and expense reimbursements paid to Mrs. Berkovits for the period of November 6, 2018, to March 14, 2024. It is the position of 153 that, as of 2022, Mrs. Berkovits had outstanding shareholder loans owing to her in the sum of $741,544. Further, the source of these shareholder loans paid to 153 have come from several individuals, including some family members, but none from Mr. Berkovits.

[23] Lastly, 153 argues that it would be inequitable and highly prejudicial for the court to grant an order that 153 pay to CIBC any amounts on the Judgment for the sole reason that 153 did not provide its Garnishee’s Statement within the time stipulated by the Rules.

Legal Principles

[24] The relevant provisions pertaining to garnishment are set out in Rule 60.08 as follows:

Garnishment

Where Available

60.08 (1) A creditor under an order for the payment or recovery of money may enforce it by garnishment of debts payable to the debtor by other persons.

Service of Notice of Garnishment

(7) The creditor shall serve the notice of garnishment,

(a) on the debtor, together with a copy of the affidavit required by subrule (4); and

(b) on the garnishee, with a blank garnishee’s statement (Form 60I) attached.

(8) The notice of garnishment shall be served by ordinary mail, or by personal service or an alternative to personal service under rule 16.03.

Garnishee Liable from Time of Service

(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.

(12) For the purposes of subrule (11), a debt of the garnishee to the debtor includes,

(a) a debt payable at the time the notice of garnishment is served; and

(b) a debt payable (whether absolutely or on the fulfilment of a condition) after the notice is served and within six years after it is issued.

Payment by Garnishee to Sheriff

(14) A garnishee who admits owing a debt to the debtor shall pay it to the sheriff in the manner prescribed by the notice of garnishment, subject to section 7 of the Wages Act.

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.

Garnishment Hearing

(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 an associate judge and raises a genuine issue of fact or of law, it shall be adjourned to be heard by a judge

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 b the garnishee, or the amount set out in the notice, whichever is less.

[25] In Benzcar v. Terk, 2023 ONCA 773 (“Benzcar”), the Ontario Court of Appeal summarized the law pertaining to garnishee statements. In that decision, the Court highlights the following principles at paragraphs 4, 8, 41, 42 and 46:

a. A garnishee who wishes to dispute the garnishment in whole or in part must serve a garnishee’s statement in a prescribed form within 10 days after service of the notice of garnishment. The form requires the garnishee to acknowledge what debts are or will be owing, or to explain why there are and will be none.

b. Where a garnishee fails to serve a statement, the creditor is entitled to an order for payment of the amount the court finds is payable by the debtor to the garnishee, or the amount of the notice, whichever is less.

c. The purpose of a garnishee statement is to accurately delineate the issue between the creditor and the garnishee − it is not the first step in “a catch me if you can” process.

d. A garnishee statement that falsely claims no debt is or will be owing when one is or will be, or that provides misleading or incomplete information in support of a false assertion of no indebtedness, is the “antithesis” of what is required of a garnishee statement.

e. A court may treat a garnishee’s statement that is materially false without reasonable justification as the equivalent of no statement at all.

f. Whether a garnishee statement is materially false without reasonable justification must be judged by assessing it as a whole, taking into account what it says and what it omits to say on the subjects the statement is required to address.

g. The required form for a garnishee statement requires disclosure not only of what is owed but of what the garnishee will owe because of arrangements existing when the garnishment notice is served.

[26] In Benzcar, the Court of Appeal commented on subrule 60.08(17) at paragraph 37 as follows:

Subrule 60.07(17) speaks of a creditor’s entitlement to an order in the lesser of two specified amounts if a garnishee statement is not served and filed. Under that subrule, the first inquiry is whether a garnishee’s statement has been served and filed - as discussed below, this includes determining whether a statement that was served and filed is, by reason of material misrepresentations or omissions, in effect no statement at all, a question of mixed fact and law. If no statement has been served and filed, the court’s second task is to determine the amount payable by the garnishee to the debtor, another question of mixed fact and law. The court’s third task is, as a matter of law, to give effect to the creditor’s entitlement to an order in the lesser of the amount payable by the garnishee to the debtor or the amount in the notice. The usual appellate standards of review to each of these inquiries should apply. The court is not granted a discretion to do other than as the subrule dictates.

[27] At paragraphs 38 and 39 of Benzcar, the Court of Appeal goes on to state:

If a garnishee statement proves to be false, the court may treat the garnishee as though it has not filed the required statement at all. There are two caveats:

First, for the proposition to apply the statement must be materially false. Second, there must be no reasonable justification for the statement’s incorrect content. The first caveat underscores that it is falsehoods that undermine the essence of what the statement should have conveyed that are the concern; the second underscores that good faith positions taken or assertions made by a garnishee with reasonable care and on a plausible factual scenario will not engage the proposition even if later proven to be incorrect.

[28] In Waxman v. Waxman, 2006 ONCA 35815, at paragraphs 37 and 38, the Ontario Court of Appeal cited with approval the following principles:

a. A garnishment is an equitable remedy and, as the language of rule 60.08(16) is permissive, the court may make whatever order it deems just in the particular circumstances of any given case; and

b. A motion judge is entitled to look at the reality of the relationship between the judgment debtor and the corporations he controls under subrule 60.08(16).

[29] In 20 Toronto Street Holdings Ltd. v. Coffee, Tea or Me Bakeries Inc., 2001 ONSC 28048, at paragraph 5, Nordheimer J. cited Halsbury’s Laws of England, 4th ed., vol. 17 for the proposition that:

The court’s power to make a garnishee order, whether it is an order nisi or an order absolute, is discretionary. A garnishee order is basically an equitable remedy, and it may be refused where the attachment of the debt would work inequitably or unfairly or cause prejudice or injustice to some person or persons other than the judgment creditor.

Discussion

[30] CIBC obtained the Judgment against Mr. Berkovits in June 2022, and the Notice of Garnishment was served on Mr. Berkovits and on 153 in August 2022.

[31] The required form for a garnishee’s statement requires disclosure of not only of what is owed but of what the garnishee will owe because of arrangements existing when the garnishment notice is served. Conveniently, Mr. Berkovits ceased taking a salary or receiving any compensation from 153 just prior to August 2022 when the Notice of Garnishment was served on him and 153.

[32] It appears that Mr. Berkovits is essentially judgment proof. The Dalemount Property for which he has lived in for over 30 years is owned by Mrs. Berkovits and its expenses are paid from 153. His Lexus Lease is paid for by 153. He incurs expenses and receives reimbursement from 153. He has several credit cards in his name and the payments for those cards come from 153. He has a non-exigible RRSP.

[33] Mr. Berkovits and 153 now seek to defeat the Notice of Garnishment that has been served upon them.

[34] Taking into consideration the totality of facts, including the evidence proffered and the lack of evidence proffered, I find that Mr. Berkovits has arranged his finances in concert with 153 to avoid having any amount garnished from 153 to pay CIBC’s Judgment. The basis for this finding is set out in the below paragraphs.

a) Failure to Deliver a Response to the Notice of Garnishment for 13 months

[35] Firstly, I do not accept the evidence of Mr. Berkovits and Mrs. Berkovits that the Notice of Garnishment was not brought to 153’s attention until October of 2023. Mr. Berkovits was served with the Notice of Garnishment at the Dalemount Property in August of 2022 and therefore would have known about its existence and the requirement to respond at that time. He is a director of 153 and has a duty not only to manage and supervise the activities and affairs of 153, but to act honestly and in good faith with a view to the best interests of the corporation. Upon receiving the Notice of Garnishment in his personal capacity, Mr. Berkovits knew or ought to have known that CIBC was attempting to garnish 153 for his debt and that 153 was obliged to respond as early as August 2022.

[36] Secondly, there is no supporting evidence filed in response to this motion from Robert Raphael, the office manager of 153, regarding the position of Mr. and Mrs. Berkovits that Mr. Raphael received the Notice of Garnishment but failed to act on it. I note that Mr. Raphael did swear an affidavit, sworn June 10, 2024, but that it fails to address his alleged receipt of the Notice of Garnishment. I draw a negative inference from the fact that Mr. Raphael did not provide any evidence in his affidavit regarding the Notice of Garnishment.

[37] Third, CIBC’s lawyers sent a follow up letter to 153 on or about March 28, 2023, requiring a response to the Notice of Garnishment. There is no evidence from 153 as to why this letter did not prompt a response. Further, CIBC served its Motion Record on both Mr. Berkovits and 153 on or about July 21, 2023. Again, there is no explanation as to why it took until October of 2023 for 153 to deliver the Garnishee Statement having received this motion in July of 2023.

[38] Given the foregoing, I find that 153 opted not to deliver any response to the Notice of Garnishment until it felt obliged to do so following the delivery of this motion. In the meantime, 153 took steps to avoid compliance with the Notice of Garnishment.

b) Cessation of Salary Payments to Mr. Berkovits

[39] In his Examination, Mr. Berkovits testified as follows:

a. He has been an employee of 153 “on and off” and on “staggered dates”; and,

b. In the year or so predating the Examination (which took place on June 28, 2023), he worked at 153 “24 hours a day, six days a week”.

[40] No evidence was proffered by 153 regarding what salary Mr. Berkovits was paid by 153, if any, predating 2021. Similarly, no supporting documentation was proffered by 153 in respect of the advice it purportedly received from its accountant regarding the salary paid to Mr. Berkovits during 2021 and 2022 that suddenly ceased in or just prior to August 2022. On its face, it seems very convenient and favourable to Mr. Berkovits and 153 that the salary was paid to him during Covid-19 to qualify for relief programs and then ceased just prior to the date of the Notice of Garnishment.

[41] Additionally, no particulars have been provided by 153 regarding the last salary payment (or in fact any payments) received by Mr. Berkovits.

[42] I draw negative inferences from these omissions.

[43] I also find that Mr. Berkovits has a degree of control over 153. This control includes signing the Garnishee’s Statement on 153’s behalf and determining when and how much of a salary he should receive.

[44] In his affidavit, sworn June 10, 2024, Mr. Berkovits states the following at paragraphs 6 and 7 regarding the salary he received from 153 for the years 2021 and 2022:

6. The reason I was drawing a salary up to August of 2022 was so that I could qualify for COVID-19 relief programs, on the advice of our accountant; and

7. By August of 2022 I no longer qualified for COVID-19 relief, so there was no longer any point for me to draw a salary from 153.

I note that there is nothing in these statements which would suggest that he required the approval or authority from Mrs. Berkovits for 153 to pay him a salary.

[45] I disagree with Mr. Berkovits statement in paragraph 7 of his affidavit that there was “no longer any point for [him] to draw a salary from 153”. There was indeed a point for him continuing to draw a salary from 153, and that point was that he was significantly indebted to CIBC and required to pay the Judgment. Despite this, 153 and Mr. Berkovits opted not to pay him a salary although he continued to provide services “24 hours a day, 7 days a week”. It seems that when it is beneficial for 153 and Mr. Berkovits to pay him a salary, he is to receive one, yet if it is not beneficial to either, then he is not to be paid one.

[46] I also do not find it credible that Mr. Berkovits would be working 24 hours a day, 7 days a week at Omni solely out of love and affection for his wife, particularly when he has been paid a salary in the past.

[47] In my opinion, to say that Mr. Berkovits is not entitled to a salary is really to say that Mr. Berkovits and 153 have determined that he shall not be paid a salary.

c) Reimbursement for Expenses and Personal Expenses Paid by 153

[48] Mr. Berkovits admitted (through his counsel) that money goes in and out from 153 to him for reimbursement of expenses. Mr. Berkovits also admitted that he receives reimbursements from 153 for expenses such as “gas, dining and interest” and that 153 pays for his Lexus Lease. He also has his household expenses and property maintenance expenses paid, at least in part, by the cashflow from 153.

[49] When asked on Examination if 153 pays for all his expenses, he stated: “Many of my expenses. Most of my expenses are related to the company.”

[50] No particulars or supporting documentation has been provided by 153 regarding the nature of these expenses, the amounts paid or the frequency of the payments. There is no evidence before me, apart from the affidavits filed by Mr. and Mrs. Berkovits, that these expenses are proper business expenses.

[51] I note that 153 has produced the Vendor Quickbook Reports showing payments from 153 to Mrs. Berkovits but has not produced similar reports that would show the historical payments to Mr. Berkovits.

[52] I also draw negative inferences from this lack of disclosure.

[53] I also agree with plaintiff’s submissions that as soon as an expense was incurred by Mr. Berkovits for 153 that required reimbursement, a debt and payment obligation was created. The expenses and Mr. Berkovits’ claim for reimbursement are sums payable in respect of a liquidated amount. Had 153 not reimbursed Mr. Berkovits for proper and approved expenses he incurred on behalf of 153, he most certainly would have a liquidated claim for which he could have demanded and recovered by way of action against 153.

[54] Given the foregoing, I find the statement (or the lack of any statement) in the Garnishee’s Statement that no amounts are payable or have been paid to Mr. Berkovits by 153 to be false, and certainly misleading. At minimum, payment was being made to reimburse him for expenses and 153 was paying personal expenses for him on an ongoing basis. As stated above, no particulars have been provided regarding these “expenses” or “reimbursements” and no mention of these expenses or reimbursements was divulged in the Garnishee’s Statement.

[55] As is the case with payment of Mr. Berkovits’ salary, to say that 153 does not owe any monies to Mr. Berkovits is really to say that Mr. Berkovits and 153 have determined that he is not owed any monies by 153.

d) Lack of Cogent and Convincing Evidence by 153

[56] I also find the supporting documentation provided by Mr. Berkovits and Mrs. Berkovits regarding the alleged loans Mrs. Berkovits has provided to 153 and the Loan Payments she has received to be unpersuasive. I am of this opinion for the following reasons:

a. There is no supporting documentation regarding any of the alleged third party loans;

b. The screen shots purporting to show deposits into the Joint Account lack detail and only date back to November 2023 to April 2024 (there is nothing from the time period between August 2022 to October 2023);

c. A number of the cheques attached to Exhibit “G” of Mr. Berkovits’ affidavit are not listed in the accounting report from 153 found at Exhibit “F”. Further, a number of the cheques are made payable to “S. Berkovits”, which could mean either Mrs. Berkovits or Mr. Berkovits whose first name is Samuel;

d. The heavily redacted screen shots attached as Exhibit “H” to Mr. Berkovits’ affidavit purportedly show deposits made by Mrs. Berkovits into 153’s bank account, but they lack dates, account particulars and sufficient detail to determine who the parties are to the transactions; and,

e. The financial statements produced by 153 are unaudited and do not disclose the particulars and details of the shareholder loans advanced or payable to Mrs. Berkovits as well as the alleged third-party loans Mrs. Berkovits/153 have received.

[57] Although two affidavits have been proffered by 153 in support of the third-party loans: 1) an affidavit of Mr. Raphael attesting to the fact that he has been employed by 153 since 2022 and, in August 2017, he loaned $300,000 to Mrs. Berkovits; and 2) an affidavit of Moses Bergman, sworn October 4, 2023, which sets out how Mr. Bergman has lent Mrs. Berkovits over a million dollars over the years; no supporting documentation or particulars have been provided in either affidavit regarding the terms of the loan and terms of repayment. There is also a blank in paragraph 4 of Mr. Bergman’s affidavit pertaining to the balance of the loan.

[58] Overall, I do not find that 153 has produced cogent and convincing evidence to establish that the payments flowing from 153 to the Joint Account and to Mrs. Berkovits are solely on account of Loan Repayments or that the source of those payments came from third parties, which require repayment.

153 is a Garnishee?

[59] 153 argues that it is not a “garnishee” contemplated by Rule 60.08(2) because it does not have any debts payable to Mr. Berkovits nor will there be any in the future. If in fact there are no debts payable to Mr. Berkovits now or in the future as 153 alleges, I find it only to be the case because Mr. Berkovits and 153 have determined it to be so. I find that 153 is a garnishee as contemplated by Rule 60.08(2). To find otherwise would be to reward 153 for its conduct in organizing its affairs in concert with Mr. Berkovits to avoid compliance with the Notice of Garnishment.

Is the Garnishee’s Statement materially deficient?

[60] As noted by the Ontario Court of Appeal in Benzcar, the purpose of the garnishee statement is to accurately delineate the issue between the creditor and the garnishee. I find that the Garnishee Statement delivered by 153 defeated the very purpose of what was required.

[61] In taking into account the circumstances as a whole, I find that the Garnishee Statement was materially false and contained material omissions without reasonable justification. At the very least, the Garnishee’s Statement ought to have detailed the last payment made to Mr. Berkovits, set out the reimbursements that had been paid to him, as well as any personal benefits being paid on his behalf by 153 for the relevant time period, and set out its justification as to why no amount was now payable. The Garnishee’s Statement also ought to have set out the salary that Mr. Berkovits had been receiving, the date it ceased, and its justification as to why he was not receiving a salary from 153. Instead, 153 gave a self-serving statement with no supporting documentation, which I find was akin to a “catch me if you can.” I therefore find that the Garnishee’s Statement amounted to no statement at all.

[62] I also find the Garnishee’s Statement to be materially deficient because it does not contain any detail or information pertaining to the 13 months that had transpired since the service of the Notice of Garnishment. Just because the Garnishee’s Statement was delivered 13 months’ late, does not mean that 153 does not have to account for the 13-month time period that predated its delivery.

[63] Given this finding, CIBC is entitled an Order for payment by the garnishee in an amount equal to the amount payable or that has been paid to Mr. Berkovits since service of the Notice of Garnishment, or the amount of the Judgment, whichever is less in accordance with Rule 60.08(17).

Amount Payable under the Garnishment:

[64] As set out in Benzcar, if no statement has been served and filed, the court’s second task is to determine the amount payable by the garnishee to the debtor. Once an amount is determined, the third task is to give effect to the creditor’s entitlement to an order in the lesser amount or the amount in the notice.

[65] The difficulty in this case lies in the lack of evidence filed by the parties in respect of the amounts payable to Mr. Berkovits by 153.

[66] In Benzcar, there was sufficient evidence before the Motions Judge to determine that the amounts payable to the debtor from the garnishee exceeded the amount in the notice of garnishment. As such, the court ordered that the garnishee pay the creditor the amount in the notice, as it was the lesser amount. Here, I lack the requisite information to make such a determination.

[67] Further, as a garnishee order is an equitable remedy, I am cautious not to order the attachment of debt inequitably or unfairly such that it may cause undue prejudice or injustice to 153.

Order:

[68] Given the foregoing, I find that my determination of the amount to be paid by 153 to CIBC pursuant to Rule 60.08(17) is adjourned to permit 153 the opportunity to provide further documentation regarding compensation paid to Mr. Berkovits. In that regard, in exercising my discretion to make an order as I determine to be just and appropriate in the circumstances, I order that within sixty (60) days from the date of this Endorsement, 153 shall serve on CIBC the following documentation:

a. Quickbook reports from 153 showing any and all payments, including, but not limited to, any salary or expense payments, made to Mr. Berkovits from November 6, 2018 to June 13, 2022 to today’s date;

b. Particulars and supporting documentation of any expenses paid for by Mr. Berkovits on behalf of 153 from August 25, 2022 to today’s date;

c. Particulars and supporting documentation of all reimbursements paid to Mr. Berkovits on account of any expenses incurred on behalf of 153 from August 25, 2022 to today’s date;

d. Particulars of the household expenses and household maintenance expenses paid on account of the Dalemount Property from August 25, 2022 to today’s date; and,

e. A copy of the Lexus Lease and details of the payments made on account of the Lexus Lease to today’s date.

[69] The motion shall be adjourned to a TBST date before me, to be scheduled through the Trial Office to discuss next steps following the delivery of the above documentation and/or if there has been no compliance with the order.

Yamashita, J. Released: December 9, 2024