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Full text of "Report on the enforcement of judgment debts and related matters"

REPORT 

ON 

THE ENFORCEMENT OF JUDGMENT DEBTS 
AND RELATED MATTERS 

ONTARIO LAW REFORM COMMISSION 




Ontario 



PARTV 



Ministry of the 1983 

Attorney 

General 



Digitized by the Internet Archive 

in 2011 with funding from 

Osgoode Hall Law School and Law Commission of Ontario 



http://www.archive.org/details/reportonenforcem05onta 



REPORT 

ON 

THE ENFORCEMENT OF JUDGMENT DEBTS 
AND RELATED MATTERS 

ONTARIO LAW REFORM COMMISSION 




,-' PART v 



Ontario 



Ministry of the 1983 

Attorney 

General 



The Ontario Law Reform Commission was established by section 1 of the 
Ontario Law Reform Commission Act. Section 2(1) of the Act states that it is the 
function of the Commission to inquire into and consider any matter relating to (a) 
reform of the law having regard to the statute law, the common law and judicial de- 
cisions; (b) the administration of justice; (c) judicial and quasi-judicial procedures 
under any Act; and (d) any subject referred to it by the Attorney General. The 
Commissioners are: 

Derek Mendes da Costa, Q.C, LL.B., LL.M., S.J.D., LL.D., Chairman 

H. Allan Leal, Q.C, LL.M., LL.D., D.C.L., Vice Chairman 

Honourable Richard A. Bell, P.C., Q.C. 

William R. Poole, Q.C. 

Barry A. Percival, Q.C. 

M. Patricia Richardson, M.A., LL.B., is Counsel to the Commission. The 
Secretary of the Commission is Miss A. F. Chute, and its offices are located on the 
Fifteenth Floor at 18 King Street East, Toronto, Ontario, Canada M5C 1C5. 



This Report is the last Part of a five Part Report. The Honourable J. C. McRuer and the 
Honourable G. A. Gale were signatories to the first three Parts, but, as will be noted, due to 
their retirement from the Commission, have not signed this Part. While the Commission bene- 
fited greatly from their knowledge and experience, and acknowledges its indebtedness to 
them, responsibility for the recommendations contained in this Report cannot be attributed to 
them. 

ISBN for Part V: 0-7743-6063-1 
ISBN 0-7743-6058-5 for Parts I to V 



TABLE OF CONTENTS 

Page 

Letter of Transmittal ix 

Chapter 1 Introduction 1 

Chapter 2 The Distribution of Proceeds of Enforcement 3 

1. Historical Background to the Enactment of the Creditors' 

Relief Act 3 

2. The Scope of the Present Creditors' Relief Act: Proceeds 
Subject to Distribution 6 

(a) Execution 6 

(i) The Supreme Court and the County and District 

Courts 6 

(ii) The Small Claims Courts 7 

(iii) The Provincial Courts (Family Division) 8 

(b) Garnishment and Attachment of Wages 9 

(i) The Supreme Court and the County and District 

Courts 9 

(ii) The Small Claims Courts 11 

(iii) The Provincial Courts (Family Division) 11 

(c) Equitable Execution, Charging Orders, and Stop 

Orders 12 

(d) Proceeds of Attachment under the Absconding Debtors 

Act 13 

3. The Scope of the Present Creditors' Relief Act: Creditors 
Entitled to Share 14 

(a) Execution Creditors 15 

(b) Certificate Creditors 18 

4. The Scheme of Distribution under the Creditors' Relief Act . 20 

(a) Rateable Distribution 20 

(b) Priorities 22 

(i) Priorities Prescribed by the Creditors' Relief Act .... 22 

a. Payments by the Debtor without Sale 22 

b. Adverse Claims and Interpleader Proceedings... 22 

c. The Costs of the First Instructing Execution 
Creditor 23 



[iii] 



[iv] 

Page 

d. The Costs of Garnishment Proceedings 23 

e. The Costs of a Creditor Responsible for the 
Appointment of a Receiver by way of Equitable 
Execution 24 

f. The Costs of Proceedings under the Absconding 
Debtors Act 24 

g. Bailiff s Costs and Sheriff s Fees 24 

h. The "Priority" under Section 32(11) and (12) of 

the Creditors' Relief Act 25 

(ii) Other Statutory Priorities 26 

a . The Priority for Maintenance Creditors 26 

b. The Priority for Wage Creditors 26 

(iii) The Priority of the Crown: The Royal Prerogative . 27 

(iv) Statutory and Common Law Liens and Charges .... 28 

(v) Private Payments 30 

5. The Need for Reform 30 

6. A Revised Creditors' Relief Act 35 

(a) The Scope of the Revised Act: Proceeds of 

Enforcement 35 

(i) General 35 

(ii) Proceeds of Provincial Court (Family Division) 

Enforcement 41 

(b) The Scope of the Revised Act: Entitlement to Share 42 

(i) Non-Judgment Creditors 43 

(ii) Judgment Creditors 48 

(iii) Time at which Entitlement to Share Determined ... 49 

(c) Priorities under the Revised Creditors' Relief Act 51 

(i) The Maintenance Creditor's Priority 51 

(ii) The Wage Creditor's Priority 54 

(iii) Distribution among Creditors Entitled to Priority . . 58 

(d) The Crown's Right to Priority 59 

(e) Statutory and Common Law Liens and Charges 63 

(i) Land 64 

(ii) Personal Property 67 



[v] 

Page 

(f) Other Priorities 68 

(i) The Costs of Instructing Creditors 68 

(ii) The Costs of Attaching and Impeaching Creditors . 71 

(iii) Adverse Claims and Interpleader Proceedings 72 

(iv) Supervening Security Interests 72 

(g) Distribution of Proceeds of Enforcement: The 

Procedure 73 

(h) County-Wide Versus Province-Wide Distribution of 

Enforcement Proceeds 78 

RECOMMENDATIONS 78 

Chapter 3 Postjudgment Arrest 83 

1 . Introduction 83 

2. Postjudgment Arrest and Imprisonment in Historical 
Perspective 84 

3. Postjudgment Arrest and Imprisonment Other Than in the 
Family Court: The Present Ontario Position 86 

4. Postjudgment Arrest and Imprisonment for Non-Payment 
of Judgments Other Than for Support or Maintenance: The 
Other Provinces 91 

5. Postjudgment Arrest and Imprisonment for Non-Payment 
of a Support or Maintenance Order: The Present Ontario 
Position 96 

6. Postjudgment Arrest and Imprisonment for Non-Payment 

of a Support or Maintenance Order: The Other Provinces ... 101 

7. Postjudgment Arrest and Imprisonment: Reform Proposals 

in Other Jurisdictions 102 

(a) Money Judgments Other Than Orders for Support or 
Maintenance 102 

(b) Money Judgments for Support or Maintenance 107 

8. Constitutionality of Postjudgment Arrest and Imprisonment 

as an Enforcement Remedy 112 

9. Postjudgment Arrest and Imprisonment: The Evidence 128 

10. Conclusions and Proposals for Reform 141 

(a) Arguments Respecting Abolition: An Evaluation 141 

(b) Conclusions 145 

(c) Recommendations 146 



[vi] 

Page 

(i) Arrest and Imprisonment in the Family Law 

Context 146 

(ii) Arrest and Imprisonment in the Non-Family Law 

Context 149 

(iii) Procedural Safeguards 150 

a. Committal for Non-Payment of a Support or 
Maintenance Obligation: Inability to Pay as a 
Defence 150 

b. Resort to Other Practicable Methods of 
Enforcement as a Precondition to Arrest and 
Imprisonment 153 

c. Early Release upon Payment 153 

d. Imprisonment and its Effect on the Outstanding 
Judgment 154 

e. Conditional Imprisonment Orders 154 

f . Ordering Imprisonment in the Absence of the 
Debtor 155 

g. Term of Imprisonment 156 

RECOMMENDATIONS 157 

Chapter 4 The Liability of Sheriffs, Creditors, and 

Solicitors in the Enforcement of Judgment Debts 161 

1 . Introduction 161 

2. Limitation Periods Respecting the Liability of the Sheriff. . . . 162 

3. Searches for Writs of Execution: Present Law and Proposals 

for Reform 164 

(a) Searches on Behalf of Purchasers and Mortgagees of 

Land, Credit Grantors, and Other Persons 164 

(b) Searches for the Purpose of Distributions under 

Creditors' Relief Legislation 168 

4. Liability of the Sheriff for Seizure and Sale of Property: 

Present Law 171 

(a) General 171 

(b) Wrongful Seizure 174 

(i) Seizing the Wrong Person's Property 174 

(ii) Excessive Seizure 176 

(iii) Failure to Seize and Insufficient Seizure 178 



[vii] 

Page 

(iv) Sheriffs Application to the Court for Directions ... 179 

(v) Manner of Seizure 179 

(c) Safeguarding of Seized Property 180 

(d) Sale of Seized Property 180 

5. Liability of the Creditor and His Solicitor for Seizure and 

Sale of Property: Present Law 182 

(a) General 182 

(b) Liability of the Creditor 183 

(i) Improper Issuance of a Writ 183 

(ii) Wrongful Seizure 184 

(c) Liability of the Creditor's Solicitor 187 

(i) General 187 

(ii) Indemnification Agreements 188 

6. Active Enforcement of a Judgment Debt: Previous 
Commission Recommendations and Further Proposals for 
Reform 190 

(a) General 190 

(b) Proposals for Reform 191 

(i) Liability and Protection of the Sheriff 191 

a. Liability Where the Sheriff Follows Directions 

from the Creditor or His Solicitor 191 

b. Indemnification Agreements 195 

c. Sale of Seized Property 197 

d . Application to the Court for Directions 1 97 

(ii) Liability and Protection of the Creditor and His 

Solicitor 198 

recommendations 201 

Conclusion 205 




Ontario 
Law Reform 
Commission 



The Honourable R. Roy McMurtry, Q.C., 
Attorney General for Ontario 



Dear Mr. Attorney: 



We have the honour to submit herewith Part V of our Report on the 
Enforcement of Judgment Debts and Related Matters. 



[ix] 



CHAPTER 1 



INTRODUCTION 



Part V of the Commission's Report on the Enforcement of Judgment 
Debts and Related Matters deals with three disparate topics in the law of 
enforcement. Chapter 2 is concerned with the end result of the enforce- 
ment process - the distribution of proceeds realized from one or more of 
the remedies discussed in Parts II, III, and IV of our Report. In chapter 3, 
the Commission examines the law concerning postjudgment arrest of a 
defaulting debtor as an enforcement remedy. Finally, in chapter 4, the lia- 
bility of sheriffs, creditors, and others in the enforcement of judgment 
debts is reviewed. 

As is the case with most aspects of the law concerning the enforcement 
of judgment debts that the Commission has studied in earlier Parts of this 
Report, the areas of Ontario law canvassed in Part V, for the most part, 
have gone unexamined for a century or more. For example, the Creditors' 
Relief Act, 1 which is the focus of attention in chapter 2, remains little 
changed from when it was first enacted in 1881. A review of the postjudg- 
ment arrest provisions of the Fraudulent Debtors Arrest Act, 2 which also 
dates from the turn of the century, is long overdue, now more so than ever 
because of the proclamation last year of the Canadian Charter of Rights 
and Freedoms. 3 The present law relating to the liability of sheriffs, credi- 
tors, and others in the enforcement of judgment debts has developed 
willy-nilly over several centuries. A review of this area of enforcement law 
is required to ensure that it complements the new enforcement regime 
proposed by the Commission in earlier Parts of this Report. As in earlier 
Parts, our goal in recommending reform of the law in these important 
areas of debtor-creditor relations has been to bring certainty, clarity, and 
fairness to the law concerning the enforcement of judgment debts. 



1 R.S.O. 1980, c. 103. 

2 R.S.O. 1980, c. 177. 

3 Being Part I of the Constitution Act, 1982, which is scheduled to the Canada Act 1982, 
c. 11 (U.K.), proclaimed in force on April 17, 1982. 



m 



CHAPTER 2 



THE DISTRIBUTION 
OF PROCEEDS OF 
ENFORCEMENT 



In Parts II and III of the Report on the Enforcement of Judgment Debts 
and Related Matters, the Commission was concerned with the methods of 
enforcement that should be available to a judgment creditor, and the 
property of a judgment debtor that may be secured for the satisfaction of 
an outstanding judgment debt. 1 In this chapter of Part V of the Report, we 
turn our attention to a different issue, that is, the distribution of proceeds 
of enforcement. We begin with a brief description of the events leading up 
to the enactment of the Creditors' Relief Act, 2 the statute that now governs 
the distribution of proceeds realized as a result of enforcement. 

1. HISTORICAL BACKGROUND TO THE ENACTMENT OF THE 
CREDITORS' RELIEF ACT 

Before the enactment of The Creditors' Relief Act, 1880, 3 proceeds of 
enforcement were distributed on a "first come, first served" basis. In other 
words, the judgment creditor who first initiated enforcement proceedings 
against the judgment debtor, by filing a writ of execution with the sheriff, 4 
was entitled to have his judgment satisfied in full out of any enforcement 
proceeds that might come into the sheriffs hands before any of the pro- 
ceeds were applied toward the satisfaction of judgment debts of subse- 
quent creditors of the judgment debtor. Subsequent judgment creditors 
would be paid in full out of the remaining enforcement proceeds in the 
order in which they initiated enforcement proceedings against the debtor. 



1 See Ontario Law Reform Commission, Report on the Enforcement of Judgment Debts 
and Related Matters (1981) (hereinafter referred to as "Commission Report"), Parts I, 
II, and III. 

2 Creditors' Relief Act, R.S.O. 1980, c. 103, first enacted as The Creditors' Relief Act, 
1880, S.O. 1880, c. 10. 

3 Supra, note 2. 

4 While delivery of a writ of execution gave rise to a right of priority over writs of execu- 
tion delivered subsequent in time, it should be noted that the priority secured by deliv- 
ery could be relinquished by the judgment creditor instructing the sheriff to suspend 
execution: see Halsbury's Laws of England (4th ed., 1976), Vol. 17, "Execution", 
para. 439, at 262. See, also, Dunlop, Creditor-Debtor Law in Canada (1981), at 414. 
For references to the priority regime in effect before the enactment of the Creditors' 
Relief Act, see Beekman v. Jarvis (1847), 3 U.C.Q.B. 280; Topping v. Joseph (1859), 1 
E. & A. 292; Rowe v. Jarvis (1863), 13 U.C.C.P. 495; and Bank of Montreal v. Munro 
(1864), 23 U.C.Q.B. 414. 

[3] 



Although mainly a common law creation, 5 by 1880 this "first come, 
first served" distribution scheme was also partly statutory. The Common 
Law Procedure Act 6 of 1857 had affected the distribution of enforcement 
proceeds in two ways. First, the Act empowered a sheriff, for the first 
time, to seize, inter alia, money and bank-notes belonging to a judgment 
debtor, and required him to pay or deliver up the same to the person "who 
sued out the execution". 7 Secondly, and more importantly, the 1857 
Common Law Procedure Act settled the priority between writs of execu- 
tion issued out of the Supreme Court and county courts, on the one hand, 
and warrants of execution issued out of the Division Courts, the precur- 
sors of the small claims courts, on the other. Where both a writ of execu- 
tion and a warrant of execution were outstanding against the same 
judgment debtor, it was provided that the right to goods seized would be 
determined "by the priority of the time of the delivery of the writ to the 
sheriff to be executed, or the warrant to the bailiff of the . . . Division 
Court". 8 

The state of affairs just described continued until 1880, when, as we 
have indicated, The Creditors' Relief Act, 1880 was enacted. It would 
appear that the reason for the enactment of this statute was the impending 
repeal of the 1875 Dominion Insolvent Act, 9 which would have left Ontario 
and the other provinces without any legislation under which the property 
of a financially embarrassed debtor could be required to be distributed 
equitably among all the creditors of the debtor. 10 With the repeal of Cana- 
da's only bankruptcy and insolvency legislation, creditors would be forced 
in every case to fall back on the "first come, first served" regime described 
above. Recognizing the need for and the desirability of "a measure of 
equal distribution of the property of execution creditors", the government 
of the day called for the enactment of suitable legislation in Ontario "with- 
out delay". 11 

The scheme of The Creditors' Relief Act, 1880 may be described briefly 
as follows. Section 4 provided that "there should be no priority between or 
among creditors by execution from Superior or County Courts"; 12 instead, 
such creditors were required to share rateably the proceeds realized from 
the seizure and sale of their judgment debtors' property. The Act, how- 
ever, was not limited in its application to execution creditors. Non- 

5 It would seem that this "first come, first served" scheme of distribution in respect of 
proceeds of enforcement was incorporated in the law of Upper Canada: see, now, 
Property and Civil Rights Act, R.S.O. 1980, c. 395. 

6 20 Vict., c. 57(U.C). 

7 Ibid., s. 22. 

8 Ibid., s. 24. 

9 Insolvent Act, 38 Vict., c. 16. This Act had replaced the 1869 Insolvent Act, 32 & 33 
Vict., c. 16. For a brief description of the differences between these two Acts, see 
Duncan and Honsberger, Bankruptcy in Canada (3d ed., 1961), at 15-16. 

10 "Bankruptcy and insolvency", it should be noted, are matters within the exclusive leg- 
islative authority of the Parliament of Canada under s. 91.21 of The British North 
America Act, 1867, 30 & 31 Vict., c. 3 (U.K.), R.S.C. 1970, Appendix II, No. 5 (now 
the Constitution Act, 1867). 

11 This statement was made in the Speech from the Throne on January 8, 1880. See Leg- 
islature of Ontario, Debates (1880). 

12 The Act did not apply to creditors by execution from the Division Courts. 



judgment creditors, in certain circumstances, were also entitled to claim a 
share in a distribution of money levied upon an execution against the prop- 
erty of their debtor by utilizing the "certificate procedure" established 
under the Act. 13 The right of a non-judgment creditor to share in proceeds 
of enforcement was limited to cases in which his debtor permitted "an exe- 
cution issued against him under which any of his goods or chattels [were] 
seized by the sheriff, to remain unsatisfied in the sheriffs hands till within 
two days of the time fixed by the sheriff for the sale thereof, or twenty days 
after such seizure". 14 In the case of an execution against his debtor's lands, 
a non-judgment creditor could claim a share in any enforcement proceeds 
where the execution was allowed "to remain unsatisfied for nine months 
after it is placed in the sheriffs hands". 15 It should be noted that only non- 
judgment creditors "in respect of debts which [were] overdue" 16 could 
resort to this special procedure. 

The right of non-judgment creditors to share in money realized from 
execution was not an absolute one. Like the 1875 Insolvent Act 11 before it, 
The Creditors' Relief Act, 1880 gave other creditors of the debtor, and the 
debtor himself, the right to dispute a non-judgment creditor's claim to a 
share of enforcement proceeds. 18 

Before moving on to discuss in detail the operation of the present 
Creditors' Relief Act, it may be useful to comment further on the 1880 Act. 
First, it should be noted that the Act abolished priority "between or 
among creditors by execution from Superior or County Courts". The Act 
did not comprehend creditors by execution from the Division Courts, now 
the small claims courts. Secondly, the 1880 Act, generally speaking, 
applied only to "creditors by execution". Consequently, money realized 
by means of garnishment, with some exceptions, 19 and money realized by 
other methods of enforcement, such as equitable execution or charging 
orders, was not required to be distributed rateably among all execution 
creditors and those non-judgment creditors entitled to share under the 
Act. In short, The Creditors' Relief Act, 1880 was far from being a compre- 
hensive scheme for the rateable distribution of all proceeds of enforce- 
ment. 

Shortly after the Legislative Assembly of Ontario enacted The Credi- 
tors' Relief Act, 1880, most of the other provinces introduced similar 
legislation. 20 In 1919, the Parliament of Canada, re-entering a field it had 

13 See discussion infra, this ch., sec. 3(b). 

14 See The Creditors' Relief Act, 1880, supra, note 2, s. 7. Interestingly, similar language 
was to be found in the 1875 Insolvent Act, supra, note 9. Section 3.k provided that a 
debtor who permitted an execution against him, under which any of his chattels, land, 
or property were seized, levied upon or taken in execution, to remain unsatisfied until 
within 4 days of the time that had been fixed for their sale, or for 15 days after such 
seizure, was deemed to be insolvent. 

15 The Creditors' Relief Act, 1880, supra, note 2, s. 7. 

16 Ibid. 

17 Insolvent Act, supra, note 9, ss. 93-96. 

18 Supra, note 2, s. 7(13)-(20). 

19 Ibid., s. 21. For a discussion of this provision, see infra, this ch., sec. 2(b)(i). 

20 Alberta: The Creditors' Relief Act, S.A. 1910(2), c. 4; British Columbia: Creditors 
Relief Act, S.B.C. 1902, c. 17; Manitoba: The Queen's Bench Act, 58-59 Vict., c. 6; 



left unoccupied for almost forty years, enacted the Bankruptcy Act. 21 
Given the impetus for the enactment of creditors' relief legislation in the 
first place - the repeal of the Insolvent Act of 1875 - it is interesting to note 
that, since 1919, no province has repealed its creditors' relief legislation. 
Accordingly, bankruptcy legislation and creditors' relief legislation now 
exist side by side in seven of the ten provinces, and in both territories. 22 

2. THE SCOPE OF THE PRESENT CREDITORS' RELIEF ACT: 
PROCEEDS SUBJECT TO DISTRIBUTION 

As we have seen, the purpose of Ontario's creditors' relief legislation 
is the abolition of priority among execution creditors. In this section, we 
shall consider the extent to which the present Creditors' Relief Act 23 suc- 
ceeds in achieving this objective, and, in particular, the extent to which the 
proceeds of various enforcement remedies are subject to rateable distribu- 
tion under the Act. We begin with an examination of the impact of the 
Creditors' Relief Act on the distribution of proceeds of execution issued 
out of the Supreme Court of Ontario, the county and district courts, the 
small claims courts, and the provincial courts (family division). 

(a) Execution 

(i) The Supreme Court and the County and District Courts 

The key provision, insofar as executions issued out of the Supreme 
Court and the county and district courts are concerned, is section 3 of the 
Creditors' Relief Act. This provision reads as follows: 

3. Subject to this Act, there is no priority among creditors by execution 
from the Supreme Court or from a county court. 

This section has remained virtually unchanged since The Creditors' Relief 
Act, 1880 24 was enacted and has given rise to no real problems. In the case 
of creditors by execution from the Supreme Court and the county and dis- 
trict courts, therefore, the Act has done away with the previously prevail- 
ing "first come, first served" regime, and replaced it with a scheme of 
rateable distribution. 



New Brunswick: Creditors Relief Act, 3 Edw. 3, c. 3; Nova Scotia: Creditors' Relief 
Act, S.N.S. 1903, c. 14; and Saskatchewan: The Creditors' Relief Act, CO. 1898, 
c. 26. 

21 S.C. 1919, c. 36. See, now, the Bankruptcy Act, R.S.C. 1970, c. B-3. Since 1975, there 
have been a number of bills introduced in Parliament for the enactment of a new 
Bankruptcy Act. The latest one is the Bankruptcy Act, 1980, Bill C-12, 1980 (32d Pari. 
1st Sess.) (hereinafter referred to as "Bill C-12"). 

22 Alberta: The Execution Creditors Act, R.S.A. 1980, c. E-14; British Columbia: 
Creditor Assistance Act, R.S.B.C. 1979, c. 80; Manitoba: The Executions Act, R.S.M. 
1970, c. E160; New Brunswick: Creditors Relief Act, R.S.N.B. 1973, c. C-33; Nova 
Scotia: Creditors' Relief Act, R. S.N.S. 1967, c. 70; and Saskatchewan: The Creditors' 
Relief Act, R.S.S. 1978, c. C-46. 

See, also, Creditors' Relief Ordinance, R.O.N.T. 1974, c. C-22, and Creditors' 
Relief Ordinance, C.O.Y.T. 1976, c. C-22. 

23 Supra, note 2. 

24 Supra, note 2. 



(ii) The Small Claims Courts 

By virtue of section 116 of the Small Claims Courts Act, 25 a creditor 
who has secured a small claims court judgment is entitled to execution 
against the goods and chattels of his judgment debtor. A small claims 
court judgment creditor also is entitled to request the issuance of an execu- 
tion against the land of his judgment debtor, but only if the amount out- 
standing on the judgment is equal to or greater than $40. 26 At present, 
generally speaking, a "first come, first served" regime exists in the small 
claims courts: section 3 of the Creditors' Relief Act, it will be remembered, 
speaks only in terms of the abolition of priority "among creditors by exe- 
cution from the Supreme Court or from a county court". A small claims 
court creditor may well be able to enjoy the fruits of his enforcement 
efforts without being required to share the proceeds with other small 
claims court judgment creditors subsequent in time, or with execution 
creditors from the Supreme Court and county and district courts. 

There are, however, certain exceptions to this "first come, first 
served" regime. For example, section 25 of the Creditors' Relief Act pre- 
scribes a set of circumstances in which "property or proceeds ... in the 
hands of the bailiff of a small claims court under an execution" may be 
required to be distributed pro rata in accordance with the Act. Section 25 
states as follows: 

25. -(1) If the sheriff does not find property of a debtor leviable under the 
executions and certificates in his hands sufficient to pay the same in full, but 
finds property or the proceeds thereof in the hands of the bailiff of a small 
claims court under an execution or attachment against the debtor, the sheriff 
shall demand and obtain them from the bailiff, who shall forthwith deliver 
them to the sheriff with a copy of every execution and attachment in his hands 
against the debtor and a memorandum showing the amount to be levied under 
the execution, including the bailiff's fees, and the date upon which each execu- 
tion or attachment was received by him. 

(2) If the bailiff fails to deliver any of such property or the proceeds thereof, 
he shall pay double the value of that which is retained, which may be 
recovered by the sheriff from him with costs of suit, and shall be accounted for 
by the sheriff as part of the estate of the debtor. 

(3) The costs and disbursements of the bailiff are a first charge upon such 
property or the proceeds thereof and shall be paid by the sheriff to the bailiff 
upon demand after being taxed by the small claims court clerk. 

(4) The sheriff shall distribute the proceeds among the creditors entitled to 
share in the distribution, and the small claims court execution creditors are 
entitled without further proof to stand in the same position as creditors whose 
executions are in the sheriffs hands. 

It should be pointed out, however, that, for two reasons, the rateable dis- 
tribution of such property or proceeds is more a theoretical than a practi- 
cal prospect. 



25 Small Claims Courts Act, R.S.O. 1980, c. 476. 

26 Ibid., s. 126(1). 



8 

First, the lack of coordination in enforcement activities among sheriffs 
and bailiffs, and the absence of any formalized exchange of information 
between such officials, makes it extremely unlikely that a sheriff will know 
when to rely on section 25. Secondly, it should be noted that this provision 
speaks in terms of the sheriff finding property or proceeds "in the hands of 
the bailiff of a small claims court". At the same time, the small claims 
courts rules of procedure require bailiffs to pay over money realized on an 
execution to the clerk of the small claims court. 27 Therefore, a sheriff will 
have only a very short time in which to call into play section 25 of the 
Creditors' Relief Act, making effective use of the section almost impos- 
sible. 

It is arguable that a second exception to the "first come, first served" 
regime that generally prevails among small claims court execution credi- 
tors exists with respect to executions against land. While the matter is cer- 
tainly not free from doubt, it would appear that the legal basis for this view 
is section 126(2) of the Small Claims Courts Act. This subsection provides 
that an execution against land issued out of a small claims court "has the 
same force and effect as an execution issued from a county court". As we 
have noted earlier, section 3 of the Creditors' Relief Act has abolished all 
priority among "creditors by execution from the Supreme Court or from a 
county court". Accordingly, it may be argued that the proceeds realized 
from an execution against land issued out of a small claims court are 
required to be distributed rateably. If, however, this is the case, it is diffi- 
cult to see the purpose of section 126(4) of the Small Claims Courts Act, 
requiring the sheriff, to whom a small claims court execution will be direct- 
ed, to "pay any money made thereon to the clerk of the court out of which 
the execution issued". This would be a seemingly pointless action if the 
sheriff were required to distribute these same proceeds in accordance with 
the terms of the Creditors' Relief Act. 

(iii) The Provincial Courts (Family Division) 

Section 27(2) of the Family Law Reform Act 28 empowers the provin- 
cial courts (family division) to issue execution in accordance with the rules 
of the court. However, the scheme of distribution that governs proceeds 
realized from such execution is unclear. The Family Law Reform Act is 
silent on this question, and the Rules of the Provincial Court (Family 
Division) 29 provide only the slightest indication of the applicability of the 
Creditors' Relief Act to such proceeds. Rule 80 of the Rules of the Provin- 
cial Court (Family Division) states that the sheriff to whom a writ of exe- 
cution is delivered "shall make a return of [the] writ of execution and pay 



27 Small claims courts Rules of Procedure, R.R.O. 1980, Reg. 917, r. 63. 

28 Family Law Reform Act, R.S.O. 1980, c. 152. It should be pointed out that, prior to 
the enactment of the Family Law Reform Act, the provincial courts (family division) 
were not empowered to issue execution. However, an order for maintenance made by 
a provincial court (family division) pursuant to The Deserted Wives' and Children's 
Maintenance Act, R.S.O. 1970, c. 128 (repealed by s. 76 of The Family Law Reform 
Act, 1978, S.O. 1978, c. 2) could be filed with the clerk of the small claims court and 
enforced by execution (s. 16). 

29 R.R.O. 1980, Reg. 810. 



to the clerk of the court on behalf of the creditor any money available for 
distribution to the creditor". 30 

The present practice, based on Rule 80, would appear to be as fol- 
lows. Once he is in receipt of proceeds realized upon a provincial court 
(family division) writ of execution, the sheriff determines the precise share 
to which the execution creditor would be entitled under the Creditors' 
Relief Act. The sheriff then pays to the clerk of the court, in accordance 
with Rule 80, only that amount "available for distribution to the creditor". 

While we have been advised that this is the present practice in the case 
of writs of execution issued out of the provincial courts (family division), it 
is questionable whether the language of Rule 80 of the Rules of the Pro- 
vincial Court (Family Division) supports it. This is particularly so, given 
the fact that section 3 of the Creditors' Relief Act, as in the case of small 
claims court execution creditors, makes no mention of creditors by execu- 
tion from a provincial court (family division). 

(b) Garnishment and Attachment of Wages 

Having reviewed the extent to which proceeds from the seizure and 
sale of a judgment debtor's property are subject to the Creditors' Relief 
Act, we turn to examine the treatment under this Act of proceeds realized 
as a result of garnishment and attachment of wages proceedings. 

(i) The Supreme Court and the County and District Courts 

When enacted, The Creditors' Relief Act, 1880, with some exceptions, 
did not cover money realized as a result of garnishment proceedings. The 
Act was addressed to the abolition of priority among "creditors by execu- 
tion". However, the Act did authorize the sheriff, where it appeared that 
the lands and goods of the debtor would not be sufficient to pay all the 
creditors who had filed an execution with him, to institute proceedings for 
the attachment of any debt owing to the execution debtor. 31 Section 21(1) 
of The Creditors' Relief Act, 1880 provided that the proceeds realized from 
such proceedings were to be distributed "in the same manner as if [the 
sheriff] had realized the same from property seizable by him under execu- 
tion". Reference should be made to one other provision of the 1880 Act 
concerning the proceeds of garnishment activity. Section 21(2) stated that, 
in the circumstances noted above, if the sheriff did not act, "any person 
entitled to distribution" could take such proceedings for the benefit of 
himself and all other persons entitled to distribution. Since money gar- 
nished and paid into the sheriffs hands was deemed to be money levied 
under execution, 32 it was required to be distributed in accordance with the 
terms of The Creditors' Relief Act, 1880. 33 



30 Emphasis added. 

31 The Creditors' Relief Act, 1880, supra, note 2, s. 21(1). 

32 Ibid., s. 21(4). 

33 Ibid., s. 5(1). 



10 

If nothing more had been said in the Act about the attachment of 
debts, the law in this regard would have been clear. However, the 1880 
Act contained one other provision concerning garnishment that caused 
some confusion. Section 21(3) stated as follows: 

21. -(3) Any judgment creditor who attaches a debt shall be deemed to do so 
for the common benefit of himself and all creditors entitled under this Act; 
payment of such debt shall be made to the sheriff, who in making distribution 
will apportion to such judgment creditor a share pro rata, according to the 
amount owing upon his judgment, of the whole amount to be distributed 
under the provisions of this Act, but such share shall not exceed the amount 
recovered by such garnishee proceedings unless the judgment creditor has 
placed a writ in the sheriffs hands .... 

It was unclear whether section 21(3) was a general rule respecting gar- 
nishment or whether the provision was relevant only in the circumstances 
described in subsection (1) of section 21, that is, where several executions 
were in the sheriffs hands and the debtor's exigible property was not suffi- 
cient to pay his execution creditors in full. 34 The latter view seems to have 
prevailed in other provinces with similar legislation. 35 

In any event, the garnishment provisions of the Act were changed sig- 
nificantly in 1909 36 and have remained unaltered since that time. The gen- 
eral rule under the present Creditors' Relief Act with respect to the pro- 
ceeds of garnishment proceedings in the Supreme Court and the county 
and district courts may be found in section 4(1): "[a] creditor who attaches 
a debt shall be deemed to do so for the benefit of all creditors of his debtor 
as well as himself". Pursuant to section 5 of the Act, all money received by 
the sheriff in respect of debts that have been attached must be distributed 
rateably among all those entitled to share. 37 



34 See Re Thompson (1896), 17 P.R. 109 (Div. Ct.). 

35 See Slinger v. Davis (1914), 20 B.C.R. 447 (S.C.); Anderson v. Dawber (1915), 22 
B.C.R. 218, 9 W.W R. 511 (C.A.); Hale v. Ross (1958), 26 W.W.R. 47 (B.C.S.C); 
and Bank of Nova Scotia v. Newcombe Enterprises, [1975] W.W.D. 115 (B.C.S.C). 
See, also, Halliday Craftsmen Ltd. v. Cogger (1967), 64 D.L.R. (2d) 452 (N.S.S.C). 

36 See The Creditors' Relief Act, S.O. 1909, c. 48, s. 5. 

37 While we are not aware of any difficulties regarding the distribution of proceeds of 
garnishment proceedings in the Supreme Court and county and district courts, we wish 
to make one comment regarding procedure. Section 4(2) of the Creditors' Relief Act 
states that a debt that has been attached shall be paid to the sheriff of the county in 
which the garnishee resides. The Supreme Court of Ontario Rules of Practice, R.R.O. 
1980, Reg. 540 (hereinafter referred to as the "Rules of Practice"), on the other hand, 
speak in terms of payment into court by the garnishee. If, in practice, garnishees pay 
into court the amount garnished, how are such funds to reach the sheriff as required 
by section 4(2) of the Creditors' Relief Act? The authorized form of "Final Garnish- 
ment Order" under the Rules of Practice - Form 80 - contains the following provision: 

2. And it is further ordered that the costs of the judgment creditor of this 
application be first paid from [the money paid into Court by the garnishee] and 

that the balance be then paid to the sheriff of the of to 

be dealt with under the Creditors' Relief Act. 

Given the Commission's recommendation for enforcement office authority over gar- 
nishment generally (see Commission Report, supra, note 1, Part II, at 193-94), the 
existing circuitous procedure for the distribution of garnishment proceeds would be 
avoided, since such proceeds would be paid directly to the enforcement office. 



11 

(ii) The Small Claims Courts 

Reference already has been made to section 4(1) of the Creditors' 
Relief Act and the general rule that a creditor who attaches a debt does so 
not only for himself but also for the benefit of all creditors of the debtor. 
In the case of garnishment proceedings in the small claims courts, this pro- 
vision must be read together with section 4(3) of that Act, which provides 
as follows: 

4. -(3) This section does not apply to debts attached by proceedings in a 
small claims court unless before the amount recovered by the garnishment 
proceedings is actually received by the creditor an execution against the prop- 
erty of the debtor is placed in the hands of the sheriff of such county. 

Subsections (5) and (8) of section 4 are also relevant: 

4. -(5) Where money that a sheriff is entitled to receive under this section is 
paid into a small claims court, the sheriff is entitled to demand and receive it 
from the clerk of the court for the purpose of distributing it under this Act. 

(8) If an attached debt that the sheriff is entitled to receive or any part of it 
is received by the attaching creditor, the sheriff may recover it from him; but a 
clerk of a small claims court is not liable for making payment to the creditor 
unless at the time of payment he has notice that there is an execution against 
the property of the debtor in the sheriffs hands. 

However, as in the case of money realized from the seizure and sale of 
a debtor's goods and chattels under a small claims court execution, the 
rateable distribution of garnishment proceeds is little more than a theo- 
retical possibility. The general lack of coordination between sheriffs and 
clerks of the small claims courts militates against the effective use of the 
provisions of the Creditors' Relief Act set out above. Without any formal- 
ized exchange of enforcement information between these officials, it is 
practically impossible for a sheriff to know when a small claims court clerk 
is in receipt of money that has been attached. Again, the problem is com- 
pounded by the fact that garnishment proceeds need be retained for only a 
short period of time before they may be paid over to the attaching 
creditor. 38 

(iii) The Provincial Courts (Family Division) 

Under the Family Law Reform Act, 39 two different methods of 
enforcement are available to reach debts owing to a maintenance debtor 
by a third person: garnishment, 40 and, in the case of wages, an attachment 
of wages order that is continuing in nature. 41 



38 Section 146 of the Small Claims Courts Act, supra, note 25, allows a clerk of a small 
claims court to pay out money paid into court by a garnishee pursuant to a direction to 
garnish 15 days after the date of service on the judgment debtor of the direction to 
garnish. 

39 Supra, note 28. 

40 Ibid., s. 27(2). 

41 Ibid., s. 30. 



12 

Insofar as proceeds of garnishment in the provincial courts (family 
division) are concerned, section 27(2) of the Family Law Reform Act pro- 
vides that subsection (3) of section 4 of the Creditors' Relief Act applies. 
Consequently, "unless before the amount recovered by the garnishment 
proceedings is actually received by the creditor an execution against the 
property of the debtor is placed in the hands of the sheriff", the attaching 
creditor will be entitled to the amount garnished. Even where an execu- 
tion is placed in the sheriff's hands before the proceeds of garnishment are 
paid out pursuant to a notice to garnishee issued out of a provincial court 
(family division), the same practical obstacles described in the previous 
section that inhibit the rateable distribution of small claims court garnish- 
ment proceeds constrain the rateable distribution of provincial court (fam- 
ily division) garnishment proceeds. 

Money collected by means of an attachment of wages order granted 
pursuant to section 30 of the Family Law Reform Act clearly is not subject 
to the scheme of distribution prescribed by the Creditors' Relief Act. Sub- 
section (3) of section 30 of the Family Law Reform Act expressly provides 
that an attachment of wages order has priority "over any other seizure or 
attachment of wages arising before or after the service of the order". As 
can be seen from the language of the provision, section 30(3) gives an 
attaching creditor even greater rights than he or she would have under a 
"first come, first served" regime. Section 4(9) of the Creditors' Relief Act 
puts the matter beyond doubt. This section provides that the garnishment 
provisions of the Creditors' Relief Act do not apply to an attachment made 
under section 30 of the Family Law Reform Act. 

(c) Equitable Execution, Charging Orders, and Stop Orders 

In appropriate circumstances, a judgment may be enforced by means 
of the appointment of a receiver by way of equitable execution. 42 
Although The Creditors' Relief Act, 1880 did not comprehend proceeds 
realized from such enforcement activity, this gap has been closed. Sections 
23 and 24 of the present Creditors' Relief Act state as follows: 

23. Where there is in a court a fund belonging to an execution debtor or to 
which he is entitled, it or a sufficient part thereof to meet the executions and 
certificates in the sheriffs hands may, on the application of the sheriff or any 
person interested, be paid over to the sheriff, and it shall be deemed to be 
money levied under execution within the meaning of this Act. 

24. Where a judgment creditor obtains the appointment of a receiver by 
way of equitable execution of property of his debtor, the receiver shall pay 
into court the money received by him by virtue of his receivership, and it is 
subject to section 23, but the creditor is entitled to be paid thereout the costs 
of and incidental to the receivership order and the proceedings thereon in pri- 
ority to the claims of all other creditors. 

Regarding charging orders, as we have indicated in Part II of the 



42 For a detailed discussion of the remedy of equitable execution, see Commission 
Report, supra, note 1 , Part II, ch. 4. 



13 

Report on the Enforcement of Judgment Debts and Related Matters , 43 there 
are for all practical purposes but two sets of circumstances in which a 
charging order now may be obtained: those described in section 146 of the 
Judicature Act 44 and those specified in Rule 551 of the Rules of Practice. 45 
The former provision deals mainly with the enforcement of a judgment 
against government funds or annuities, and stock or shares of or in a pub- 
lic company in Ontario; the latter concerns the enforcement of a judgment 
against a partner in his personal capacity and the right to reach the part- 
ner's interest in partnership property and profits. Given the silence of the 
Creditors' Relief Act insofar as charging orders are concerned, it would 
appear, as has been suggested by at least one commentator, 46 that a cred- 
itor who resorts to either of the charging order remedies described would 
be entitled to a priority vis-a-vis other judgment creditors. 

Finally, there is the question of the applicability of the Creditors' 
Relief Act to proceeds secured by a judgment creditor by means of the stop 
order remedy contained in Rule 730 of the Rules of Practice. 47 Under this 
Rule, a judgment creditor is able to reach money in court standing to the 
credit of his judgment debtor. This remedy is similar in effect to that avail- 
able to a sheriff under section 23 of the Creditors' Relief Act, set out 
above. While it is clear that money secured by the sheriff under section 23 
must be distributed pursuant to the Creditors' Relief Act, the fate of money 
realized by means of the procedure under Rule 730 is less certain. 

(d) Proceeds of Attachment under the Absconding Debtors Act 

The Commission discussed generally the operation of the Absconding 
Debtors Act 48 in chapter 2 of Part IV of the Report on the Enforcement of 



43 Ibid. 

44 R.S.O. 1980, c. 223. This section has been omitted from the Proposed Revision of The 
Judicature Act, contained in Province of Ontario, Ministry of the Attorney General, 
Civil Procedure Revision Committee, untitled report (June 1980). Unfortunately, no 
reasons were given for the omission of this provision. 

45 Supra, note 37. 

46 See Ellis, "The Charging Order - A Neglected Means of Enforcement" (1962), 20 
U.T. Fac. L. Rev. 35, at 41. See, however, McDougall v. Inglis (1909), 12 W.L.R. 78 
(Alta. S.C.). 

47 Supra, note 37. Rule 730 reads as follows: 

730. -(1) Any person claiming to be interested in, or to have a lien or charge 
upon, or an assignment of, any money or securities in court, or invested in the 
name of the Accountant, or any portion thereof, or claiming to have the same 
applied towards the satisfaction of any judgment or execution against the person 
to whose credit such moneys or securities stand, or for whose benefit the same 
are held by the Accountant may, upon an affidavit verifying his claim, apply ex 
parte for an order directing that such money or securities shall not be paid out or 
dealt with except upon notice to him (Form 73). 

(2) Where moneys are standing in court to the credit of any party, a person, 
having obtained the order in subrule (1) may, on notice to all interested persons 
apply to the court for an order directing payment out. 

For the Commission's recommendations concerning this remedy, see Commission 
Report, supra, note 1, Part II, at 156-58. 

48 Absconding Debtors Act, R.S.O. 1980, c. 2. 



14 

Judgment Debts and Related Matters. In this section, we are concerned 
simply with the question whether proceeds realized as a result of attach- 
ment under the Absconding Debtors Act are subject to rateable distribu- 
tion under the Creditors' Relief Act. 

Section 5(1) of the Creditors' Relief Act makes money that the sheriff 
receives from the sale of a debt under section 15 of the Absconding Debt- 
ors Act subject to rateable distribution under the Creditors' Relief Act. 49 It 
is unclear, however, whether proceeds realized from the sale of property 
attached under the Absconding Debtors Act must be distributed in accord- 
ance with the Creditors' Relief Act. 50 Section 5(1) of the Creditors' Relief 
Act contains no express reference to such proceeds. Nevertheless, a read- 
ing of section 5(12) and section 21(1) of this Act suggests that the proceeds 
of attached property are governed by the Creditors' Relief Act. 51 

3. THE SCOPE OF THE PRESENT CREDITORS' RELIEF ACT: 
CREDITORS ENTITLED TO SHARE 

In the previous section, the Commission considered the extent to 
which the present Creditors' Relief Act applies to the distribution of pro- 
ceeds of the various enforcement measures that now may be employed by 
a judgment creditor against his judgment debtor. Our examination of this 
aspect of Ontario's creditors' relief legislation has led us to conclude that 
the Creditors' Relief Act is less than comprehensive in its abolition of prior- 
ities among judgment creditors. In this section, we look at another side of 
the comprehensiveness issue: what creditors are entitled to share in the 
enforcement proceeds that must be distributed rateably under this Act? 

The key provisions of the Creditors' Relief Act in this regard are sub- 
sections (1) and (2) of section 5, which provide as follows: 

5.-(l) Where a sheriff levies money under an execution against the property 
of a debtor or receives money in respect of a debt that has been attached or 
sold under section 15 of the Absconding Debtors Act, he shall forthwith make 



49 Strangely, however, section 5(1) of the Creditors' Relief Act does not refer to proceeds 
realized from a suit brought to recover a debt owing to a debtor: see the Absconding 
Debtors Act, supra, note 48, s. 14. 

50 A debtor's attached property may be sold before judgment under ss. 8(1) and 12(2) of 
the Absconding Debtors Act, supra, note 48. 

51 These two provisions read as follows (emphasis added): 

5. -(12) Where money in the hands of the sheriff for distribution is the proceeds 
of the property of an absconding debtor against whom an order of attachment has 
been issued under the Absconding Debtors Act, the period mentioned in subsec- 
tion (2) is two months, and subsection (8) shall be read as if the words 'the 
month' in the first line were 'the two months'. 

21. -(1) Where proceedings have been taken against a debtor under the 
Absconding Debtors Act and his property has been attached under an order of 
attachment before an execution has been placed in the hands of the sheriff and 
the money levied is the proceeds of such property or a part thereof, the cost of the 
order of attachment, or, if there are more than one, the one first placed in the 
sheriff's hands and the proceedings thereon have priority over the claim of all 
other creditors. 



15 

an entry in Form 1 in a book to be kept in his office, and such book shall be 
open to the public for inspection without charge. 

(2) The money shall thereafter be distributed rateably among all execution 
creditors and other creditors whose executions or certificates given under this 
Act were in the sheriff's hands at the time of the levy or receipt of the money 
or who deliver their executions or certificates to the sheriff within one month 
from the entry, subject to the provisions hereinafter contained as to the reten- 
tion of dividends in the case of contested claims, and to the payment of the 
costs of the creditor under whose execution the amount was made, and subject 
also to subsection 4(6), and, as respects money recovered by garnishment pro- 
ceedings, subject to the payment thereout to the creditor who obtained the 
attaching order of his costs of such proceedings. 

While subsection (1) of section 5 refers to the proceeds of enforcement 
that must be recorded by the sheriff upon receipt, subsection (2) lists those 
creditors who are entitled to share in the proceeds. They fall into two 
groups: "execution creditors", that is, those creditors who have obtained 
judgment and filed an execution with the sheriff within the time prescribed 
by section 5(2); and "certificate creditors", that is, those non-judgment 
creditors who become entitled to share by filing with the sheriff a certifi- 
cate obtained pursuant to sections 6 to 15 of the Creditors' Relief Act. 

We begin with a discussion of the rights of "execution creditors" to 
share in proceeds of enforcement required to be distributed under the 
Creditors' Relief Act. In addition to Supreme Court and county and district 
court judgment creditors, reference will be made to the rights of judgment 
creditors of the small claims courts and provincial courts (family division) 
to share in a distribution of enforcement proceeds. We shall deal subse- 
quently with the rights of "certificate creditors". 

(a) Execution Creditors 

The term "execution creditors" is not defined by the Creditors' Relief 
Act, although it certainly refers to Supreme Court and county and district 
court creditors who have secured and filed with the sheriff a writ of fieri 
facias. 52 Generally speaking, every execution creditor whose writ of fieri 
facias is in the sheriffs hands at the time of the levy or receipt of money 
referred to in section 5(1), or within one month of the entry required to be 
made by the sheriff under this section, is entitled to a pro rata share of 
such money. 

In theory, garnishment creditors are provided with a more limited 
right to share in enforcement proceeds. Section 4(6) of the Creditors' 
Relief Act states as follows: 

4. -(6) An attaching creditor is entitled to share in respect of his claim 
against the debtor in any distribution made under this Act, but his share shall 
not exceed the amount recovered by his garnishment proceedings unless he 



52 The term "execution", defined in s. 1(c) of the Creditors' Relief Act, supra, note 2, 
includes "a writ of fieri facias and every subsequent writ for giving effect thereto". 



16 

has in due time placed an execution or a certificate given under this Act in the 
sheriffs hands. 

This limitation is more theoretical than real because judgment creditors or 
their legal advisors, as a matter of practice, will file a writ of execution as 
soon as possible after judgment has been issued and entered. Therefore, a 
garnishment creditor normally will be an execution creditor also and enti- 
tled to share in the proceeds of enforcement in accordance with section 
5(2) of the Creditors' Relief Act. 

Regarding the right of a creditor who has resorted to equitable execu- 
tion, or one of the other enforcement measures the proceeds of which may 
or may not be subject to rateable distribution, the problem is similar to 
that with respect to garnishment creditors. In theory, even where the fruits 
of their enforcement efforts are required to be distributed pursuant to the 
Creditors' Relief Act, such creditors may not be entitled to receive a share 
of the proceeds: the term "execution creditor" is not likely to be inter- 
preted to include a creditor relying on equitable execution, a charging 
order, or a stop order. Again, however, we would suggest that a creditor 
who has resorted to one of these enforcement remedies most likely will 
also have delivered to the sheriff a writ of execution. Accordingly, the 
creditor would be entitled, as an execution creditor, to share rateably in 
the proceeds of all enforcement measures taken against his judgment debt- 
or. 

Special mention should be made here of the rights of a creditor who 
has had property and debts of his debtor attached under the Absconding 
Debtors Act. Even where property or debts attached under this Act have 
been sold, the attaching creditor has no interest in the proceeds of sale 
until he has secured judgment against the debtor and placed a writ of exe- 
cution in the hands of the sheriff, or has obtained and filed a certificate in 
accordance with the procedure discussed below. Nevertheless, the 
Creditors' Relief Act does contain a number of concessions insofar as such 
creditors are concerned. First, under section 21(1), an attaching creditor in 
certain circumstances may claim a priority over all other creditors in 
respect of "the cost of the order of attachment . . . and the proceedings 
thereon". This right to a priority is available where the property was 
attached "before an execution has been placed in the hands of the sheriff". 
Secondly, in the case of proceeds realized from attached property of an 
absconding debtor, the ordinary one month period during which execu- 
tions and certificates may be filed with the sheriff is extended to two 
months. 53 It would appear that the time for filing was extended to allow a 
prejudgment attaching creditor more time to obtain a judgment and writ 
of execution. Of course, the attaching creditor would be free to obtain and 
file a certificate within the extended period. 54 

A further question concerns the rights of small claims court judgment 
creditors and provincial court (family division) maintenance creditors to 



53 Creditors' Relief Act, supra, note 2, s. 5(12). 

54 The certificate procedure is discussed infra, this ch., sec. 3(b). 



17 

share in any proceeds of enforcement. The Creditors' Relief Act contains 
no reference to execution issued out of the provincial courts (family divi- 
sion). Accordingly, there is some doubt whether a provincial court (family 
division) maintenance creditor, who has obtained and delivered to the 
sheriff a writ of execution issued out of that court, would have the same 
right to share in enforcement proceeds as a creditor with a Supreme Court 
or county court writ of execution. 55 Although section 5(2) of the Creditors' 
Relief Act speaks in terms of "execution creditors", which would seem to 
comprehend provincial court (family division) execution creditors, it must 
be remembered that section 3 of this Act provides for the abolition of pri- 
ority "among creditors by execution from the Supreme Court or from a 
county court". 56 On the other hand, the argument that provincial court 
(family division) execution creditors are entitled to share in a distribution 
under the Creditors' Relief Act is strengthened by the fact that, as dis- 
cussed earlier, 57 proceeds realized pursuant to a provincial court (family 
division) execution are required, as a matter of practice, to be distributed 
in accordance with the Creditors' Relief Act. 

While small claims court judgment creditors may or may not be con- 
sidered "execution creditors" within the meaning of section 5(2) , 58 they 
are entitled to share in a distribution of proceeds of enforcement pursuant 
to the Creditors' Relief Act under other provisions of that Act. First, where 
the sheriff has gone after property or proceeds thereof in the hands of the 
bailiff of a small claims court under subsection (1) of section 25, all "small 
claims court execution creditors are entitled without further proof to stand 
in the same position as creditors whose executions are in the sheriff's 
hands". 59 In these circumstances, in other words, they would become "ex- 
ecution creditors" within the meaning of section 5(2). Secondly, section 16 
of the Creditors' Relief Act enables a small claims court judgment creditor 
to deliver to the sheriff "a certificate ... of the amount of his judgment 
and of the costs to which he is entitled". Section 16 further provides that, 
for the purposes of the Creditors' Relief Act, such a certificate of judgment 
has "the same effect . . . as if the creditor had delivered to the sheriff an 



55 For a discussion of this issue in the case of the British Columbia Creditor Assistance 
Act, supra, note 22, see Law Reform Commission of British Columbia, Report on 
Creditors' Relief Legislation: A New Approach (1979), at 55-56 (hereinafter referred 
to as "British Columbia Report"). 

56 This despite the fact that the sheriff would be responsible for the enforcement of a 
provincial court (family division) writ of execution, and therefore would be the initial 
recipient of any proceeds realized thereunder. 

57 See discussion supra, this ch., sec. 2(a)(iii). 

58 Section 3 of the Creditors' Relief Act makes no mention of the small claims courts. 
However, as was discussed supra, this ch., sec. 2(a)(ii), a small claims court creditor 
does file his execution against land with the sheriff; accordingly, it may be argued not 
only that any proceeds from the sale of the debtor's land pursuant to such a writ must 
be distributed pursuant to the Creditors' Relief Act, but also that the small claims court 
creditor in such a case is an "execution creditor". The status of a small claims court 
judgment creditor with an execution against goods and chattels of the debtor is more 
questionable. Since this type of execution is delivered to the bailiff of the small claims 
court (Small Claims Courts Act, supra, note 25, s. 116(2)) rather than to the local sher- 
iff, such an execution creditor is unlikely to fulfil all the conditions of section 5(2) of 
the Creditors' Relief Act, and accordingly will not be allowed to share in a distribution 
of the proceeds of the enforcement activity of other execution creditors. 

59 Creditors' Relief Act, supra, note 2, s. 25(4). 



18 

execution from a county court"; therefore, he too would be entitled to 
share in accordance with section 5(2) in a distribution under the Creditors' 
Relief Act. 

(b) Certificate Creditors 

As indicated, section 5(2) permits not only execution creditors to 
share under the Creditors' Relief Act, but also other creditors who file a 
certificate in accordance with the procedure prescribed by the Act. As will 
be recalled, The Creditors' Relief Act, 1880 was not restricted in its appli- 
cation to judgment creditors, 60 but gave non-judgment creditors a right to 
share in the distribution of enforcement proceeds in certain circumstances. 
This right on the part of non-judgment creditors has been retained. In 
order to share, a non- judgment creditor must secure a "Certificate of 
Proof of Claim". 61 That an attaching creditor under the Absconding Debt- 
ors Act may rely on the certificate procedure of the Creditors' Relief Act is 
made very clear by section 17 of the former Act. This section provides that 
"[w]here the plaintiff desires to avail himself of the Creditors' Relief Act, 
he may, instead of proceeding with his action, obtain a certificate". 

The circumstances in which a non-judgment creditor may apply for a 
certificate that entitles him to share in any distribution of enforcement pro- 
ceeds are outlined in section 6(1) of the Creditors' Relief Act. A non- judg- 
ment creditor may resort to the certificate procedure where the debtor 
permits "an execution . . . under which any of his goods or chattels are 
seized ... to remain unsatisfied in the sheriffs hands until within two days 
of the time fixed ... for the sale thereof, or for twenty days after their sei- 
zure". He also may do so where an execution against his debtor's lands is 
allowed to remain unsatisfied for nine months. Unlike the 1880 Act, the 
present creditors' relief legislation even allows a non-judgment creditor 
with a claim not yet due to rely upon the certificate procedure where a sale 
has taken place under an execution. 62 

The procedure to be followed by a non-judgment creditor seeking a 
Creditors' Relief Act certificate is as follows. The creditor must serve his 
debtor 63 with a copy of an affidavit of claim in the prescribed Form, 64 along 
with the necessary notice regarding the creditor's claim for a certificate. 65 
A copy of the affidavit of claim and the notice, as well as an affidavit of 
service thereof, must be delivered to the clerk of the county court of the 
county where the unsatisfied execution is filed. 66 In addition, the creditor is 
required to present to the clerk of the county court "a certificate of the 
sheriff, or an affidavit, showing that such proceedings [under section 6] 



60 See discussion supra, this ch. , sec. 1 . 

61 Creditors' Relief Act, supra, note 2, Form 5. 

62 Ibid., s. 6(2). The subsection does not differentiate between a sale of personalty and a 
sale of realty. 

63 Ibid., s. 7(3). 

64 Ibid., Form 2. 

65 Ibid., Form 3. 

66 Ibid., s. $(5). 



19 

have been had against the debtor as entitle the creditor" to claim a 
certificate. 67 It should be noted that the Act does not require that a copy of 
the non-judgment creditor's affidavit of claim be filed with the sheriff, exe- 
cution creditors, or other certificate creditors. 

Once the material has been served on the debtor, he has ten days 
within which to contest the non-judgment creditor's claim. 68 Under section 
9(1), if the debtor fails to contest the claim, the clerk of the county court, 
upon receipt of the documentation mentioned above, must issue a certifi- 
cate. To contest the claim of a non-judgment creditor, the debtor simply 
must file with the county court clerk an affidavit "stating that he has a 
good defence to the claim or to a specified part of it on the merits". 69 Sub- 
sections (3) and (5) of section 10 of the Creditors' Relief Act also require 
the debtor to serve the creditor with a copy of this affidavit, together with 
a "notice of contestation". The onus then shifts to the creditor, who must 
apply within eight days of his receipt of the notice of contestation for an 
order allowing his claim; otherwise, "he shall be taken to have abandoned 
his claim". 70 

Regarding the procedure in the case of a contestation, section 13(1) of 
the Creditors' Relief Act provides that "[t]he judge may determine any 
question in dispute in a summary manner or may direct an action to be 
brought or an issue to be tried with or without a jury". Section 14 of the 
Act also concerns the procedures available in the case of a contestation. It 
reads as follows: 

14. The same proceedings may be had for the production of documents and 
for the examination of parties or others, either before or at the trial, as may be 
taken in an ordinary action, and such proceedings may also be taken before 
the application to the judge, and as a foundation therefor. 

As has been pointed out above, a creditor applying for a certificate 
need not serve any of the debtor's other creditors with a copy of the affi- 
davit of claim or the prescribed notice. Nevertheless, creditors of the 
debtor also may contest the non-judgment creditor's claim. 71 Indeed, it 
would appear that the debtor's creditors, unlike the debtor, may contest a 
creditor's claim any time up until distribution. 72 As in the case of the 
debtor, a creditor wishing to contest a certificate must file an affidavit with 
the county court clerk. 73 However, section 10(4) states that, in his affidav- 
it, a contesting creditor must also indicate "that he has reason to believe 
that the debt claimed is not really and in good faith due from the debtor to 
the claimant". In all other respects, the procedure is identical to that 
described above: the certificate creditor must apply for an order allowing 



61 Ibid., s. 7(2). 

68 Ibid., s. 10(1), (2), and (3). Section 10(3) also authorizes a judge to extend the time 
within which a debtor may contest a claim. 

69 Ibid., s. 10(2). 

70 Ibid.,s. 12(2). 

71 Ibid.,s. 10(1). 

72 lbid.,%. 10(6). 

73 Ibid.,%. 10(4). 



20 

his claim within the time prescribed, and the judge may dispose of any 
question in dispute in the manner already outlined. 

What then is the effect of a certificate obtained under section 9(1) of 
the Creditors' Relief Act? Generally speaking, a certificate has the same 
force and effect as an execution once it is delivered to the sheriff. Section 
9(2) provides as follows: 

9. -(2) Upon delivery of the certificate to the sheriff the claimant shall be 
deemed to be an execution creditor within the meaning of this Act, and is enti- 
tled to share in any distribution as if he had delivered an execution to the sher- 
iff, and the certificate binds the lands and goods of the debtor in the same 
manner as an execution, subject, however, to the debt being afterwards dis- 
puted by a creditor as hereinafter provided. 

The certificate also is deemed to be an execution for the purpose of inter- 
pleader proceedings, 74 and section 9(5) states that the sheriff, upon receipt 
of a certificate, "shall make a further seizure of the property of the debtor 
to the amount of the debt so claimed and the sheriffs fees". There is, how- 
ever, one major difference between a writ of execution and a certificate 
secured under the Creditors' Relief Act. A writ of execution remains in 
force for six years; 75 a certificate is effective only for a period of three 
years. 76 

4. THE SCHEME OF DISTRIBUTION UNDER THE CREDITORS' 
RELIEF ACT 

(a) Rateable Distribution 

To this juncture, we have described in general terms proceeds 
required to be distributed under the Creditors' Relief Act and the persons 
who may be entitled to share in such proceeds. In this section, we take a 
closer look at the scheme of distribution under the Act, with a view to 
determining to what extent priority actually has been abolished among 
creditors, even creditors by execution from the Supreme Court and the 
county and district courts. 

We already have discussed in some detail section 5(1) and (2) of the 
Creditors' Relief Act, perhaps the most important provisions of the Act. 
They outline the proceeds required to be distributed in accordance with 
the Act, and describe briefly the scheme of distribution. As we have seen, 
money required to be distributed under the Act must be distributed rate- 
ably. The sheriff is ordinarily required to wait one month from the time he 
receives any money before he distributes it, since not only those "execu- 
tion creditors and other creditors whose executions or certificates . . . were 
in the sheriffs hands at the time of the levy or receipt of the money", but 
also those "who deliver their executions or certificates to the sheriff within 
one month" from such time, are entitled to share in the distribution. 77 



74 Ibid., s. 9(3). 

75 Rules of Practice, supra, note 37, r. 566(1). 

76 Creditors' Relief Act, supra, note 2, s. 9(6). 

77 Ibid., s. 5(2). 



21 

The meaning of the words "distributed rateably" in section 5(2) of the 
Creditors' Relief Act is dealt with further by section 26 of the Act. This 
provision states as follows: 

26. Where the amount levied by the sheriff is not sufficient to pay the execu- 
tions and certificates with costs in full, the money shall be applied to the pay- 
ment rateably of such debts and costs of the creditors, after retaining the 
sheriffs fees including poundage, and after payment in full of the taxed costs 
and the costs of the execution to the creditor at whose instance and under 
whose execution the seizure and levy were made where he is entitled to prior- 
ity therefor under this Act. 

We shall return to the matter of priorities later in this chapter. 78 

Whenever a distribution is required to be made in accordance with 
section 26, the sheriff must comply with the following procedure. Before 
distributing any money, he must "first prepare for examination by the 
debtor and his creditors a list of the creditors entitled to share in the distri- 
bution, with the amount due to each for principal, interest and costs". 79 
Pursuant to section 32(2), a copy of this list must be sent by registered mail 
to each creditor or his solicitor. Surprisingly, the Act does not obligate the 
sheriff to send a copy of the distribution list to the debtor. The creditors 
then have eight days within which to make an objection to the proposed 
scheme of distribution in the manner prescribed by section 32(5). 80 If there 
is no objection within that time, or within such further time as the judge 
may allow, distribution is to be made in accordance with the list. 81 

Where an objection is filed within the time stipulated, the sheriff still 
may distribute some of the money: he^is entitled to "distribute rateably so 
much of the money made, and among such persons, as will not interfere 
with the effect of the objection in case it should be allowed". 82 However, 
unless the person objecting to the distribution list - "the contestant" - 
takes certain other steps, his objection will be taken as abandoned, and 
presumably the amount in dispute then could also be distributed. 83 Within 
eight days of filing an objection, the contestant must "apply to the judge 
for an order adjudicating upon the matter in dispute" and "obtain from 
the judge an appointment for hearing and determining the matter in 
dispute". 84 He then must serve the debtor and the other creditors with a 
copy of the appointment and a "Notice of Contestation of Scheme of Dis- 
tribution" in Form 7. 85 An objection to the distribution list may be dis- 
posed of by the judge in the same manner as an objection to a claim by a 
non- judgment creditor for a certificate. 86 The amount in dispute should be 



78 See discussion infra, this ch., sec. 4(b). 

79 Creditors' Relief Act, supra, note 2, s. 32(1). 

80 Ibid., s. 32(3). 

81 Ibid. 

82 Ibid., s. 32(4). 

83 Ibid., s. 32(6). 

84 Ibid., s. 32(7). 

85 Ibid.,s. 32(8). 

86 Ibid., ss. 32(9) and 33. See supra, this ch., sec. 3(b). 



22 

distributed in accordance with the judge's determination of the 
objection. 87 

(b) Priorities 

While the general scheme of the Creditors' Relief Act calls for the rate- 
able distribution of proceeds of enforcement among those creditors enti- 
tled to share, there are a great many exceptions to this principle. First, the 
Act itself contains provisions granting priority to certain execution credi- 
tors. Secondly, there are a number of priorities available under other legis- 
lation such as, for example, the Family Law Reform Acfi 8 and the Wages 
Act. 89 Thirdly, the Crown will be exempt from the application of the Act. 
Fourthly, the common law and certain statutes create a number of liens 
and charges that must be satisfied out of proceeds realized upon the sale of 
a debtor's property pursuant to an execution. And, finally, the Creditors' 
Relief Act does not proscribe private payments by a debtor whereby he 
may frustrate the scheme of rateable distribution under the Act. These 
exceptions to the Act are discussed below. 

(i) Priorities Prescribed by the Creditors' Relief Act 

While most of the priorities granted under the Creditors' Relief Act are 
minor in nature, there are two priorities under the Act that evidence a 
substantial deviation from the principle of rateable distribution. We begin 
by examining these two major exceptions. 

a. Payments by the Debtor without Sale 

On two occasions, money received by the sheriff from the debtor does 
not have to be held for the one month period stipulated by section 5(2) of 
the Creditors' Relief Act. Under section 20(1) of the Act, if the debtor, 
without a sale by the sheriff, pays to the sheriff an amount sufficient to sat- 
isfy in full all executions and claims in his hands at that time, the money 
may be paid over without complying with section 5(1) and (2). The same is 
true where the debtor pays to the sheriff part of the amount owing in 
respect of a sole execution or certificate in the sheriff's hands at the time of 
the payment. 90 

b. Adverse Claims and Interpleader Proceedings 

In chapter 5 of Part II of the Report on the Enforcement of Judgment 
Debts and Related Matters, the Commission described in considerable 
detail the law with respect to interpleader proceedings that may be taken 
to resolve disputes that develop in the course of enforcement proceedings 
between persons claiming an interest in property. Here we are concerned 



87 Ibid.,s. 32(10). 

88 Supra, note 28, s. 30(3). 

89 Wages Act, R.S.O. 1980, c. 526, s. 3. 

90 Creditors' Relief Act, supra, note 2, s. 20(3). 



23 

solely with the interplay between the Creditors' Relief Act and interplead- 
er. 

Section 5(4) of the Creditors' Relief Act gives certain creditors a prior- 
ity "[w]here proceedings are taken by a sheriff for relief under any provi- 
sions relating to interpleader". Section 5(4) reads as follows: 

5. -(4) Where proceedings are taken by a sheriff for relief under any provi- 
sions relating to interpleader, those creditors only who are parties thereto and 
who agree to contribute pro rata in proportion to the amount of their execu- 
tions or certificates to the expense of contesting any adverse claim are entitled 
to share in any benefit that may be derived from the contestation of such claim 
so far as is necessary to satisfy their executions or certificates. 

Therefore, while, under this provision, the enforcement proceeds will be 
distributed pro rata among the creditors entitled to share under section 
5(4), not all creditors who would be qualified to share under section 5(2) 
will necessarily be entitled to a pro rata share. 

It should be noted that Rule 642 of the Supreme Court of Ontario 
Rules of Practice 91 seems to suggest that the court has some discretion to 
permit a non-contributing creditor to share in the benefits of interpleader 
proceedings. The inconsistency between this Rule and section 5(4) of the 
Creditors' Relief Act would be resolved in favour of the latter under our 
earlier recommendations. 92 



c. The Costs of the First Instructing Execution Creditor 

Under sections 5(2) and 26 of the Creditors' Relief Act, "the creditor 
at whose instance and under whose execution the seizure and levy were 
made" is entitled to "payment in full of the taxed costs and the costs of the 
execution" before any of the other creditors receive a share of any pro- 
ceeds of enforcement. Two features of section 26 should be emphasized. 
First, in order to claim this priority, it is not sufficient to be the first cred- 
itor to have filed an execution; the creditor must be the first instructing 
execution creditor. Secondly, the section gives the creditor in question a 
priority in respect of not only the costs of execution but also his taxed costs 
of the action giving rise to the execution. 93 

d. The Costs of Garnishment Proceedings 

A creditor responsible for the garnishment of a debt or debts owed to 
his debtor by a third person is entitled to recover the costs of the garnish- 
ment proceedings in priority to other creditors entitled to share in the 
proceeds. 94 This priority would seem to be available to any creditor who 



91 Rules of Practice, supra, note 37. 

92 See Commission Report, supra, note 1, Part II, at 277. 

93 See Royal Bank of Canada v. R. in right of Canada (1981), 40 C.B.R. (N.S.) 27 (Ont. 
Div. Ct.). 

94 Creditors' Relief Act, supra, note 2, s. 5(2). 



24 

has attached debts owing to his debtor that are required to be distributed 
rateably in accordance with the Creditors' Relief Act; the fact that the 
attaching creditor is a small claims court or provincial court (family divi- 
sion) creditor is apparently irrelevant. It should be noted, however, that 
an attaching creditor, unlike the first instructing execution creditor, is not 
entitled to any priority with respect to "taxed costs". 

e. The Costs of a Creditor Responsible for the Appointment of 
a Receiver by way of Equitable Execution 

Previously in this chapter, we discussed whether proceeds realized by 
reason of the appointment of a receiver by way of equitable execution 
must be distributed rateably. Reference was made at that time to section 
24 of the Creditors' Relief Act. While this section makes the proceeds of 
equitable execution subject to the Act's scheme of distribution, it also pro- 
vides the creditor who obtained the appointment with a priority vis-a-vis 
other creditors for "the costs of and incidental to the receivership order 
and the proceedings thereon". Again, the creditor is given no priority for 
his "taxed costs". 



/. The Costs of Proceedings under the Absconding Debtors 
Act 

Where all or part of the proceeds to be distributed under the 
Creditors' Relief Act represent property attached under the Absconding 
Debtors Act, 95 the first attaching creditor is entitled to "the cost of the 
order of attachment . . . and the proceedings thereon" in priority to the 
claim of all other creditors. 96 In such a case, the first instructing execution 
creditor will not be able to claim the priority described above. 97 

g. Bailiffs Costs and Sheriffs Fees 

In our examination of the applicability of the Creditors' Relief Act to 
the proceeds of execution from the small claims courts, we noted the 
power of the sheriff under section 25 of this Act to demand and receive 
any "property or the proceeds thereof in the hands of the bailiff of a small 
claims court under an execution or attachment against the debtor". Where 
a sheriff exercises this power, the costs and disbursements of the bailiff are 
protected, since section 25(3) states that these shall constitute a first 
charge upon the property or proceeds. 

Similarly, the fees of the sheriff are fully protected where money is to 
be distributed rateably pursuant to the Creditors' Relief Act. Section 26 of 
the Act calls for rateable distribution of enforcement proceeds only after 
"the sheriffs fees including poundage" have been retained. 98 



95 See supra, this ch. , sec. 2(d). 

96 Creditors' Relief Act, supra, note 2, s. 21(1). 

97 Ibid., s. 21(2). 

98 For the meaning of poundage, see infra, note 123, and accompanying text. 



25 

h. The "Priority" under Section 32(11) and (12) of the 
Creditors' Relief Act 

Section 32(11) and (12) of the Creditors' Relief Act is concerned with 
priorities among execution creditors in the case of a supervening security 
interest. These provisions apply where an execution is filed with the sher- 
iff, property subject thereto is subsequently mortgaged, another execution 
is filed with the sheriff after the giving of the mortgage, and the mortgaged 
property is then sold pursuant to either writ of execution. The language of 
the two subsections is convoluted and unsatisfactory, to say the least, and 
provides as follows: 

32. -(11) Where a debtor has executed a mortgage or other charge, other- 
wise valid, upon his property or a part thereof after the receipt of an execution 
by the sheriff and before distribution, such mortgage or charge shall not pre- 
vent the sheriff from selling the property under an execution or certificate 
placed in his hands before distribution as if such mortgage or charge had not 
been given, nor prevent creditors whose executions or certificates are subse- 
quent thereto from sharing in the distribution; but, in distributing the money 
realized from the sale of such property, the sheriff shall deduct and pay to the 
person entitled thereto the amount of such mortgage or charge from the 
amount that would otherwise be payable out of the proceeds of such property 
to such subsequent creditors. 

(12) In the case provided for in subsection (11), the sheriff shall prepare a 
separate scheme of distribution of the proceeds of the encumbered property 
without reference to the mortgage or charge, and from the dividends payable 
according to such scheme to subsequent creditors there shall be deducted the 
amount of the mortgage or charge, and the amount so deducted shall be paid 
to the encumbrancer. 

Until 1899, the Ontario Creditors' Relief Act was silent respecting the 
priorities of execution creditors in the case of a supervening security inter- 
est. As a result, despite the guiding principle of rateable distribution en- 
shrined in the Act, courts concluded that a subsequent execution creditor 
was not entitled to share in the proceeds of enforcement to which the first 
execution creditor was entitled; the subsequent execution creditor, it was 
held, was only entitled to the proceeds representing the debtor's interest in 
the property, that is to say, the debtor's equity of redemption." Despite 
the enactment in 1899 of what is now section 32(11) and (12), 100 Ontario 
courts still distribute proceeds of enforcement in the circumstances under 
discussion as if the common law position had not been affected by the 
introduction of section 32(11) and (12). 101 As a result, the first execution 
creditor enjoys a priority over the subsequent execution creditor, contrary 
to the directive in section 3 of the Act that "there is no priority among 
creditors by execution from the Supreme Court or from a county court". 



99 See, for example, Roach v. McLachlan (1892), 19 O.A.R. 496. See, also, the cases 
cited in Dunlop, supra, note 4, at 439, n. 28. 

100 See An Act to amend the Statute Law, S.O. 1899, c. 11, s. 13. 

101 See, for example, Union Bank of Canada v. Taylor (1915), 33 O.L.R. 255 (H.C. 
Div.). 



26 

(ii) Other Statutory Priorities 

The principle of rateable distribution embodied in the Creditors' Relief 
Act has been diluted further by the creation of a number of other statutory 
exceptions. The most important of these exceptions concern maintenance 
creditors and wage creditors. 

a. The Priority for Maintenance Creditors 

Until the enactment of the Family Law Reform Act, maintenance 
creditors were entitled to no special priority in the distribution of proceeds 
of enforcement: they were forced to share rateably even the enforcement 
proceeds realized as a result of their own efforts. 102 This state of affairs has 
been modified somewhat by section 30(3) of the Family Law Reform Act. 
Section 30 of the Act, in addition to enabling a maintenance creditor to 
attach the wages of the maintenance debtor on a continuing basis, gives an 
attachment of wages order "priority over any other seizure or attachment 
of wages arising before or after the service of the order". Granted, this 
priority, on its face, is very limited in scope. However, given the means of 
most maintenance debtors, the priority granted maintenance creditors 
under section 30(3) is, practically speaking, very significant. 

b. The Priority for Wage Creditors 

At the present time, both the Wages Act m and the Employment Stan- 
dards Act m contain a provision giving wage creditors a limited priority 
over all other creditors. Section 3 of the Wages Act provides as follows: 

3. All persons who, at the time of the seizure by the sheriff or who within 
one month prior thereto, were in the employment of the execution debtor, 
and who become entitled to share in the distribution of money levied out of 
the property of a debtor within the meaning of the Creditors' Relief Act are 
entitled to be paid out of such money the wages due to them by the execution 
debtor, not exceeding three months wages, in priority to the claims of the 
other creditors of the execution debtor, and are entitled to share pro rata with 
such other creditors as to the residue, if any, of their claims. 

Section 14 of the Employment Standards Act, on the other hand, reads as 
follows: 

14. Notwithstanding the provisions of any other Act and except upon a dis- 
tribution made by a trustee under the Bankruptcy Act (Canada), wages shall 
have priority to the claims or rights, including the claims or rights of the 
Crown, of all preferred, ordinary or general creditors of the employer to the 
extent of $2000 for each employee. 

While a comparison of these two provisions discloses a number of signifi- 
cant differences, the need for two such provisions is not readily apparent. 



102 See Billinghurst v. Billinghurst (1977), 3 C.P.C. 247 (S.C.O. Master). 

103 Supra, note 89. 

104 Employment Standards Act, R.S.O. 1980, c. 137. 



27 

(iii) The Priority of the Crown: The Royal Prerogative 

At common law, the sovereign enjoys a great many privileges and 
immunities, generally known as royal prerogatives. One of these is of par- 
ticular interest in the present context. Longstanding authority supports the 
proposition that, "when the rights of the Crown come in conflict with the 
right of a subject in respect to the payment of debts of equal degree, the 
right of the Crown must prevail". 105 Accordingly, when the Crown is one 
of a number of execution creditors asserting a claim to proceeds of 
enforcement, the Crown will be entitled to be paid in full in priority to the 
other execution creditors. Both the Crown in right of Canada and the 
Crown in right of any of the provinces enjoy this prerogative. It is a right 
that has not been abrogated by the Creditors' Relief Act, although it has 
been affected by both provincial 106 and federal legislation. 107 It also should 
be pointed out that it does not seem that this right to a priority may be 
waived or lost by laches. 108 

While there is some doubt about the matter, it would appear that, 
where both the Crown in right of Canada and the Crown in right of a prov- 
ince assert a claim to the same proceeds of enforcement, their claims rank 
pari passu; each is entitled to a pro rata share of the proceeds in priority to 
all other execution creditors. 109 Other uncertainties surround this royal 
prerogative. For example, although it would appear that Parliament may 
enact legislation impinging upon the prerogative right of the Crown in 
right of Ontario, there is some doubt whether the provincial legislature 
can constitutionally enact legislation proscribing the prerogative right of 
the Crown in right of Canada. 110 Other unresolved questions regarding the 



105 See The Queen v. Bank of Nova Scotia (1885), 11 S.C.R. 1, at 10, per Ritchie C.J. For 
a recent reaffirmation of this principle, see Household Realty Corp. Ltd. v. A. G. 
Can., [1980] 1 S.C.R. 423, at 426-27, 105 D.L.R. (3d) 266, per Ritchie J., delivering 
the judgment of the Court. For a detailed discussion of royal prerogatives, see Chitty, 
A Treatise on the Law of the Prerogatives of the Crown (1820); Robertson, The Law 
and Practice of Civil Proceedings by and against the Crown (1908); and Dunlop, supra, 
note 4, at 446-54. See, also, Law Reform Commission of British Columbia, Report on 
The Crown as Creditor. Priorities and Privileges (1982), at 7-9 (hereinafter referred to 
as "British Columbia Priorities Report"). 

106 See, for example, the Employment Standards Act, supra, note 104, s. 14. 

107 See the Bankruptcy Act, supra, note 21, s. 107. 

108 See The Queen v. Bank of Nova Scotia, supra, note 105; R. v. Hamilton (1962), 37 
D.L.R. (2d) 545, 39 W.W.R. 545 (Man. Q.B.); Cumming v. Stroud (1961), 28 D.L.R. 
(3d) 366, 35 W.W.R. 4 (Sask. C.A.) (priority not lost by filing execution); and Re 
Marten; Royal Bank of Canada v. The Queen (1981), 34 O.R. (2d) 399 (Div. Ct.). 
Compare Tudor Holdings Ltd. v. Robertson (1974), 43 D.L.R. (3d) 752, [1974] 2 
W.W.R. 546 (B.C.S.C). 

109 Re Silver Bros. Ltd.; A. G. Can. v. A. G. Que., [1932] A.C. 514, [1932] 2 D.L.R. 673 
(P.C.). See, also, Re Walters Trucking Service Ltd. (1965), 50 D.L.R. (2d) 711 (Alta. 
S.C., App. Div.), and Re Yancey's Men's Wear Ltd. (1982), 17 Sask. R. 287 (Q.B.). 

Regarding the power of the federal government to impinge upon the provincial 
Crown's right to a priority, see Re Cardston U. F. A. Co-op. Ass'n Ltd., Ex parte The 
King, [1925] 4 D.L.R. 897, [1925] 3 W.W.R. 651 (Alta. S.C. in Bktcy). Insofar as the 
power of a provincial government to affect the federal Crown prerogative is con- 
cerned, see Re Adams Shoe Co. Ltd. (1923), 54 O.L.R. 625, [1923] 4 D.L.R. 927 
(S.C.O. in Bktcy); Emerson v. Simpson (1962), 32 D.L.R. (2d) 603, 38 W.W.R. 466 
(B.C.S.C); and Re Sternschein (1965), 50 D.L.R. (2d) 762, 51 W.W.R. 437 (Man. 
Q.B.). See, also, the discussion of this issue in the British Columbia Priorities Report, 
supra, note 105, at 40-41. 



no 



28 

prerogative right of priority vis-a-vis execution creditors of equal degree 
concern the applicability of this prerogative to Crown debts that are com- 
mercial in nature, 111 and the right of Crown agencies and statutory authori- 
ties to rely on it. 112 

It should be apparent that the Crown's right to a priority respecting 
proceeds of enforcement constitutes a major exception to the principle of 
rateable distribution that is central to the Creditors' Relief Act. Indeed, the 
very fact that the Act introduces a delay period of a month, in most 
instances where enforcement proceeds have been realized, has enhanced 
the importance of the common law Crown priority. The ability of the pro- 
vincial Crown and the federal Crown to "snatch" the fruits of the enforce- 
ment efforts of ordinary execution creditors is certainly one of the features 
of the law pertaining to the distribution of proceeds of enforcement that is 
most often criticized. 

(iv) Statutory and Common Law Liens and Charges 

In addition to Crown priorities, and equally troublesome from the 
point of view of ordinary execution creditors, is the plethora of statutory 
liens to which both provincial and federal legislation has given rise. Most 
of these may be characterized as government liens, since they are in favour 
of some level of government, be it federal, provincial, or municipal. 113 
Some liens, however, have been created to provide individual, as opposed 
to government, creditors with security for a debt owed to them. 114 

It is important to recognize the difference between the common law 
Crown priority, discussed in the preceding section, and a lien in favour of 
a creditor of the debtor. While both may result in frustration of the 
enforcement efforts of an ordinary execution creditor, they are quite dif- 
ferent in substance. The Crown's right to priority may be lost unless the 
Crown asserts it before the proceeds of enforcement are distributed. The 
same generally is not true of statutory liens: a creditor's right to the prop- 
erty of his debtor that is impressed with a statutory lien is subject to the 
rights of the lienholder in that property. If the property has been seized 
and sold by the sheriff under a writ of execution, the only proceeds that 
will be available for distribution in accordance with the Creditors' Relief 
Act are those in excess of the amount of the lien. Since the judgment cred- 
itor stands in the shoes of his judgment debtor, he is entitled only to that 



111 See The Queen v. Workmen's Compensation Board (1962), 36 D.L.R. (2d) 166, 39 
W.W.R. 291, affd (1963), 40 D.L.R. (2d) 243, 42 W.W.R. 226 (Alta. S.C., App. 
Div.). See, also, Food Controller v. Cork, [1923] A.C. 647, [1923] All E.R. Rep. 463 
(H.L.); Re Cardston U. F. A. Co-op. Ass'n Ltd., Ex parte The King, supra, note 110; 
Crowther v. A. G. Can. (1959), 17 D.L.R. (2d) 437, 42 M.P.R. 269 (N.S.S.C, App. 
Div.); Alberta Government Telephones v. Selk, [1974] 4 W.W.R. 205 (Alta. Dist. Ct.); 
and Bank of Nova Scotia v. Hart, [1981] 1 W.W.R. 552 (Alta. Q.B.). 

112 See The Queen v. Workmen's Compensation Board, supra, note 111, and Tamlin v. 
Hannaford, [1950] 1 K.B. 18, [1949] 2 All E.R. 327 (C.A.). 

113 See British Columbia Priorities Report, supra, note 105, chs. V-VII. 

114 For example, section 15 of the Employment Standards Act, supra, note 104, provides 
that vacation pay accruing due to an employee becomes "a lien and charge upon the 
assets of the employer". 



29 

which the debtor owned at the time of the delivery of the writ. In other 
words, from the perspective of an ordinary judgment creditor, a lienholder 
is little different from a secured creditor. 

The significance of many of the statutory liens and charges now extant 
in provincial and federal law is increased by the fact that most of them are 
not required to be recorded in any public register. For example, the 
Ontario Personal Property Security Act 115 does not cover statutory liens. 
Section 3(1)(«) provides that, subject to a few narrow exceptions, the Act 
"does not apply ... to a lien given by statute or rule of law". Given the 
number of statutory liens and charges now in existence, it is extremely diffi- 
cult, if not impossible, for an execution creditor to determine to what 
extent, if any, his debtor's property is subject to such liens and charges. 
The execution creditor wishing to pursue enforcement remedies against his 
debtor, therefore, must do so at his own risk: he may well incur substantial 
costs only to find out subsequently that the proceeds of enforcement real- 
ized as a result of his efforts belong to one or more of the debtor's unregis- 
tered lienholders. One can only conclude, therefore, that the principle 
caveat creditor - let the creditor beware - prevails in this area of the law of 
the enforcement of judgment debts. 

The plethora of liens, both statutory and common law, creates difficul- 
ties not only for execution creditors, but also for lienholders. For example, 
one problem that arises with seeming regularity concerns the distribution 
of proceeds of enforcement where more than one lien claimant claims to 
be entitled to the proceeds. The sheriff now is frequently asked to deter- 
mine the priorities between lienholders, as well as to resolve disputes 
among lienholders and execution creditors. Unfortunately, present legisla- 
tion provides the sheriff with little or no guidance concerning the order of 
priorities among competing lienholders, with the result that disputes are 
not resolved in any uniform fashion, and all too often must be untangled 
by costly, and in the Commission's view unnecessary, litigation. 

This problem is made more intractable by the fact that there is little or 
no uniformity in the language employed to create a great many statutory 
liens. How, for example, is a sheriff, charged with the responsibility of dis- 
tributing enforcement proceeds, to determine priorities among a "first 
lien", 116 a "special lien", 117 and a "lien and charge"? 118 Solomon himself 
would have had difficulty fashioning a solution to this problem. The sher- 
iff's responsibility may be complicated further by the fact that some of the 
lien claimants are the federal government and federal agencies, while 
others are the provincial government and individuals entitled to a lien 
against some or all of the debtor's property. 



115 R.S.O. 1980, c. 375. 

116 See The Corporations Tax Act, 1972, S.O. 1972, c. 143, s. 167(1), since repealed and 
replaced by s. 1 of The Corporations Tax Amendment Act, 1979 (No. 2), S.O. 1979, 
c. 89. 

117 See, for example, the Municipal Act, R.S.O. 1980, c. 302, s. 369. 

118 Crown Timber Act, R.S.O. 1980, c. 109, s. 21. 



30 



(v) Private Payments 



In the preceding sections of this chapter, the focus of discussion has 
been the wide variety of priorities that have been created by law and that 
substantially dilute the principle of rateable distribution enshrined in the 
Creditors' Relief Act. However, perhaps an even more significant breach in 
the aforementioned principle is the result not of legally sanctioned priori- 
ties, but of the actions of the debtor himself. By making private payments 
to his judgment creditors, the debtor can circumvent the Creditors' Relief 
Act almost entirely. There is nothing in the present Act to prevent a judg- 
ment debtor from establishing his own system of priorities by paying his 
judgment debts in the order that is most beneficial to him. Nor does the 
Act prohibit a judgment creditor from accepting a private payment from 
his debtor in satisfaction of his outstanding judgment debt. And this is the 
case even where the creditor himself has commenced enforcement pro- 
ceedings against the debtor by delivering a writ of execution to the sheriff. 

At the present time, such private payments may run afoul of the 
Assignments and Preferences Act 119 and, as a result, may be declared void 
and set aside by the courts. However, as we pointed out in chapter 3 of 
Part IV of our Report on the Enforcement of Judgment Debts and Related 
Matters,™ concerned with what we have referred to as voidable transac- 
tions, section 4(2) of the Assignments and Preferences Act only prohibits 
payments to creditors where the debtor is insolvent, on the eve of insol- 
vency, or unable to pay his debts in full, and where the debtor has the 
intent to prejudice creditors. We shall return to the subject of private pay- 
ments later in this chapter. 

5. THE NEED FOR REFORM 

Creditors' relief legislation, as stated at the beginning of this chapter, 
is to be found in the majority of common law jurisdictions in Canada. 
Even in Quebec, where a judgment debtor is shown to be insolvent, 
moneys levied are required to be distributed "pro rata between the ordi- 
nary creditors who have filed their claims". 121 At the same time, it should 
be pointed out that creditors 1 relief legislation of the sort described above 
appears to be unique to Canada. In most other jurisdictions, a "first come, 
first served" regime for the distribution of enforcement proceeds seems to 
prevail. The fact that creditors' relief legislation appears to be indigenous 
to Canada can be explained by the disappearance in the 1880s of all Cana- 
dian bankruptcy and insolvency legislation, a state of affairs that existed 
for nearly forty years, and one that perhaps has not been seen elsewhere. 
This does not explain, however, the co-existence in Canada of creditors' 
relief legislation and bankruptcy legislation since 1919. Certainly, the time 
has come to re-examine the need for creditors' relief legislation in Ontar- 
io. 

That reform of the present Creditors' Relief Act is long overdue is 



119 R.S.O. 1980, c. 33. 

120 Ontario Law Reform Commission, Report on the Enforcement of Judgment Debts and 
Related Matters (1983), Part IV. 

121 See Code of Civil Procedure, R.S.O. 1977, c. C-25, art. 578. 



31 

beyond doubt. As has been stated elsewhere, the language of the present 
Act is both "archaic and obscure to the modern reader". 122 For example, a 
number of sections of the Act refer to the sheriff's right to collect 
poundage, 123 whereas in practice poundage is never claimed. Indeed, the 
Ontario Rules of Practice no longer refer to poundage, but rather to the 
sheriff's fees and expenses. 124 Another example of the antiquated nature of 
the Act is the reference in section 5(10) to "executions against goods or 
lands only or against goods and lands". Yet, writs of execution issued out 
of the Supreme Court or county and district courts in Ontario have bound 
both goods and lands since at least 1909. 125 The terminology of the Act is 
also woefully inconsistent; for example, the words "creditor" and "claim- 
ant" seem to be used interchangeably. 126 The order in which some of the 
provisions appear in the Act is confusing, particularly in the case of the 
provisions respecting the certificate procedure. In short, the drafting of the 
Act is, in our view, totally inadequate, and the Act, if found still to serve 
some useful function, should be redrafted to reflect at least present legal 
realities. 

However, the outdated language and loose drafting of the Creditors' 
Relief Act, by themselves, do not warrant the Act's repeal. We turn now to 
consider some of the more substantial deficiencies of the Ontario 
Creditors' Relief Act. 

Undoubtedly, a most serious failing of the present creditors' relief leg- 
islation is the fact that it is less than comprehensive in scope. Not all pro- 
ceeds of enforcement are required to be distributed in accordance with the 
Act; nor does it seem that all enforcement creditors are entitled to share in 
the proceeds of enforcement in the same way. A great many statutory liens 
and priorities have grown up around the Act, in many cases frustrating the 
purpose of the Act. 127 Even assuming that all these liens and priorities are 
to be retained, it is our view that some attempt must be made to rational- 
ize them in order to facilitate the distribution of enforcement proceeds. 
Then, of course, there is the problem of the right of the Crown, as execu- 
tion creditor, to take in priority to all other execution creditors. 128 And 
finally, we have the right of the debtor to create, in effect, his own scheme 
of distribution by making private payments to his judgment creditors. 129 
However, while all these shortcomings of the present Act are serious in 
nature, they do not, in our view, justify reversion to a "first come, first 



122 See Law Reform Commission of British Columbia, Working Paper No. 21, The 
Enforcement of Judgments: The Creditors' Relief Act (n.d.), at 35 (hereinafter referred 
to as the "British Columbia Working Paper No. 21"). 

123 See, for example, ss. 4(7), 26, and 28 of the Creditors' Relief Act, supra, note 2. 
"Poundage fees" is defined in Black's Law Dictionary (5th ed., 1979) as an "allowance 
to the sheriff of so much upon the amount levied under an execution". 

124 Rules of Practice, supra, note 37, r. 550. 

125 See The Execution Act, S.O. 1909, c. 47, s. 9, and see, now, the Execution Act, 
R.S.O. 1980, c. 146, s. 10. The same is not true under the Small Claims Courts Act, 
supra, note 25: see discussion supra, this ch., sec. 2(a)(ii). 

126 See ss. 6-10, 17, and 18 of the Creditors' Relief Act, supra, note 2. 

127 See supra, this ch., sec. 4(b)(iv). 

128 Ibid., sec. 4(b)(iii). 

129 Ibid., sec. 4(b)(v). 



32 

served" distribution regime. Rather, it would be quite possible, assuming 
the desirability of a scheme of rateable distribution, to design a much more 
comprehensive Creditors' Relief Act. 

A more serious charge that has been levelled against creditors' relief 
legislation is that it is inherently unfair: it rewards the creditor actively 
pursuing his enforcement remedies too little and the idle creditor too 
much. It legitimizes parasitic behaviour on the part of some creditors, 
while militating against resort to enforcement proceedings by others; for 
example, a creditor with a small claim, willing to run a high risk if he can 
enjoy all the fruits of his efforts, may be unwilling to take such a risk 
knowing that he must share his spoils. These arguments against creditors' 
relief legislation were among those that convinced the Law Reform Com- 
mission of British Columbia to recommend repeal of that Province's credi- 
tors' relief statute in its 1979 Report on Creditors' Relief Legislation: A 
New Approach . 13 ° 

It should be pointed out, however, that a "first come, first served" 
regime for the distribution of proceeds of enforcement also may produce 
its share of unfairness. 131 Under such a regime, priority may well be deter- 
mined by irrelevant, as well as fortuitous, circumstances; for example, 
proceedings in one court or in one jurisdiction may be concluded more 
quickly than in another. It may be questioned whether "commercial 
morality [would be more] significantly advanced" 132 by such a regime than 
by the present creditors' relief regime. 

Also among arguments advanced for the repeal of the British Colum- 
bia Creditors' Relief Act 133 by the Law Reform Commission of British 
Columbia in its 1979 Report was the administrative complexity of that 
Act, or of a more comprehensive "ideal" Act, when compared with a 
"first come, first served" distribution scheme. 134 We do not find this argu- 
ment to be compelling. In the view of this Commission, the cumbersome- 
ness of the present Ontario Creditors' Relief Act is due in large part to the 
existence of the certificate procedure described earlier in this chapter. Yet, 
from the evidence available to us, it seems that the certificate procedure is 
resorted to but rarely. 135 In our opinion, the abolition of the certificate pro- 
cedure could well minimize administrative inefficiency, with little or no 
practical effect on the principle of rateable distribution. 

A further question is whether creditors' relief legislation is needed if 



130 See British Columbia Report, supra, note 55, at 21. 

131 Ibid., at 6. 

132 Ibid., at \1. 

133 R.S.B.C. 1960, c. 85. See, now, the B.C. Creditor Assistance Act, supra, note 22. 

134 British Columbia Report, supra, note 55, at 17-18. 

135 In its review of Ontario's Creditors' Relief Act, the Commission undertook an exami- 
nation of the operation of this legislation in the Judicial District of York in the year 
1977. The Commission examined all the distribution lists prepared by the Sheriff of 
the Judicial District of York in that year. It was learned that in 1977 the sheriff paid 
out approximately 800 dividends pursuant to the Creditors' Relief Act. Only one of 
these dividends, or .00125 percent, was paid to a certificate creditor. 



33 

the principle of equality of distribution is enshrined in comprehensive 
bankruptcy and insolvency legislation, such as the Bankruptcy Act. 136 
Clearly, the Law Reform Commission of British Columbia, in its 1979 
Report on Creditors' Relief Legislation: A New Approach, was of the view 
that, given the existence of federal bankruptcy and insolvency legislation, 
the provincial statute served little or no purpose. The Commission com- 
mented as follows: 137 

Finally, the existence of Federal insolvency legislation is relevant to a 
consideration of repeal. It is not unusual to find both Federal and Provincial 
governments, through legislation, pursuing similar policies with respect to the 
same subject-matter. Leaving aside questions of constitutional law, such a sit- 
uation does not necessarily lead to the conclusion that one or the other should 
withdraw from the field. But where other factors suggest that a withdrawal by 
one may be appropriate, the presence of the other serves to rebut any argu- 
ment that such a withdrawal would leave an undesirable void. 

This is the case with the Creditors' Relief Act. If the Act were to be 
repealed and the first-in-time rule reinstated, the creditor who was not first 
would not be left without a remedy. In [most] cases he could have recourse to 
the Bankruptcy Act to ensure that a distribution occurred if he wished to pur- 
sue that course of action. 

We are unable to agree with this conclusion of the Law Reform Com- 
mission of British Columbia. In the opinion of this Commission, the 
Ontario Creditors' Relief Act, even alongside the Bankruptcy Act, serves a 
useful function. To gather information about the operation of the 
Creditors' Relief Act, the Commission carried out a study of distributions 
thereunder in 1977 by the Sheriff of the Judicial District of York. The 
Commission examined all distribution lists prepared by the sheriff during 
that year. Our analysis of these distributions disclosed, for example, that 
over fifty percent of all distributions involved three or more creditors. 
Nearly sixty percent of all dividends were paid out in the course of distri- 
butions involving four or more creditors. To ensure receipt of some share 
of a debtor's exigible property, a subordinate creditor in a "first come, first 
served" regime would be forced to resort to petitioning the debtor into 
bankruptcy. The Law Reform Commission of British Columbia admitted 
that repeal of the Creditors' Relief Act was likely to result "in some 
increase in the incidence of bankruptcy proceedings invoked by subordi- 
nate creditors who have no other way to enforce the right to equal 
distribution", 138 a consequence of repeal that the British Columbia Com- 
mission apparently was prepared to countenance. 

We do not see bankruptcy as a desirable alternative to rateable distri- 
bution under a revised Creditors' Relief Act. While we agree that the 
orderly payment of debts scheme proposed by this Commission, 139 and the 
substantial modifications to Canada's bankruptcy laws now under consid- 



136 Supra, note 21. 

137 British Columbia Report, supra, note 55, at 18 (footnote reference omitted). 

138 Ibid., at 13-14. 

139 See Commission Report, supra, note 1, Part I, ch. 2. 



34 

eration by the Parliament of Canada, 140 would make near-bankruptcy and 
bankruptcy a somewhat less terrifying alternative, nevertheless, for many, 
the trauma of bankruptcy will not be minimized or eliminated. Moreover, 
the bankruptcy option, rather than being less cumbersome and less costly 
than rateable distribution under a creditors' relief regime, would put into 
motion the whole bankruptcy machinery at a substantial cost in time and 
money to both the debtor and his creditors. Even if the Commission's 
orderly payment of debts scheme were invoked, substantial costs still 
would be incurred. 

Other arguments for and against repeal of the Creditors' Relief Act 
canvassed by the Law Reform Commission of British Columbia included 
the impact of repeal on litigation and enforcement practices. The Commis- 
sion could only speculate whether a "first come, first served" regime 
would foster a "get-in-quick" attitude, or whether a more comprehensive 
Creditors' Relief Act would deter creditors from litigating and enforcing 
their claims. 141 

As the preceding discussion makes clear, there is much that is wrong 
with the present Ontario Creditors' Relief Act. Unlike the Law Reform 
Commission of British Columbia, however, we believe that the Act, with 
certain substantial changes, can continue to play an important role in the 
law of this Province. In some circumstances, it permits rateable distribu- 
tion of the proceeds realized from the debtor's exigible assets without 
resort to the machinery of bankruptcy. In addition, as the British Colum- 
bia Report itself suggested, a creditors' relief scheme, if properly designed 
and efficiently managed, "could eliminate priorities where they are not 
socially justifiable, and provide a structure within which meritorious claims 
to priorities are recognized" 142 more readily than a "first come, first 
served" regime. 

Interestingly, just before the proposal by the Law Reform Commis- 
sion of British Columbia for repeal of that Province's Creditors' Relief Act, 
the "first come, first served" regime in two jurisdictions had come under 
attack. Both in the United Kingdom and in New South Wales, there has 
been a call in recent years for the introduction of a pro rata scheme of dis- 
tribution in respect of proceeds of enforcement in place of their existing 
"first come, first served" regimes. 

In the United Kingdom, the Report of the Committee on the Enforce- 
ment of Judgment Debts m recommended that all proceeds of enforcement 
be distributed rateably among creditors enforcing their judgments at the 
time the proceeds are received. 144 This proposal, referred to as "fair shares 
distribution", would be made practicable by requiring all creditors wishing 



140 See Bill C-12, supra, note 21. 

141 British Columbia Report, supra, note 55, at 13-14. 

142 Ibid., at 16. 

143 Report of the Committee on the Enforcement of Judgment Debts (Cmnd. 3909, 1969) 
(hereinafter referred to as the "Payne Committee Report"). 

144 Ibid., para. 416, at 110. 



35 

to employ enforcement measures to undertake that all payments made by, 
or on behalf of, a judgment debtor would be handed over to the Enforce- 
ment Office. 145 

The New South Wales Law Reform Commission, in its 1975 Draft 
Proposal Relating to the Enforcement of Money Judgments, made similar 
recommendations. 146 We also would note that, in contrast to the recom- 
mendation of the Law Reform Commission of British Columbia, the Law 
Reform Division of the New Brunswick Department of Justice in 1976 
advocated the retention and expansion of the New Brunswick Creditors 
Relief Act. , 147 

For all the above reasons, we recommend that the Ontario Creditors' 
Relief Act should be retained, but that it should be amended substantially 
to eliminate the inequities and deficiencies of the present Act. 

6. A REVISED CREDITORS ' RELIEF ACT 

Having proposed the retention of the Creditors' Relief Act in some 
amended form, we turn to consider what changes are necessary to give 
greater effect to the principle of rateable distribution of the proceeds of 
enforcement and to ensure that those creditors in need of some protection 
are accorded the appropriate priority. Just as we commenced our consid- 
eration of the operation of the present Act by describing the proceeds that 
are subject to it, we begin this section with a discussion of what proceeds 
should be comprehended by a revised Creditors' Relief Act. 

(a) The Scope of the Revised Act: Proceeds of Enforcement 

(i) General 

As a general principle, the Commission knows of no reason why all 
enforcement proceeds should be distributed in any manner other than in 
accordance with a revised Creditors' Relief Act. In other words, the Act 
should apply regardless of whether the proceeds are realized from the sei- 
zure and sale of the debtor's property, as a result of the garnishment of his 
debts, or pursuant to a receivership order or stop order. 148 Similarly, the 
fact that the judgment being enforced is one from the Supreme Court, a 
county or district court, or a small claims court should be irrelevant. We 



145 



Ibid. 



146 See s. 58 of the draft Money Judgments Enforcement Act, 1975, proposed by the New 
South Wales Law Reform Commission in its Draft Proposal Relating to the Enforce- 
ment of Money Judgments (1975) (hereinafter referred to as the "New South Wales 
Report"). 

147 See New Brunswick Department of Justice, Law Reform Division, Third Report of the 
Consumer Protection Project, Vol. II, Legal Remedies of the Unsecured Creditor After 
Judgment (1976), at 27-35 (hereinafter referred to as the "New Brunswick Report"). 

148 Charging orders, discussed supra, this ch., sec. 2(c), would be abolished under the 
Commission's earlier recommendations: see Commission Report, supra, note 1, Part 
II, at 250-56. For the Commission's recommendations concerning the appointment of 
a receiver for the purpose of enforcing a judgment, see ibid. , at 234-41 . 



36 

deal separately with the question whether proceeds realized as a result of 
the enforcement of a provincial court (family division) judgment ought to 
be subject to rateable distribution. 149 

The Commission has considered the argument that a Creditors' Relief 
Act of general application might discourage certain creditors, for example, 
small claims court creditors, from initiating and pursuing claims against 
their debtors because of the necessity of sharing any proceeds realized 
with other creditors. This point was made by the Law Reform Commission 
of British Columbia in its 1979 Report on Creditors' Relief Legislation: A 
New Approach. 150 We do not believe, however, that a requirement to 
share proceeds of enforcement would deter the initiation of actions in the 
small claims courts. Since the upper limit of the monetary jurisdiction of 
the small claims courts is now $1000, 151 actions in the small claims courts 
will not always involve minor amounts. It also should be pointed out that 
the small claims courts are far from the exclusive domain of small credi- 
tors; indeed, many large corporations commonly rely on these courts for 
the collection of outstanding debts. 

With respect to the enforcement of small claims courts judgments, in 
most cases the costs of enforcement proceedings are inconsequential and 
are unlikely to discourage the commencement of enforcement activity 
against a debtor. Furthermore, as the Law Reform Commission of British 
Columbia itself stated, legislation ensuring that a successful enforcement 
creditor receives adequate compensation for the costs of enforcement 
would weaken considerably the "disincentive to enforcement" argument 
in respect of a creditors' relief regime. 152 

On balance, we are of the view that the risks of a comprehensive 
Creditors' Relief Act for small claims creditors are minimal and the benefits 
substantial; the concomitant of the obligation to share proceeds of 
enforcement would be the right to receive a share of the proceeds realized 
by other creditors. We shall deal with this issue later in this chapter. 

Although a proposal to make all enforcement proceeds subject to 
rateable distribution pursuant to a revised Creditors' Relief Act would be a 
substantial departure from the present law, the Commission already has 
made a number of recommendations that lead almost inexorably to this 
conclusion. For example, in chapter 3 of Part I of the Report on the 
Enforcement of Judgment Debts and Related Matters, the Commission rec- 
ommended the establishment of a reorganized enforcement office that 
would be responsible for the enforcement of judgments from all court lev- 
els, including the small claims courts and the provincial courts (family 



149 See infra, this ch., sec. 6(a)(ii). 

150 British Columbia Report, supra, note 55, at 12 and 17. 

151 See the Small Claims Courts Act, supra, note 25, s. 55. It should be noted that the 
monetary jurisdiction of the small claims courts in the Municipality of Metropolitan 
Toronto has been increased to $3000: see the Provincial Court (Civil Division) Project 
Act, R.S.O. 1980, c. 397, s. 6, as amended by the Provincial Court (Civil Division) 
Project Amendment Act, 1 982, S.O. 1982, c. 58. 

152 British Columbia Report, supra, note 55, at 15 and 17. 



37 

division). 153 Furthermore, the Commission proposed the centralization of 
virtually all enforcement measures in the new enforcement office, includ- 
ing the garnishment of debts, receivership, and stop orders. Consequently, 
it would be difficult from an administrative point of view for an enforce- 
ment office with such a mandate to bifurcate its enforcement activities 
depending upon the courts from which the judgments being enforced ema- 
nated. Some scheme of distribution would have to be invented to allow the 
enforcement office to allocate the proceeds of enforcement in such circum- 
stances. 

Insofar as the proceeds of specific enforcement remedies are con- 
cerned, given the fact that, under our earlier recommendations, the 
enforcement office generally would be responsible for garnishment, it no 
longer seems to make any sense to make only some garnishment proceeds, 
but not others, subject to a revised Creditors' Relief Act, as is now the case 
under the Creditors' Relief Act. 154 As indicated earlier, while all garnish- 
ment proceeds are, theoretically, required to be distributed rateably under 
the Act, proceeds of garnishment issued out of the small claims courts and 
the provincial courts (family division) are not, in practice, subject to the 
Act. 155 The reason for this state of affairs is the fact that a sheriff generally 
is not in a position to know whether there are garnishment proceeds in the 
hands of a clerk of the small claims court or a clerk of the provincial court 
(family division) and, consequently, cannot make use of section 4(6) and 
(8) of the Creditors' Relief Act. Under our recommendations respecting 
garnishment, this would no longer be a problem, as all proceeds of gar- 
nishment, except family court wage garnishment, would be paid to the 
new enforcement office. 

With respect to execution against real and personal property, under 
the Commission's recommendations for the centralization of enforcement 
activities in the new enforcement office, all writs of enforcement, even 
those issuing from small claims courts, would be executed by the new 
office. 156 There would be no administrative need to differentiate between 
proceeds of enforcement realized pursuant to a small claims court execu- 
tion and those secured under a writ of enforcement from the Supreme 
Court or a county or district court. Accordingly, the sheriffs theoretical 
right, discussed above, to claim proceeds in the hands of a bailiff under 
section 25 of the present Creditors' Relief Act and to distribute them under 
the Act would no longer be necessary: the proceeds would be in the hands 
of the new enforcement office ab initio. 

With respect to money realized as a result of receivership and stop 
order proceedings, again, under the Commission's earlier proposals, this 
money would be paid to the new enforcement office as a matter of course. 



153 See Commission Report, supra, note 1, Part I, at 109-18. However, the new enforce- 
ment office would not be responsible for family court wage garnishment and show 
cause proceedings; these would continue to be the responsibility of family court offi- 
cials: see ibid., at 87-96. 

154 For the Commission's recommendations respecting garnishment, see Commission 
Report, supra, note 1, Part II, ch. 3. 

155 See discussion supra, this ch., sees. 2(b)(ii) and (hi). 

156 See Commission Report, supra, note 1, Part I, at 5 and 78-79. 



38 

Accordingly, the Commission recommends that, with the exception of 
proceeds of family court enforcement, all proceeds realized as a result of 
enforcement activity should be distributed in accordance with the revised 
Creditors' Relief Act, irrespective of the method of enforcement employed 
and regardless of whether the judgment being enforced emanated from 
the Supreme Court, a county or district court, or a small claims court. 

Because of the present, narrow interpretation given to the term 
"money levied" found in section 5(1) of the present Creditors' Relief Act, a 
further recommendation is necessary, lest the words contained in the 
above recommendation, "proceeds realized as a result of enforcement 
activity", be interpreted restrictively. There is case law to the effect that, 
although there need not be a sale of property seized under a writ of execu- 
tion in order for there to be a "levy" within the meaning of section 5(1), 
property transferred and money paid to the sheriff must have been trans- 
ferred or paid as a consequence of a seizure before it can be said to have 
been levied. 157 Money paid under a threat of seizure has been held not to 
be "money levied". 158 And it matters not whether, in such a case, the 
money is paid to the sheriff by the judgment debtor or by a third person on 
behalf of the debtor. We find this to be an entirely unsatisfactory state of 
affairs. 

In the view of the Commission, the distinction that has been drawn in 
the cases between funds received as a result of an actual seizure and those 
received as a result of a threatened seizure is an artificial one. In each case, 
the enforcement office would be called upon to take active measures to 
enforce a judgment; the money paid would be paid to an official of the 
enforcement office acting in that capacity; and the payment would be 
made as a direct result of enforcement activity. We do not believe that, 
before money should be subject to rateable distribution, the sheriff should 
be required to go to the lengths of actually seizing the debtor's property - 
incurring certain costs as a result - when the threat of seizure might be just 
as effective. Accordingly, we recommend that all payments made to the 
sheriff either by the judgment debtor or by a third person on his behalf, 
once enforcement proceedings have been initiated against the debtor, 
should be distributed in accordance with a revised Creditors' Relief Act. 

It should be noted that this recommendation resembles proposals 
made by the Law Reform Commission of British Columbia in its 1976 
Working Paper No. 21, The Enforcement of Judgment Debts: The Credi- 
tors' Relief Act. In this Working Paper, which preceded the Commission's 
final Report, the British Columbia Commission outlined the changes that 
would have to be made to the British Columbia Creditors' Relief Act to 



157 See Reid v. Gowans (1886), 13 O.A.R. 501, at 520, and Benjamin Moore & Co. Ltd. 
v. Finnie. [1954] O.W.N. 772, [1955] 1 D.L.R. 557 (Co. Ct.). See, also, Trust and 
Loan Co. v. Cook (1910), 3 S.L.R. 210, 14 W.W.R. 727 (C.A.), and Badiuk v. 
Moore, [1930] 1 D.L.R. 47, [1929] 3 W.W.R. 115 (Alta. Dist. Ct.). See, also, Dunlop, 
supra, note 4, at 423-26. 

158 See Benjamin Moore & Co. Ltd. v. Finnie, supra, note 157. Compare In re Young v. 
Ward (1896), 27 O.R. 588 (H.C.J.), and Re Koppers Co. Inc. and Dominion Foun- 
dries & Steel Ltd. (1965), 52 D.L.R. (2d) 36, 8 C.B.R. (N.S.) 49 (Man. C.A.). 



39 

create an "ideal" Act. The following amendment to the British Columbia 
Act was suggested: 159 

The Creditors' Relief Act be amended so as to include within its scope: 

(i) any payment made to a sheriff by a debtor after a writ of execution 
has been issued. 

(ii) any payment made to a sheriff in respect of a judgment by any other 
person who was induced to do so by the existence of a writ of execu- 
tion. 

The final question concerning the scope of a revised Creditors' Relief 
Act is whether the judgment debtor, by making private payments to his 
judgment creditors, should be free to bypass the scheme of priorities 
established in a new Creditors' Relief Act. This particular issue has 
received the attention of the Law Reform Commission of British Colum- 
bia, the English Committee on the Enforcement of Judgment Debts, and 
the New South Wales Law Reform Commission, the latter two bodies hav- 
ing advocated a creditors' relief type of regime. 

The 1969 Payne Committee Report contained the following comments 
on this subject: 160 

416. It is an essential part of the machinery of the Enforcement Office 
that all monies paid by, or recovered from, the judgment debtor after an 
enforcement order has been made against him, or otherwise obtained in the 
course of enforcement, should be paid into, or accounted for, to the Enforce- 
ment Office. Unless such monies are dealt with by the Enforcement Office it 
would not be possible for it to control the course of the enforcement or to dis- 
tribute the proceeds among several judgment creditors pro rata according to 
the priorities (if any) which are attached to their respective debts. We fully 
appreciate that in many instances judgment debtors and judgment creditors 
may wish to negotiate directly with each other and we would not wish to dis- 
turb any such negotiations. Nevertheless, we think it is necessary that machin- 
ery be provided to ensure that all payments made by, or on behalf of, a 
judgment debtor to a judgment creditor or his agent should either be paid 
into, or accounted for, to the Enforcement Office. Such machinery is also nec- 
essary to enable the Enforcement Office to deduct or to recover the prescribed 
fees for the enforcement proceedings. . . . 

417. In every application the creditor should undertake to pay all monies 
received from or on behalf of the debtor into the Enforcement Office. At the 
time of making the enforcement order the Enforcement Office should also 
make an order on the debtor not to pay to the creditor or creditors any money 
towards the satisfaction of the judgment debt except through the Enforcement 
Office. 

These sentiments were echoed in the 1975 Draft Proposal Relating to the 
Enforcement of Money Judgments prepared by the New South Wales Law 
Reform Commission. 161 



159 British Columbia Working Paper No. 21, supra, note 122, at 39. 

160 p a y ne Committee Report, supra, note 143, at 110. 

161 See New South Wales Report, supra, note 146, at 39. 



40 

Interestingly, the Law Reform Commission of British Columbia did 
not share this view, although British Columbia has had a creditors' relief 
scheme in force since 1902. In its 1979 Report, the Law Reform Commis- 
sion of British Columbia noted as one of the likely consequences of an 
"ideal" Creditors' Relief Act the following: 162 

An 'ideal' Creditors' Relief Act might encompass payments made directly 
by the debtor to the creditor who has initiated enforcement proceedings. Such 
a creditor could be compelled to remit that payment to the sheriff for distribu- 
tion to all creditors who qualify under the Act. But very often such a payment 
is made in return for a 'release' by the creditor of the particular property 
which had been charged or bound by the execution. It is our belief that a 
Creditors' Relief Act expanded in this way would have a significant effect on 
the willingness of creditors to enter into such arrangements. 

While, ideally, it would be most equitable to adopt the approach 
espoused in the Payne Committee Report and the New South Wales Draft 
Proposal Relating to the Enforcement of Money Judgments, the Commis- 
sion finds itself in agreement with the conclusion drawn by the British 
Columbia Commission. In our view, the negative impact of such a pro- 
posal on the willingness of creditors to enter into negotiated settlements 
would prove more detrimental to the enforcement of judgment debts than 
the benefit to be gained from prohibiting private payments and requiring 
any such payments to be turned over to the enforcement office for distri- 
bution under a revised Creditors' Relief Act. Accordingly, we recommend 
that private payments to a creditor by a debtor or a third party on the 
debtor's behalf should not be proscribed by the revised Act. 

At the same time, we do not wish to appear to be encouraging credi- 
tors to look to the publicly funded enforcement office for the enforcement 
of judgment debts, while thumbing their noses at the public policy embod- 
ied in a revised Creditors' Relief Act. We should point out that a judgment 
debtor may not always be free to make such private payments, nor a cred- 
itor to receive them, without legal repercussions. For example, a payment 
by a judgment debtor to one of his judgment creditors may well run afoul 
of the Commission's proposed voidable transactions legislation. 163 Conse- 
quently, another judgment creditor may be in a position to institute legal 
proceedings to impeach the payment and trace it into the hands of the pre- 
ferred judgment creditor. In addition, the Commission will propose below 
that every creditor entitled to receive a share of a distribution made pur- 
suant to the revised Act should be under a legal obligation to advise the 
enforcement office of the precise status of his judgment debt. 164 Failure to 
do so would subject the creditor to a fine, which in turn would be distrib- 
uted among the debtor's other judgment creditors. 165 

While these two measures may not result in the establishment of an 
"ideal" Creditors' Relief Act, we believe that, if enacted, they would result 



162 British Columbia Report, supra, note 55, at 12. 

163 See ch. 3 of Part IV of the Commission's Report on the Enforcement of Judgment 
Debts and Related Matters, supra, note 120. 

164 See infra, this ch., sec. 6(g). 

165 Ibid. 



41 

in a satisfactory compromise. The debtor and his creditors would remain 
free to reach mutually satisfactory accommodations regarding the payment 
of the debtor's judgment debts, while, at the same time, the possible pre- 
judice to any one of the debtor's judgment creditors that might be occa- 
sioned thereby would be reduced to the practical minimum. 

(ii) Proceeds of Provincial Court (Family Division) Enforcement 

In chapter 3 of Part I of its Report on the Enforcement of Judgment 
Debts and Related Matters, the Commission considered whether the pro- 
posed enforcement office should be responsible for the enforcement of 
judgments emanating from the provincial courts (family division). The 
Commission concluded as follows: 166 

As a general principle, the Commission is of the view that separate family 
court enforcement, distinct from the proposed new enforcement office, would 
be administratively cumbersome and redundant as well as conceptually 
unsound. There is no more reason for having separate personnel in the family 
court responsible for the mechanics of enforcing support orders than there is 
for having separate enforcement officers responsible for enforcing Supreme 
Court, county and district court and small claims court judgment debts. The 
issue concerning which body should have jurisdiction to issue the proposed 
new writ of enforcement should be kept separate from the issue concerning 
which body is best equipped to enforce the writ. Integration of the enforce- 
ment of support orders into the new system that we have proposed would 
obviate the constant delays, innumerable telephone calls and substantial paper 
work inherent in a bifurcated enforcement system. Moreover, along with the 
integration of small claims court enforcement recommended earlier, the inte- 
gration of family court enforcement finally would bring almost all enforcement 
activities under one administrative umbrella. Accordingly, we recommend 
that, except with respect to 'show cause' proceedings and enforcement against 
a maintenance debtor's wages, the new enforcement office should have exclu- 
sive jurisdiction to enforce, by any means, support orders either made by the 
family court or made by another court and now enforceable through the fam- 
ily court. 

The bases for the exceptions in respect of family court wage garnish- 
ment and show cause proceedings were three in number. First, the Com- 
mission was of the view that these two remedies were intimately related 
and, in essence, formed "a single, cohesive enforcement mechanism". 167 
Secondly, it was the opinion of the Commission that maintaining family 
court wage garnishment and the show cause procedure available under the 
Family Law Reform Act in the provincial courts (family division) was 
essential to the "efficiency and effectiveness of the 'automatic enforcement 
system' ". 168 Finally, the Commission noted the close relationship between 
family court creditors and the family court, and the general trust reposed 
by family court creditors in the family court, and expressed the view that 
this important relationship would be jeopardized if the two remedies 



166 Commission Report, supra, note 1, Part I, at 89. 

167 Ibid., at 91. 

168 Ibid., at 92. 



42 

under discussion were taken out of the family court and put under the aus- 
pices of the proposed new enforcement office. 169 

In light of the Commission's earlier proposals concerning responsibil- 
ity for the enforcement of provincial court (family division) judgments, it 
has been necessary to deal with the question whether the proceeds realized 
as a result of enforcement measures taken with respect to such judgments 
should be required to be shared with other creditors of a maintenance 
debtor. Later in this chapter, and for reasons there discussed, the Com- 
mission will recommend that maintenance creditors should have a priority 
in respect of any proceeds of enforcement realized as a result of enforce- 
ment measures taken against a maintenance debtor. 170 Implicit in this rec- 
ommendation is a decision that proceeds of enforcement activity for which 
the maintenance creditor is responsible should not be required to be dis- 
tributed pursuant to the proposed revised Creditors' Relief Act, whether 
the enforcement measures adopted are those for which the provincial 
court (family division) would be responsible or those that would come 
under the aegis of the enforcement office under our earlier recommenda- 
tions. We so recommend. 

We should point out that our recommendation that the proceeds of 
enforcement activity for which a maintenance creditor is responsible 
should not be subject to rateable distribution under the revised Creditors' 
Relief Act would constitute a major change; it would appear that, at the 
present time, maintenance creditors enjoy no such exclusive rights to the 
fruits of their enforcement labours, except in the case of the present 
attachment of wages remedy available under section 30 of the Family Law 
Reform Act. 111 However, for the same reasons that in our view justify the 
maintenance creditor's priority recommended below, we believe that this 
approach is a sound one. 

With respect to proceeds realized as a result of enforcement measures 
for which the enforcement office is responsible, because all proceeds real- 
ized pursuant to such measures will go to satisfy the judgment or order of 
the maintenance creditor in any event, we believe that the enforcement 
office should act simply as a conduit and pass the moneys on to the appro- 
priate provincial court (family division), to be paid in turn to the mainten- 
ance creditor. Given the enforcement office's responsibility for securing 
such funds, we believe that it makes administrative sense to have the pro- 
ceeds pass through the enforcement office in order that that office can 
make the necessary bookkeeping entries. Moreover, it seems administra- 
tively desirable that the enforcement office not divide its enforcement 
activities; when it acts, it should do so on behalf of all creditors who have 
filed a writ of enforcement with the enforcement office. 

(b) The Scope of the Revised Act: Entitlement to Share 

As discussed previously in this chapter, the present Creditors' Relief 
Act is not comprehensive with respect to the types of judgment creditor 



169 Ibid. , at 93-94. 

170 See infra, this ch., sec. 6(c)(i). 

171 See discussion supra, this ch. , sec. 4(b)(ii)a. 



43 

entitled to share in a distribution under the Act. For example, while it is 
clear that creditors by execution from the Supreme Court, county and dis- 
trict courts and, in some cases, the small claims courts, are entitled to 
share rateably in the proceeds of enforcement now required to be distrib- 
uted in accordance with the Act, the right of creditors by execution from 
the provincial courts (family division) so to share is questionable. In the 
case of creditors responsible for the garnishment of money owing to the 
judgment debtor by third persons, the Act provides only a limited right to 
participate in a distribution under the Act. 172 The position of other judg- 
ment creditors, such as those who have resorted to equitable execution, 
charging orders, or stop orders is, as we have discussed earlier, far from 
clear under the present Act. 

While the right of certain judgment creditors to share under the 
Creditors' Relief Act is unclear or absent, the Act does afford non-judg- 
ment creditors a right to share in proceeds of enforcement in certain lim- 
ited circumstances by using the certificate procedure under the Act. In this 
section, we shall examine three matters: first, whether non-judgment cred- 
itors should continue to be entitled to partake in the distribution of 
enforcement proceeds; secondly, whether all judgment creditors should be 
covered by the Act; and thirdly, the time at which entitlement to share 
should be determined. 

(i) Non- Judgment Creditors 

The argument in favour of the certificate procedure is based on eco- 
nomics. It is contended, for example, that the certificate procedure found 
in the Act discourages a "get-in-quick" attitude on the part of creditors. If 
non-judgment creditors are able to share in the distribution of enforce- 
ment proceeds, they are more likely to be willing to afford their debtors an 
opportunity to meet his financial obligations without resort to legal 
process. The absence of any need to institute legal proceedings without 
delay against the debtor means that both the debtor and his creditors will 
be able to save the cost of what otherwise could be a "rush to judgment". 
This savings may well help the debtor to set his financial house in order. 

Another argument in favour of the present certificate procedure is that 
it helps to eliminate purely fortuitous results. For example, the debtor's 
creditors may have limited control over how quickly proceedings against 
their debtor are determined. Because of circumstances over which the 
creditors have no control, an action in one court may be resolved more 
speedily than one in another court: the trial list in one county may be 
much longer than in another and, in the case of the Supreme Court of 
Ontario, litigants in some cases must wait a considerable time for the 
arrival of the circuit judge. 

While the above arguments are not without merit, the Commission 
believes that there are strong countervailing reasons for the abolition of 



172 Creditors' Relief Act, supra, note 2, s. 4(6). 



44 

the present certificate procedure. First and foremost, the Commission is of 
the view that, on principle, it ought not to sanction a scheme of distribu- 
tion that allows non-judgment creditors to take advantage of the some- 
times costly and time-consuming efforts of judgment creditors responsible 
for the realization of enforcement proceeds. While it may be "unfair" to 
require non-judgment creditors to proceed to judgment in all cases before 
being entitled to claim a share of their debtor's assets, it is equally "un- 
fair" to force a judgment creditor to share the fruits of his labours with 
those who are more than happy to let someone else incur the expense of 
securing a judgment and enforcing it against the debtor. This "coattails" 
feature of the Creditors' Relief Act has been criticized severely by mem- 
bers of the legal profession. 

We would also suggest that the cost savings argument, set out above, 
may not be entirely accurate. While it may be true to say that a certificate 
procedure may obviate the need for some creditors to institute full scale 
legal proceedings against their debtors, legal proceedings may not be elim- 
inated entirely. They may simply take on a different form, and substantial 
costs still will be incurred. This will be true where the debtor or a judg- 
ment creditor contests the non-judgment creditor's claim and resort must 
be had to the dispute resolution procedures found in the Creditors' Relief 
Act™ 

The Commission has concluded that the limited right of non-judgment 
creditors to participate in a distribution of enforcement proceeds pre- 
scribed at present by the Creditors' Relief Act, while of theoretical signifi- 
cance, is of little practical importance. Although the elimination of the 
certificate procedure that now forms a part of Ontario's creditors' relief 
legislation may be seen as a radical step, in our view, abolition of the cer- 
tificate procedure is likely to have little negative impact on enforcement 
practices. We have arrived at this conclusion for two main reasons. First, 
we would point out that the right of non-judgment creditors to share in 
distributions under the Act at the present time is severely restricted. Only 
in those circumstances outlined in section 6 of the Creditors' Relief Act 
may a non-judgment creditor resort to the certificate procedure. 174 More- 
over, even if the circumstances described in section 6 exist, it still may be 
very difficult for a non-judgment creditor to meet all the procedural 
requirements to become entitled to share in a distribution of proceeds 
under section 5(2) of the Act. 175 



173 lbid.,ss. 12-14. 

174 Section 6 reads as follows: 

6.-(l) If a debtor permits an execution issued against him under which any of 
his goods or chattels are seized by a sheriff to remain unsatisfied in the sheriffs 
hands until within two days of the time fixed by the sheriff for the sale thereof, or 
for twenty days after the seizure, or allows an execution against his lands to 
remain unsatisfied for nine months after it has been placed in the sheriffs hands, 
the proceedings hereinafter authorized may be taken by other creditors or claim- 
ants in respect of debts that are overdue. 

(2) When a sale has taken place under an execution, the proceedings herein- 
after authorized may be taken by any creditor of the execution debtor even 
though his claim is not then due. 

175 The certificate procedure is described in detail supra, this ch., sec. 3(b). 



45 

The second ground for our conclusion that abolition of the certificate 
procedure is unlikely to have an adverse effect on enforcement practices is 
the fact that, from the evidence available to the Commission, the proce- 
dure is resorted to only rarely in any event. For example, of the dividends 
paid out pursuant to the Creditors' Relief Act in 1977 by the Sheriff of the 
Judicial District of York, approximately one-tenth of one percent went to 
certificate creditors. 

This paucity of certificate creditors may be attributable to the practis- 
ing Bar's unawareness of the certificate procedure and the unwieldy nature 
of the present procedure. It may be argued, therefore, that what is needed 
is not the elimination of the certificate procedure, but a heightened aware- 
ness of its availability and improvement of the procedure. The Commis- 
sion, however, does not believe that greater reliance on the certificate 
procedure can be realized without increased administrative complexity 
and without further jeopardizing the position of judgment creditors. Any 
benefits that might be secured by "improving" the certificate procedure 
would be offset, in our opinion, by the adverse consequences to a revised 
creditors' relief regime that would be occasioned by such an "improve- 
ment". Therefore, the Commission recommends that, generally speaking, 
non-judgment creditors should not have a right to share rateably in the dis- 
tribution of enforcement proceeds under the revised Creditors' Relief Act, 
and that, accordingly, the present certificate procedure should not be 
included in the revised Act. 

Notwithstanding the proposed abolition of the certificate procedure, 
the Commission believes that, in three cases, non-judgment creditors 
should be entitled to share in a distribution of proceeds under the revised 
Act. We think that an exception must be made, first, in the case of non- 
judgment creditors who have proved their claim against the debtor in the 
context of an arrangement made under the proposed orderly payment of 
debts scheme that subsequently has been annulled; 176 secondly, in the case 
of creditors who attach property of debtors prior to judgment; and thirdly, 
in the case of non-judgment creditors who are responsible for impeaching 
a voidable transaction. 

In chapter 2 of Part I of the Commission's Report on the Enforcement 
of Judgment Debts and Related Matters, we discussed in considerable 
detail the operation of an orderly payment of debts scheme along the lines 
of Part III of the proposed new Bankruptcy Act. 171 One of the subjects 
expressly dealt with by the Commission at that time was the kinds of claim 
that should be admissible where the debtor proposes to make an orderly 
payment of debts arrangement. While we did not recommend that a cred- 
itor with unliquidated or contingent debts or claims should be allowed to 
prove his claim and participate in a proposed arrangement, we were of the 
opinion that a creditor with a debt payable immediately or at a future 
time, whether liquidated, certain, secured, or unsecured, should be able to 
do so. 178 In order to participate in an arrangement, a non-judgment cred- 



176 See Commission Report, supra, note 1, Part I, at 41-44. 

177 Bill C-\2, supra, note 21. 

178 See Commission Report, supra, note 1 , Part I, at 23-21. 



46 

itor would have to satisfy the Administrator of the validity of his claim. 179 
Where, for whatever reason, the arrangement must be annulled, we can 
see no justification in then requiring the non-judgment creditor to proceed 
to judgment in order to share in any distribution under a revised Creditors' 
Relief Act. In our opinion, the validation of the creditor's claim under an 
arrangment should be the equivalent of a judgment for the purposes of the 
new Act. 

We have come to this conclusion for the following reasons. First, given 
the fact that the creditor's claim may have been contested by the debtor's 
other creditors, and will have been examined and approved by the Admin- 
istrator, whose decision will be subject to appeal, there would seem to be 
little danger in permitting the non-judgment creditor to share in a distribu- 
tion under a revised Creditors' Relief Act. In essence, there would be little 
to distinguish such a non-judgment creditor from a creditor who has pro- 
ceeded to judgment in the usual way. To require a non-judgment creditor 
whose claim has been validated in the course of an orderly payment of 
debts arrangement to proceed to judgment once the arrangement has been 
annulled would be to ask the creditor and his debtor to incur what, in our 
view, would be a needless expense. 

Secondly, it must be remembered that a creditor whose claim is sub- 
sumed in an arrangement will be subject to a stay of proceedings imposed 
with respect to all actions and activities concerning the collection of debts 
from the applicant debtor. 180 Creditors with unliquidated or contingent 
claims, on the other hand, will be free to continue legal proceedings 
against the debtor. 181 Therefore, a non-judgment creditor with an admis- 
sible claim could be in a less advantageous position than creditors not com- 
prehended by the arrangement in respect of the enforcement of his claim 
if, after the annulment of an arrangement, he were required to obtain 
judgment against the debtor in order to share in any Creditors' Relief Act 
distribution. In the view of the Commission, such a result would be unfair 
to those non-judgment creditors who would be comprehended by an 
arrangement and should not be countenanced. Therefore, we recommend 
that a non-judgment creditor whose claim has been approved under an 
orderly payment of debts arrangement that has been annulled should be 
entitled to share pro rata in a distribution of proceeds under the revised 
Creditors' Relief Act. 

Turning to the second exception to our recommendation that non- 
judgment creditors not be permitted to participate in distributions under 
the revised Creditors' Relief Act - concerning a creditor ^who attaches 
property of his debtor prior to judgment - the Commission, in chapter 2 of 
Part IV of its Report on the Enforcement of Judgment D&bts and Related 
Matters, recommended sweeping changes to the law of provisional or pre- 
judgment relief. We there proposed that a creditor should be able to 
attach his debtor's property before judgment in certain circumstances. The 



179 ibid. 

180 Ibid., at 34-36. 

181 Ibid., at 23-27. 



47 

abolition of the certificate procedure available under the present Creditors' 
Relief Act could have serious implications for non-judgment creditors 
employing the new attachment remedy. If a debtor's judgment creditors 
were able to take the property attached before judgment in satisfaction of 
their judgments against the debtor, and if at the same time the attaching 
creditor were not allowed to share in the proceeds realized therefrom until 
he too had obtained judgment, the attaching creditor might well incur sub- 
stantial expense without benefit. 

We do not believe that the creditors entitled to share in a distribution 
under the Creditors' Relief Act should benefit at the attaching creditor's 
expense. 182 Accordingly, we recommend that, as an exception to the gen- 
eral scheme of a revised Creditors' Relief Act, an attaching creditor should 
be entitled to share pro rata in the proceeds realized from property that he 
has had attached. 

Since, then, an attaching creditor would be entitled to share in a distri- 
bution under the Act, what mechanism ought to be adopted to give effect 
to this right? Several alternatives are open. The sheriff could be required 
to hold all proceeds from the sale of the attached property until the plain- 
tiff obtains judgment. This alternative, however, has the disadvantage of 
potentially tying up for a long period the proceeds of the sale of what may 
be the debtor's only exigible asset. Consequently, all creditors would be 
delayed. A second alternative would be to require the sheriff to hold back 
the attaching creditor's anticipated pro rata share of the proceeds. If the 
final judgment was for a lesser amount, a further distribution to the other 
creditors could be made. However, in some cases - for example, where the 
non-judgment creditor's main action is for defamation - it might be very 
difficult to estimate the amount to be held back. A third alternative would 
be to establish a summary method of determining the amount of the plain- 
tiff's claim, utilizing a mechanism akin to the one for certificate creditors 
now found in the Creditors' Relief Act. m 

On balance, the Commission has concluded that specific legislation 
setting forth the precise mechanism to be followed in permitting a success- 
ful non-judgment creditor to reap the benefits of his attachment would be 
unduly rigid, and likely unnecessary. Accordingly, we recommend that the 
court, upon application, should determine the manner in which an attach- 
ing creditor should share, having regard to all relevant circumstances, 
including the nature of the non- judgment creditor's claim, and the time 
before judgment in the main action likely will be given. Of course, the 
attaching creditor's share, in such a case, should not be distributed to him 
before judgment; distribution should await a judgment in the attaching 
creditor's favour. If the attaching creditor is ultimately unsuccessful in the 
action against the debtor, his share should be distributed pro rata to the 
judgment creditors required to share with the attaching creditor. 



182 Later in this chapter we also recommend that an attaching creditor should be provided 
with protection in respect of the costs incurred in having the debtor's property 
attached: see infra, this ch., sec. 6(f)(ii). 

183 See discussion supra, this ch. , sec. 3(b). 



48 

Finally, we turn to the position of persons responsible for impeaching 
voidable transactions. In chapter 3 of Part IV of this Report, the Commis- 
sion recommended that creditors should continue to be able to impeach 
certain voidable transactions by their debtors - transactions now known as 
fraudulent conveyances and fraudulent preferences. In light of our pro- 
posal to abolish the certificate procedure available under Ontario's present 
creditors' relief legislation, to give standing to a non- judgment creditor to 
impeach such transactions could be a rather empty gesture. For example, 
the creditor's main action against the debtor might not be completed until 
after judgment has been given in the fraudulent conveyance or fraudulent 
preference action, with the result that he would not be entitled to a writ of 
enforcement. Where there are other creditors of the debtor who have 
writs filed with the sheriff, only they would have an opportunity to receive 
a share of the proceeds obtained from a sale of the property in dispute in 
such an action. The non-judgment creditor's successful impeachment of 
the conveyance or preference would enure to the benefit of the other cred- 
itors alone. 

The Commission believes that there is a strong argument that a non- 
judgment creditor who successfully impeaches a voidable transaction 
should be entitled to share in any distribution of the proceeds realized as a 
result of the action, and we so recommend. 184 The creditor, after all, has 
taken the initiative and assumed certain risks in commencing his action, to 
the benefit of all creditors. With respect to the manner of sharing, as in the 
case of an attaching creditor, we recommend that, where the successful 
plaintiff in a fraudulent conveyance or fraudulent preference action is a 
non-judgment creditor, the court, upon application, should determine the 
manner in which the plaintiff should share in any distribution of enforce- 
ment proceeds arising as a result, having regard to all relevant circum- 
stances, including the nature of the plaintiff's claim and the time before 
judgment in the main action likely will be given. Of course, the right to 
receive his share would be contingent upon the creditor obtaining judg- 
ment against the debtor. 

(ii) Judgment Creditors 

We turn now to the question whether all judgment creditors who have 
taken enforcement measures against their judgment debtors should be 
entitled to share in the distribution of enforcement proceeds under the 
new Act, irrespective of the type of remedy employed by them. At the 
present time, when all enforcement activity is not centred in the sheriff's 
office, and when not all enforcement proceeds are subject to the Creditors' 
Relief Act, it may be logical to provide that only certain judgment creditors 
should be entitled to share rateably in the proceeds subject to the Act. 
While we would challenge even this assertion, the Commission is of the 
opinion that the centralization of virtually all enforcement activity in the 
new enforcement office recommended by the Commission 185 must change 
this picture substantially. 



184 Later in this chapter, we also recommend that a non-judgment creditor who brings a 
successful voidable transaction suit should be provided with protection in respect of 
the costs incurred in such proceedings: see infra, this ch., sec. 6(f)(ii). 

185 See Commission Report, supra, note 1, Part I, at 109-15. 



49 

Under the Commission's proposals, enforcement of a judgment debt 
would be initiated by filing the proposed writ of enforcement in the 
enforcement office. Execution and, with the exception of family court 
wage garnishment, garnishment would be under the auspices of the new 
enforcement office, as would receivership and stop orders. Consequently, 
at any given time, the enforcement office would be in a position to ascer- 
tain all judgment creditors who have instituted enforcement proceedings 
against a particular debtor. Under such a regime, there would seem to be 
no reason to limit the right of participation of any enforcement creditor in 
a distribution under a revised Creditors' Relief Act. 

With respect to maintenance creditors, although we are of the view 
that these creditors should not be required to share the proceeds of 
enforcement for which they are responsible, we do believe that they 
should be entitled to share in a distribution of enforcement proceeds that 
have been secured as a result of the efforts of other non-maintenance cred- 
itors. Indeed, as we pointed out above and as we shall explain below, the 
Commission favours a priority for maintenance creditors in respect of all 
such proceeds. 

Therefore, subject to the matter discussed in the section immediately 
following, we recommend that all creditors who deliver a writ of enforce- 
ment to the new enforcement office should be entitled to share in any dis- 
tribution of enforcement proceeds made pursuant to the revised Act, 
regardless of the method of enforcement employed. 

(iii) Time at which Entitlement to Share Determined 

The preceding discussion has focused upon the creditors who should 
be entitled to share in proceeds of enforcement distributed under the 
revised Creditors' Relief Act. We now turn to a discrete issue, namely, at 
what time should the creditors entitled to share in a particular distribution 
be determined. 

It will be remembered that, under section 5(2) of the Creditors' Relief 
Act, "all execution creditors and other creditors whose executions or cer- 
tificates . . . were in the sheriffs hands at the time of the levy or receipt of 
the money or who deliver their executions or certificates to the sheriff 
within one month from the entry", prescribed by section 5(1) of the Act, 
are entitled to share in such money. Having proposed the elimination of 
the certificate procedure now available under the Act, we must consider 
whether, under a revised Creditors' Relief Act, an enforcement creditor 
should have any right to share in proceeds of enforcement realized prior to 
the filing of his writ of enforcement. 

It should be noted that existing creditors' relief legislation in Canada 
invariably provides some grace period within which subsequent enforce- 
ment creditors may assert a claim to money already levied or received. 186 



186 The waiting period varies from 14 days in the case of the Alberta Execution Creditors 
Act, R.S.A. 1980, c. E-14, s. 10, to 2 months in the case of the Saskatchewan 
Creditors' Relief Act, R.S.S. 1978, c. C-46, s. 6. This issue was examined in the New 



50 

At the same time, all existing creditors' relief legislation enables non-judg- 
ment creditors to share in proceeds of enforcement, thereby necessitating 
the establishment of some grace period in any event. 

Consequently, it may be useful to look at the proposals in this regard 
contained in the Payne Committee Report and the New South Wales 
Report. 187 As was pointed out earlier, both reports advocated the creation 
of a creditors' relief type of distribution scheme. Moreover, neither pro- 
posed that non-judgment creditors should have any right to share in the 
proceeds of enforcement. Therefore, it is instructive to note that neither 
the Payne Committee Report nor the New South Wales Report saw the 
need to allow subsequent enforcement creditors - that is to say, those 
creditors filing or registering their judgments after the realization of 
enforcement proceeds - to share in such proceeds. 

While it may be argued that the elimination of the one month grace 
period now enjoyed by subsequent enforcement creditors would foster a 
"get-in-quick" attitude among a debtor's creditors, it is the view of the 
Commission that the abolition of the period of grace now enjoyed by 
enforcement creditors under section 5(2) of the Creditors' Relief Act would 
have little or no impact on litigation and enforcement practices. In most 
instances, the existing one month period would not be sufficient time 
within which to rush to judgment, whether or not legal proceedings have 
been commenced at the time enforcement proceeds are realized. Existing 
practices confirm that subsequent enforcement creditors do not become 
entitled to share as a result of conscious efforts; their right to share is for- 
tuitous rather than planned, and one that seldom is realized. 188 Conse- 
quently, the Commission recommends that only those creditors who have 



Biunswick Report, and a forty-five day waiting period has been proposed: see New 
Brunswick Report, supra, note 147, at 320. It should be noted that the forty-five day 
period would begin to run from the time a decision is made respecting the method of 
enforcement to be used, rather than from the time money is realized. 

187 See Payne Committee Report, supra, note 143, and New South Wales Report, supra, 
note 146, discussed supra, this ch. , sec. 5. 

188 It would appear that creditors or their advisors automatically file a writ of execution as 
soon as possible after judgment in their favour has been pronounced. There would 
seem to be little use made of s. 30 of the Creditors' Relief Act, supra, note 2, which 
allows a person to learn from the sheriff the amount of enforcement proceeds in his 
hands at any given time. Section 30 states as follows: 

30. Pending the distribution, the sheriff shall keep, in the book mentioned in 
section 5, a statement in Form 6 showing, 

(a) the amounts levied or received and the dates of levy or receipt; 

(b) each execution, certificate or order in his hands at the time of making 
the entry in Form 1, or subsequently received during the month, the 
amount thereof, for debt and costs, and the date of receipt, and such 
statement shall be amended from time to time as additional amounts 
are levied or received or further executions, certificates or orders are 
received. 

Our study of the operation of the Creditors' Relief Act in 1977 in the Judicial District 
of York disclosed that the vast majority of those who received dividends were entitled 
to share in the proceeds because their writs of execution were on file with the sheriff at 
the time that the proceeds were received. 



51 

delivered a writ of enforcement to the enforcement office by the time pro- 
ceeds of enforcement are realized should be entitled to share therein. This 
recommendation would have the virtue of further simplifying Ontario's 
creditors' relief legislation, while doing little injustice to subsequent 
enforcement creditors. 

(c) Priorities under tiie Revised Creditors' Relief Act 

Although the Commission favours retention of a modified Creditors' 
Relief Act, which would continue to embody the principle of rateable dis- 
tribution of enforcement proceeds among a debtor's enforcement credi- 
tors, we do believe that any new creditors' relief legislation also ought to 
give express recognition to certain competing policies. In this section, we 
shall consider what priorities should receive legislative sanction in a 
revised Creditors' Relief Act. 

(i) The Maintenance Creditor's Priority 

Earlier in this chapter, 189 we discussed briefly the extent to which 
maintenance creditors now are afforded priority under the law. It was 
pointed out that the only priority enjoyed by maintenance creditors under 
the present law is with respect to the proceeds of an attachment of wages 
order under section 30 of the Family Law Reform Act. In all other 
respects, maintenance creditors, whether they have a Supreme Court 
judgment, a county or district court judgment, or an order of a provincial 
court (family division), must share rateably with other creditors of the 
maintenance debtor enforcement proceeds for which they are 
responsible. 190 

The Commission is of the view that maintenance creditors, who, in 
many cases, are dependent upon their maintenance payments for their 
day-to-day necessities, do not enjoy adequate protection under the present 
law. In our view, the obligation owed by a debtor to a maintenance cred- 
itor is of a higher order than that owed by the debtor to any of his or her 
other creditors. The courts have said on a number of occasions that satis- 
faction of support or maintenance debts must come before payment of 
one's ordinary creditors. 191 We share this opinion. That there is a need for 
greater protection of maintenance creditors is apparent from the statistics 
respecting the amount of maintenance or support arrears owing - in the 
last year in which figures were kept, there were arrears outstanding in the 
amount of approximately forty million dollars. 192 The question that has 



189 See supra, thisch., sec. 4(b)(ii)a. 

190 In the case of garnishment proceeds, however, while a maintenance creditor may the- 
oretically be required to share these proceeds with other execution and certificate 
creditors, s. 4(3) of the Creditors' Relief Act, supra, note 2, will mean that, in practice, 
the maintenance creditor will not have to share: see discussion supra, this ch., sec. 
2(b)(iii). 

191 See, for example, Re Makkinga and Makkinga (No. 2) (1980), 28 O.R. (2d) 249 (Dist. 
Ct.). 

192 See Laskin et al. , Debtor and Creditor. Cases, Notes and Materials (2d ed., 1982), at 
489. 



52 

troubled us is the extent to which such creditors should be favoured under 
a revised Creditors' Relief Act, since a broader priority for maintenance 
creditors might have a significant impact on the enforcement practices of 
other creditors. 

One alternative considered by the Commission is that recently 
adopted by the Legislative Assembly of Alberta. In 1977, the Alberta 
Domestic Relations Act 193 was amended to provide maintenance creditors 
with greater protection in enforcement proceedings. 194 The 1977 amend- 
ments, now in force, 195 have the following effect. Where a maintenance 
debtor is in arrears in respect of a maintenance order, the maintenance 
creditor's writ of execution is entitled to priority over other writs of execu- 
tion to the extent of three months maintenance payments. 196 In addition, 
as a result of the 1977 amendments, 197 where a maintenance creditor 
resorts to garnishment to collect arrears under a maintenance order, the 
proceeds realized thereby are not subject to the Alberta equivalent of the 
Ontario Creditors' Relief Act, that is, the Execution Creditors Act. 198 

Shortly after these amendments were promulgated, they were the sub- 
ject of review by the Alberta Institute of Law Research and Reform. 199 
The only additional protection for maintenance creditors recommended by 
the Alberta Institute in its 1978 Report on Matrimonial Support was a pri- 
ority for proceeds realized as a result of a continuing attachment of earn- 
ings order along the lines of the priority found in section 30(3) of the 
Ontario Family Law Reform Act. 200 However, it should be noted that, 
although the Alberta Institute proposed no other changes concerning the 
position of maintenance creditors, it was less than enthusiastic in its sup- 
port of the 1977 amendments to the Alberta Domestic Relations Act. Nev- 
ertheless, given the fact that the matter had been reviewed so recently by 
the Alberta legislature, the Alberta Institute saw little purpose in recom- 
mending sweeping changes in the law. 201 

A second option examined by the Commission - an option consider- 
ably more far-reaching in scope - would be to recommend that mainten- 
ance creditors receive a priority for the full amount of their judgments 
with respect to proceeds realized as a result of both their own enforcement 
efforts and those of other non-maintenance creditors. This alternative has 
certain, obvious attractions, as it would guarantee to all maintenance cred- 
itors a preferred position in any scheme of distribution. 



193 R.S.A. 1970, c. 113. 

194 The Domestic Relations Amendment Act, 1977, S. A. 1977, c. 64, s. 6. 

195 As of June 30, 1979. 

196 Supra, note 194, adding s. 28.2(6) and (7) to The Domestic Relations Act, supra, note 
193. (See, now, Domestic Relations Act, R.S.A. 1980, c. D-37, s. 30(6).) 

197 The Domestic Relations Amendment Act, 1977, supra, note 194, adding s. 28.3 to The 
Domestic Relations Act, supra, note 193. (See, now, Domestic Relations Act, R.S.A. 
1980, c. D-37, s. 31.) 

198 R.S.A. 1980, c. E-14. 

199 Alberta Institute of Law Research and Reform, Report on Matrimonial Support 
(1978). 

200 Ibid., at 138-39. 

201 Ibid., at 130-33. 



53 

We recognize that such a priority has certain disadvantages. For exam- 
ple, it might make other judgment creditors somewhat reluctant to instruct 
the enforcement office to take active enforcement measures against their 
debtors. Nevertheless, we believe that the collection of support and main- 
tenance payments is of such importance as to justify running this risk. 

A more serious objection to a full priority in favour of maintenance 
creditors may be found in the Payne Committee Report, where the con- 
cern was expressed that other creditors would resort to bankruptcy pro- 
ceedings to overcome such a priority. 202 It should be noted that neither the 
present Bankruptcy Act 203 nor the proposed new Bankruptcy Act 204 gives 
maintenance creditors any preference. Consequently, it might well be 
advantageous for an ordinary judgment creditor to petition a maintenance 
debtor into bankruptcy. While this is a real possibility, we are nevertheless 
of the view that the principle of a maintenance creditor's priority should 
receive the sanction of the provincial legislature. 

Accordingly, we recommend that maintenance creditors should be 
entitled to be paid in full in priority to all other creditors under the revised 
Creditors' Relief Act. We further recommend that, for the purposes of the 
proposed maintenance creditor's priority, maintenance creditors should be 
defined to include not only persons with a support order or maintenance 
order in their favour, but also creditors who have obtained a money judg- 
ment based on the support or maintenance provisions of a cohabitation 
agreement, marriage contract, separation agreement, or paternity agree- 
ment, as defined by the Family Law Reform Act 205 We can see no rational 
basis upon which to distinguish between the two types of maintenance or 
support creditor - a position that we have adopted in respect of similar 
issues on a number of occasions throughout the Report on the Enforcement 
of Judgment Debts and Related Matters.™ Finally, in order to preclude the 
use of bankruptcy proceedings to circumvent this proposed priority, we 
recommend that the Parliament of Canada ought to be urged to give effect 
to this principle in any new bankruptcy legislation. 

In chapter 3 of Part I of the Commission's 1981 Report on the Enforce- 
ment of Judgment Debts and Related Matters, we discussed the manner in 
which effect should be given to the principle of a maintenance creditor's 
priority. It was the opinion of the Commission that, rather than putting the 
onus on the enforcement office to satisfy itself prior to the distribution of 



202 See Payne Committee Report, supra, note 143, para. 1117, at 293: 

[W]e feel that it would be unrealistic not to recognize in our proposed enforce- 
ment system the same priorities as obtain in bankruptcy. Otherwise there would 
be a risk - as to the extent of which the Committee is not wholly in agreement - 
that creditors might resort to bankruptcy in order to obtain preferential treat- 
ment which they could not have in the Enforcement Office .... 

See, also, paras. 1120 and 1121, at 294. 

203 Supra, note 21. 

204 Bill C-12, supra, note 21. 

205 Supra, note 28, ss. 50-53 and 58. 

206 See, for example, Commission Report, supra, note 1, Part II, at 93 and 174. 



54 

proceeds of enforcement that there are no maintenance creditors who 
could assert a claim to proceeds of enforcement in the hands of the sheriff, 
the onus should rest squarely with maintenance creditors, who would be 
the sole beneficiaries of the priority. Consequently, we proposed that only 
maintenance creditors who have filed with the enforcement office at the 
time any enforcement proceeds are realized a writ of enforcement contain- 
ing a notation to the effect that it is in respect of a maintenance debt 
should be entitled to priority with respect to such proceeds. 207 In this way, 
the sheriff, by examining his books, would immediately be in a position to 
determine who is to receive the specific proceeds of enforcement in ques- 
tion. 

We are of the view that, if non-maintenance creditors were to have 
access to this information, any adverse impact of the proposed mainten- 
ance creditor's priority would be minimized, for other creditors would be 
able to make an informed decision concerning whether it would be worth- 
while to commence legal proceedings or enforcement proceedings against 
their debtors. Accordingly, we recommend that the register of mainten- 
ance judgment debts, which the enforcement office would be required to 
establish and maintain under an earlier recommendation, 208 should be a 
public register. 

(ii) The Wage Creditor's Priority 

As was pointed out earlier in this chapter, the other significant prior- 
ity, or exception to the scheme of rateable distribution, embodied in the 
Creditors' Relief Act that has received the imprimatur of the Legislative 
Assembly of Ontario is the one in favour of wage creditors. At the present 
time, a wage creditor's priority exists under both the Wages Act 209 and the 
Employment Standards Act, 210 although in somewhat inconsistent terms. 
At this juncture, therefore, it may be useful to compare the existing statu- 
tory priorities in favour of wage creditors. 211 

Section 3 of the Wages Act and section 14 of the Employment Stan- 
dards Act provide, respectively, as follows: 

3. All persons who, at the time of the seizure by the sheriff or who within 
one month prior thereto, were in the employment of the execution debtor, 
and who become entitled to share in the distribution of money levied out of 
the property of a debtor within the meaning of the Creditors' Relief Act are 
entitled to be paid out of such money the wages due to them by the execution 



207 Ibid., Part I, at 95-96. 

208 Ibid. 

209 Supra, note 89. 

210 Supra, note 104. 

211 For a discussion of the priorities accorded wage creditors in Canada generally, see 
Dunlop, supra, note 4, at 460-62; Christie, Employment Law in Canada (1980), ch. 8; 
and Zatzman, "The Unpaid Employee as Creditor: Case Comment on Homeplan 
Realty" (1980), 6 Dalhousie L.J. 148. See, also, the federal Report of the Committee 
on Wage Protection in Matters of Bankruptcy and Insolvency (October, 1981), at 
18-21. 



55 

debtor, not exceeding three months wages, in priority to the claims of the 
other creditors of the execution debtor, and are entitled to share pro rata with 
such other creditors as to the residue, if any, of their claims. 

14. Notwithstanding the provisions of any other Act and except upon a dis- 
tribution made by a trustee under the Bankruptcy Act (Canada), wages shall 
have priority to the claims or rights and be paid in priority to the claims or 
rights, including the claims or rights of the Crown, of all preferred, ordinary 
or general creditors of the employer to the extent of $2,000 for each em- 
ployee. 

First, it should be noted that section 3 of the Wages Act may be relied 
upon only by persons who were in the employ of the judgment debtor "at 
the time of the seizure by the sheriff or within one month prior thereto". 
Section 14 of the Employment Standards Act contains no similar restric- 
tion: it would seem to be available to anyone who is owed wages. 

Secondly, the Wages Act, unlike the Employment Standards Act, con- 
tains an additional requirement that must be satisfied before the wage 
creditor's priority may be claimed. To be entitled to the priority referred 
to in section 3 of the Wages Act, the wage creditor must be "entitled to 
share in the distribution of money levied out of the property of a debtor 
within the meaning of the Creditors' Relief Act'\ In other words, the wage 
creditor must be either an execution creditor or a certificate creditor 
within the meaning of the Act. 212 Again, no similar limitation exists in 
respect of the priority established by section 14 of the Employment Stan- 
dards Act. 

Thirdly, the extent of the priority varies from statute to statute. In the 
case of the Wages Act, a person may be entitled to a priority for up to 
three months wages, with no maximum amount fixed by statute. Under 
the Employment Standards Act, on the other hand, priority may be 
claimed only in respect of $2000. In some instances, the former may prove 
to be a greater amount, although the latter generally will be more benefi- 
cial to the low-income earner. 

A fourth difference between these two statutory provisions may prove 
to be extremely important in certain cases. Section 14 of the Employment 
Standards Act provides that the wage creditor is to have priority over all 
unsecured creditors of the employer, including the Crown. No such prior- 
ity for wage creditors is to be found in section 3 of the Wages Act. 

Finally, it is worth pointing out that the definition of wages in the 
Employment Standards Act 213 may well be substantially broader than that 



212 See s. 5(2) of the Creditors' Relief Act, supra, note 2. 

213 Supra, note 104, s. l(p), which provides as follows: 

\(p) 'wages' means any monetary remuneration payable by an employer to an 
employee under the terms of a contract of employment, oral or written, express 
or implied, any payment to be made by an employer to an employee under this 
Act, and any allowances for room or board as prescribed in the regulations or 
under an agreement or arrangement therefor but does not include, 

(i) tips and other gratuities, 

(ii) any sums paid as gifts or bonuses that are dependent on the discretion 
of the employer and are not related to hours, production or efficiency, 

(iii) travelling allowances or expenses, 

(iv) contributions made by an employer to a fund, plan or arrangement to 
which Part X of this Act applies. 



56 

contained in the Wages Act. 2H This too may prove quite significant in a 
particular case. 

While we can see no reason for the existence of both section 3 of the 
Wages Act and section 14 of the Employment Standards Act, we believe 
that wage creditors should continue to have the benefit of some priority 
vis-a-vis other creditors of their debtor. A great many provinces have leg- 
islation to this effect, 215 and the Bankruptcy Act 216 too provides wage credi- 
tors with some priority in recognition of the importance of wage claims. 

Our reasons for proposing a wage creditor's priority are similar to 
those expressed in proposing a broad maintenance creditor's priority, 217 
and to those supporting the wage garnishment exemption recommended in 
chapter 3 of Part II of the Commission's Report on the Enforcement of 
Judgment Debts and Related Matters. 218 In short, just as maintenance cred- 
itors rely for the most part on the payment of support or maintenance to 
secure the necessities of life, so the majority of the Canadian public is 
dependent on wages for their day-to-day survival. Consequently, a certain 
percentage or amount of a person's wages must be guaranteed. 

In considering the garnishment of wages, the Commission supported a 
policy that generally would exempt from garnishment eighty-five percent 
of a person's wages and income. 219 Although a priority for a similar per- 
centage would have the advantage of conceptual neatness, for the sake of 
administrative convenience we have decided instead upon a three months 
priority for wages similar to that now contained in the Wages Act. While 
such a priority may, practically speaking, treat wage creditors differently, 
in our view, it has the advantage of more accurately reflecting the needs of 
a particular wage creditor. In addition, a three months wages priority will 
not be subject to the ravages of inflation as would a priority of $2000 or 
some other figure. It would be possible, of course, to tie such a figure to 
the Consumer Price Index in order to keep pace with inflation. However, 
in our opinion, a three months wages priority on the whole would be eas- 
ier to administer and just as effective. 

Accordingly, subject to the discussion below respecting the relative 



214 Wages are defined in s. 1 of the Wages Act, supra, note 89, to mean "wages or salary 
whether the employment in respect of which the same is payable is by time or by the 
job or piece or otherwise". 

215 See, for example, Execution Creditors Act, R.S.A. 1980, c. E-14, s. 16, and 
Employment Standards Act, R.S.A. 1980, c. E-10.1, s. 100(1); Creditor Assistance 
Act, R.S.B.C. 1979, c. 80, s. 36; and Wage Earners Protection Act, R.S.N.B. 1973, 
c. W-l,s. 4(1). 

216 Supra, note 21. Priority for wage creditors is retained in Bill C-12, supra, note 21, 
s. 265. 

217 See supra, this ch. , sec. 6(c)(i). 

218 See Commission Report, supra, note 1 , Part II, at 168. 

219 Ibid. 



57 

priorities of maintenance and wage creditors, the Commission recom- 
mends that wage creditors should be entitled to a priority over other 
enforcement creditors in respect of three months unpaid wages. In all 
other respects, the wage creditor's priority should resemble the priority 
outlined in section 14 of the Employment Standards Act rather than the 
one described in section 3 of the Wages Act. Consequently, the wage cred- 
itor should not have to prove that he was in the debtor's employ "at the 
time of seizure ... or within one month prior thereto"; rather, he should 
be required to show simply that he is owed a specific amount by the debtor 
for unpaid wages. We are also of the view that the definition of wages that 
should be adopted for the purpose of determining a particular wage cred- 
itor's priority should be the broader one contained in section \{p) of the 
Employment Standards Act. 

Finally, we wish to make some comments regarding the manner in 
which a wage creditor's claim should be established. We mentioned earlier 
that, under the Wages Act, before a wage creditor will be allowed a prior- 
ity, he must have delivered to the sheriff either a judgment, or a certificate 
procured pursuant to the Act, in respect of his wages. In the light of the 
Commission's proposal to abolish the certificate procedure and to elimi- 
nate the grace period 220 now sanctioned by section 5(2) of the Creditors' 
Relief Act, and given the Commission's recognition of the prime impor- 
tance of wages to the general populace, 221 some other means of establish- 
ing a wage claim must be adopted. The method favoured by the Commis- 
sion is the one already available under the Employment Standards Act. 
Section 47 of the Act empowers an employment standards officer to make 
certain orders where he finds that an employee is entitled to any wages by 
his employer. Where an order has been made under this section, the 
Director of Employment Standards is authorized to "issue a certificate 
thereof and cause the same to be filed in a court of competent jurisdiction 
and thereupon the certificate shall be enforceable as a judgment or order 
of the court". 222 Similar legislation is to be found in a number of the other 
provinces. 223 

We believe that a scheme whereby a wage creditor could apply for 
such a certificate, which he himself then could file with the enforcement 
office, would be quite advantageous to the wage creditor. The procedure 
would be a simple and straightforward one; it would be swift and econom- 
ical, and the claims could be resolved by persons who have developed a 
certain expertise respecting such matters. Accordingly, we recommend 
that a wage creditor should establish his entitlement to a priority in respect 
of any proceeds of enforcement in the hands of the new enforcement office 
by filing with the enforcement office either a writ of enforcement or a cer- 
tificate of unpaid wages issued under the Employment Standards Act. 



220 See supra, this ch., sees. 6(b)(i) and (iii). 

221 See, for example, Commission Report, supra, note 1, Part II, at 154-57. 

222 Employment Standards Act , supra, note 104, s. 54(1). 

223 See, for example, The Executions Act, R.S.M. 1970, c. E160, s. 9; Wage Earners Pro- 
tection Act, R.S.N. B. 1973, c. W-l, s. 4; and The Creditors' Relief Act, R.S.S. 1978, 
c. C-46, s. 15. 



58 

(iii) Distribution among Creditors Entitled to Priority 

The Commission has proposed above that maintenance creditors 
should be entitled to priority over other enforcement creditors to the full 
extent of any outstanding support or maintenance debt. We also have 
advocated that wage creditors should be preferred in any distribution of 
enforcement proceeds in respect of three months unpaid wages. We must 
now consider the relationship between these two very important priorities. 

Although far from an easy decision to make, the Commission has 
decided that these two groups should be ranked as follows: first, mainten- 
ance creditors and, secondly, wage creditors. As we have pointed out, the 
creditors in each of these categories are likely to be dependent upon the 
income in question for the day-to-day necessities of life. However, it is the 
view of the Commission that a maintenance creditor is likely to have more 
difficulty finding an adequate, alternative source of income than an unpaid 
wage earner. Indeed, a wage creditor may well have secured another posi- 
tion of employment with a regular source of income at the time he is seek- 
ing to recover unpaid wages. Therefore, the Commission recommends that 
maintenance creditors should be entitled to a priority over wage creditors. 

One other matter concerning these two categories of preferred cred- 
itor that we believe should be dealt with is the rights of creditors in each of 
these categories vis-a-vis one another. For example, there may well be a 
number of wage creditors claiming to be entitled to certain proceeds of 
enforcement. Similarly, it is possible to envisage a situation in which more 
than one maintenance creditor of the same debtor is vying to be paid out 
of the same fund. 224 If nothing more were said, it might be argued that, 
between or among maintenance creditors or wage creditors, a "first come, 
first served" regime prevails. We believe that this matter should be put 
beyond doubt. We can see no reason why the basic principle of rateable 
distribution should not govern in such circumstances as well: in such a 
way, the burden of any shortfall could be shared equally by all the credi- 
tors in the category entitled to the proceeds. In the case of wage creditors, 
there already exists an express precedent for such a scheme. Section 53(4) 
of the Employment Standards Act provides as follows: 

53. -(4) Where the moneys received by the Director under this Act are 
insufficient to pay the wages due employees of an employer in full, the Direc- 
tor shall distribute the moneys received by him, including any penalty, rate- 
ably among those employees on whose behalf the moneys were received. 

Insofar as maintenance creditors are concerned, while they do not enjoy a 
general priority at the present time, any proceeds of enforcement to which 
such creditors now would be entitled would have to be shared rateably in 
accordance with the Creditors' Relief Act. 225 



224 Since the enactment of the Family Law Reform Act, supra, note 28, the likelihood of 
this occurring has been increased, for this Act imposes an obligation of support not 
only on spouses by marriage, but also on common law spouses: see the definition of 
"spouse" in s. 14 of the Act. The Family Law Reform Act also obligates every parent 
to provide support for his or her child (s. 16) and every child who is not a minor to 
provide support for his or her parent (s. 17). 

225 See Billinghurst v. Billinghurst (1977), 3 C.P.C. 247 (S.C.O. Master). 



59 

Accordingly, with one qualification, we recommend that proceeds of 
enforcement should be distributed rateably among creditors in the same 
category in the case of both maintenance creditors and wage creditors. 
Given the power of the courts to vary a support 226 or maintenance order, 227 
and the possibility of unique circumstances where several maintenance 
creditors of the same debtor, with varying degrees of need, claim to be 
entitled to enforcement proceeds, we recommend that a provincial court 
(family division) should be empowered to impose some scheme of distri- 
bution other than rateable distribution upon maintenance creditors, where 
it considers it just and equitable to do so. The principle of rateable distri- 
bution would apply to maintenance creditors unless there is an order to the 
contrary. 

(d) The Crown's Right to Priority 

"I do not think there can be a doubt that the Crown is entitled at com- 
mon law to a preference in a case such as this, for when the rights of the 
Crown come in conflict with the right of a subject in respect to payment of 
debts of equal degree, the right of the Crown must prevail . . .". So com- 
mented Chief Justice Ritchie in an 1885 judgment of the Supreme Court of 
Canada, The Queen v. Bank of Nova Scotia. 228 In this section, the Com- 
mission will examine whether this long accepted rule of the common law 
should continue to be the law of Ontario. In considering this question, it 
should be kept in mind that the Crown's right to priority has been restrict- 
ed, to a greater or lesser degree, by a number of statutes, including the 
Bankruptcy Act 229 and the Employment Standards Act 230 Clearly, this 
royal prerogative is far from immutable. 

In recent years, the privileged position of the Crown, especially in the 
context of bankruptcy and insolvency, has come under increasing attack. 
For example, both the Report of the Commission on the Bankruptcy Laws 
of the United States 231 and the Canadian Report of the Study Committee on 
Bankruptcy and Insolvency Legislation 232 were highly critical of the pref- 
erence enjoyed by the government or Crown under existing bankruptcy 
and insolvency legislation. It may be useful to quote at length from the 
Report of the Study Committee on Bankruptcy and Insolvency Legislation 
on this subject: 233 

It is, we believe, important to re-examine the public policy in respect of the 
Crown priority. It must be determined whether such a priority is justified in a 
modern society. Certainly, it is not necessary for the financial stability of the 
government. The argument that the Crown cannot choose its own debtor has 



226 See the Family Law Reform Act, supra, note 28, s. 21 . 

227 See the Divorce Act, R.S.C. 1970, c. D-8, s. 11(2). 

228 (1885), 11S.C.R. 1, at 10. 

229 Supra, note 21 , s. 107. 

230 Supra, note 104, s. 14, discussed supra, this ch., sec. 6(c)(ii). 

231 Part I (1973), at 214 et seq. 

232 Report of the Study Committee on Bankruptcy and Insolvency Legislation (1970), at 
122 et seq. 

233 Ibid., at 122-23. 



60 

some relevance in claims for taxes, but none, as regards contractual claims. In 
this respect, it should be pointed out that individuals claiming damages do not 
choose their debtors either; and yet, they do not benefit by a priority of rank. 
One wonders whether, in our economy of easy credit, the businessman has 
always the economic freedom to choose his debtor or whether he is not 
bound, to a certain point, to give credit to the same extent as do his closest 
competitors. It could even be argued that the government should rank after 
ordinary creditors, as the public treasury is, in fact, in a better position than 
anyone to bear the inevitable losses. The government can, in effect, divide the 
burden of tax left unpaid by the bankrupt among all the tax paying public. It 
would be more logical for the government to do this, than to take advantage 
of the bankruptcy of an insolvent taxpayer to reimburse itself, at the expense 
of the creditors who have already suffered losses. Certainly, there can be no 
rational explanation for the government to attempt to obtain payment of the 
tax due by a bankrupt from his creditors. Such a proposition offends one's 
sense of natural justice. 

Whatever the logic or lack of logic there is in the priority of the Crown, the 
cumulative impact of the priority has substantially increased since the Second 
World War. Crown priorities have grown in three dimensions: (1) the rates of 
existing or old taxes have been increased; (2) there have been many new kinds 
of taxes; and (3) the Crown has become extensively engaged in business, par- 
ticularly through the use of Crown corporations to which the Crown priority 
has been held, in many cases, to apply. The apathy of creditors to take part in 
the administration of an estate in bankruptcy can very well be explained by 
reason of the Crown priority. Very often, for the creditors to involve them- 
selves in the administration of estates is equivalent to their volunteering as 
agents of the public treasury. 



In our opinion, the priority of the Crown in our modern society cannot be jus- 
tified and we recommend that it be abolished. 

Essentially, the arguments raised in support of the abolition of Crown 
priority in the bankruptcy context are three in number. First, it is con- 
tended that the government can better absorb losses than can private cred- 
itors, since the government has the ability to distribute losses among its 
many taxpayers. Secondly, it is argued that creditors who are assured of a 
larger dividend are more likely to involve themselves in bankruptcy 
administration, thereby improving the process. Thirdly, it is pointed out 
that the Crown's priority is an historical anachronism, which is of little or 
no relevance today. 

These arguments have not gone unchallenged. However, even com- 
mentators who support a Crown priority in the context of bankruptcy pro- 
ceedings recognize the need to limit this priority severely. One 
commentator, 234 for example, has drawn a distinction between debts vol- 
untarily incurred and what may be termed "involuntary debts", such as 
taxes, noting the following distinction between these two types of debt: 235 

[A] private business creditor who extends credit anticipates a profit or busi- 
ness advantage in return for which he voluntarily accepts the risk of the debt- 



234 See Shanker, "The Worthier Creditors (And a Cheer for the King)" (1975-76), 1 Can. 
Bus. L.J. 340. 

235 Ibid., at 345. 



61 

or's insolvency. If the risks outweigh the business advantages, then the private 
creditor need not proceed with the transaction, or can demand cash or securi- 
ty. On the other hand, the Government is required to furnish to the bankrupt 
the services which give rise to the tax debt; and has no practical way of avoid- 
ing the risk of default by insisting upon cash in advance or security. Indeed, 
realistically speaking, the Government has no way even of determining the 
full debt due it until that debt is long overdue. 

As a result, it was urged "that the Government tax claims are more worthy 
than those of a business creditor; and thus entitled to priority in a bank- 
ruptcy situation". 236 

In a similar vein, the Payne Committee Report contained the follow- 
ing argument with respect to a right of priority for taxes: 237 

These debts are owed not to private creditors as are trading debts, loans of 
money and so forth, but the community at large, represented either by the 
local authorities for the collection of rates or the Board of Inland Revenue for 
the collection of tax. These debts are also involuntary in that the claimants 
have had no choice in the granting of credit to ratepayers and taxpayers. They 
cannot withdraw or restrict credit in the same way as a trading concern or pri- 
vate creditor. For these reasons they lack that control over the debtor which is 
to some extent enjoyed by the general body of creditors. . . . 

Two recent reports, on the other hand, have proposed a total abolition 
of the Crown priority. In 1978, the Australian Senate Standing Committee 
on Constitutional and Legal Affairs issued a Report entitled Priority of 
Crown Debts. 238 This Committee examined the subject of Crown priority 
not only in the context of bankruptcy, but also as it relates to "corporate 
liquidations or other cases of impecunious persons or corporations". 239 
After examining the basis of the priority, the Report listed and discussed 
the major objections to the Crown priority in Australia, namely, the hard- 
ship occasioned thereby, the complexity of the law, the inhibiting effect of 
the Crown's priority on other creditors, the uncertainty occasioned by it, 
and the resultant delay in payment. 240 The Committee in the end recom- 
mended the total abolition of all rights to priority enjoyed by the Crown. 241 
The Committee drew no distinction between tax debts and other Crown 
debts. 

As a "second-best" solution, the Australian Senate Standing Commit- 
tee on Constitutional and Legal Affairs suggested that "certain taxes 
should be accorded priority only as to the amount owing in respect of the 3 
months immediately preceding the commencement of the insolvency 
administration". 242 While this suggestion was framed in terms of insolven- 
cy, it would seem equally appropriate in the case of a distribution under 



236 Ibid. 

237 Payne Committee Report, supra, note 143, para. 1115, at 292. 

238 Australian Senate Standing Committee on Constitutional and Legal Affairs, Priority 
of Crown Debts (1978). 

239 Ibid., at 1. 

240 Ibid., ch. IV. 

241 Ibid., at 42 and 57. 

242 Ibid., at 63. 



62 

the revised Creditors' Relief Act. A Crown priority limited in this way 
would reduce the hardship that results from a Crown priority and the 
inhibiting effect of the priority on other creditors. However, as the Com- 
mittee pointed out, "anything short of total abolition would not solve the 
problems of complexity, uncertainty, delay, and expense which are the 
product of Crown priority". 243 

Interestingly, the Australian Senate Standing Committee on Constitu- 
tional and Legal Affairs made specific reference to the likely financial con- 
sequences of abolition. For a variety of reasons, it did not believe that the 
fiscal repercussions of abolition would be very serious. First, the amount 
of revenue foregone, in absolute terms, did not appear to be significant. 244 
Secondly, the Committee pointed out that "abolition of the Crown's prior- 
ity would not result in the Commonwealth receiving no distribution .... It 
would still . . . receive partial repayment of its debts . . . ." 245 Thirdly, the 
Committee noted that "the increased amounts recovered by other credi- 
tors if priority were abolished" would mean that "these creditors would 
pay increased income tax because of the reduction in the quantum of bad 
debts". 246 Finally, it suggested that the abolition of the Crown priority 
likely would result in greater efforts by ordinary creditors to recover their 
debts, with the result that "greater sums could be expected to be 
recovered". 247 

The Law Reform Commission of British Columbia also has recently 
examined the arguments for and against the retention of the Crown's pre- 
rogative right to priority. 248 Relying heavily on the Report of the Austra- 
lian Senate Standing Committee on Constitutional and Legal Affairs, the 
British Columbia Commission has proposed that "[t]he prerogative right 
of the Crown in right of British Columbia as a creditor to priority over 
other creditors of the same debtor be abolished". 249 In large part, this pro- 
posal was animated by the following reasoning: 250 

Even if one adopts the position that there may be cases in which the claim 
of the Crown should be preferred, the prerogative right, as a rule of general 
application, proceeds on an entirely wrong principle. Essentially, the preroga- 
tive demands that priority should be determined by reference to the character 
of the creditor rather than by the character of the claim. This is indefensible in 
a society that long ago completed the transition from status to contract. 

Like the Law Reform Commission of British Columbia and the Aus- 



243 Ibid. 

244 Ibid., at 44. This fact may well serve as a double-edged sword. For example, Shanker, 
supra, note 234, at 346-47, points to the fact that government claims take up only a 
small share of a bankrupt's estate as, perhaps, an argument in favour of retaining the 
Crown priority. 

245 5wpra,note238,at45. 

246 Ibid. 

247 Ibid. 

248 See British Columbia Priorities Report, supra, note 105. 

249 Ibid., at 42 (emphasis deleted). 

250 Ibid., at 40. 



63 

tralian Senate Standing Committee on Constitutional and Legal Affairs, 
we too favour abolition of the Crown's royal prerogative to be paid in pri- 
ority to creditors of equal degree. The Commission adopts this view not 
because the Crown has a "deep pocket" and, therefore, may be in a better 
position to absorb and distribute its losses. 251 Rather, we are persuaded in 
part by the financial evidence assembled by the Australian Senate Stand- 
ing Committee on Constitutional and Legal Affairs concerning the limited 
impact on the Crown of abolition of the right to priority. We also agree 
with both the Committee and the Law Reform Commission of British 
Columbia that the problems resulting from the Crown's priority far exceed 
the benefit to the Crown derived therefrom. Finally, we share the view of 
the Law Reform Commission of British Columbia that the Crown's right 
to priority over creditors of equal degree is an historical anomaly, out of 
place in an age of "equality before and under the law". 252 Accordingly, we 
recommend that the right of the provincial Crown to be preferred over 
creditors with debts of equal degree in any distribution of enforcement 
proceeds should be abolished. 

We recognize that abolition of the provincial Crown's right to priority, 
without similar action being taken in respect of the federal Crown's right 
to priority, could result in the latter enjoying a priority over claims of the 
provincial Crown. To avoid such a result, we would recommend that the 
Parliament of Canada be asked to do away with the federal Crown's royal 
prerogative to priority. 253 Given the state of legal authorities respecting the 
power of a provincial legislature to impinge on any of the royal preroga- 
tives enjoyed by the federal Crown, 254 it would be best if the Parliament of 
Canada specifically addressed itself to this issue and introduced appro- 
priate legislation. 

(e) Statutory and Common Law Liens and Charges 

In addition to the common law right of the Crown to priority, another 
source of great frustration for ordinary unsecured judgment creditors is 
the seeming plethora of statutory and common law liens and charges in 
favour of the Crown, a Crown agency or, in some cases, individual credi- 
tors, which now are not required to be registered in order to be effective. 
As in the case of the prerogative right to priority, these unregistered liens 
and charges can cause hardships for enforcement creditors, inhibit 
enforcement creditors from taking active measures against their debtor, 
and occasion a great deal of uncertainty and delay in the distribution of 
enforcement proceeds. What follows, then, are a number of proposals that 
the Commission views as a minimum for reform of this area of the law. 



251 See Shanker, supra, note 234, at 343-44. See, also, Payne Committee Report, supra, 
note 143, para. 1115, at 292. 

252 See s. 15(1) of the Canadian Charter of Rights and Freedoms, being Part I of the 
Constitution Act, 1982, scheduled to the Canada Act 1982, c. 11 (U.K.). Section 15 
comes into force on April 17, 1985. 

253 For a somewhat similar proposal, see British Columbia Priorities Report, supra, note 
105, at 42. 

254 Some of the leading authorities may be found in note 110, supra. 



64 



Because of the wide variety of circumstances in which statutory and 
common law liens and charges may arise, we do not think that it is appro- 
priate to attempt to determine, in the context of this Report, whether, for 
example, any or all such liens and charges should be abolished. Given the 
complexity of the subject-matter, we recommend that statutory and com- 
mon law liens and charges should be the subject of a separate, in-depth 
study. The recommendations that follow are designed simply to eliminate 
some of the uncertainties and injustices that are the result of the present 
state of the law. 



(i) Land 

We turn first to the problems experienced by creditors as a result of 
the great many unregistered liens and charges that affect land. In this con- 
text, comments contained in the Commission's 1971 Report on Land 
Registration 255 may be noteworthy. In that Report, the Commission out- 
lined the problem of unregistered claims affecting land in the following 
terms: 256 

The problem ... is to determine what claims, if any, should be effective, even 
though not registered. 

The general factors to be considered are cost, and the effect on a claim of 
a requirement of registration for effectiveness. The cost to be considered is the 
cost of making the registration, or the cost of making searches for the claims if 
no requirement of registration is imposed. 

The effect of a requirement of registration is more complex. Some claims 
might not be registered because of ignorance - either ignorance of the exist- 
ence of the claim itself or ignorance of the requirement of registration. The 
requirement may make a claim less effective, either because administrative 
difficulties may prevent registration immediately after the claim arises or 
because the owner of the claim may not know the identity of the land against 
which it can be registered. 

At present a bewildering array of claims that need not be registered 
exists. Many of them are a potential trap for an unwary purchaser if a search is 
not made, or require an inefficient dispersal of time and energy if a search is 
made. 

If read in terms of the enforcement process, rather than the system of land 
registration, the preceding remarks would provide a most apt description 
of the effect of unregistered liens and charges. 

To minimize what the Commission viewed as a "potential trap for an 
unwary purchaser", and to increase efficiency in the conveyancing process, 
it advocated two major reforms. First, insofar as liens against specific par- 
cels of land were concerned, the Commission proposed that all such liens 
"must be registered to be enforceable, except for the lien to secure pay- 
ment of municipal taxes, and other debts that are secured and collected 



255 Ontario Law Reform Commission, Report on Land Registration (1971). 

256 Ibid., at 34. 



65 

through this lien". 257 This recommendation was based on the Commis- 
sion's view that arrears of municipal taxes could be discovered "without 
much cost or difficulty", whereas registration "would be extremely expen- 
sive for the foreseeable future, although the adoption of electronic tech- 
nology and the integration of systems of information about land may 
eventually eliminate this cost". 258 This recommendation has not been 
implemented to date. 

Secondly, with a couple of exceptions, we supported the abolition of 
liens purporting to bind all the lands of a particular debtor. 259 We gave as 
our reason the fact that, since such liens "are rarely enforced against pur- 
chasers if searches are not made", "the substantial cost of searching, or 
the uncertain prospect of a claim if searches are not made, is larger than 
any possible loss of revenue". 260 The exceptions to this recommendation 
concerned writs of execution 261 and liens to secure the payment of corpora- 
tions tax 262 and succession duty. 263 Insofar as the latter were concerned, we 
were of the view that the inconvenience and annoyance for lawyers, and 
the costs to their clients occasioned thereby, were outweighed by the reve- 
nue they protected. 

The legislative response to these two important recommendations 
should be noted. Appendix I of the Commission's 1971 Report on Land 
Registration listed six statutes that created government liens against all 
land owned by the debtor. 264 Nearly all these general liens have been 
abolished. 265 More significant, in our view, is the fact that the Legislative 
Assembly of Ontario has seen fit to abolish one of the general liens whose 
retention we considered justified. As a result of recent amendments to The 
Corporations Tax Act, 1972, 266 the general lien available thereunder has 
been eliminated. 267 To be effective, a corporation tax lien now must be 
registered against the property sought to be bound. 



257 Ibid., at 37. The existing legislation normally provided for one of two kinds of lien: 
one attached to a particular piece of real property; the other bound all the debtor's 
property wherever situated in the Province. 

258 Ibid., at 3$. 

259 Ibid. 

260 Ibid., at 39. 

261 Ibid., at 41 etseq. 

262 Ibid., at 38. 

263 Ibid. 

264 The statutes listed there are The Corporations Tax Act, R.S.O. 1960, c. 73, s. 91(1); 
The Logging Tax Act, R.S.O. 1960, c. 224, s. 31; The Motor Vehicle Fuel Tax Act, 
R.S.O. 1960, c. 248, s. 17; The Retail Sales Tax Act, 1960-61, S.O. 1960-61, c. 91, 
s. 16; The Tobacco Tax Act, 1965, S.O. 1965, c. 130, s. 7(2); and The Assessment Act, 
1968-69, S.O. 1968-69, c. 6, ss. 8(15) and 33(14). 

265 See The Corporations Tax Amendment Act, 1979 (No. 2), S.O. 1979, c. 89, s. 1; The 
Motor Vehicle Fuel Tax Amendment Act, 1975, S.O. 1975, c. 10, s. 5; The Retail Sales 
Tax Amendment Act, 1975, S.O. 1975, c. 9, s. 7; The Tobacco Tax Amendment Act, 
1979, S.O. 1979, c. 17, s. 4; and The Assessment Amendment Act, 1972, S.O. 1972, 
c. 125, s. 2, repealing s. 8 of The Assessment Act, R.S.O. 1970, c. 32. Section 33(14) of 
this Act is still in effect. 

266 S.O. 1972, c. 143. 

267 The Corporations Tax Amendment Act, 1979 (No. 2), S.O. 1979, c. 89, s. 1. The other 
general lien that the Commission excepted from its recommendation for the abolition 



66 

We would note that, in introducing the amendments in question, the 
Minister of Revenue commented as follows: 268 

The development of more effective collection methods, concentrating on 
delinquent payments and noncompliance with statute requirements, has 
enabled us to protect revenues where the statutory lien provisions have been 
repealed to date. This gives us every reason to expect the same result with 
respect to corporation taxes. In view of this, I believe the statutory lien is no 
longer required under The Corporations Tax Act. 

In my ministry's quest for tax simplification and regulatory reform, we 
have recognized that only a small percentage of taxpayers poses any collection 
problem and that both the direct and indirect costs of our requirements to 
Ontario's taxpayers must be a paramount consideration. I estimate that corpo- 
rate taxpayers incur costs of approximately $1.25 million annually in applying 
for and obtaining corporations tax lien clearances. Added to this is the cost 
incurred by individuals who have to obtain lien clearances where they are 
acquiring property which at some time within the preceding five years was 
owned by a corporation. 

Because of the 20 percent growth in lien clearance requests, taxpayer 
costs in this area would escalate substantially if the program were to continue. 
Over 200,000 applications for lien clearances are received yearly. For 80 per 
cent of these requests, approval is automatically given. The proposed measure 
to repeal the statutory lien will relieve the vast majority of taxpayers from 
complying with the present lien provision and thus represents a major step 
towards deregulation and tax simplification. 

Turning to those statutes that create liens against specific parcels of 
land, we would note that general implementation of our recommendation 
in favour of registration has not been forthcoming. 269 In the context of the 
present Report, we would reaffirm our earlier recommendation that such 
liens should be effective only if and from the time they are registered. It is 
only through registration that an enforcement creditor is likely to learn of 
the existence of competing claims that may be entitled to priority, thereby 
enabling him to make informed decisions regarding the utility of taking 
legal proceedings or enforcement measures against his debtor. Only in this 
way can hardship to creditors be minimized, and complexity and delay in 
the distribution of enforcement proceeds be reduced significantly. 



of all general liens - in respect of succession duty - is no longer of concern since the 
repeal of The Succession Duty ,4a, 'R.S.O. 1970, c. 449, in 1979: see The Succession 
Duty Repeal Act, 1979, S.O. 1979, c. 20. 

268 See Legislature ofOntarip Debates, 31st Pari. 3d Sess., November 6, 1979, at 4245. 

269 A number of such liens were required to be registered even at the time the Commis- 
sion issued its 1971 Report on Land Registration: see, for example, The Bail Act, 
R.S.O. 1970, c. 37, ss. 2-5 (now R.S.O. 1980, c. 36, ss. 2-5); The Farm Loans Act, 
R.S.O. 1970, c. 158, s. 36 (now R.S.O. 1980, c. 154, s. 36); The Legal Aid Act, R.S.O. 
1970, s. 239, s. 18 (now R.S.O. 1980, c. 234, s. 18); and The Workmen's Compensation 
Act, R.S.O. 1970, c. 505, s. 116(4) (now R.S.O. 1980, c. 539, s. 120(4)). 

Compare, for example, The Mining Act, R.S.O. 1970, c. 274, ss. 101(4) and 672 
(now R.S.O. 1980, c. 268, ss. 92(4) and 216); The Mining Tax Act, 1972, S.O. 1972, 
c. 140, s. 18 (now R.S.O. 1980, c. 269, s. 21); The Power Corporation Act, R.S.O. 
1970, c. 354, s. 41(10) (now R.S.O. 1980, c. 384, s. 40(10)); and The Provincial Land 
Tax Act, R.S.O. 1970, c. 370, s. 26(1) (now R.S.O. 1980, c. 399, s. 26(1)). 



67 

Turning to liens that may be collected through the municipal tax lien, 
we find our earlier recommendation to exempt from any registration 
requirement liens for municipal taxes, and other debts that are secured 
and collected through this lien, to be inadequate in the present context. 
Up-to-date information concerning the nature of the debtor's property 
interests is central to the efficient and equitable operation of the enforce- 
ment system from the enforcement creditor's point of view. While this 
objective could be attained by a registration requirement, it also could be 
achieved by a simple requirement that the liens under discussion be added 
to the collector rolls in order to be guaranteed a priority in any distribution 
of enforcement proceeds realized from the sale of the particular parcel of 
land. Accordingly, we recommend that liens that now may be enforced 
through the municipal tax lien should be enforceable only if the amount in 
question is added specifically to the collector rolls. We would note that this 
recommendation would enure to the benefit not only of enforcement cred- 
itors but also to purchasers and others who seek to acquire an interest in 
land. 

(ii) Personal Property 

We come now to the subject of liens and charges against personal 
property of the debtor. Before proceeding any further, we should point 
out that we are concerned here only with non-possessory liens, since the 
mere fact of possession of the debtor's property by a third person will pro- 
vide an enforcement creditor, in most cases, with an indication that the 
property may be subject to prior third party claims. Accordingly, the cred- 
itor is likely to proceed cautiously before instructing the enforcement 
office to take active enforcement measures against the property. Rather, 
the focus of the present concern is non-possessory liens and charges, 
which, by their very nature, may be difficult to discover. In part, this is due 
to the fact that the Personal Property Security Act 210 does not apply to such 
liens. This exclusion, while justified on the ground that the Act is con- 
cerned with consensual transactions, 271 may be attributable more to per- 
ceived problems associated with the inclusion of non-possessory liens in 
the personal property security registration system. 272 Whatever the reason 
may have been for exempting such liens from the operation of the 
Personal Property Security Act when the Act first was enacted, this is a 
matter that now perhaps should be re-examined. 

270 R.S.O. 1980, c. 375, s.3(l)(a). 

271 See Catzman et al. , Personal Property Security Law in Ontario (1976), at 3. 

272 See, for example, Law Reform Commission of Saskatchewan, Proposals for a Saskat- 
chewan Personal Property Security Act (1977), at 11. The Commission considered the 
integration of the non-possessory lien granted by The Garage Keepers Act, R.S.S. 
1965, c. 279, into the proposed Personal Property Security Act. The conclusion arrived 
at by the Commission was as follows: 

The Commission discovered that only through massive modification in the 
structure of The Personal Property Security Act or through substantial changes in 
the legislative policies underlying The Garage Keepers Act would a unified system 
be developed. It concluded that these were very high prices to pay for the con- 
venience of such a system. 
See, also, Ontario Law Reform Commission, Report on the Non-Possessory Repair- 
man s Lien (1972). 



68 



In the interim, we believe that some minor changes to the present law 
should be made in order to facilitate enforcement against personal prop- 
erty of the debtor. In Part II of our Report on the Enforcement of Judg- 
ment Debts and Related Matters, 273 we made a number of recommenda- 
tions concerning the consequences that ought to flow when a third party 
who has an interest in property that has been seized fails to assert a timely 
claim thereto. We proposed, inter alia, that in such circumstances the third 
party's claim to the property and the proceeds therefrom should be extin- 
guished once the proceeds have been distributed. 274 To put the matter 
beyond doubt, we now recommend that a non-possessory lien or charge 
against personal property should bind the property only until sold and the 
proceeds therefrom only until distributed to those enforcement creditors 
entitled to receive a share of the proceeds. Consistent with our earlier rec- 
ommendations, the Commission also recommends that a purchaser of per- 
sonal property sold by the enforcement office should take it free and clear 
of any non-possessory lien or charge unless, prior to the sale, a valid claim 
has been filed with the enforcement office. 

While some may see the Commission's proposals respecting statutory 
and common law liens and charges as radical, we are convinced that our 
recommendations provide a reasonable approach, one that successfully 
balances the interests of all concerned. We are fortified in this view by the 
fact that the new proposed Bankruptcy Act 215 takes a similar approach to 
certain unregistered security interests. Section 270(1) of the proposed Act 
provides as follows: 

270. -(1) Where an arrangement or a bankruptcy order is made in respect of 
a debtor, any security interest to secure 

(a) the payment of a tax claim, 

(b) contributions to social security plans, or 

(c) the payment of a claim of a public utility for the provision of its ser- 
vices, 

is void unless the security interest has been registered in fact before the date of 
filing a petition or a proposed arrangement in respect of the debtor, and not 
only deemed to be registered, pursuant to a general system of registration of 
security interests that is available not only to Her Majesty in right of Canada 
or of a province but also to every other creditor holding a security interest and 
that is open to the public for inspection. 

(f) Other Priorities 

(i) The Costs of Instructing Creditors 

One of the criticisms voiced by the Law Reform Commission of Brit- 
ish Columbia, in its 1979 Report on Creditors' Relief Legislation: A New 



273 Commission Report, supra, note 1, Part II, at 263-64. 

274 Ibid. 

275 Bill C-\2, supra, note 21. 



69 

Approach, concerned the position of a creditor who incurs costs in initiat- 
ing enforcement proceedings against a debtor and then is required to share 
the proceeds of enforcement with other enforcement creditors of the 
debtor. 276 Without adequate compensation for the instructing creditor, it 
was argued, a creditors' relief regime gives rise to unfair results, and is 
likely to discourage creditors from initiating active enforcement measures. 
While noting that "[a]dequate compensation may make [the instructing 
creditor's] position somewhat more acceptable", the British Columbia 
Commission did not view compensation as a "complete answer". The 
Report stated: "Not all enforcement measures are successful, and there is 
no acceptable way to pass the costs of abortive enforcement measures on 
to other creditors." 277 Given this Commission's decision to recommend the 
retention, albeit in an altered form, of the Creditors' Relief Act, it has been 
necessary to grapple with the criticisms of the Law Reform Commission of 
British Columbia set out above. 

It will be recalled that a number of provisions of the present Act are 
directed to providing the successful enforcement creditor with compensa- 
tion. For example, sections 5(2) and 26 provide that, before the distribu- 
tion of enforcement proceeds, "the creditor at whose instance and under 
whose execution the seizure and levy were made" is entitled to "payment 
in full of the taxed costs and the costs of the execution". Section 5(2) pro- 
vides a priority in respect of the costs of garnishment to a creditor obtain- 
ing an attaching order. Reference should also be made to the priority 
accorded a creditor who resorts to equitable execution, 278 and that to 
which a creditor responsible for an attachment of the debtor's property 
under the Absconding Debtors Act 279 is entitled. 280 

For the most part, we find the approach adopted in the Creditors' 
Relief Act to be just and equitable, and sufficient to ensure that but few 
creditors will be unwilling to engage in active enforcement measures 
against their debtors, even though the proceeds realized thereby will be 
required to be shared rateably by all enforcement creditors. There are a 
number of matters in the present legislation, however, that do require the 
Commission's attention. 

First, under section 26 of the Act, referred to above, only the first 
instructing creditor is entitled to a priority in respect of his taxed costs and 
costs of execution. Other creditors who may also have instructed the sher- 
iff to enforce their judgments are simply entitled to add enforcement costs 
to their judgment and to a pro rata share of any distribution based on this 
total amount. 281 We find this to be an unsatisfactory state of affairs. 



276 British Columbia Report, supra, note 55, at 17. 

277 Ibid. 

278 Creditors' Relief Act, supra, note 2, s. 24. 

279 Supra, note 48. 

280 Creditors' Relief Act, supra, note 2, s. 21(1). 

281 This would be in addition to any interest they might be entitled to pursuant to their 
judgments: see Creditors' Relief Act, supra, note 2, s. 32(1). Where, of course, two or 
more creditors have instructed the sheriff in respect of different pieces of property of 
the debtor, and the sheriff has been successful in seizing and selling the property, each 



70 

Throughout this chapter, we have sought to avoid the creation of a scheme 
of distribution where the race goes to the swiftest. In our view, this can be 
accomplished by providing every instructing creditor with the same prior- 
ity insofar as his costs of enforcement are concerned. 282 We turn now to 
discuss the particulars of the proposed priority. 

In our view, the priority should be available only to creditors who suc- 
cessfully undertake enforcement proceedings. The Commission did give 
consideration to a scheme whereby unsuccessful enforcement creditors too 
would be provided with some compensation for their efforts. However, for 
two reasons, we decided that such a scheme was impracticable. First, 
unsuccessful measures may have been taken unreasonably or they may 
have been taken with some oblique motive in mind. In such circumstances, 
the unsuccessful enforcement creditor hardly seems deserving of protec- 
tion. Secondly, although an unsuccessful enforcement creditor who acts 
reasonably and in good faith may deserve protection, we have concluded 
that it would be administratively cumbersome and inefficient to hold up 
the distribution of enforcement proceeds while it is determined whether 
the creditor's actions should be the subject of compensation. 

Insofar as the extent of the priority is concerned, we first would point 
out that we do not believe that enforcement proceedings should give rise 
to any priority regarding the taxed costs of the action leading to the judg- 
ment that is being enforced against the debtor. One has nothing to do with 
the other. We wish to make clear, however, that we are not suggesting 
that a creditor's taxed costs should not be added to the judgment for all 
purposes of enforcement and pro rata distribution. Rather, we are saying 
that enforcement ought not to be available as a means of securing a posi- 
tion of priority over other creditors in respect of taxed costs. In this view, 
we are supported by the Law Reform Division of the New Brunswick 
Department of Justice. 283 

Apart from the present provision giving a priority for taxed costs, 
there are, in our opinion, two ways in which the present priority provisions 
are inadequate. First, we think that the priority should extend to all rea- 
sonable out-of-pocket expenses incurred by the creditor in the course of 
enforcement proceedings as determined by the enforcement office. Sec- 
ondly, given the fact that enforcement creditors frequently must obtain 
legal advice or assistance regarding enforcement proceedings, the law 
should ensure that creditors are provided with at least a partial indemnifi- 



creditor would be entitled to recover his "costs of the execution" from the proceeds 
for which he is responsible prior to the distribution of the proceeds pursuant to section 
26 of the Act. 

282 See s. 58(1) of the proposed Money Judgments Enforcement Act, 1975, contained in 
the New South Wales Report, supra, note 146, at 93. 

283 See New Brunswick Report, supra, note 147, at 30 (emphasis deleted): 

It is recommended that the priority of one bill of costs under the Creditors 
Relief Act be abolished to avoid any incentive to precipitous action by a creditor 
and to remove any question as to which creditor is entitled, or alternatively that 
the priority be fixed upon the first creditor to deliver a writ of fi. fa. to the sheriff, 
unless otherwise ordered by the County Court. 



71 

cation for legal costs so incurred. To avoid any complexity in the calcula- 
tion of the amount to which each instructing creditor should be entitled, 
we propose that this amount should be prescribed by regulation. Priority 
in respect of these two sums would minimize the supposed disincentive 
effect of a creditors' relief regime. 

Accordingly, the Commission makes the following recommendations 
with respect to the right of instructing creditors to a costs priority. All 
creditors who instruct the enforcement office to take active enforcement 
measures against their debtors, if the measures are successful, should be 
entitled to a priority over all other creditors, including maintenance credi- 
tors and wage creditors, in respect of the costs of enforcement, that is to 
say, the creditor's reasonable out-of-pocket expenses as determined by the 
enforcement office, together with a fee, prescribed by regulation, for any 
legal expenses incurred as a result. In addition, an enforcement creditor 
should be entitled to add the taxed costs of his action against the debtor to 
the judgment debt for all purposes of enforcement and pro rata distribu- 
tion. We further recommend that, contrary to sections 5(2) and 26 of the 
Creditors' Relief Act, no creditor should be entitled to a priority in respect 
of his taxed costs. 

(ii) The Costs of Attaching and Impeaching Creditors 

In an earlier section of this chapter, we considered whether non-judg- 
ment creditors who have preserved some of their debtors' property for 
enforcement purposes should be entitled to share in a distribution of the 
proceeds representing such property. We concluded that, although under 
the revised Creditors' Relief Act non-judgment creditors would generally 
not be entitled to share in the distribution of enforcement proceeds, an 
exception ought to be made in the case of creditors who have successfully 
attached some of their debtors' property before judgment and non-judg- 
ment creditors who have succeeded in impeaching some voidable transac- 
tion by their debtor. 284 

We believe that such creditors should not only be entitled to share in a 
distribution of proceeds from property saved for the debtors' creditors by 
their efforts, but they should also be entitled to recover from the proceeds 
the amounts expended by them in securing their debtors' property before 
any money is distributed. In our opinion, it is only fair and equitable that a 
creditor who has attached some of his debtor's property 285 or impeached 
some transaction by his debtor should be compensated for the costs he has 
incurred as a result; other creditors entitled to share in proceeds represent- 
ing attached property or property that has been the subject of a voidable 
transaction suit should not benefit at the expense of an attaching or 
impeaching creditor. Accordingly, the Commission recommends that, 
before proceeds of attached property or property that has been the subject 
of a successful voidable transaction suit are distributed, the attaching cred- 
itor or the impeaching creditor, as the case may be, should be reimbursed 



284 See supra, this ch., sec. 6(b)(i). 

285 See now s. 21(1) of the Creditors' Relief Act, supra, note 2. 



72 

for all reasonable and necessary expenses incurred by him in preserving 
the debtor's property. 

(iii) Adverse Claims and Interpleader Proceedings 

In chapter 5 of Part II of our Report on the Enforcement of Judgment 
Debts and Related Matters, we discussed in great detail the law relating to 
interpleader proceedings. We there considered, inter alia, the issue of the 
distribution of enforcement proceeds realized as a result of such proceed- 
ings, and recommended that section 5(4) of the Creditors' Relief Act 
should be retained. 286 As a result, only those creditors "who are parties [to 
the interpleader proceedings] and who agree to contribute pro rata in pro- 
portion to the amount of the executions ... to the expense of contesting 
any adverse claim" would be entitled to share in any benefit secured there- 
by. While this scheme may be seen as an exception to the principle of rate- 
able distribution behind a revised Creditors' Relief Act, we believe that 
interpleader proceedings are sufficiently unique to justify such a minor 
departure from this principle. 

(iv) Supervening Security Interests 

Earlier in this chapter, 287 we outlined the history and the effect of sec- 
tion 32(11) and (12) of the Creditors' Relief Act. In short, while introduced 
to guarantee, in principle, rateable distribution of proceeds of enforce- 
ment among execution creditors despite the existence of a supervening 
security interest, the provisions seem to have been ignored by the courts. 
This attitude on the part of the courts perhaps can be explained by the 
cryptic language of the provisions. On the other hand, it is possible that 
the courts are uncomfortable with the results achieved by the application 
of subsections (11) and (12) of section 32 of the Creditors' Relief Act. 

Dunlop, in his text on creditor-debtor law, illustrated the effect of the 
common law and the statutory provisions with the following hypothetical 
example: 288 

Creditor A obtains judgment for $400 and issues a writ of execution for the 
same amount, pursuant to which the sheriff seizes a chattel belonging to the 
debtor. The chattel is left in the possession of the debtor on a bailee's under- 
taking. Before sale of the chattel by the sheriff, the debtor grants to B a chat- 
tel mortgage on the chattel to secure a loan of $400. Thereafter, either before 
the sheriffs sale of the chattel or after the sale but within one month of its 
date, creditor C files with the sheriff a writ of execution in the amount of $400. 
The proceeds of the sheriff's sale of the chattel are $600. 

Under the common law, Dunlop explained, "out of the proceeds of $600 
from the sheriffs sale, creditor A would get $400 and secured creditor B 
would get $200. Creditor C would get nothing." 289 Turning to the effect of 
section 32(11) and (12), Dunlop described the result as follows: 290 



286 Commission Report, supra, note 1, Part II, at 276. 

287 See discussion supra, this ch., sec. 4(b)(i)h. 

288 See Dunlop, supra, note 4, at 438. 

289 Ibid., at 440. 

290 Ibid., at 441. 



73 

The law requires the sheriff to permit creditors, whether before or after the 
chattel mortgage, to 'share' in the distribution. The sheriff starts therefore by 
allotting $300 to A and $300 to C. However, the section goes on to say that the 
dividends allotted to subsequent creditors are not paid to them but are instead 
paid to 'the person entitled thereto', i.e. , the secured creditor B. The result is 
that A gets $300 and B gets $300. C gets nothing. 

Dunlop criticized this result because it "increase[s] B's share at the 
expense of A without helping C for whose benefit the amendment may 
have been passed". 291 

As an alternative to the common law approach and that required by 
section 32(11) and (12), Dunlop suggested that the prior execution cred- 
itor should continue to enjoy a priority over the subsequent mortgagee, 
but that the prior execution creditor should be required to share the pro- 
ceeds pro rata with the subsequent execution creditors. Using the hypoth- 
etical set out above, the result would be that A, B, and C would each be 
entitled to receive $200. 292 

In our view, the approach suggested by Dunlop is to be preferred to 
either the common law position or that now enshrined in the Creditors' 
Relief Act. The common law approach ignores the direction in section 3 of 
the Act that priority among execution creditors is abolished. The approach 
in the present Act, as Dunlop has pointed out, rewards the mortgagee at 
the expense of the prior execution creditor. Dunlop's approach, on the 
other hand, ensures rateable distribution among execution creditors, while 
giving the supervening secured creditor no greater benefit than he would 
expect. We would note that the solution advocated by Dunlop is the one 
that has been adopted in another, analogous context, that is, where there 
is a supervening security interest and a number of mechanics' liens. 293 

Accordingly, the Commission recommends that section 32(11) and 
(12) of the Creditors' Relief Act should be repealed and replaced by a pro- 
vision to the effect that, where property of a debtor that is subject to a writ 
of enforcement is mortgaged or charged, any subsequent execution cred- 
itor should be entitled to share pro rata with the prior execution creditor 
any proceeds of enforcement to which the latter is entitled. 

(g) Distribution of Proceeds of Enforcement: The Procedure 

The course that a sheriff in receipt of enforcement proceeds is now 
required to follow is found in sections 32 to 35 of the Creditors' Relief Act, 
and has been described earlier. 294 We are satisfied that the present proce- 
dure for the distribution of proceeds of enforcement is operating satisfac- 
torily, and therefore does not need to be amended in any substantial way. 



291 Ibid. 

292 Ibid., at 440. 

293 See, for example, Waynco Ltd. v. Terrace Manor Ltd. (1981), 127 D.L.R. (3d) 142, 39 
C.B.R. (N.S.) 203 (Ont. Div. Ct.). 

294 See supra, this ch., sec. 4(a). 



74 

However, the Commission believes that, with one or two minor changes, 
the procedure can be made more efficacious. At this juncture, it may be 
useful again to describe briefly the existing procedure. 

In any case where the money in the sheriffs hands is not sufficient to 
pay all claims in full, section 32(1) of the Creditors' Relief Act provides 
that the sheriff shall first prepare for examination by the debtor and his 
creditors a "list of the creditors entitled to share in the distribution with 
the amount due to each for principal, interest and costs". The word "cred- 
itors" in this section must refer to those execution and certificate creditors 
entitled to share in a distribution of enforcement proceeds in accordance 
with section 5(2) of the Act, and not all the debtor's creditors. Under sec- 
tion 32(2) of the Act, a copy of the distribution list is required to be deliv- 
ered or sent by registered mail to each creditor or his solicitor. Creditors 
are given eight days from the date of delivery or mailing of the copies of 
the distribution list within which to file an objection. 295 

Where no objection is filed, the sheriff is free to distribute the enforce- 
ment proceeds on hand in accordance with the distribution list. 296 Where 
an objection is filed, the sheriff still may distribute the proceeds, but he 
may do so only to the extent that it does not "interfere with the effect of 
the objection in case it should be allowed". 297 An objection must be in 
writing and must state the grounds for the objection. 298 The objecting cred- 
itor, the "contestant", must apply to a judge under section 32(6) "for an 
order adjudicating upon the matter in dispute". The contestant has eight 
days within which to make the application; failure to do so will result in 
the objection being treated as abandoned. 299 Upon obtaining "an appoint- 
ment for hearing and determining the matter in dispute", a copy of the 
appointment and a "Notice of Contestation of Scheme of Distribution" 
must be served on the debtor and the creditors by the contesting 
creditor. 300 

Regarding the procedure for the determination of an objection to the 
scheme of distribution, section 32(9) states that the judge may decide "any 
question in dispute in a summary manner, or may direct an action to be 
brought or an issue to be tried with or without a jury in any court". To 
simplify the proceedings, the judge may give "such directions for saving 
the expense of an unnecessary number of parties and trials, and of unnec- 
essary proceedings, as he considers just". 301 The judge also is given broad 
powers in respect of the costs of any such proceedings: he may direct "by 
whom and in what proportions any cost incurred in the contestation, or in 
any proceedings thereunder, shall be paid, and whether any and what 
costs shall be paid out of the money levied". 302 A right of appeal to the 



295 Creditors' Relief Act, supra, note 2, s. 32(3) and (5). 
2% Ibid., s. 32(3). 
297 Ibid., s. 32(4). 
m Ibid., s. 32(5). 

299 Ibid., s. 32(6). 

300 Ibid.,s. 32(8). 

301 Ibid., s. 33. 

302 Ibid. 



75 

Divisional Court is given by the Creditors' Relief Act in respect of any 
question involving a sum greater than $100. 303 

As we stated earlier, the procedure to be followed for the distribution 
of proceeds of enforcement is, for the most part, quite satisfactory. It 
allows all those entitled to share in any distribution to ensure that the prin- 
ciple of rateable distribution is adhered to, and that those creditors enti- 
tled to priority are accorded preferential treatment. Given the 
Commission's recommendations regarding maintenance creditors and 
wage creditors, the latter will be particularly important in any revised 
Creditors' Relief Act. Therefore, the Commission recommends that, sub- 
ject to the changes proposed below, the present procedure for the distribu- 
tion of proceeds of enforcement contained in the existing Creditors' Relief 
Act should be retained. Accordingly, upon the receipt of enforcement pro- 
ceeds, the enforcement office would be required to prepare a distribution 
list like the one required to be prepared and delivered under section 32 of 
the present Creditors' Relief Act. 

However, we do not see any need for distribution lists to be delivered 
or sent by registered mail, as is now the case under section 32(2) of the 
Act. In our view, the use of registered mail in this context is wasteful. 
Elsewhere in our Report on the Enforcement of Judgment Debts and 
Related Matters, we proposed that service of documents should be effected 
by ordinary mail. 304 We see no reason to depart from this general philoso- 
phy in the case of distribution lists. Therefore, we recommend that a copy 
of the distribution list should be required to be sent by ordinary prepaid 
mail to the debtor and to each creditor (or his solicitor) entitled to share in 
the proceeds in question. It should be noted that, under this recommenda- 
tion, the enforcement office would be required to send a copy of the distri- 
bution list to the debtor, a requirement not now found in section 32 of the 
Creditors' Relief Act. 

One of the practical problems that sheriffs administering the 
Creditors' Relief Act must deal with is the possibility that a creditor to 
whom a share of enforcement proceeds has been assigned may have had 
his judgment debt satisfied in whole or in part as a result of a private pay- 
ment from his debtor or a third person. In such a case, the distribution list 
prepared by the sheriff will be inaccurate, and the creditor in question may 
receive a larger dividend than he otherwise would be entitled to receive. 
As the Commission has not proposed that such private payments should 
be prohibited, 305 this administrative problem could continue to plague 
sheriffs under the revised Creditors' Relief Act. 306 

303 Ibid., s.3S. 

304 See, for example, Commission Report, supra, note 1, Part II, at 206. 

305 Supra, this ch., sec. 6(a)(i). 

306 E ven if private payments were prohibited, the situation under consideration still could 
arise, since a creditor might be prepared to accept payment of his judgment debt in 
contravention of any such prohibition. This possiblity was addressed expressly in the 
draft Money Judgments Enforcement Act, 1975 proposed by the New South Wales 
Law Reform Commission: see New South Wales Report, supra, note 146, at 41. 



76 

We, therefore, make the following recommendations. First, it is rec- 
ommended that, where the amount shown on a distribution list as owing to 
a creditor is greater than the amount actually owing, that creditor should 
be under a statutory obligation to advise the enforcement office, no later 
than fifteen days from receipt of the list, of the amount that actually is 
owed to him by the debtor pursuant to the judgment. Secondly, in order to 
ensure compliance with the statutory duty proposed above, we recom- 
mend that a creditor who fails to comply should be subject to a fine equal 
to twice the difference between the amount shown as owing on the distri- 
bution list and the amount actually owing to the creditor pursuant to the 
judgment, and that this fine should be distributed to the other creditors of 
the debtor entitled to a share of any proceeds of enforcement. While we 
recognize that such a fine may be viewed as Draconian, in our view it is the 
only viable solution to the problem of non-disclosure. To require a cred- 
itor who fails to disclose an error in his favour on the distribution list sim- 
ply to pay back any excess would do little to encourage compliance with 
the proposed duty of disclosure. 

Insofar as the actual distribution of proceeds of enforcement is con- 
cerned, with one exception, distribution should take place fifteen days 
after the mailing of the distribution list if no objection to the list is received 
within such time. Where a timely objection is filed, distribution should be 
made in accordance with provisions similar to subsections (4) and (10) of 
section 32 of the present Creditors' Relief Act, which read as follows: 

32. -(4) If objection is made, the sheriff shall forthwith distribute rateably so 
much of the money made, and among such persons, as will not interfere with 
the effect of the objection in case it should be allowed. 

(10) Where a claimant is held to be not entitled or to be entitled to part only 
of his claim, the money retained pending the contestation or the portion as to 
which the claimant has failed shall be distributed among the creditors who 
would have been entitled to it as it would have been distributed had the claim 
in respect thereof not been made. 

The one exception referred to above concerns the distribution of small 
shares of enforcement proceeds. From the evidence available to us, it 
would appear that nearly fifty percent of all dividends are for an amount 
equal to or less than $50, with a quarter of all dividends being for a sum 
less than $20. 307 The administrative costs of such distributions are dispro- 
portionately high, and one way in which this difficulty might be amelio- 
rated would be to empower the enforcement office to withhold small 
dividends for a certain period of time. The enforcement office may know, 
for example, that additional proceeds of enforcement will likely be 
received; therefore, a number of dividends to the same creditor could be 
combined, with a resultant saving in administrative costs. While such an 
approach entails some prejudice to the small creditor, we believe that it is 
justified, particularly since we have done away with the one month grace 
period under the present Creditors' Relief Act. m In the absence of a right 



307 These figures were obtained by the Commission as a result of its examination of the 
operation of the Creditors' Relief Act in 1977 in the Judicial District of York. 

308 See discussion supra, this ch., sec. 6(b)(iii). 



77 

to withhold small dividends, it is possible to foresee cases in which an 
enforcement office would receive proceeds of enforcement many times in 
a short period, entailing a great many distributions of perhaps insignificant 
amounts. Therefore, the Commission recommends that the enforcement 
office should be empowered to withhold any dividend that is less than $50 
until the creditor's share of the debtor's assets totals $50, or for a period of 
three months, whichever comes first. 

Before we leave the topic of the procedure for the distribution of pro- 
ceeds of enforcement, the Commission would like to comment briefly on 
the right of creditors to object to the distribution list setting out the divi- 
dend to which each creditor is entitled. Given our recommendation to 
require creditors entitled to a dividend to disclose receipt of any private 
payment, 309 we believe that objections should be reduced significantly. 
Nevertheless, we recognize the need for some dispute resolution proce- 
dure for situations where a creditor has failed to advise the enforcement 
office of a private payment, or where the enforcement office has made 
some error in calculating the dividends payable under a particular distribu- 
tion. In our view, the present procedure, contained in sections 32 to 35 of 
the Creditors' Relief Act and described above is, with one modification, 
adequate to the task. 

The single modification to this procedure is necessitated by an earlier 
recommendation of the Commission to permit certain non-judgment cred- 
itors to share in any distribution of enforcement proceeds. In a preceding 
section of this chapter, 310 we recommended that non-judgment creditors 
who were entitled to participate in an orderly payment of debts arrange- 
ment should be entitled to share in a distribution of enforcement proceeds 
that takes place after an annulment of the arrangement. Because it is pos- 
sible that only some of the other creditors entitled to share in such a distri- 
bution would have been able to contest the non-judgment creditor's claim 
made in the course of the orderly payment of debts arrangement - that is 
to say, those creditors with admissible claims 311 - we believe that those 
creditors who would have been unable to contest the claim (those with 
inadmissible claims) should be entitled to do so. We see no need to pro- 
vide creditors who have already had such an opportunity in the context of 
an arrangement with the same right; otherwise, we would be giving credi- 
tors who participated in the annulled arrangement a second chance to pre- 
vent the non-judgment creditor from sharing in the debtor's assets, with 
resultant delay and unnecessary expense for all concerned. 

Accordingly, we recommend that the present procedure for objecting 
to a distribution list, outlined in sections 32 to 35 of the Creditors' Relief 
Act, should continue to be available under revised creditors' relief legisla- 
tion; however, only those creditors entitled to share in the distribution 
who have not had an opportunity to contest the validity of the claim of a 
non-judgment creditor in an orderly payment of debts arrangement that 



309 Supra, this sec. 

310 Supra, this ch., sec. 6(b)(i). 

311 See Commission Report, supra, note 1, Part I, at 23-27. 



78 

subsequently has been annulled should be entitled to contest the claim at 
this stage. 

(h) County- Wide Versus Province- Wide Distribution of 
Enforcement Proceeds 

In chapter 3 of Part I of the Commission's Report on the Enforcement 
of Judgment Debts and Related Matters, 312 we considered the question 
whether enforcement of judgment debts should be on a province-wide 
basis, as opposed to the present system of county-wide enforcement. 
Although we there proposed some movement toward province-wide 
enforcement, 311 we nevertheless recommended that the county continue to 
be the basic unit for most purposes of enforcement, particularly those con- 
cerned with administration. 

Given these earlier proposals, the Commission is of the view that it 
would be inconsistent to propose at this time that the distribution of 
enforcement proceeds take place on a province-wide basis. Moreover, 
until the creation of a province-wide register of enforcement activities, 314 
province-wide distribution would be, from a practical viewpoint, quite 
unwieldy. Whenever enforcement proceeds were available for distribu- 
tion, inquiries would have to be made in the enforcement office in each 
county to determine those creditors entitled to share in the proceeds. Con- 
sequently, we propose no change in the present county-wide distribution 
scheme. However, this is a matter that, in our opinion, should be reviewed 
once a province-wide register of enforcement activities is in place, and we 
so recommend. 

Recommendations 

The Commission makes the following recommendations: 

1. The Creditors' Relief Act should be retained, but it should be amended 
substantially to eliminate the inequities and deficiencies of the present 
Act. 

2. Subject to Recommendation 5, all proceeds realized as a result of 
enforcement activity should be distributed in accordance with the 
revised Creditors' Relief Act, irrespective of the method of enforce- 
ment employed and regardless of whether the judgment being 
enforced emanated from the Supreme Court, a county or district 
court, or a small claims court. 

3. Once enforcement proceedings have been initiated against the debtor, 
all payments made to the sheriff, either by the judgment debtor or by 
a third person on his behalf, should be distributed in accordance with 
the revised Creditors' Relief Act. 



312 Ibid., at 77-78 and 115-18. 

313 For example, we proposed the establishment of an office of Provincial Director of 
Enforcement and the creation of a province-wide register of enforcement activities. 

314 See Commission Report, supra, note 1 , Part I, at 149-51 . 



79 

4. Private payments to a creditor by a debtor or a third person on the 
debtor's behalf should not be proscribed by the revised Creditors' 
Relief Act. 

5. Proceeds of enforcement activity for which a maintenance creditor is 
responsible should not be required to be distributed pursuant to the 
revised Creditors' Relief Act, irrespective of whether the enforcement 
measures adopted are those for which the provincial court (family 
division) would be responsible or those that would come under the 
aegis of the enforcement office. 

6. Subject to Recommendations 7-9, non-judgment creditors should not 
have a right to participate in a distribution under the revised Creditors' 
Relief Act; accordingly, the present certificate procedure should not be 
included in any revised Act. 

7. A non-judgment creditor whose claim has been approved under an 
orderly payment of debts arrangement (see Part I, chapter 2) that has 
been annulled should be entitled to share pro rata in a distribution of 
proceeds under the revised Creditors' Relief Act. 

8. A non-judgment creditor who attaches his debtor's property prior to 
judgment should be entitled to share pro rata in the proceeds realized 
from property that he has had attached, but his share should not be 
distributed to him until he has obtained judgment. The court, upon 
application, should determine the manner in which an attaching cred- 
itor should share, having regard to all relevant circumstances, includ- 
ing the nature of the attaching creditor's claim and the time before 
judgment likely will be given in the main action. 

9. A non-judgment creditor who successfully impeaches a fraudulent 
conveyance or fraudulent preference should be entitled to share pro 
rata in any distribution of proceeds realized as a result thereof. The 
court, upon application, should determine the manner in which an 
impeaching creditor should share, having regard to all relevant cir- 
cumstances, including the nature of the impeaching creditor's claim 
and the time before judgment likely will be given in the main action. 

10. Subject to Recommendation 11, all creditors who deliver a writ of 
enforcement to the new enforcement office should be entitled to share 
in any distribution of enforcement proceeds made pursuant to the 
revised Act, regardless of the method of enforcement employed. 

11. The existing one month grace period under the present Creditors' 
Relief Act should be abolished; accordingly, only those creditors who 
have delivered a writ of enforcement to the enforcement office by the 
time proceeds of enforcement are realized should be entitled to share 
therein. 

12. (1) Maintenance creditors who file a writ of enforcement with the 

enforcement office should be entitled to be paid in full in priority 
to all other creditors under the revised Creditors' Relief Act. 



80 

(2) For the purposes of Recommendation 12(1), maintenance credi- 
tors should be defined to include not only persons with a support 
or maintenance order in their favour, but also creditors who have 
obtained a money judgment based on the support or maintenance 
provisions of a cohabitation agreement, marriage contract, sepa- 
ration agreement, or paternity agreement, as defined by the 
Family Law Reform Act. 

(3) To preclude the use of bankruptcy proceedings to circumvent the 
priority proposed in Recommendation 12(1), the Parliament of 
Canada should be urged to give effect to the principle of a main- 
tenance creditor's priority in any new bankruptcy legislation. 

(4) The register of maintenance judgment debts, which the enforce- 
ment office would be required to establish and maintain under an 
earlier recommendation (see Part I, Recommendation 111) should 
be a public register. 

13. (1) Subject to Recommendation 12, wage creditors should be entitled 

to priority over all other enforcement creditors in respect of three 
months unpaid wages under the revised Creditors' Relief Act. 

(2) In all other respects, the wage creditor's priority should be similar 
to that contained in section 14 of the Employment Standards Act. 
Accordingly, 

(a) to claim this priority, a wage creditor should not have to show 
that he was in the debtor's employ at the time of seizure or 
within one month prior thereto; rather, he should be required 
to show simply that he is owed a specific amount by the debtor 
for unpaid wages; 

(b) for the purposes of this Recommendation, "wages" should be 
defined as in section \(p) of the Employment Standards Act; 
and 

(c) a wage creditor should be able to establish his entitlement to a 
priority in respect of any proceeds of enforcement by filing 
with the enforcement office a writ of enforcement or a certifi- 
cate of unpaid wages issued pursuant to the Employment Stan- 
dards Act. 

14. (1) Subject to Recommendation 14(2), proceeds of enforcement 

should be distributed rateably among creditors in the same cate- 
gory in the case of both maintenance creditors and wage creditors. 

(2) The provincial courts (family division) should be empowered to 
impose some scheme of distribution other than rateable distribu- 
tion upon maintenance creditors, where it considers it just and 
equitable to do so. 

15. The right of the provincial Crown to be preferred over creditors with 
debts of equal degree in any distribution of enforcement proceeds 
should be abolished. 



81 

16. The Parliament of Canada should be asked to abolish the federal 
Crown's royal prerogative to priority. 

17. Subject to the interim proposals contained in Recommendations 18, 
19, and 20, statutory and common law liens and charges should be the 
subject of a separate in-depth study. 

18. Liens against specific parcels of land should be effective only if and 
from the time they are registered against such parcels. 

19. Liens that may be enforced through the municipal tax lien should be 
enforceable only if the amount in question is added specifically to the 
collector rolls. 

20. (1) A non-possessory lien or charge against personal property should 

bind the property only until sold, and the proceeds therefrom only 
until distributed to those enforcement creditors entitled to receive 
a share of the proceeds. 

(2) A purchaser of personal property sold by the enforcement office 
should take it free and clear of any non-possessory lien or charge 
unless, prior to the sale, a valid claim has been filed with the 
enforcement office. 

21. (1) All creditors who instruct the enforcement office to take active 

enforcement measures against their debtors, if the measures are 
successful, should be entitled to a priority over all other creditors, 
including maintenance creditors and wage creditors, in respect of 
the costs of enforcement, that is to say, the creditors' reasonable 
out-of-pocket expenses as determined by the enforcement office, 
together with a fee, prescribed by regulation, for any legal expen- 
ses incurred as a result. 

(2) An enforcement creditor should be able to add the taxed costs of 
his action against the debtor to the judgment debt for all purposes 
of enforcement and pro rata distribution. 

(3) Contrary to sections 5(2) and 26 of the present Creditors' Relief 
Act, no creditor should be entitled to a priority in respect of his 
taxed costs. 

22. Before proceeds of attached property or of property that has been the 
subject of a successful voidable transaction suit are distributed, the 
attaching creditor or the impeaching creditor, as the case may be, 
should be reimbursed for all reasonable and necessary expenses incur- 
red by him in preserving the debtor's property. 

23. Section 32(11) and (12) of the present Creditors' Relief Act should be 
repealed and replaced by a provision to the effect that, where property 
of a debtor that is subject to a writ of enforcement is mortgaged or 



82 

charged, any subsequent execution creditor should be entitled to share 
pro rata with the prior execution creditor any proceeds of enforcement 
to which the latter is entitled. 

24. The procedure for the distribution of proceeds of enforcement con- 
tained in the present Creditors' Relief Act should be retained, subject 
to the following changes: 

(a) A copy of the distribution list should be required to be sent, by 
ordinary prepaid mail rather than by registered mail, to the debtor 
and to each creditor (or his solicitor) entitled to share in the pro- 
ceeds in question. 

(b) Where the amount shown on a distribution list as owing to a cred- 
itor is greater than the amount actually owing, the creditor should 
be under a statutory obligation to advise the enforcement office, 
no later than fifteen days from the receipt of the list, of the 
amount that actually is owed to him by the debtor pursuant to the 
judgment, and a creditor who fails to comply with this statutory 
duty should be subject to a fine equal to twice the difference 
between the amount shown as owing on the distribution list and 
the amount actually owing to the creditor pursuant to the judg- 
ment, and this fine should be distributed to the other creditors of 
the debtor entitled to a share of any proceeds of enforcement. 

(c) Subject to the following Recommendation, distribution should 
take place fifteen days after the mailing of the distribution list if no 
objection to the list is received within such time. Where a timely 
objection is filed, distribution should be made in accordance with 
provisions similar to subsections (4) and (10) of section 32 of the 
present Creditors' Relief Act. 

(d) The enforcement office should be empowered to withhold any 
dividend that is less that $50 until the creditor's share of the debt- 
or's assets totals $50, or for a period of three months, whichever 
comes first. 

(e) The present procedure for the resolution of disputes, contained in 
sections 32 to 35 of the Creditors' Relief Act, should be retained; 
however, only those creditors entitled to share in a distribution 
who have not had an opportunity to contest the validity of the 
claim of a non-judgment creditor in an orderly payment of debts 
arrangement that subsequently has been annulled (see Recom- 
mendation 7) should be entitled to contest the claim at this stage. 

25. Distribution of enforcement proceeds should continue to be made on 
a county- wide basis. This Recommendation should be reviewed, how- 
ever, once a province-wide registei of enforcement activities is in 
place (see Part I, Recommendation 149). 



CHAPTER 3 



POSTJUDGMENT ARREST 



1. INTRODUCTION 

In its review of the law relating to prejudgment enforcement reme- 
dies, the Commission considered, inter alia, whether arrest and imprison- 
ment of the debtor should continue to be available to a creditor before 
judgment. The Commission concluded that, given its recommendations 
for prejudgment attachment of a debtor's property, retention of the rem- 
edy of prejudgment arrest and imprisonment could no longer be justified. 
Accordingly, the Commission proposed the repeal of the prejudgment 
arrest provisions of the Fraudulent Debtors Arrest Act. 1 The Commission 
decided, however, to recommend the retention of the remedy of prejudg- 
ment arrest authorized by section 24 of the Family Law Reform Act. 2 We 
now turn to consider to what extent arrest and imprisonment of a debtor 
for non-payment of a money judgment should be available as a remedy to 
creditors after judgment. 

In answering this question, it is important to keep in mind a general 
outline of the new enforcement regime proposed by the Commission. In 
particular, it should be recalled that, as a result of the Commission's rec- 
ommendations, enforcement of judgment debts would be greatly facilitat- 
ed. All the property of a debtor, except that expressly exempted from 
enforcement, would be available to satisfy the debtor's outstanding judg- 
ment debts. 3 Such remedies as garnishment and receivership would be 
much more effective. 4 In addition, many fraudulent dealings by a debtor 
with his property would be prevented by the Commission's proposals 
respecting prejudgment attachment, 5 or at least made much more difficult 
as a result of the recommendations 6 for reform of the law of voidable 
transactions, now governed by the Fraudulent Conveyances Act 7 and the 
Assignments and Preferences Act. 8 It is in this context that the Commission 

1 Fraudulent Debtors Arrest Act, R.S.O. 1980, c. 177. See Ontario Law Reform Com- 
mission, Report on the Enforcement of Judgment Debts and Related Matters (herein- 
after referred to as "Commission Report"), Part IV (1983), ch. 2, sec. 7(a). 

2 Family Law Reform Act, R.S.O. 1980, c. 102. See Commission Report, supra, note 1, 
Part IV (1983), ch. 2, sec. 7(a). 

3 See, for example, Commission Report, supra, note 1, Part II (1981), at 79-106 and 
153-87. 

4 Ibid., chs. 3 and 4. 

5 See Commission Report, supra, note 1, Part IV (1983), ch. 2. 

6 Ibid., ch. 3. 

7 R.S.O. 1980, c. 176. 

8 R.S.O. 1980, c. 33. 

[83] 



84 

has had to consider whether postjudgment arrest of the debtor for non- 
payment of a money judgment is still necessary and, if so, in what circum- 
stances this remedy should be available to a judgment creditor. 

We wish to make clear at the outset that our recommendations for 
reform of this important area of enforcement law are animated by a con- 
cern that the judgments and orders of Ontario courts not be thwarted or 
frustrated by the actions of debtors seeking to avoid payment of their just 
debts. In those circumstances in which we believe postjudgment arrest and 
imprisonment has a useful role to play, it is as an enforcement remedy, not 
as a method of punishing the debtor for his conduct, that we recommend 
the remedy be employed. In no way do we intend this ultimate enforce- 
ment sanction to be used against those who do not have the means to pay 
their debts; our recommendations will make clear that this remedy is 
reserved for those with an ability to pay and who, by their refusal to pay or 
by their other actions, have shown their contempt for the judicial process. 
While there are always dangers in the use of arrest and imprisonment 
powers, we believe that the restrictions on the remedy proposed in this 
chapter, as well as the procedural safeguards that we advocate, should 
guarantee that any such dangers are reduced to a minimum. 

We begin our discussion of postjudgment arrest and imprisonment 
with a brief history of its development. 

2. POSTJUDGMENT ARREST AND IMPRISONMENT IN 
HISTORICAL PERSPECTIVE 

While the law respecting the arrest and imprisonment of debtors in 
Ontario is now based entirely on statute, the common law origins of this 
remedy should be mentioned briefly. At common law, the appearance of a 
defendant in an action could be secured by his arrest pursuant to a writ of 
capias ad respondendum (ca.re.), and this soon became the preferred 
method of commencing an action. 9 Beginning in the early part of the four- 
teenth century, it was decided "that when a writ of capias ad 
respondendum lay to get the defendant before the court, a writ of capias 
ad satisfaciendum (ca.sa.) would lie to obtain execution of the 
judgment". 10 In other words, at common law, prejudgment arrest of a 
debtor could be secured by the writ of capias ad respondendum and 
postjudgment arrest was possible by means of the writ of capias ad 
satisfaciendum. 

In Upper Canada, the first restriction on the remedy of postjudgment 
arrest was introduced in 1858. Section 1 of The Act for the abolition of 



9 See Sutherland, "Mesne Process upon Personal Actions in the Early Common Law" 
(1966), 82 L.Q. Rev. 482. For a history of the remedies of prejudgment and postjudg- 
ment arrest, see, also, Morris and Wiener, "Civil Arrest: A Medieval Anachronism" 
(1976-77), 43 Brooklyn L. Rev. 383; Freedman, "Imprisonment for Debt" (1927-28), 
2 Temple L.Q. 330; Note, "Arrest and Attachment", [1960] U. 111. L.F. 141; Ford, 
"Imprisonment for Debt" (1926-27), 25 Mich. L. Rev. 24; and Dunlop, 
Creditor-Debtor Law in Canada (1981), at 93-98. 

10 Holdsworth, A History of English Law (2d ed. rep., 1966), Vol. VIII, at 231 . 



85 

Imprisonment for debt u stated that, after September 1, 1858, "no person 
shall be arrested upon mesne [prejudgment] or final process in any civil 
action in any of Her Majesty's Courts in Upper Canada", except as pro- 
vided by the Act. The Act specified the following situations in which arrest 
of a debtor was still available as an enforcement remedy: 12 

1. where "there is good and probable cause for believing that such 
person, unless he be forthwith apprehended, is about to quit Can- 
ada with intent to defeat his creditors generally or the said party 
or plaintiff in particular"; and 

2. where the defendant "hath parted with his property or made some 
secret or fraudulent conveyance thereof in order to prevent its 
being taken in execution". 

The Act found its way into the 1859 Consolidated Statutes of Upper Can- 
ada as An Act respecting Arrest and Imprisonment for Debt. 13 This legisla- 
tion should be read in conjunction with The Indigent Debtor's Act. u Under 
the latter statute, a debtor under arrest could secure his release by estab- 
lishing "[t]hat he is unable to find security for the limits" of the bond for 
his release and "is not worth the sum of five pounds". 15 The Indigent Debt- 
or's Act and An Act respecting Arrest and Imprisonment for Debt formed 
the basis of The Fraudulent Debtors Arrest Act, ]6 which was first intro- 
duced in 1909. Since that time, the Act has remained basically the same. 

Imprisonment for debt was abolished in England in 1869 except in 
those circumstances outlined in The Debtors Act, 1869. 17 We need not con- 
cern ourselves here with all the exceptions prescribed by this Act. Suffice it 
to say that, under section 5, post judgment arrest was preserved in the case 
of money judgments "where it is proved to the satisfaction of the court 
that the person making default either has or has had since the date of the 
order or judgment the means to pay the sum in respect of which he has 
made default, and has refused or neglected, or refuses or neglects, to pay 
the same". 

Postjudgment arrest in England was further circumscribed by the 
Administration of Justice Act 1970. ]8 Section 11 of this Act provides that 
the jurisdiction given by section 5 of The Debtors Act, 1869 to commit to 
prison a person who makes default in payment of a debt shall be exercis- 
able only in respect of maintenance orders and, in the case of a county 
court, in respect of a judgment or order for the payment of certain taxes, 
contributions, and liabilities. 19 



1 22 Vict., c. 96 (Can.). 

2 Ibid., s. 6. 

3 C.S.U.C. 1859, c. 24. 

4 C.S.U.C. 1859, c. 26. 

5 Ibid.,s. 1. 

6 The Fraudulent Debtors Arrest Act, S.O. 1909, c. 50. 

7 The Debtors Act, 1869, 32 & 33 Vict., c. 62. 

8 C31. 

9 For the procedure to be followed to commit a debtor for non-payment of a mainten- 
ance order, see the English Rules of the Supreme Court 1965, Ord. 45, r. 5, and Ord. 
52. For a brief discussion of the procedure, see Black, Execution of a Judgment (6th 
ed., 1979), at 88-91. 



86 

Having discussed briefly the historical development of postjudgment 
arrest and imprisonment, we turn to an examination of present debtor's 
arrest and imprisonment legislation. 

3. POSTJUDGMENT ARREST AND IMPRISONMENT OTHER THAN 
IN THE FAMILY COURT: THE PRESENT ONTARIO POSITION 

Arrest for the non-payment of money judgments in general is covered 
by the Fraudulent Debtors Arrest Act. 20 By virtue of section 12 of the Act, 
arrest for contempt for non-payment of a money judgment of the Supreme 
Court or a county or district court has been abolished. Section 12 provides 
as follows: 

12. No person is liable to arrest for contempt for non-payment of any sum of 
money or of any costs, charges, or expenses payable by a judgment or order of 
the Supreme Court or of a judge thereof, or of a county court or of a judge 
thereof, and no person is liable to arrest for non-payment of costs. 

As a result of this provision, the only postjudgment arrest power in respect 
of Supreme Court and county or district court money judgments is that 
specifically prescribed by the Fraudulent Debtors Arrest Act. 

Section 27(1) of the Act provides that a judgment creditor is entitled 
to a writ of capias ad satisfaciendum without a court order "[w]here a 
defendant has been arrested [before judgment] and has given security . . . 
or is imprisoned or detained in custody in default of giving security". The 
writ must issue within fourteen days after the plaintiff has become entitled 
to enter final judgment. 21 A writ of capias ad satisfaciendum also may be 
obtained under section 27(2) where the debtor has not been arrested 
before judgment. To secure such an order, the judgment creditor must sat- 
isfy a judge of the Supreme Court or of a county or district court, as the 
case may be, of the following: 

1) that judgment has been recovered against the defendant in an 
amount equal to or greater than $100, and 

2) that there is good and probable cause for believing that 

(a) unless forthwith apprehended, the debtor is about to quit 
Ontario with intent to defraud his creditors generally or the 
applicant in particular, or 

(b) the debtor has parted with his property or made some secret or 
fraudulent conveyance of the property in order to prevent its 
being taken in execution. 

Section 27(3) provides that every writ of capias ad satisfaciendum against a 
debtor remains in force for two months. 



20 Supra, note 1. 

21 Ibid., s. 27(1). 



87 

The Fraudulent Debtors Arrest Act contains a number of provisions 
dealing with the question of the debtor's right to secure his discharge. Sec- 
tion 49, for example, provides as follows: 

49. A debtor in close custody in execution or on mesne process and a debtor 
arrested under a writ of capias ad satisfaciendum, though he is not in close cus- 
tody but has given bail, may, after giving to the person at whose instance he is 
in close custody or has been so arrested ten days notice in writing of his inten- 
tion to do so, apply to the court or a judge to be discharged. 

This provision must be read in conjunction with sections 50 and 51(1) of 
the Act. Section 50 allows the judgment creditor to apply to the court or a 
judge for an order that the debtor be examined viva voce on oath. The 
purpose of such an examination would be to obtain information regarding 
the debtor's assets. Section 51(1) provides that the debtor's application for 
a discharge must be supported by an affidavit indicating "that he is not 
worth $20, exclusive of his goods and chattels exempt from seizure under 
execution", and that he has complied with any order made under section 
50, or that no order has been made under that section. 

Before leaving the subject of the debtor's right to be discharged from 
custody, reference should be made to two other sections of the Fraudulent 
Debtors Arrest Act. First, it should be noted that, pursuant to section 56, a 
judgment creditor may authorize the discharge of his debtor held under a 
writ of capias ad satisfaciendum. Secondly, under section 24(1) of the Act, 
"[a] person arrested upon an order for arrest may apply to the court or a 
judge for an order that he be discharged out of custody, and the court or 
judge, subject to appeal, may make such order thereon as seems just". 
This section and section 49, set out above, would seem to overlap. It has 
been suggested, however, that section 24 is available only to debtors 
arrested before judgment. 22 This interpretation would seem to be correct, 
since the section speaks of a person arrested under an order for arrest, 
rather than under a writ of capias ad satisfaciendum, used for the arrest of 
a debtor once judgment has been rendered against him. 

Finally, reference should be made to section 57 of the Fraudulent 
Debtors Arrest Act, which provides as follows: 

57. Neither the taking of a debtor in execution under a writ of capias ad 
satisfaciendum nor his imprisonment thereunder or under this Act nor his dis- 
charge from custody by the voluntary action of his creditor or under the 
powers conferred by this Act operates as a satisfaction or extinguishment of 
the debt or deprives the creditor of the right to take out execution or other 
process against the property of the debtor or to take any other proceeding 
against him in the same manner as if the debtor had not been taken in execu- 
tion or discharged out of custody. 

Before turning to consider postjudgment arrest powers in other juris- 
dictions, brief reference should be made to some of the provisions of the 



22 12C.E.D. (Ont. 3rd), Execution, §301, at 58-153. See, also, s. 34(1) of the Fraudulent 
Debtors Arrest Act, supra, note 1, which would also appear to apply to prejudgment 
arrest. 



88 

Supreme Court of Ontario Rules of Practice 23 with respect to the arrest 
and imprisonment of a debtor. Rule 569 provides as follows: 24 

569. A judgment requiring any person to do an act, other than the payment 
of money, or to abstain from doing anything, may be enforced by attachment 
or by committal .... 

This provision, like section 12 of the Fraudulent Debtors Arrest Act, 
clearly suggests that the only authority under which a debtor may be 
imprisoned for non-payment of a judgment debt is that Act. However, 
until the recent decision of the Court of Appeal for Ontario in Cohen v. 
Cohen, 25 where the Court held that there is no power to punish for con- 
tempt for non-compliance with a Supreme Court maintenance order, the 
correctness of this proposition was uncertain. 

In a previous decision, Re Kapis and Kapis, 26 Wright J. had been 
asked to commit a maintenance debtor for non-payment of maintenance. 
The maintenance creditor sought to rely on the "inherent power in the 
Court to commit persons who failed to comply with alimony or mainten- 
ance orders", 27 a power "frequently sought from, and used by, the Judges 
in like cases". 28 Wright J. was of the view that the whole question of the 
power of the courts to commit for non-payment of a maintenance or sup- 
port order was in need of review by the Court of Appeal for a number of 
reasons. First, he noted that the earlier decision of Freedman v. 
Freedman 29 denied that the courts had the power to commit a defendant 
for non-payment of interim alimony. Relying on earlier English 
authority, 30 cited to the Court in Freedman v. Freedman, Wright J. con- 
cluded that the Freedman case was "wrong and of sufficient importance to 
be considered in a higher Court". 31 Secondly, Wright J. concluded that 
Rule 569 of the Supreme Court of Ontario Rules of Practice and section 12 
of the Fraudulent Debtors Arrest Act, prohibiting "arrest for contempt for 
non-payment of any sum of money", were not enacted with the defaulting 
maintenance debtor in mind. 32 Rather, the object of this legislation was 
"to prevent the imprisonment of persons for nonpayment of ordinary 
debts". Moreover, Mr. Justice Wright pointed out that, in the past, ali- 
mony and maintenance were not considered to be debts. Finally, Wright J. 
made reference to the fact that judges of the provincial court (family divi- 



23 Supreme Court of Ontario Rules of Practice, R.R.O. 1980, Reg. 540 (hereinafter 
referred to as "Rules of Practice"). 

24 Emphasis added. 

25 Cohen v. Cohen (1979), 10 R.F.L. (2d) 169 (Ont. C. A.). 

26 Re Kapis and Kapis (1977), 15 O.R. (2d) 772, 76 D.L.R. (3d) 950 (H.C.J.) (subse- 
quent references are to 15 O.R. (2d)). 

27 Ibid., at 774. 

28 Ibid. 

29 (1923), 25 O.W.N. 3 (H.C.J. ). 

30 Lynch v. Lynch (1885), 10 P.D. 183, 34 W.R. 47, and Bates v. Bates (1888), 14 P.D. 
17, 37 W.R. 230 (C.A.). See, also, DeLossy v. DeLossy (1890), 15 P.D. 115. 

31 Supra, note 26, at 778. 

32 Ibid., at 777 -78. 



89 

sion) were given the power to imprison a defaulting maintenance debtor 
by a number of statutes. His Lordship found it hard to conclude "that 
these powers were conferred on the Judges of the Provincial Courts (Fam- 
ily Division) without the Legislature recognizing that the respective Judges 
of the other courts have always had inherent or implied power to imprison 
for contempt for non-payment of alimony or maintenance ordered in 
orders or judgments of the Supreme Court of Ontario or the County or 
District Courts or of the Surrogate Courts". 33 

In reviewing the earlier English authorities cited in Freedman, Wright 
J. noted that imprisonment was based on the debtor's failure to provide 
security in accordance with the order of the court. If attachment could be 
ordered only for failure to comply with the security provision of a mainten- 
ance order, Mr. Justice Wright commented, "then orders to pay mainten- 
ance in family law cases in the Supreme Court and the County or District 
Courts should be reinforced by an order to give security for maintenance. 
This I propose to do in this and future cases, for the authority of the 
Court's orders must be maintained." 34 

In spite of the forceful arguments of Wright J. in Re Kapis and Kapis, 
the Court of Appeal for Ontario in the case of Cohen v. Cohen 35 concluded 
that the Supreme Court of Ontario has no inherent power "to commit to 
gaol for contempt of court for non-payment of a sum of money arising 
under a judgment, whether that judgment is for payment of maintenance 
or otherwise". 36 Interestingly, the judgment of Wright J. in Re Kapis and 
Kapis does not appear to have been cited to the Court; in any event, the 
case is not referred to in Cohen v. Cohen. As a result, one is left to wonder 
whether the Court of Appeal may yet come to a different conclusion on 
this question and whether the Court of Appeal would agree with Wright J. 
that imprisonment for non-payment of a sum characterized as security or 
for the non-delivery of a bond would be in contravention of section 12 of 
the Fraudulent Debtors Arrest Act. 37 

Finally, mention should be made of Rule 594 of the Supreme Court of 
Ontario Rules of Practice, which reads as follows: 38 



33 Ibid., at US. 

34 Ibid., at 777. 

35 Supra, note 25. 

36 Ibid., at 171. Steinberg U. F.C.J. , in Harris v. Harris (1982), 37 O.R. (2d) 552 
(U.F.C.), came to the same conclusion concerning the powers of a judge of the 
Unified Family Court acting other than pursuant to the Family Law Reform Act, 
R.S.O. 1980, c. 152. 

37 In the family law context, see, for example, s. 12(b) of the Divorce Act, R.S.C. 1970, 
c. D-8, and s. 19(1 )(k) of the Family Law Reform Act, R.S.O. 1980, c. 152, which 
authorize the court to demand security for the payment of a maintenance order and 
support order, respectively. 

38 Emphasis added. A provision similar to r. 594 was introduced for the first time in 1858 
(The Act for the abolition of Imprisonment for debt, 22 Vict., c. 96 (Can.), s. 13), and 
appeared in An Act respecting Arrest and Imprisonment for Debt, C.S.U.C. 1859, 
c. 24, s. 41. It became part of the rules of procedure in 1881: see The Judicature Act, 
44 Vict., c. 5, Schedule, r. 369(a). 

The Civil Procedure Revision Committee has proposed that a provision along the 
lines of r. 594 be included in the Proposed Rules of Civil Procedure. Rule 61 .10(4) of 
the Proposed Rules reads as follows: 



90 

594. Where the judgment debtor does not attend [a judgment debtor 
examination], does not allege a sufficient excuse for not attending, or, if 
attending, refuses to disclose his property or his transactions, or does not 
make satisfactory answers respecting the same, or, if it appears from such 
examination that he has concealed or made away with his property in order to 
defeat or defraud his creditors or any of them, the court may order the debtor 
to be committed to the common jail of the county or district in which he 
resides for a term of not more than twelve months, or that a writ of capias ad 
satisfaciendum may be issued against the debtor, or, in case the debtor is at 
large upon bail, may make an order for his committal to close custody, and the 
sheriff, on due notice of the order, shall forthwith take the debtor and commit 
him to close custody until he obtains an order allowing him to go out of close 
custody, on giving the necessary bond in that behalf, or until he is otherwise 
discharged in due course of law. 

What is particularly noteworthy about this provision is the fact that it 
empowers the court to order a debtor to be committed for a period of up 
to twelve months on the basis that "it appears . . . that he has concealed or 
made away with his property in order to defeat or defraud his creditors or 
any of them". It would seem that the Rule applies whether the conduct 
complained of took place before or after the debtor has become a judg- 
ment debtor. In its scope, the provision is similar to section 350(a) of the 
Criminal Code? 9 which provides as follows: 

350. Every one who, 

(a) with intent to defraud his creditors, 

(i) makes or causes to be made a gift, conveyance, assignment, 
sale, transfer or delivery of his property, or 

(ii) removes, conceals or disposes of any of his property, 



is guilty of an indictable offence and is liable to imprisonment for two years. 

The constitutional validity of Rule 594, at least insofar as the court's power 
to commit a debtor who "has concealed or made away with his property in 
order to defeat or defraud his creditors or any of them" is concerned, has 
been questioned on the ground that the matter is one of criminal law and 
within the exclusive jurisdiction of Parliament. 40 



61. 10. -(4) Where a judgment debtor neglects or refuses to attend for an exami- 
nation under this rule or, where he attends and refuses to disclose his property or 
his transactions, or does not make satisfactory answers respecting the same or, if 
it appears from such examination that he concealed or disposed of his property in 
order to defraud his creditors or any of them, a judge may commit him for con- 
tempt. 

See Province of Ontario, Ministry of the Attorney General, Civil Procedure Revision 
Committee, untitled report (June 1980). 

39 R.S.C. 1970, c. C-34. See, also, s. 301 of the Criminal Code, which provides that 
"[ejvery one who, for a fraudulent purpose, takes, obtains, removes or conceals any- 
thing is guilty of an indictable offence and is liable to imprisonment for two years". 

40 See discussion infra, this ch., sec. 8. 



91 

4. POSTJUDGMENT ARREST AND IMPRISONMENT FOR NON- 
PAYMENT OF JUDGMENTS OTHER THAN FOR SUPPORT OR 
MAINTENANCE: THE OTHER PROVINCES 

Both Alberta 41 and Saskatchewan 42 have enacted legislation declaring 
that the Imperial Debtors Act, 1869 is no longer in force in those prov- 
inces. While civil contempt proceedings are not available in Alberta for 
failure to pay a money judgment, 43 the same may not be true in 
Saskatchewan. 44 In Quebec, imprisonment in civil matters has been abol- 
ished, but not "in cases of contempt of court". 45 

Although a debtor in British Columbia can no longer be arrested and 
imprisoned on the ground that he is about to depart the jurisdiction 
intending to defraud his creditors, 46 and although the Court Order 
Enforcement Act 47 provides that "[n]o person shall be taken in execution 
on a judgment", the British Columbia Supreme Court Rules 1976 48 pro- 
vide for arrest in a number of specific cases. For example, arrest may be 
ordered where, upon a judgment debtor examination, it appears that the 
debtor, "with intent to defraud the creditor, has made or caused to be 
made any gift or delivery or transfer of property, or has removed or con- 
cealed property". 49 The British Columbia Supreme Court Rules 1976 also 
authorize payment of a judgment debt by instalments or in a lump sum. 50 
A debtor who fails to comply with such an order, and who fails to show 
"good cause why an order of committal should not be made against him", 
may be arrested and imprisoned for up to forty days. 51 



41 See An Act respecting The Imperial Debtors' Act of 1869, S.A. 1908, c. 6, and An Act 
to Amend the Statute Law, S.A. 1909, c. 4, s. 20. 

42 See An Act respecting The Imperial Debtors Act of 1869, S.S. 1918-19, c. 83. 

43 See Alberta Rules of Court, Alta. Reg. 390/68 as am., r. 354. 

44 It is not clear whether a debtor can be committed for non-payment of an ordinary 
money judgment in Saskatchewan. Rule 372 of the Saskatchewan Rules of the Court 
of Queen's Bench states that "[a] judgment requiring any person to do any act other 
than the payment of money . . . may be enforced by committal". However, in 
Mihalyko v. Mihalyko (1974), 13 R.F.L. 394 (Sask. Q.B.), concerned with the non- 
payment of a maintenance order, Bayda J. (at 396-97) seemed to suggest that the 
power to commit under r. 523 of the Saskatchewan Rules of the Court of Queen's 
Bench was "derived from and must be governed by s. 5 of the Debtors Act". Given 
that the Imperial Debtors Act, 1869 was no longer in force in Saskatchewan at the time 
of this decision, the remarks of Bayda J. are somewhat difficult to understand. 

45 Code of Civil Procedure, R.S.Q. 1977, c. C-25, arts. 1 and 49-54. 

46 Until 1975, a creditor could secure the arrest of his judgment debtor where there was 
probable cause for believing that the debtor was about to depart the jurisdiction with 
the requisite intent: see Arrest and Imprisonment for Debt Act, R.S.B.C. 1960, c. 17, 
s. 1. This Act was repealed, however, in 1975: see Attorney-General Statutes Amend- 
ment Act, S. B.C. 1975, c. 4, s. 1. 

47 Court Order Enforcement Act, R.S.B.C. 1979, c. 75, s. 45. Section 5 of the precursor 
Execution Act, R.S.B.C. 1960, c. 135, provided that the only jurisdiction for the arrest 
of a defaulting judgment debtor was to be found in the Arrest and Imprisonment for 
Debt Act, supra, note 46. 

48 B.C. Reg. 310/76. 

49 Ibid.,v. 42(36)(a). 

50 Ibid.,v. 42(37). 

51 Ibid., r. 42(38) and (39). The interrelationship of s. 45 of the Court Order Enforce- 
ment Act, supra, note 47, and r. 42(38) and (39) is dealt with by the British Columbia 
Court of Appeal in Microwave Cablevision Ltd. v. Harvard House Capital Ltd. (1982), 
37 B.C.L.R. 101, 132 D.L.R. (3d) 570 (C.A.), rev'g (1981), 28 B.C.L.R. 393 (S.C.). 



92 

The other Canadian provinces have a variety of statutory provisions 
that are similar to, or broader than, the provisions of the British Columbia 
Supreme Court Rules 1976. For example, the Manitoba Queen's Bench 
Rules 52 contain a general prohibition against attachment of the person "by 
reason only of the non-payment of money". 53 However, Manitoba courts, 
like the British Columbia courts, are empowered to order a debtor to pay 
a judgment debt by instalments where the court is "satisfied that the judg- 
ment debtor is or will be in a position to pay the whole or any part of the 
judgment". 54 Non-compliance with such an order could result in the 
imprisonment of the judgment debtor for a period not exceeding twelve 
months. 55 

Under the New Brunswick Arrest and Examinations Act, 56 the court 
"may commit . . . any person who makes default in payment of any sum 
from him in pursuance of any order or judgment" where the court is sat- 
isfied that (1) the debtor has or has had, since the date of the order or 
judgment, the ability to pay (in whole or in part) and has refused or neg- 
lected to do so; (2) the debtor, with intent to defraud his creditors, has 
"made or caused to be made any gift, delivery or transfer of or charge on 
his property whereby the [creditor] is materially prejudiced in obtaining 
satisfaction"; 57 (3) the debtor, with the requisite intent has removed or 
concealed his property, thereby materially prejudicing the creditors' 
efforts to obtain payment; 58 or (4) the judgment is based on conduct of the 
debtor that can be characterized as criminal. 

The New Brunswick Arrest and Examinations Act also makes provi- 
sion for a court to order payment of a judgment in instalments. A debtor 
in default of such an order, as is the case in British Columbia and Mani- 
toba, is subject to bodily attachment. 59 

In Newfoundland, arrest and imprisonment of a judgment debtor is 
available as an enforcement remedy where the court finds: 60 

(a) that the judgment debtor has made or is about to make some disposition 
of some or all of his property; 

(b) that the judgment debtor is about to quit the province, and that his 
absence will materially prejudice the recovery of the judgment; or 



52 Man. Reg. 26/45. 

53 Ibid., rr. 478 and 479. 

54 See The Queen's Bench Act, R.S.M. 1970, c. C280, s. 99, and the Manitoba Queen's 
Bench Rules, Man. Reg. 26/45, r. 523. 

55 Ibid. 

56 Arrest and Examinations Act, R.S.N.B. 1973, c. A-12, s. 40. 

57 A judgment debtor may also be committed for contempt in similar circumstances 
under r. 61.14(7)(d) of the New Brunswick Rules of Court, N.B. Reg. 81-174. 

58 A judgment debtor may also be committed for contempt in similar circumstances 
under r. 61. 14(7)(d) of the New Brunswick Rules of Court, ibid. 

59 See Arrest and Examinations Act, supra, note 56, s. 45. 

60 See The Judicature Act, R.S.N. 1970, c. 187, s. 102. The power to secure the arrest of 
a defaulting debtor in such circumstances is an exception to the general rule under 
s. 100 of The Judicature Act that "[n]o person shall be arrested and held to bail in any 
civil action, on either original or final process . . .". 



93 

(c) that the judgment debtor is possessed of means of payment, of which he 
has control, and which he withholds from his creditors. 

Similar to Ontario's Fraudulent Debtors Arrest Act is the Prince 
Edward Island Bailable Proceedings Act. 61 Under both Acts, the arrest and 
imprisonment of a judgment debtor who is about to quit the province with 
the intent to defraud his creditors may be ordered. 62 The Bailable Proceed- 
ings Act, however, also provides expressly for the arrest and imprisonment 
of a non-resident. 63 In Ontario, on the other hand, there is persuasive 
authority that a non-resident debtor cannot be arrested under the 
Fraudulent Debtors Arrest Act. 64 

Undoubtedly, the most comprehensive arrest and imprisonment 
powers are to be found in Nova Scotia. The statute governing post judg- 
ment arrest of debtors in Nova Scotia is the Collection Act. 65 Section 3 of 
this Act prohibits arrest or imprisonment for default in payment of any 
judgment ordering or adjudging the payment of money otherwise than 
pursuant to the Act. The Act empowers a judgment creditor in Nova Sco- 
tia to conduct a judgment debtor examination to obtain information 
regarding the debtor's circumstances, his present or prospective means of 
paying the debt, and the disposition by the debtor of any of his property. 66 
If the debtor fails to attend at the appointed time, a warrant for his arrest 
may issue. 67 Section ll(l)(c) of the Collection Act even permits a warrant 
to issue before an appointment for the examination of the debtor has been 
obtained where the creditor states under oath that "the debtor is about to 
leave the Province". 

More importantly, the debtor may be committed to jail for a period 
not exceeding twelve months where it appears: 68 

(a) that the debt, which forms the subject of the judgment, was fraudu- 
lently contracted; or 

(b) that the credit was obtained under false pretences; or 

(c) that the debtor contracted the debt without having at the time any rea- 
sonable expectation of being able to pay the same; or 

(d) that any other fraudulent circumstances have occurred in connection 
with the contracting of the debt; or 

(e) that the debtor has made a fraudulent disposition of his property; or 

(f) in cases of tort, that the tort was wilful and malicious. 



61 R.S.P.E.I. 1974, c. B-l. 

62 Ibid., s. 7. Section 8 of the Act provides that arrest for non-payment of a judgment 
debt otherwise than in accordance with the Act is abolished. 

63 Ibid., s. 23. 

64 See Red Star Laboratories Co. v. Pabst, [1937] O.R. 864, [1937] 4 D.L.R. 236 (C.A.). 

65 Collection Act, R.S.N. S. 1967, c. 39. See, also, the Indigent Debtors Act, R.S.N.S. 
1967, c. 136. 

66 Collection Act, supra, note 65, s. 4(1). 

67 Ibid.,s. 10. 

6S Ibid., s. 27(2). 



94 

If it appears that the judgment debtor has sufficient income or means, sec- 
tion 29(1) authorizes the making of "an order requiring [the debtor] to pay 
the amount due on the judgment by instalments". Failure to comply with 
such an order may result in the debtor undergoing further examination, 
and "[w]here, upon such examination, it appears . . . that the debtor has 
without reasonable excuse refused or neglected to pay . . . and is possessed 
of means or income sufficient to pay", 69 the debtor may be arrested and 
imprisoned. As in the case of the legislation of most provinces, the Nova 
Scotia Collection Act provides a procedure by which the judgment debtor 
can apply for his release. 70 

In addition to the arrest powers contained in the Collection Act, ref- 
erence should be made to certain provisions contained in the 1971 Nova 
Scotia Civil Procedure Rules concerned with the matter of arrest. Rule 
55.01(1) states as follows: 

55.01 .-(1) The power of the court to punish for contempt of court may be 
exercised by a contempt order, which may be granted by the court, upon 
notice .... 

Reference should also be made to paragraphs (1), (2), and (3) of Rule 
52.01, which read as follows: 71 

52.01 .-(1) An order for the payment of money, other than the payment of 
money into court, may be enforced by one or more of the following orders, 

(a) an execution order as provided in rule 53; 

(b) a receivership order as provided in rule 54; 

(c) a contempt order as provided in rule 55. 

(2) An order for the payment of money into court may be enforced by one or 
more of the following orders, 

(a) a receivership order under rule 54; 

(b) a contempt order under rule 55. 

(3) An order for the recovery of money may be enforced by one or more of 
the following orders, 

(a) an execution order as provided in rule 53; 

(b) a receivership order as provided in rule 54. 



69 Ibid., s. 30(4). 

70 Ibid., ss. 30(5) and 31 et seq. 

71 Emphasis added. 



95 

The relationship between Rule 55 and the prohibition against arrest 
contained in section 3 of the Collection Act was considered in the recent 
case of Mac Neil v. Mac Neil. 72 This case concerned an application for a 
contempt order under Rule 55 by a maintenance creditor seeking to 
enforce a lump sum maintenance order. The evidence showed that, imme- 
diately after the maintenance order was made, the maintenance debtor 
removed certain securities to the United States from Nova Scotia. The 
maintenance debtor argued that he could not be imprisoned for contempt 
for failure to pay the lump sum maintenance order, since section 3 of the 
Collection Act abolished arrest and imprisonment of debtors for non-pay- 
ment of a judgment debt except in accordance with the terms of this Act. 

The judgment of the Nova Scotia Supreme Court, Appeal Division, 
was delivered by MacKeigan C.J.N.S. His Lordship was careful to point 
out that the contempt found by the judge at first instance "was not mere 
default in payment of an order for payment of money, but a defiance of 
the court by manipulating, concealing and removing assets from the juris- 
diction so as to make execution impossible". 73 Chief Justice MacKeigan 
then added the following comments: 74 

The act of removing the assets from the jurisdiction was an act 'obstruct- 
ing, or tending to obstruct or interfere with the administration of justice' and 
not just 'disobedience to the judgments, order or other process of the court'. 
This is thus not just a private matter between Mr. and Mrs. MacNeil. It has 
become one which concerns the state, because an offence has been committed 
against the state itself in the administration of justice making a travesty of the 
court and its process. The offence is aggravated by the offender being a 
Queen's Counsel, a Crown prosecutor, and an officer of the court. 

In support of this conclusion, the Chief Justice of Nova Scotia noted that, 
in spite of the fact that the Ontario Fraudulent Debtors Arrest Act provides 
that "no person shall be liable to arrest for contempt for non-payment of 
money payable by a judgment", Rule 594 of the Supreme Court of 
Ontario Rules of Practice authorizes committal where it appears from a 
judgment debtor examination that the debtor "has concealed or made 
away with his property in order to defeat or defraud his creditors". 

MacKeigan C.J.N.S., it should be noted, also expressed the opinion 
that Rule 55 of the 1971 Nova Scotia Civil Procedure Rules overruled sec- 
tion 3 of the Collection Act "to the extent that any inconsistency or conflict 
exists". 75 Accordingly, even if it were necessary to hold that the arrest was 
ordered for non-payment of money, rather than "for criminal contempt in 
concealing and removing assets to avoid execution", 76 the arrest still would 
have been proper. 

As the discussion above indicates, the availability of postjudgment 



72 (1975), 25 R.F.L. 357 (N.S.S.C, App. Div.). 

73 Ibid., at 365. 

74 Ibid., at 367. 

75 Ibid., at 369. 

76 Ibid., at 368. 



96 

arrest and imprisonment as an enforcement remedy varies from province 
to province. Its use is most restricted in Alberta. While the remedy has 
been abolished in Quebec and Saskatchewan, it may be that a creditor in 
these two provinces may resort to contempt proceedings in appropriate 
circumstances. In Prince Edward Island, postjudgment arrest and impris- 
onment is available in circumstances similar to those outlined in the 
Ontario Fraudulent Debtors Arrest Act. In Manitoba, arrest and imprison- 
ment is available to enforce a judgment where the judgment has been 
ordered to be paid in instalments; postjudgment arrest and imprisonment 
is available in British Columbia for this and other purposes. The remedy of 
postjudgment arrest and imprisonment is most widely available in New 
Brunswick, Newfoundland, and Nova Scotia. 

5. POSTJUDGMENT ARREST AND IMPRISONMENT FOR NON- 
PAYMENT OF A SUPPORT OR MAINTENANCE ORDER: THE 
PRESENT ONTARIO POSITION 

It has already been noted that the Supreme Court of Ontario and the 
county and district courts in the Province apparently have no inherent 
power to commit for contempt a debtor who does not pay a money 
judgment. 77 Nor is there legislative authority to imprison for non-payment 
of a money judgment in the case of these courts. The latter situation 
should be contrasted with the statutory arrest and imprisonment powers 
enjoyed by the Ontario provincial courts (family division) with respect to 
maintenance and support orders. 

The arrest and imprisonment powers of the provincial court (family 
division) are now to be found in the Family Law Reform Act.™ The most 
important of these powers is contained in section 29, which may be called 
into play in conjunction with "show cause proceedings" authorized by sec- 
tion 28 of the Act. Sections 28 and 29 of the Family Law Reform Act read 
as follows: 

28. -(1) Where there is default in payment under an order for support or 
maintenance, a clerk of the Unified Family Court or a provincial court (family 
division) may require the debtor, upon notice, 

(a) to file a statement of financial information referred to in section 23; 

(b) to submit to an examination as to assets and means; and 

(c) to appear before the court to explain the default. 

(2) If the debtor fails to appear as required after being served with a notice, 
or if the court is satisfied that the debtor cannot be served or intends to leave 
Ontario without appearing as required after being served, the court giving the 
notice may issue a warrant for the arrest of the debtor for the purpose of com- 
pelling attendance. 



77 See discussion supra, this ch. , sec. 3. 

78 Family Law Reform Act, R.S.O. 1980, c. 152. 



97 

29. -(1) Where the debtor fails to satisfy the court that the default is owing to 
his or her inability to pay and where the court is satisfied that all other practi- 
cable means that are available under this Act for enforcing payment have been 
considered, the court may, 

(a) order imprisonment for a term of not more than ninety days to be 
served intermittently or as ordered by the court; or 

(b) make such other order as may be made upon summary conviction for 
an offence. that is punishable by imprisonment. 

(2) The order for imprisonment under subsection (1) may be made condi- 
tional upon default in the performance of a condition set out in the order, 
including the performance of a community service order. 

It should be noted that proceedings under these provisions may be ini- 
tiated by the clerk of the court. Moreover, by virtue of section 27(1 )(c) of 
the Act, enforcement proceedings may be initiated by the Ministry of 
Community and Social Services or a municipal corporation if the Ministry 
or the municipality is providing the maintenance or support creditor 79 with 
benefits under the Family Benefits Act 80 or assistance under the General 
Welfare Assistance Act 81 

Reference also should be made to section 24 of the Family Law 
Reform Act, which provides as follows: 

24. Where ... a notice is issued under section 28 and a judge of the court is 
satisfied that the . . . debtor is about to leave Ontario, the judge may issue a 
warrant in the form prescribed by the rules of the court for the arrest of the 
. . . debtor. 

It should be noted that the warrant for arrest prescribed by the Rules of 
the Provincial Court (Family Division) 82 commands the peace officer to 
whom it is directed "to bring [the debtor] before the court to be dealt with 
according to law or, if the court is not then sitting or [the debtor] is found 
in another county or district and cannot be brought before the court imme- 
diately ... to take him/her to a provincial correctional institution or other 
secure facility and to detain him/her there until he/she can be brought 
before the court". The Act gives no indication of what may or ought to 
happen to a debtor arrested pursuant to section 24 when he or she is 
brought before the court. 

There is little jurisprudence on the scope of the provisions of the 
Family Law Reform Act set out above. As sections 28 and 29 have taken 
the place of the "show cause" provisions of The Deserted Wives' and Chil- 
dren's Maintenance Act, 83 cases decided under that Act may be of assis- 



79 The terms maintenance and support are used interchangeably throughout this chapter. 

80 R.S.O. 1980, c. 151. 

81 R.S.O. 1980, c. 188. 

82 Rules of the Provincial Court (Family Division), R.R.O. 1980, Reg. 810, Form 3. 

83 R.S.O. 1970, c. 128, s. 12. 



98 

tance in interpreting the new legislation. However, there is very little case 
law respecting section 12 of The Deserted Wives' and Children's Mainten- 
ance Act. We turn then to consider what little jurisprudence there is under 
both The Deserted Wives' and Children's Maintenance Act and the Family 
Law Reform Act concerning the availability of postjudgment arrest and 
imprisonment as an enforcement remedy in the circumstances under con- 
sideration. 

One of the more noteworthy decisions to date with respect to sections 
28 and 29 of the Family Law Reform Act is Das v. Das. 84 There the main- 
tenance debtor had been served with a notice of default, pursuant to sec- 
tion 28(1), indicating that he was $510 in arrears in the payment of 
support. The maintenance debtor paid this sum into court, but additional 
arrears then began to build up. The maintenance debtor argued that, since 
the amount specified in the notice of default had been paid, he could not 
be required to appear in court to explain the subsequent default. In sup- 
port of this contention, the debtor argued "that where imprisonment is a 
possible result . . . [he] must receive notice of the exact case that he has to 
meet as a matter of natural justice". 85 This was the position under section 
12 of The Deserted Wives' and Children's Maintenance Act, the precursor 
to sections 28 and 29 of the Family Law Reform Act. 

Weisman Prov.Ct.J. rejected the arguments of the maintenance debt- 
or. His views on the jurisdiction granted by these sections of the Family 
Law Reform Act were as follows: 86 

[Difficulties arose in enforcement proceedings under s. 12 of the Deserted 
Wives' and Children's Maintenance Act. Since the Court's jurisdiction was lim- 
ited to the amount stated in the information arrears accruing after the date of 
the information could not be enforced at the hearing. The husband accord- 
ingly was able to remain continuously in arrears by delaying proceedings. 

Section 10 of the Interpretation Act, R.S.O. 1970, c. 225, provides, in 
part: 

10. Every Act shall be deemed to be remedial . . . and shall accordingly 
receive such fair, large and liberal construction and interpretation as will 
best ensure the attainment of the object of the Act according to its true 
intent, meaning and spirit. 

This leads me to conclude that in the absence of clear legislative intent to 
the contrary I am not to construe [s. 28(1) and s. 29] of The Reform Act in a 
manner which would perpetuate the abuses that existed under s. 12 of the 
Deserted Wives' and Children's Maintenance Act. 

In my opinion the words 'may enforce the order' in [s. 28(1)] of The 
Reform Act authorize the Court to enforce payment of any arrears that are 



84 (1978), 21 O.R. (2d) 701, 93 D.L.R. (3d) 638 (Prov. Ct. (F.D.)) (subsequent refer- 
ences are to 21 O.R. (2d)). 

85 Ibid., at 702. 

86 Ibid. 



99 

proven to exist as of the date of the hearing. The Court is not limited to those 
arrears outstanding at the date the notice of default was issued. 

In other words, the maintenance debtor need not be advised precisely as 
to the case he must meet insofar as show cause proceedings under the 
Family Law Reform Act are concerned. 

Where imprisonment of the debtor is desired by the maintenance 
creditor, undoubtedly the most important issue will be the maintenance 
debtor's ability to pay. Under section 29(1) of the Family Law Reform 
Act, where a debtor is brought before a court to explain his default in pay- 
ment of a maintenance order, the onus is on the debtor "to satisfy the 
court that the default is owing to his or her inability to pay". Again, the 
case law is very sparse on the meaning to be given to the term "inability to 
pay". Only a few reported cases defining this phrase have been decided 
under the Family Law Reform Act. However, there are a number of 
reported cases in which this issue was considered in connection with sec- 
tion 12 of The Deserted Wives' and Children's Maintenance Act. It may be 
useful at this juncture to set out section 12: 

12. -(1) When default is made in the payment of a sum of money ordered to 
be paid under this Act, a justice of the peace, 

(a) may from time to time summon the person in default to explain the 
default; and 

(b) if the service of the summons is proved and the person summoned 
does not appear and sufficient reason for his absence is not given, or 
if it appears that the summons could not be served, may issue a war- 
rant for his arrest, 

and, if upon the hearing before a judge the person in default fails to satisfy 
him that the default is due to inability to pay, he may order and adjudge the 
person to be imprisoned for a term of not more than three months unless the 
sum payable under the first-mentioned order, or such lesser sum as the judge 
designates, is sooner paid. 

It should be noted that the only defence apparently available to a 
defaulting maintenance debtor under this provision was inability to pay, 
and it was so held in a number of decisions. 87 Consequently, the fact that 
the maintenance creditor denied the maintenance debtor access to their 
children was not a valid defence to a request for the imprisonment of the 
maintenance debtor by the maintenance creditor for default in payment of 
a maintenance order. 88 Similarly, the fact that the maintenance creditor 
had left the jurisdiction afforded no defence to the maintenance debtor. 89 

The most detailed discussion of the issue of inability to pay would 



87 See, for example, Hwong v. Hwong (1976), 24 R.F.L. 70 (Ont. Prov. Ct. (F.D.)). 

88 See Komar, "The 'Show Cause' Enforcement of Maintenance Orders" (1978), 1 Can. 
J. Fam. L. 511, at 556-57. 

89 Ibid., at 559. 



100 

appear to be contained in the judgment of Main Prov. Ct. J. in Gallivan v. 
Gallivant where it was stated as follows: 91 

There may be many reasons for a respondent's failure to meet the financial 
obligation imposed by a maintenance order. Too often the excuses given 
range from outright defiance to a misguided sense of priorities. In regard to 
the latter, the court is frequently urged to accept and endorse a diversion of 
available funds to the satisfaction of voluntary expenditures rather than to the 
duty of compliance with the maintenance order of a court of competent juris- 
diction, which order ordinarily ranks ahead of such expenditures in time and 
always in importance. Such a proposal is unacceptable and does not reflect the 
meaning of the words 'inability to pay'. Subject to a consideration of all the 
relevant circumstances in any particular case, the words, 'inability to pay' 
mean a deficit of resources with which to meet the outstanding legal obligation 
and which deficit has resulted from circumstances beyond the control of the 
payor. Should the court determine that the failure to pay was due to other than 
such involuntary circumstances then the respondent is without lawful excuse 
and is subject to the exercise of a judicial discretion as to the terms of any 
enforcement order. In this regard, the current availability of resources as well 
as the effect of the order upon present dependents are factors which must be 
taken into account. The order for and use of incarceration to evoke payment 
and thus provide the resources to meet the needs of the recipients of the main- 
tenance order is a legitimate consideration in appropriate circumstances. 

If the maintenance debtor is capable of securing employment, but chooses 
not to do so, then arguably he has the ability to pay. 92 This view is in 
accordance with a great many American authorities, 93 although support 
also can be found for the contrary view. 94 

Those cases decided under the Family Law Reform Act make clear at 
least one point. The onus of establishing "inability to pay" under section 
29(1) rests with the defaulting maintenance or support debtor, whereas the 
onus of showing that "all other practicable means . . . for enforcing pay- 
ment have been considered" rests with the applicant. 95 

One final point about the enforcement of maintenance orders by way 
of the arrest and imprisonment of the maintenance debtor should be made 
here. Earlier, we made reference to the recent decision of the Ontario 
Court of Appeal in Cohen v. Cohen. % The Court in that case concluded 



90 (1977), 26 Chitty's L.J. 67 (Ont. Prov. Ct. (F.D.)). 

91 Ibid. , at 70 (emphasis added). 

92 See, for example, Harris v. Watson (1981), 34 O.R. (2d) 495 (Prov. Ct. (F.D.)); Re 
Gehl and Greaves (1981), 127 D.L.R. (3d) 653, 25 R.F.L. (2d) 193 (Ont. Co. Ct.) 
(husband lost job as a result of drinking problem), citing Rajan v. Rajan, unreported 
(June 22, 1981, Ont. Prov. Ct. (F.D.)) (self-induced impairment resulting in inability 
to continue employment due to incarceration is not justifiable or acceptable inability 
to pay); and Re Warman, unreported (April 8, 1981, Ont. Prov. Ct. (F.D.)). 

93 See Komar, supra, note 88, at 542. 

94 Ibid. 

95 See Coomber v. Coomber (1981), 21 R.F.L. (2d) 382 (Ont. Co. Ct.); Mol v. Mol 
(1980), 18 R.F.L. (2d) 253 (Ont. Co. Ct.); and Re Cserzy v. Cserzy (1981), 33 O.R. 
(2d) 653, 23 R.F.L. (2d) 217 (Co. Ct.). See, also, the recent case of Brindley v. 
Brindley, unreported (May 18, 1982, Ont. Co. Ct.). 

96 Supra, note 25. 



101 

that the Supreme Court of Ontario has no power "to commit to gaol for 
contempt of court for non-payment of a sum of money arising under a 
judgment, whether that judgment is for payment of maintenance or 
otherwise". 97 Nevertheless, arrest and imprisonment for non-payment of a 
maintenance or support order from the Supreme Court, or a county or dis- 
trict court for that matter, is still an option that is available to such main- 
tenance creditors. A maintenance creditor in such a case may request that 
his or her order for support or maintenance be enforced by a provincial 
court (family division) and, as a result, have the benefit of the show cause 
procedure prescribed by the Family Law Reform Act. 98 The right to have a 
Supreme Court or county or district court judgment enforced in this man- 
ner is similar to the right that previously existed under The Provincial 
Courts Act," which gave a maintenance creditor access to the "show 
cause" procedure under The Deserted Wives' and Children's Maintenance 
Act. 

6. POSTJUDGMENT ARREST AND IMPRISONMENT FOR NON- 
PAYMENT OF A SUPPORT OR MAINTENANCE ORDER: THE 
OTHER PROVINCES 

In this section, it is proposed to outline briefly the law of arrest and 
imprisonment for non-payment of a support or maintenance order in the 
other Canadian provinces. 

In two provinces - New Brunswick 100 and Prince Edward Island 101 - 
recently enacted family law legislation contains a scheme for postjudgment 
arrest and imprisonment of maintenance or support creditors very similar 
to the "show cause procedure" found in sections 28 and 29 of the Ontario 
Family Law Reform Act. With respect to the enforcement of maintenance 
orders in the superior courts in New Brunswick, it will be recalled that the 
Arrest and Examinations Act m contains a broad provision permitting the 
imprisonment of debtors on the ground, inter alia, of "ability to pay". 

In Alberta, although an ordinary creditor can no longer resort to 
postjudgment arrest and imprisonment to enforce a judgment, 103 a main- 
tenance creditor may do so under the Alimony Orders Enforcement Act m 
and the Domestic Relations ^4cr. 105 The former is concerned with the 
powers of the Alberta Court of Queen's Bench, the latter with provincial 
family courts. Under the Alimony Orders Enforcement Act, a maintenance 
debtor may be imprisoned for as long as one year where he has dealt with 



97 Ibid., at 171. 

98 Family Law Reform Act, supra, note 78, s. 29(1). 

99 R.S.O. 1970, c. 369, s. 25, rep. by S.O. 1978, c. 2, s. 86. 

100 See Child and Family Services and Family Relations Act, S.N.B. 1980, c. C-21, ss. 123 
and 126, as am. by S.N.B. 1981, c. 10. 

101 Family Law Reform Act, S.P.E.I. 1978, c. 6, ss. 28, 29, and 37. 

102 Supra, note 56, discussed supra, this ch., sec. 4. 

103 See discussion supra, this ch., sec. 4. 

104 R.S.A. 1980, c. A-40, s. 8. 

105 R.S.A. 1980, c. D-37, s. 28. Imprisonment is based on a default by the debtor and the 
fact that the debtor fails to satisfy the court of his inability to pay. 



102 

his property with intent to avoid compliance with a maintenance order or 
where he has had the ability to pay but has refused or neglected to do so. 106 

Somewhat similar legislation may be found in Newfoundland. Under 
section 14 of The Maintenance Act, 101 a maintenance debtor may be 
ordered arrested where the court is satisfied that the debtor "has made or 
is about to make some disposition of his or her property or part thereof or 
is about to leave his or her place of residence for another locality or prov- 
ince". The debtor, under this provision, may be held "until the disposition 
of the case". 

In British Columbia, 108 Manitoba, 109 Newfoundland, 110 Nova Scotia, 111 
and Saskatchewan, 112 a maintenance debtor is subject to some form of 
"show cause" proceedings. While the Newfoundland, Nova Scotia, and 
Saskatchewan legislation allows a defaulting maintenance debtor to escape 
arrest and imprisonment where he is able to show that he is unable to com- 
ply with the order, there is no express "inability to pay" defence found in 
the British Columbia and Manitoba legislation. 

In a number of provinces, a maintenance debtor may be arrested and 
imprisoned for non-payment pursuant to the court's contempt power. This 
would appear to be the case, for example, in Quebec, 113 Nova Scotia, 114 
and Saskatchewan. 115 

7. POSTJUDGMENT ARREST AND IMPRISONMENT: REFORM 
PROPOSALS IN OTHER JURISDICTIONS 

(a) Money Judgments Other Than Orders for Support or 
Maintenance 

In this section, we shall examine the proposals for reform of post judg- 
ment arrest and imprisonment of a defaulting debtor put forth by the 
English Committee on the Enforcement of Judgment Debts (the "Payne 



106 Supra, note 104, s. 8(l)(c)(i) and (ii). 

107 R.S.N. 1970, c. 223, as amended. See, also, s. 13 of The Maintenance Act authorizing 
imprisonment where there is a default and the debtor fails to satisfy the court that the 
default is due to inability to pay. 

108 Family Relations Act, R.S.B.C. 1979, c. 121, s. 67. See Butler v. Butler (1981), 27 
B.C.L.R. 268 (C.A.); Prins v. Blomly, [1982] 3 W.W.R. 753 (B.C.S.C); La v. La 
(1982), 27 R.F.L. (2d) 36 (B.C.C.A.); and Vance v. Vance (1982), 28 R.F.L. (2d) 420 
(B.C.S.C). 

109 The Family Maintenance Act, S.M. 1978, c. 25, s. 26, as am. by S.M. 1979, c. 38, s. 1, 
andS.M. 1982, c. 13, s. 3. 

110 The Maintenance Act, supra, note 107, s. 13. 

111 Family Maintenance Act, S.N.S. 1980, c. 6, s. 39. 

112 The Deserted Wives' and Children's Maintenance Act, R.S.S. 1978, c. D-26, s. 14. 

113 See Code of Civil Procedure, supra, note 45, art. 1 . 

114 See Nova Scotia Civil Procedure Rules, r. 55, and discussion supra, this ch., sec. 4. 

115 See Saskatchewan Rules of the Court of Queen's Bench 1967, rr. 523, 624, and 646. 
See, for example, Mihalyko v. Mihalyko, supra, note 44; Lafonde v. Lafonde (1981), 
23 R.F.L. (2d) 135 (Sask. Q.B.); and Parker v. Parker (1982), 29 R.F.L. (2d) 451 
(Sask. Q.B.). 



103 

Committee"), 116 the Third Report of the Consumer Protection Project pre- 
pared by the Law Reform Division of the New Brunswick Department of 
Justice, 117 the Report on Debt Recovery in Australia prepared by the Aus- 
tralian Government Commission of Inquiry into Poverty, 118 and a Study 
Paper on the Nova Scotia Collection Act prepared for the Nova Scotia Law 
Reform Advisory Commission. 119 We begin with an outline of the views 
and recommendations of the Payne Committee. 

In its 1969 Report, the Payne Committee recommended the abolition 
of imprisonment for non-payment of civil debts other than support or 
maintenance debts, and the repeal of section 5 of The Debtors Act, 1869. 120 
The Committee's conclusions may be summarized as follows: 

— the hardship caused by imprisonment is out of all proportion to 
the debt sought to be collected; 121 

— imprisonment makes it more difficult for the debtor to meet his 
present and future debts; 122 

— the benefits realized from imprisonment do not justify its cost; 123 

— imprisonment, while an effective inducement to payment, is ren- 
dered redundant by a more effective enforcement regime; 124 

— the judgment summons procedure under section 5 of The Debtors 
Act, 1869 is not consistent with fairness principles; 125 

— the judgment summons procedure is costly and time-consuming; 126 

— the types of debtor who go to prison are "inadequate men who are 
incapable of managing their own affairs; they are men who have 



116 Report of the Committee on the Enforcement of Judgment Debts (Cmnd. 3909, 1969) 
(hereinafter referred to as the "Payne Committee Report"). 

117 New Brunswick Department of Justice, Law Reform Division, Third Report of the 
Consumer Protection Project, Vol. II, Legal Remedies of the Unsecured Creditor After 
Judgment (1976) (hereinafter referred to as the "New Brunswick Report"). 

118 Australian Government Commission of Inquiry into Poverty, Debt Recovery in 
Australia (1977) (hereinafter referred to as the "Australian Report"). 

119 Nova Scotia Law Reform Advisory Commission, The Collection Act: A Study Paper 
(1974) (hereinafter referred to as the "Nova Scotia Report"). 

120 Compare the approach adopted by the Report of the Joint Working Party on the 
Enforcement of Judgments, Orders and Decrees of the Courts in Northern Ireland 
(1965), at 55, where no change was proposed in connection with the Debtors Act (Ire- 
land), 1872. 

121 Payne Committee Report, supra, note 116, para. 958, at 247. 

122 Ibid. 

123 Ibid., paras. 959-67, at 247. 

124 Ibid., para. 965, at 248. 

125 Ibid., para. 961, at 247. 

126 Ibid., para. 962, at 247. 



104 

become overwhelmed by a burden of debt through illness, unem- 
ployment or other misfortune; they are irresponsible or feckless 
people who need control or temporary help, or many other types 
for whom imprisonment. . .was certainly not intended"; 127 and 

— whereas the able but unwilling debtor usually avoids imprison- 
ment by last-minute payment of an outstanding judgment debt, 
the feckless or inadequate debtor frequently does not respond to a 
judgment summons and, as a result, is imprisoned by default. 128 

The Committee recognized the utility of a threat of imprisonment for 
the recalcitrant debtor: 129 

996. It would be idle not to recognise that in the past committal orders 
and the threat of imprisonment have compelled or induced many thousands of 
debtors to pay their debts in full or in part or to bring their instalments up to 
date, and this threat is still a potent factor in the field of debt recovery and 
enforcement. It does not, however, follow that, because committal has been 
in so many cases in the past the only effective process for the enforcement of 
debt, the sanction is therefore essential or desirable. 

In reference to what it called the "hard core", the Payne Committee com- 
mented further as follows: 130 

1002. We ought perhaps, at the risk of repetition, to refer once more to 
the important topic of the hard core. We have been often asked what we pro- 
pose to do with the hard core of persistent debtors if imprisonment is abol- 
ished, and we do not shrink from this important question. Members of the 
Committee are not sympathetic towards debtors of this class and they realise 
that there are many debtors who incur debts dishonestly and live on the fringe 
of fraud. Nonetheless they remain convinced that committal under the Debt- 
ors Act 1869 should be abolished. Under the system which has obtained for a 
hundred years or more the threat of imprisonment has no doubt been a potent 
factor in enforcing the recovery of debts from recalcitrant debtors, and it may 
be that for a time our new sanctions may seem less onerous, but we cannot 
reconcile ourselves to the view that it is justifiable to send inadequate or feck- 
less persons to prison, or to threaten them with imprisonment, in order to 
extract money from thousands of others who have the means to pay. It must 
be remembered that it is not the persistent and dishonest debtor with means 
who goes to prison. He pays when the bailiff comes to arrest him. 

1003. There are two further answers to those who are troubled about the 
future of the hard core. The first is that the new enforcement procedure will 
provide a more effective method of extracting money from any debtors who 
have earnings, assets or property than have been available in the past. Second- 
ly, potential creditors must, in the public interest, be encouraged or induced 
to protect themselves more vigilantly than they have hitherto. The Committee 
do not accept that any benefit to the business or trading community or to the 



127 Ibid., para. 980, at 251. 

128 Ibid., para. 1001, at 257-58. 

129 Ibid., para. 996, at 256. 

130 Ibid., paras. 1002-04, at 258-59. 



105 

public at large can flow from the creation of bad debts, and, if would-be sup- 
pliers of goods can be persuaded to make proper inquiries before entering into 
transactions so as to ascertain whether their customers are, in fact, credit- 
worthy before goods are supplied, this would be of the greatest benefit to all 
concerned and to the national interest. 

The solution 

1004. The new enforcement system is designed to discover and distinguish 
the inadequate from the recalcitrant, and, if committal were retained, we 
should hope to save the inadequates from prison, but the system is also 
designed to provide the means of obtaining money from debtors who have 
assets or income without the necessity of sending them to prison, and this, 
after all, is what the creditors desire. We are not abolishing committal because 
we are tender towards the persistent debtors but because we believe that more 
effective methods of obtaining payment can be introduced. If there are any 
who are inclined to use a fashionable phrase and describe the new enforce- 
ment system as a 'debtors' charter', we believe that time will show how erro- 
neous is that judgment. 

The issue of postjudgment arrest and imprisonment was also 
addressed in the Third Report of the Consumer Protection Project, Volume 
II, entitled Legal Remedies of the Unsecured Creditor After Judgment, pre- 
pared by the Law Reform Division of the New Brunswick Department of 
Justice. After a review of the postjudgment arrest provisions of the New 
Brunswick Arrest and Examinations Act, the Report stated as follows: 131 

Little useful purpose seems to be served by the retention of provision for 
arrest of the debtor as a means of enforcing a judgment in an ordinary civil 
action. If resort to arrest is necessary as a punishment for disobedience of a 
direct court order, it can be dealt with under the power of the court to punish 
contempt. Direct orders to a debtor to pay, which may occur in the case of 
claims against fiduciaries such as lawyers and trustees, and instalment orders 
under the Arrest and Examinations Act could be enforced by contempt proce- 
dures in the same way that a specific remedy like an injunction or order for 
specific performance is enforced. 

The cost of imprisonment to the individual arrested and to society invari- 
ably outweighs the benefit to the claimant. The availability of this procedure 
should be limited to cases in which there is also an affront to society, such as a 
contempt of court. All other remnants of arrest in a civil action that were pre- 
served at the time of the general abolition of arrest for debt to New Brunswick 
in 1874 should be eliminated. 

The New Brunswick Report made the following recommendation: 132 

It is recommended that all remaining provisions for arrest of a person in a 
civil action, before or after judgment, other than provisions for punishment of 
disobedience of a direct court order under powers respecting contempt of 
court, be eliminated. 

Insofar as the court's contempt powers were concerned, the Law Reform 



131 New Brunswick Report, supra, note 117, at 77. 

132 Ibid., at 78 (emphasis deleted). 



106 

Division of the New Brunswick Department of Justice wished to see them 
extended to enable "a court to make an order to pay, enforceable by pro- 
ceedings for contempt, in any case in which the judgment debtor has incur- 
red a liability in the province which he does not pay within what the court 
considers a reasonable time if the debtor has not sufficient assets within 
the jurisdiction to satisfy the liability and if the court is satisfied that it is 
necessary and just for such an order to be made". 133 

If implemented, the proposals contained in the Third Report of the 
Consumer Protection Project, discussed above, would have the following 
effect. The grounds for postjudgment arrest and imprisonment set out in 
the New Brunswick Arrest and Examinations Act 134 would be replaced by a 
general contempt power. It is unclear from the New Brunswick Report 
whether the contempt power would comprehend some or all of the 
grounds for imprisonment found in the Arrest and Examinations Act or 
would be available only in the case of a direct order to pay. 

Reference should also be made to the discussion of postjudgment 
arrest and imprisonment as a method of enforcement in the 1977 Report 
on Debt Recovery in Australia, prepared by the Australian Government 
Commission of Inquiry into Poverty. The Report made no recommenda- 
tions concerning the abolition or retention of the remedy of postjudgment 
arrest and imprisonment. Rather, it examined the use of arrest and impris- 
onment to combat two perceived abuses: (1) non-attendance on an exami- 
nation summons, and (2) refusing or neglecting to pay a debt, 
notwithstanding the availability of funds to do so. Its main concern with 
the use of imprisonment to deal with these abuses was the "lack of due 
process": 135 

On the one hand, the type of hearing which is held is such as to raise the most 
serious questions concerning the protection afforded the debtor. Representa- 
tion is extremely rare, the strict rules of evidence are inapplicable, the burden 
of proof is less than that required for criminal conviction and the range of pen- 
alties available to the tribunal is narrower than on a criminal charge. 

While referring to the existence of a special procedure available to a 
debtor imprisoned for non-attendance on an examination, the Report of 
the Australian Government Commission of Inquiry into Poverty noted 
that "many, if not most, debtors made subject to such an order remain in 
complete ignorance of the special procedure". 136 It added that "[n]o con- 
certed effort is made to ensure that the debtor is aware of his rights". 137 In 
addition, the Report was critical of the ability of a defaulting debtor to 
purge his contempt "by paying the sum still outstanding", since this had 



133 Ibid., at 80 (emphasis deleted). It should be noted, however, that the Report did 
include a recommendation to the effect that "further study be given to the contempt 
power as the ultimate weapon of the courts in both public and private legal process": 
ibid., at 81 (emphasis deleted). 

134 Supra, note 56, discussed supra, this ch., sec. 4. 

135 Australian Report, supra, note 118, at 7-8. 

136 Ibid., at 8. 

137 Ibid. 



107 

"the effect of discriminating, on the basis of the possession of, or access 
to, funds adequate for the purpose, between persons whose fault in non- 
attendance on a summons is identical". 138 

The Study Paper on the Collection Act prepared for the Nova Scotia 
Law Reform Advisory Commission described the impact on resort to 
imprisonment of a 1969 amendment to the Act. 139 That amendment 
removed the issuance of warrants for arrest from the jurisdiction of exam- 
iners and special examiners and empowered only county court judges to 
issue such warrants. In the view of the author of the Study Paper, this 
amendment rendered "the Act more or less ineffectual", 140 because of the 
"additional trouble and expense of making a separate application to a 
county court judge". 141 The author of the Study Paper suggested that 
resort to arrest and imprisonment also had declined because of "the new 
form of execution order available under the Civil Procedure Rules ... a 
more effective means of collecting debts - it is cheaper and more direct; 
one document can be used to levy against goods and, in particular, to gar- 
nishee wages". 142 In addition, it was pointed out that "[t]he attachment 
order under the Civil Procedure Rules and the capias procedure of the 
minor civil courts have always provided a more effective means of dealing 
with absconding debtors". 143 For these and other reasons, it was recom- 
mended that the Collection Act be repealed. 144 It was further proposed, 
however, that certain features of the Collection Act be transferred to the 
small claims court; for example, a procedure for the examination of the 
debtor, and a provision for the making of instalment orders. 145 Finally, it 
was recommended that the small claims court be authorized to issue 
attachment (for the seizure of goods) in circumstances identical to those 
outlined in Rule 49.04A of the Nova Scotia Civil Procedure Rules. 146 Pre- 
sumably, these additional powers would reduce the risks for unsecured 
creditors, since their debtors would be less likely to frustrate enforcement 
efforts by disposing, removing, or concealing exigible property before 
judgment. 

(b) Money Judgments for Support or Maintenance 

Significantly, there has been nearly unanimous support for the reten- 
tion of postjudgment arrest and imprisonment as a final means of enforc- 
ing a maintenance or support order. Earlier in this chapter, the 
postjudgment arrest provisions that exist in the common law provinces 
were described. Recently enacted legislation in New Brunswick, Nova 
Scotia, and Prince Edward Island has confirmed the power of the court to 



138 Ibid., at 9. 

139 An Act to Amend Chapter 39 of the Revised Statutes, 1967. the Collection Act, S.N.S. 
1969, c. 30. 

140 N ova Scotia Report, supra, note 119, at i. 

141 Ibid., at 119. 

142 Ibid. 

143 Ibid. 

144 Ibid., at 126. 

145 Ibid., at 126-29. 

146 Ibid., at 129-30. 



108 

imprison a defaulting maintenance debtor in a variety of circumstances. 147 
In addition, virtually all law reform bodies that have examined the need 
for such a power have been in favour of resort to arrest and imprisonment 
as the ultimate weapon in the maintenance or support creditor's arsenal. 

The most comprehensive examination of this issue is to be found in 
the Report of the Committee on the Enforcement of Judgment Debts. u * It 
will be recalled that the Payne Committee advocated the abolition of 
postjudgment arrest as a means of enforcing money judgments other than 
those for maintenance or support. The Committee, however, was badly 
divided on the issue of abolition in the context of support or maintenance 
orders. 

Three Committee members favoured the retention of the postjudg- 
ment arrest remedy available to support or maintenance creditors for the 
following reasons: 

— maintenance or support debtors should not be allowed to flout a 
court order with impunity; 149 

— maintenance debts and ordinary civil debts are distinguishable, 
the former being continuing in nature; 150 

— the maintenance creditor is an involuntary creditor without ability 
to terminate his or her spouse's "credit"; 151 

— improved methods of distinguishing between "adequate" and "in- 
adequate" debtors would help to ensure that only those who wil- 
fully refuse to pay their maintenance obligations would be 
imprisoned; 152 and 

— maintenance orders, unlike ordinary civil judgments, are subject 
to variation in accordance with the means available to mainten- 
ance debtors. 153 

Six members of the Payne Committee proposed the abolition of 
imprisonment as a method of enforcing a maintenance or support order 
for many of the same reasons that convinced the Committee that imprison- 
ment for ordinary civil debt should be abolished. First, they rejected the 
position that imprisonment for debt serves as a general deterrent. 154 
Secondly, they were of the view that "many maintenance defaulters are 



147 See discussion supra, this ch. , sec. 6. 

148 Payne Committee Report, supra, note 116. 

149 /tod., para. 1037, at 267-68. 

150 Ibid., para. 1042, at 268. 

151 Ibid., para. 1043, at 268-69. 

152 Ibid., para. 1045, at 269. 

153 Ibid., para. 1053, at 271. 

154 Ibid., para. 1091, at 280. 



109 

just as inadequate and socially incompetent as civil debtors". 155 Thirdly, 
they were concerned that there were insufficient safeguards against an 
unfair deprivation of liberty. 156 Fourthly, it was their opinion that the 
improvements recommended by the Committee for the enforcement of 
judgment debts rendered postjudgment arrest unnecessary. In this 
respect, they stated: 157 

[W]e think the position of defaulters is straightforward: either they have the 
means to pay or they have not. If they have the means, the maintenance order 
will not be flouted because the machinery of extraction will be exercised to the 
full. If they lack the means to pay, they are not wilfully or culpably refusing to 
pay. From the community's point of interest, imprisoning maintenance defaul- 
ters is futile. 

These Committee members denied that there was any meaningful 
distinction between maintenance creditors and ordinary judgment 
creditors. 158 They pointed out that the Committee had recommended the 
abolition of imprisonment in the case of another category of involuntary 
creditors - that is, where the debts were rates and taxes. 159 In conclusion, it 
was their view that imprisonment "is expensive, it is likely to reduce the 
already poor earning power of the defaulter, it provides neither financial 
assistance nor safeguards for wives or children and it damages marriage by 
destroying finally any hope of reconciling the estranged spouses or encour- 
aging continuing relationships between fathers and their children". 160 

Two members of the Committee were of the view that arrest for non- 
payment of a maintenance order should be retained solely on the grounds 
that maintenance creditors are involuntary creditors and that the "new 
system of enforcement would be more effective if imprisonment was 
retained". 161 They thought that, "until either the State makes better provi- 
sion for the deserted wife and child, or the new system for enforcement of 
civil debts has been in operation for some years and has been found to 
work efficiently", 162 abolition of postjudgment arrest would be premature. 

Finally, a single Committee member did not see any urgency regard- 
ing the abolition of postjudgment arrest in the case of maintenance 
defaulters: 163 

Defaulting deserting husbands have not a good public image. They must not 
be surprised if some of us do not include them in the same Charter as civil 
debtors, whom I have included in my first priority. We would all like a perfect 
world now, but experience teaches us that some things must come gradually. 



155 Ibid., para. 1092, at 281. 

156 Ibid., paras. 1093-95, at 281-84. 

157 Ibid., para. 1096, at 284. 

158 Ibid., para. 1097, at 285. 

159 Ibid. 

160 Ibid. 

161 Ibid., paras. 1101-04, at 287-88. 

162 Ibid., para. 1104, at 288. 

163 Ibid., para. 1108, at 289. 



110 

In my view this is such an example. This problem in any case impinges on fam- 
ily law and is not exclusively within our terms of reference. 

In 1978, the Alberta Institute of Law Research and Reform published 
Report No. 27: Matrimonial Supports Among the matters examined by 
the Institute in this Report was the power of a court to imprison a default- 
ing maintenance debtor under section 8 of The Alimony Orders Enforce- 
ment Act, }65 as well as under section 28 of The Domestic Relations Act. 166 
The Institute noted the following arguments in favour of abolishing impris- 
onment for non-payment of a maintenance debt: 167 

Imprisonment for debt is repugnant to present notions of justice. The present 
law which we have described provides for imprisonment for refusal to pay 
when able to do so and not for the debt itself; but it is a feature of the system 
which makes the system appear punitive and its processes like those of the 
criminal law. Imprisonment, whether for debt or for refusal to pay, is not 
available to any other creditor with a money judgment. Whatever the situa- 
tion might have been in earlier times, the availability of social assistance 
means that the dependent spouse and family will not be utterly destitute if 
support payments are not made, so that there is now less reason to apply such 
a harsh sanction. Judges are reluctant to commit, and the threat is therefore 
often seen as an empty one. Attachment of earnings is more likely to be a 
more efficient remedy if the principal financial resource of the respondent is 
his earnings, and execution and garnishment are available in the case of one 
who has property and business resources. Finally, if a respondent spouse is in 
jail he has no way of earning money to pay the arrears. 

Nonetheless, retention of imprisonment as an enforcement tool was advo- 
cated. It was noted that "quite often money is forthcoming in order to 
avoid imprisonment and that the respondent is thereafter likely to be care- 
ful not to provoke the exercise of that power again". 168 In addition, the 
Report commented on the inappropriateness of existing legal machinery 
for the collection of small periodic sums, such as maintenance. Even 
improvement in the enforcement system, the Institute stated, would not 
obviate the need or usefulness of imprisonment, or the threat of imprison- 
ment, as a method of enforcement. 169 

However, the Institute did stress the importance of restricting the 
availability of this remedy "to the case of a respondent spouse who could 
pay and has not done so". 170 Moreover, the Report noted the need to pro- 
vide the defaulting maintenance debtor with an "adequate opportunity to 
have the propriety of the award reviewed". 171 



164 Alberta Institute of Law Research and Reform, Report No. 27: Matrimonial Support 
(1978) (hereinafter referred to as the "Alberta Report"). 

165 R.S.A. 1970, c. 17. See now the Alimony Orders Enforcement Act, R.S.A. 1980, 
c. A-40. 

166 R.S.A. 1970, c. 113, as amended. See now the Domestic Relations Act, R.S.A. 1980, 
c. D-37. 

167 Alberta Report, supra, note 164, at 146. 

168 Ibid., at 146-47. 

169 Ibid., at 147. 

170 Ibid. 

171 Ibid. 



Ill 

Imprisonment for non-payment of maintenance orders also was exam- 
ined in the recently published Tentative Proposals for an Enforcement of 
Maintenance Orders Act, put forward by the Law Reform Commission of 
Saskatchewan. 172 While recognizing the utility of "routine use of imprison- 
ment to enforce compliance with maintenance orders", 173 the Saskat- 
chewan Commission was of the opinion that the objections to the practice 
outweighed its advantages. Accordingly, the Commission recommended 
that the power to commit for contempt of court be retained in modified 
form, and that the following provision be included in the proposed 
Enforcement of Maintenance Orders Act: X7A 

(1) Except as otherwise provided in this Act, no person shall be imprisoned 
as a result of failure to pay maintenance. 

(2) The court may, following a show cause examination, direct that a main- 
tenance debtor be imprisoned for contempt if, in the opinion of the court, 
the maintenance debtor has the ability to pay maintenance but has 

(i) wilfully evaded payment of maintenance by concealing or attempting 
to conceal assets, or by placing, or attempting to place, assets beyond 
the reach of the maintenance creditor; or 

(ii) repeatedly failed to make payments of maintenance when directed to 
do so following show cause examinations. 

(3) A person imprisoned under this section may be imprisoned until the con- 
tempt is purged, or thirty days, whichever is the lesser. 

Insofar as "show cause" proceedings under The Deserted Wives' and Chil- 
dren's Maintenance Act 175 were concerned, the Law Reform Commission 
of Saskatchewan did not recommend any change to the power of a court to 
imprison a debtor for failure to show cause. 176 



172 Law Reform Commission of Saskatchewan, Tentative Proposals for an Enforcement of 
Maintenance Orders Act (1982) (hereinafter referred to as the "Saskatchewan 
Report"). 

173 Ibid., at 53. 

174 Ibid., at 53-54. 

175 R.S.S. 1978, c. D-26,s. 14. 

176 The Commission, however, did recognize the need to provide expressly for the powers 
that a court should have in show cause proceedings. For example, it was recom- 
mended that the proposed Enforcement of Maintenance Orders Act provide that "the 
court may examine the debtor concerning his assets, income and other financial 
affairs, and the reason for his default": Saskatchewan Report, supra, note 172, at 57 
(emphasis added). In this way, Saskatchewan show cause proceedings would be simi- 
lar to the default proceedings available under the Ontario Family Law Reform Act 
(see discussion supra, this ch., sec. 5), with express authorization for the court to con- 
duct the examination of the defaulting maintenance debtor. In addition, it was recom- 
mended that the show cause procedure should be available to a maintenance creditor 
proceeding in any Saskatchewan court: Saskatchewan Report, supra, note 172, at 57. 



112 

8. CONSTITUTIONALITY OF POSTJUDGMENT ARREST AND 
IMPRISONMENT AS AN ENFORCEMENT REMEDY 

There are now two potential grounds for challenging legislation giving 
courts the power to imprison a debtor for non-payment of a judgment 
debt. The first concerns sections 91 and 92 of The British North America 
Act, 1867 - now the Constitution Act, 1867 111 - which deals with the divi- 
sion of powers between the federal and provincial legislatures. The sec- 
ond possible basis for challenging the validity of postjudgment arrest 
provisions is the recently proclaimed Canadian Charter of Rights and 
Freedoms. 178 

The division of powers argument revolves around section 91.27 and 
paragraphs 13, 14, and 15 of section 92. Section 91.27 gives the Parliament 
of Canada exclusive legislative authority over "[t]he criminal law, except 
the constitution of courts of criminal jurisdiction, but including the proce- 
dure in criminal matters". Paragraphs 13, 14, and 15 of section 92 give 
provincial legislatures the exclusive right to make laws in respect of the fol- 
lowing matters: 

13. Property and civil rights in the Province. 

14. The administration of justice in the Province, including the constitution, 
maintenance, and organization of provincial courts, both of civil and of 
criminal jurisdiction, and including procedure in civil matters in those 
courts. 

15. The imposition of punishment by fine, penalty, or imprisonment for 
enforcing any law of the Province made in relation to any matter coming 
within any of the classes of subjects enumerated in this section. 

The constitutionality of provincial legislation authorizing postjudg- 
ment arrest of debtors was first raised in the case of Ex parte Ellis. 119 At 
issue was New Brunswick legislation similar to sections 5 and 13 of the 
Imperial Debtors Act, 1869. m Section 5, as we have seen, empowers a 
court to imprison a debtor who "has or has had since the date of the order 
or judgment the means to pay the sum in respect of which he has made 
default, and has refused or neglected, or refuses or neglects, to pay the 
same". Section 13(1) of The Debtors Act, 1869 made it an offence, punish- 
able by imprisonment, "if in incurring any debt or liability" any one "has 
obtained credit under false pretences, or by means of any other fraud". 181 

Allen C.J., speaking for the majority of the Court, was of the opinion 
that the legislation under review was not in relation to matters of criminal 
law: 182 



177 See the schedule to the Constitution Act, 1982, which itself is scheduled to the Canada 
Act 1982, c. 11 (U.K.), proclaimed in force on April 17, 1982. 

178 Being Part I of the Constitution Act, 1982, supra, note 177. 

179 Ex parte Ellis (1878), 17 N.B.R. 593 (S.C.). 

180 Supra, note 17. 

181 This section was repealed by the Theft Act 1968, c. 60, ss. 33(3) and 35, Sch. 3, Part I. 

182 Supra, note 179, at 597. 



113 

The whole object of that part of the Act is to enforce the payment of the judg- 
ment, just as was formerly the object of issuing a Ca. Sa. execution against a 
judgment debtor. There is nothing in the Act making the refusal to pay the 
amount of the judgment an offence or subjecting the debtor to a penalty for 
refusing .... 

Insofar as the provision equivalent to section 13(1) of the Imperial Debtors 
Act, 1869 was concerned, Allen C.J. commented as follows: 183 

By the 92d section of 'The British North America Act,' the Provincial 
Legislature has the exclusive right to make laws (inter alia) in relation to (13) 
'Property and civil rights in the Province.' (14) 'The administration of justice 
in this Province including the constitution, maintenance and organization of 
Provincial Courts, both of civil and criminal jurisdiction, and including proce- 
dure in civil matters in those Courts.' (15) 'The imposition of punishment by 
fine, penalty or imprisonment, for enforcing any law of the Province made in 
relation to any matter coming within any of the classes of subjects enumerated 
in this section.' 

Now, surely, the enforcing the payment of a judgment is a civil right, and 
the mode of enforcing it [is] a part of the administration of justice, and proce- 
dure in civil matters in the Province, all of which are expressly within the juris- 
diction of the Provincial Legislature. Having therefore the right to legislate on 
these subjects, the 15th sub-section gives them power to enforce any such laws 
by imposing imprisonment. It would seem, therefore, that the power confer- 
red by this section of c. 38, Consolidated Statutes, [is] strictly within the 92d 
section of the British North America Act. 

Weldon J. dissented, concluding that the provision similar to section 
13(1) of The Debtors Act, 1869 dealt with matters within the exclusive 
domain of the Parliament of Canada by virtue of section 91.27 of The Brit- 
ish North America Act, 1867. Mr. Justice Weldon commented that obtain- 
ing by false pretences was a crime by Canadian law, and added that the 
provisions relied upon by the plaintiff, "although [they] may profess to be 
for the recovery of debts or for the enforcement of the payment of judg- 
ments, the Local Legislature cannot directly or indirectly make it a crimi- 
nal offence, and punish in a summary manner by affidavits or testimony 
reduced to writing, and withdraw the protection which the Criminal Law 
casts around the person charged with such an offence". 184 He added that 
the "Local Legislature cannot, by engrafting such a section or Act for the 
recovery of debts, give themselves the power to pass such an enactment: it 
clearly belongs to the supreme authority of the Dominion to legislate 
upon, and they have done so". 185 

The view enunciated by the majority of the Court in Ex parte Ellis has 
been adopted in a number of subsequent decisions. For example, in Re 
Dunn, m section 27(1) of the Nova Scotia Collection Act 187 was found to be 



183 Ibid. , at 598 (emphasis in original). 

184 Ibid., at 600. 

185 Ibid., at 601. 

186 Re Dunn, [1939] 4 D.L.R. 382, 14 M.P.R. 289 (N.S.S.C.) (subsequent references are 
to [1939] 4 D.L.R.). See, also, Re Haddad (1963), 49 M.P.R. 34 (N.S. Co. Ct.). 

187 S.N.S. 1933, c. 4. See, now, Collection Act, R.S.N.S. 1967, c. 39. 



114 

intra vires. This section, like the provision examined in Ex parte Ellis, pro- 
vided for arrest of a defaulting judgment debtor where credit was obtained 
under false pretences. There Chisholm C J. remarked as follows: 188 

The aim of the proceedings under the statute and its amendments is, it seems 
to me, to enforce the payment of the debt, and the proceedings taken for that 
purpose are so different in aim and character from proceedings under the Cr. 
Code that I feel they cannot be regarded as proceedings in the criminal law as 
intended by s. 91 of the B.N. A. Act. They are not instituted by officers of the 
Crown; the Crown is not a party to them; and the order of the special exam- 
iner cannot successfully be invoked by a debtor indicted for false pretences as 
a plea of autrefois convict. 

Interestingly, in the editorial accompanying the report of the decision in 
Re Dunn, the following question was raised: 189 

The question might be asked why the Legislature confined the sanction of 
imprisonment to debts incurred by false pretences and other wrongful means, 
and the answer must surely be the reprehensibility of the debtor's conduct and 
the greater necessity in such cases of safeguarding the public by making such 
conduct subject to drastic consequences. The creditor of an unfortunate 
debtor as distinct from a dishonest one certainly has an equal interest in the 
enforcement of his claim. 

More recently, the issue was canvassed in Microwave Cablevision Ltd. 
v. Harvard House Capital Ltd. m The provision under attack in that case 
was Rule 42(36)(«) of the British Columbia Supreme Court Rules 1976, 
which states as follows: 

42. -(36) If it appears to the examiner that the debtor, 

(a) with intent to defraud the creditor, has made or caused to be made 
any gift or delivery or transfer of property, or has removed or con- 
cealed property, 



then 

(d) if the examiner is a Master or Registrar, he may make a report of his 
findings and fix a time and place for the person subpoenaed to appear 
before the Court, and at that time and place the creditor may apply 
without notice for committal, or 

(e) if the examiner is the Court, the examiner may order committal. 

Meredith J. concluded that the purpose of Rule 42(36) is "to force a 
debtor to pay where it is to be presumed that he has the means to do 



188 Re Dunn, supra, note 186, at 386. 

189 Ibid., at 382-83. 

190 (1979), 17 B.C.L.R. 382, [1980] 3 W.W.R. 83 (S.C.) (subsequent references are to 17 
B.C.L.R.). 



115 

so". 191 In distinguishing proceedings under Rule 42(36) from criminal pro- 
ceedings, Mr. Justice Meredith remarked as follows: 192 

The proceedings concerning committal orders under R. 42 differ funda- 
mentally from sentences to imprisonment imposed under the criminal law or 
even from orders of committal in contempt proceedings. Under R. 42 the 
creditor has conduct of the enforcement of the order, he can forestall execu- 
tion of the order for up to a year, he can nullify the effect of the order by non- 
payment of the debtor's board and he can effect the release of the debtor from 
prison at any time without reference to the court. The debtor himself is 
released from the order automatically on payment of the debt. Additionally, 
the rule requires that before the execution of any order of committal the 
debtor must be brought before the court so that, if shown to be warranted, 
execution of the order may be stayed. Furthermore, and most important, 
committal orders obtained under R. 42 are obtained by a process of inquisi- 
tion, a process altogether foreign to the criminal law. 



He then continued with his analysis: 



193 



The wording of R. 42(36)(a) comes from s. 151 [repealed 1976, c. 33, 
s. 71] of the County Courts Act. Similar wording was employed in the Arrest 
and Imprisonment for Debt Act. The mention of fraud suggests criminality, 
especially since the wording is the same as is contained in s. 350 of the Crimi- 
nal Code, R.S.C. 1970, c. C-34. Section 151 of the County Courts Act may 
well have presented a constitutional problem for it contained a provision call- 
ing not only for imprisonment for fraudulent concealment of assets but also 
for debts fraudulently contracted. ' 194 ' Since the enactment of the rules and the 
repeal of portions of the County Courts Act and of the Arrest and Imprison- 
ment for Debt Act, fraud in contracting debts is now left to the exclusive pur- 
view of the criminal law. 

I think R. 42(36)(a) simply provides instances of refusal to pay under 
para, (b) of the same subrule. A person, having had the means, who neglected 
or refused to pay his debts under para, (b) or, having had means, fraudulently 
concealed, etc., assets under para, (a) and thus refused to pay, will be pre- 
sumed to have the means to pay. This presumption is inherent in the heading 
to R. 42(36): 'Debtor Unreasonably Refusing to Pay'. It is unlikely where the 
debtor has deliberately refused to pay that his present means to do so will be 
disclosed by examination. Rule 42(36) therefore effectively places the onus on 
the debtor who has been in fraud or neglect to show that he cannot pay on 
pain of imprisonment if he fails to do so. 

As I have said, I conclude that the purpose of the relevant rules is 
enforcement of judgments, not punishment per se, and that the rules are 
therefore within the legislative competence of the province. 



191 Ibid., at 386. 

192 Ibid. 

193 Ibid., at 387. 

194 What is particularly interesting about these last passages is the suggestion that a provi- 
sion calling for the imprisonment of a debtor on the grounds of fraudulently incurring 
the debt in question "may well have presented a constitutional problem": ibid., at 
386. There is no reference in the judgment of Meredith J. to the earlier cases of Ex 
parte Ellis, supra, note 179, and Re Dunn, supra, note 186, where this very issue arose 
and where the Courts found the legislation in question intra vires. 



116 

It should be noted that questions were raised by the Royal Commis- 
sion Inquiry into Civil Rights (the McRuer Commission) 195 concerning the 
constitutionality of provisions of The Division Courts Act 196 similar to 
those considered by the Courts in Ex parte Ellis, Re Dunn, and the 
Microwave Cablevision case. Section 132 of The Division Courts Act, the 
precursor to the present Small Claims Courts Act, provided that, if it 
appeared to a judge on a judgment summons that the debtor, 

(c) obtained credit from the judgment creditor or incurred the debt or 
liability under false pretences, or by means of fraud or breach of 
trust; or 

(d) has made or caused to be made any gift, delivery or transfer of any 
property, or has removed or concealed any property with intent to 
defraud his creditors or any of them; or 

(e) had, when or since judgment was obtained against him, sufficient 
means and ability to pay the debt or damages or costs recovered 
against him, either altogether or by the instalments that the court in 
which the judgment was obtained ordered, without depriving himself 
or his family of the means of living, and that he has wilfully refused 
or neglected to make payment as ordered, 

the judge may order him to be committed to the jail of the county in which he 
resides or carries on business, for any period not exceeding forty days. 

The McRuer Commission recommended the abolition of the power of 
committal in the above circumstances. 197 This was done in 1969. 198 

Somewhat similar constitutional issues have arisen in the context of 
the enforcement of support and maintenance orders. In Regina v. Kirkpa- 
trick Ex parte Gutsch, 199 the validity of the show cause proceedings, and 
imprisonment pursuant thereto, available under The Children's Mainten- 
ance Act 200 was attacked. This Act imposed an obligation on every parent 
to maintain his or her child, and made it an offence for a parent to fail to 
do so. The Criminal Code then in force, as is the case with the present 
Criminal Code, 201 made it an offence for anyone under a legal duty to pro- 
vide necessaries to fail to do so, thereby leaving the person to whom the 
duty is owed "in destitute or necessitous circumstances". 202 

Ferguson J., after a review of the relevant provisions of The British 
North America Act, 1867, noted that the provincial legislation, while over- 



195 Province of Ontario, Royal Commission Inquiry into Civil Rights, Report No. 1 
(1968), Vol. 2, at 639. 

196 R.S.O. 1960, c. 110. 

197 Supra, note 195. 

198 The Division Courts Amendment Act, 1968-69, S.O. 1968-69, c. 30, s. 6. 

199 Regina v. Kirkpatrick Ex parte Gutsch, [1959] O.R. 539 (H.C.J. ). 

200 R.S.O. 1950, c. 52, s. 2. 

201 R.S.C. 1970, c. C-34. 

202 Ibid.,%. 197(2)(a)(i). 



117 

lapping with the provisions of the Criminal Code, did not deal with pre- 
cisely the same matter. There was no question that the Province had the 
authority to enact legislation imposing an obligation on parents to support 
their children and, as a result, there could be "no objection to the validity 
of a provincial statute that . . . creates a new offence if the penalty is 
imposed to enforce an obligation which the Province is entitled to impose. 
It may be provincial criminal law, but it is not ultra vires unless it precisely 
overlaps a field occupied by the Dominion". 203 

Ferguson J. also noted the existence of similar enforcement provisions 
in the Province's Deserted Wives' and Children's Maintenance Act, 204 and 
then added the following comments: 205 

Penalties for failure to observe civil obligations are not uncommon in the laws 
of this Province. For example, it has never been contended that the provisions 
of the Division Courts Act which provide that a debtor may be imprisoned for 
his failure to meet the legal obligation imposed by a Division Court judgment 
against him are ultra vires of the Province as being criminal law. The Division 
Courts Act provides that in proper circumstances if the debtor had, when or 
since the judgment was obtained against him, sufficient means and ability to 
pay the debt or damage or costs recovered, the Judge may order him to be 
committed for any period not exceeding 40 days. The Master & Servant Act 
confers in appropriate circumstances the same powers on a magistrate who has 
made an award under that Act against an employer. 

As can be seen from the preceding discussion, there would appear to 
be little doubt that provincial legislation that authorizes the arrest and 
imprisonment of a judgment debtor for failure to pay a money judgment, 
or for actions aimed at frustrating the enforcement efforts of his judgment 
creditor, would be held to be intra vires or constitutionally valid, at least 
insofar as the legislation does not seek to deal with fraudulent conduct on 
the part of the debtor. The object of such legislation, unlike similar federal 
legislation found in the Criminal Code, is the enforcement of judgments, 
not punishment of the debtor. The validity of such provincial legislation in 
this respect, however, does not guarantee that the legislation will be in 
accordance with the Canadian Charter of Rights and Freedoms. 

The second basis upon which the constitutional validity of postjudg- 
ment arrest and imprisonment may be challenged is the Canadian Charter 
of Rights and Freedoms. 206 A number of the provisions of the Charter may 
be relevant. In the present context, undoubtedly the most significant pro- 
vision of the Charter is section 7, which provides that "[e]veryone has the 
right to life, liberty and security of the person and the right not to be 
deprived thereof except in accordance with the principles of fundamental 
justice". 207 Reference should also be made to section 9 of the Charter: 
"Everyone has the right not to be arbitrarily detained or imprisoned." 



203 Regina v. Kirkpatrick Ex parte Gutsch, supra, note 199, at 542. 

204 R.S.O. 1950, c. 102. 

205 Regina v. Kirkpatrick Ex parte Gutsch, supra, note 199, at 544-45. 

206 Supra, note 178. The Charter was proclaimed on April 17, 1982. 

207 Emphasis added. 



118 

Finally, sections 10, 11, and 12 of the Canadian Charter of Rights and 
Freedoms provide as follows: 

10. Everyone has the right on arrest or detention 

(a) to be informed promptly of the reasons therefor; 

(b) to retain and instruct counsel without delay and to be informed of 
that right; and 

(c) to have the validity of the detention determined by way of habeas 
corpus and to be released if the detention is not lawful. 

11. Any person charged with an offence has the right 

(a) to be informed without unreasonable delay of the specific offence; 

(b) to be tried within a reasonable time; 

(c) not to be compelled to be a witness in proceedings against that per- 
son in respect of the offence; 

(d) to be presumed innocent until proven guilty according to law in a fair 
and public hearing by an independent and impartial tribunal; 

(e) not to be denied reasonable bail without just cause; 

(/) except in the case of an offence under military law tried before a mil- 
itary tribunal, to the benefit of trial by jury where the maximum pun- 
ishment for the offence is imprisonment for five years or a more 
severe punishment; . . . 

12. Everyone has the right not to be subjected to any cruel and unusual 
treatment or punishment. 

A discussion of the applicability of these provisions to the postjudgment 
arrest and imprisonment remedies available at present in Ontario will be 
undertaken below. Before proceeding to this discussion, however, it may 
be useful to outline a few of the other Charter provisions. 

First, regarding the applicability of the Charter, section 32(1) would 
seem to be the governing provision. This section reads as follows: 

32. -(1) This Charter applies 

(a) to the Parliament and government of Canada in respect of all matters 
within the authority of Parliament including all matters relating to 
the Yukon Territory and Northwest Territories; and 

(b) to the legislature and government of each province in respect of all 
matters within the authority of the legislature of each province. 

There would seem to be general agreement that the effect of section 



119 

32(l)(b) is to make the Charter applicable to all laws - statutory as well as 
regulatory - within the authority of the legislature of the province. 

The rights and freedoms described in sections 7, 9, 10, 11, and 12 of 
the Charter are not absolute. Rather, under section 1 of the Charter, it is 
made clear that these rights and freedoms are guaranteed "subject only to 
such reasonable limits prescribed by law as can be demonstrably justified in 
a free and democratic society". 208 

It is also important to note that those rights and freedoms described 
above are subject to the non obstante clause in the Charter of Rights. Sec- 
tion 33(1) of the Charter states that "Parliament or the legislature of a 
province may expressly declare in an Act of Parliament or the legislature, 
as the case may be, that the Act or a provision thereof shall operate not- 
withstanding a provision included in section 2 or sections 7 to 15 of this 
Charter". 

Finally, where there has been a violation of any of the rights or free- 
doms guaranteed by the Charter, the injured party "may apply to a court 
of competent jurisdiction to obtain such remedy as the court considers 
appropriate and just in the circumstances". This remedial provision of the 
Charter - section 24(1) - is very broad indeed. Section 52 of the Charter, it 
should be noted, provides that any law that is inconsistent with the provi- 
sions of the Constitution (including the Canadian Charter of Rights and 
Freedoms) is, "to the extent of the inconsistency, of no force or effect". 

Turning, then, to the impact of the Charter on the postjudgment 
arrest provisions found in the Fraudulent Debtors Arrest Act, 209 and the 
Family Law Reform Act™ it is clear, by virtue of section 32(1) of the 
Charter, that this legislation must satisfy the standards established by sec- 
tions 1 and 7, as well as perhaps sections 9, 10, 11, and 12 of the Charter. 
Clearly, a defaulting judgment debtor arrested and imprisoned under 
either of the two Acts mentioned above is deprived of his liberty. Accord- 
ingly, the first question to be considered is whether that deprivation would 
be "in accordance with the principles of fundamental justice", as required 
by section 7 of the Charter. In this respect, it will be convenient to refer 
once again to some of the relevant provisions of the Fraudulent Debtors 
Arrest Act and the Family Law Reform Act. 

Looking, first, at the Fraudulent Debtors Arrest Act, it should be noted 
that an order for the imprisonment of a judgment debtor may be secured 
on an ex parte motion. Before a writ of capias ad satisfaciendum may issue, 
the judgment creditor must file an affidavit with the court indicating that a 
judgment in the amount of at least $100 has been secured and setting out 
the "facts and circumstances as [to] satisfy the judge that there is good and 
probable cause for believing either that the defendant, unless he be forth- 
with apprehended, is about to quit Ontario with intent to defraud his cred- 



208 Emphasis added. 

209 Supra, note 1. 

210 Supra, note 78. 



120 

itors generally or the plaintiff in particular, or that the defendant has 
parted with his property or made some secret or fraudulent conveyance 
thereof in order to prevent its being taken in execution". 211 Section 32 may 
result in the judgment debtor being given a day's reprieve from arrest. It 
provides as follows: 

32. The sheriff, at the request of the person arrested, and upon being pre- 
paid a sum of money sufficient to cover the sheriffs reasonable fees and 
expenses incident to the delay, shall grant to such person a delay of twenty- 
four hours after the arrest before committing him to a correctional institution, 
and shall take him for the twenty-four hours to some safe and convenient 
house in his county. 

Following his arrest, the debtor is provided with a number of methods 
of securing his release. First, the debtor may apply to be discharged under 
section 49 of the Act. At least ten days notice of the application for dis- 
charge must be given by the debtor to the person at whose instance he has 
been arrested. This ten day period is to allow the creditor to apply to have 
the debtor attend to be examined, 

for the purpose of discovering any property or effects that he is possessed of or 
entitled to, or that are in the possession or under the control of any other per- 
son for the use or benefit of the debtor, or that the debtor having been in pos- 
session of may have fraudulently disposed of for the purpose of hindering, 
delaying, defrauding or defeating his creditors, and touching the debtor's 
estate and effects and the circumstances under which he contracted the debt or 
incurred the liability that was the subject of the action in which judgment has 
been recovered against him, and as to the means and expectations he then 
had, and as to the property and means he still has, and as to the disposal he 
may have made of any of his property J 212 l 

Once he has been examined, or where no order for the debtor's exam- 
ination has issued within the ten day period, the debtor, upon swearing 
"that he is not worth $20, exclusive of his goods and chattels exempt from 
seizure under execution" 213 and upon the court's being satisfied that his 
cross-examination, if any, is "satisfactory", will be entitled to be dis- 
charged. Secondly, it will be recalled that the debtor may also be dis- 
charged upon the consent of the creditor responsible for his arrest. 214 

With regard to imprisonment for non-payment of a maintenance or 
support obligation, the process begins with a default notice issued pur- 
suant to section 28 of the Family Law Reform Act, which will normally 
require the defaulting maintenance debtor 

(a) to file a statement of financial information referred to in section 23; 

(b) to submit to an examination as to assets and means; and 



211 Fraudulent Debtors Arrest Act, supra, note 1 , s. 27(2). 

212 Ibid., s. 50. 

213 Ibid. ,s. 51(1). 

214 Ibid., s. 56. 



121 

(c) to appear before the court to explain the default. 

Under section 28(2), the debtor may be arrested if he fails to appear in 
accordance with the default notice, or "if the court is satisfied that the 
debtor cannot be served or intends to leave Ontario without appearing as 
required after being served". Such arrest is said to be "for the purpose of 
compelling attendance". 

The main imprisonment provision is section 29 of the Family Law 
Reform Act. There is no express requirement that the debtor must be pres- 
ent in court before an order for his or her imprisonment is made; section 
29(1) states simply that the debtor may be imprisoned "[w]here the debtor 
fails to satisfy the court that the default is owing to his or her inability to 
pay and where the court is satisfied that all other practicable means that 
are available under this Act for enforcing payment have been considered". 
It should be noted as well that section 29(2) empowers the court to make 
an order for imprisonment "conditional upon default in the performance 
of a condition set out in the order", for example, payment of the outstand- 
ing arrears within thirty days. Again, it is not clear from this section 
whether, before the debtor is imprisoned for failing to comply with the 
order, he is entitled to notice and a hearing at which he may seek to 
explain his default. 

Postjudgment arrest of a maintenance debtor is also possible under 
section 24 of the Family Law Reform Act. Section 24 states as follows: 

24. Where ... a notice is issued under section 28 and a judge of the court is 
satisfied that the . . . debtor is about to leave Ontario, the judge may issue a 
warrant in the form prescribed by the rules of the court for the arrest of the 
. . . debtor. 

As we have indicated, the warrant that would be issued under this section 
does require the debtor to be brought before the court as soon as possible. 
The Act, however, is silent concerning the debtor's right to secure his dis- 
charge; indeed, there does not appear to be any limitation on the period 
for which the debtor may be imprisoned in such a case. 

Do the procedures under the Fraudulent Debtors Arrest Act and the 
Family Law Reform Act satisfy the standards established by the new 
Canadian Charter of Rights and Freedoms? Because of the Charter's very 
recent adoption, there is insufficient case law upon which to base a defini- 
tive answer to this question. However, it may be useful to see how similar 
issues have been treated by courts in the United States. 

Under both the Fifth and Fourteenth Amendments to the United 
States Constitution, there is a prohibition against depriving any person "of 
life, liberty or property without due process of law". While the due 
process clauses are not identical to section 7 of the Charter, they are suffi- 
ciently similar that the cases decided thereunder may provide some indica- 
tion of the considerations that Ontario courts will apply to section 7 of the 
Charter. 



122 

It would appear that the minimum protections that must be provided 
to a debtor about to be imprisoned for non-payment of a judgment debt 
are notice of the default proceedings and an opportunity to be heard. 215 In 
Desmond v. Hachey, 216 the Court found to be unconstitutional - because it 
violated the due process clause - a Maine statute that authorized the arrest 
and imprisonment of a debtor who failed to appear for a judgment debtor 
examination without affording the debtor an opportunity to be heard 
before his incarceration. The fact that the statute provided the debtor with 
the right to a hearing within two to ten days of his imprisonment was held 
by the Court not to be sufficient to satisfy the consitutional due process 
clause. The reasoning of the Court was as follows: 217 

[The] Section . . . permits the arrest and imprisonment of the debtor, not 
because he has failed to pay the judgment debt, in which case it could be 
argued that he has had his day in court . . . but because he has failed to 
respond to the subpoena. Wilful failure to obey a court subpoena is unques- 
tionably a contempt of court. . . . But inability to comply with a subpoena is a 
defense to the contempt charge. 

The Court continued: 218 

The evil attacked here is the summary imprisonment of one who, for whatever 
reason, fails to obey a disclosure commissioner's subpoena. Such a drastic 
infringment upon personal liberty cannot be tolerated unless the procedure is 
hedged about with sufficient safeguards to assure that one who is innocent of 
any wrongdoing will not be punished. Only a procedure which provides an 
opportunity for the debtor to explain, prior to incarceration, why he failed to 
obey the subpoena can adequately meet the constitutional imperative. Due 
process normally requires a hearing and an opportunity to present a defense 
before incarceration, and the fact that there is a subsequent procedure by 
which the debtor may obtain his release does not change the result. 

The principle enunciated in Desmond v. Hachey, if applicable under 
section 7 of the Canadian Charter of Rights and Freedoms, could well ren- 
der much of the Fraudulent Debtors Arrest Act inoperative, as well as the 
arrest and imprisonment for non-appearance powers under section 28(2) 
of the Family Law Reform Act. It will be recalled that, under section 27(2) 
of the Fraudulent Debtors Arrest Act, a debtor may be imprisoned pur- 
suant to an order obtained ex parte. A debtor seeking a discharge under 
section 49 from an order of imprisonment must give the creditor ten days 
notice of his application. In this respect, at least, the Fraudulent Debtors 
Arrest Act is similar to the imprisonment provision at issue in Desmond v. 
Hachey. 

Insofar as section 28(2) of the Family Law Reform Act is concerned, 



215 For a discussion of the due process requirements in the case of imprisonment for debt, 
see Note, "Imprisonment for Debt and the Constitution", [1970] Law & Soc'y Rev. 
659; Note, "Body Attachment and Body Execution: Forgotten but not Gone" (1976), 
17 W. & M. L. Rev. 543; and Note, "Enforcement of Money Judgments and Divorce 
Decrees in Maine" (1972), 24 Maine L. Rev. 99. 

216 315 F. Supp. 328 (S.D. Me. 1970). 

217 Ibid., at 332. 
m Ibid., at 333. 



123 

while it would appear that arrest under that section is for the purpose of 
compelling attendance at a show cause hearing, the debtor would not seem 
to have the right to challenge his arrest on the basis that the alleged 
grounds for his arrest have not been satisfied. Moreover, it does not 
appear that there is any limit to the amount of time the debtor may be held 
pending the show cause hearing. 

In two other cases from Maine, Yoder v. County of Cumberland 219 and 
Lindsey v. County of Cumberland™ the Courts found legislation permit- 
ting the incarceration of a defaulting maintenance debtor to be unconstitu- 
tional where the debtor was not provided with the right to a hearing to 
explain his default before incarceration. Again, as in Desmond v. Hachey, 
the Courts in the abovementioned decisions rejected the argument that 
the debtor's right to due process was protected by a post-incarceration 
hearing at which inability to pay might be established so that the debtor's 
freedom could be secured. 221 

Since, under section 29 of the Family Law Reform Act, the debtor 
would normally have an opportunity to establish his inability to pay before 
incarceration, this provision would not seem to contravene section 7 of the 
Charter. Where, however, the court has made a conditional order of 
imprisonment under section 29(2) of the Family Law Reform Act, it may 
not be in accordance with the principles of fundamental justice to imprison 
the debtor without giving him a further opportunity to explain his 
default. 222 Because the Fraudulent Debtors Arrest Act appears to provide a 
judgment debtor with only a post-incarceration hearing, it may be argued 
that the postjudgment imprisonment provisions of that Act contravene 
section 7 of the Charter - since the debtor, it could be said, is deprived of 
the right to liberty other than in accordance with the principles of funda- 
mental justice - and therefore that the provisions are "of no force or 
effect". 

Regarding the need for notice, a number of American cases have con- 
sidered the nature of the notice that a defaulting debtor must be given 



219 278 A.2d 379 (Sup. Judicial Ct. Me. 1971). 

220 278 A.2d 391 (Sup. Judicial Ct. Me. 1971). 

221 See, also, Mills v. Howard, 280 A. 2d 101 (Sup. Ct. R.I. 1971); Abbit v. Bernier, 387 
F. Supp. 57 (D. Conn. 1974); and Singer v. Singer, 382 N.Y.S.2d 793 (Sup. Ct. App. 
Div. 1976). 

222 In the American context, see, for example, Ex parte Lee, 568 S.W.2d 689 (Civ. App. 
Texas 1st Dist. 1978), and Ex parte Mason, 584 S.W.2d 936 (Civ. App. Texas 1979). 
The Commission has been advised that the common practice under section 29(2) is to 
adjourn the matter after a conditional imprisonment order has been made and to 
reopen the matter at a later date where the conditions of the order have not been sat- 
isfied. 

For some English authorities on point, see R. v. Clerkenwell Stipendiary Magis- 
trates, Ex parte Mays, [1975] 1 W.L.R. 52, [1975] 1 All E.R. 65 (D.C.); R. v. Dudley 
Justices, Ex parte Payne, [1979] 1 W.L.R. 891, [1979] 2 All E.R. 1089 (D.C.); In re 
Hamilton; In re Forrest, [1981] A.C. 1038, [1981] 3 W.L.R. 79, [1981] 2 All E.R. 711 
(H.L.); and R. v. Chichester Justices, Ex parte Collins, [1982] 1 W.L.R. 334, [1982] 1 
All E.R. 1000 (D.C.). These cases are concerned with conditional imprisonment 
orders made in connection with the non-payment of fines. The principles enunciated, 
however, would seem applicable to the present discussion. 



124 

before he can be incarcerated. It has been held, for example, that, to be 
meaningful, notice must include a statement of the purpose of the hearing, 
must make clear that the debtor may assert financial inability as a defence, 
and must outline the consequences of his failure to appear. 223 It should be 
noted that Form 43 224 under the Family Law Reform Act - the notice of a 
default hearing pursuant to section 28 of the Act - would seem to satisfy 
the American constitutional requirements for notice; the Form notifies the 
debtor of his need to appear and of the risk of arrest and imprisonment 
should he fail to appear or to satisfy the court of his inability to pay. 

Even apart from the Canadian Charter of Rights and Freedoms, it may 
well be a requirement under the common law doctrine of fairness that a 
defrauding debtor have notice of the imprisonment proceedings and an 
opportunity to be heard. For example, in the recent case of Re Crossfield 
and The Queen in Right of British Columbia, 125 one of the issues before the 
Court was whether the debtor was entitled to receive a copy of the instal- 
ment order, in respect of which he was alleged to be in default, before he 
could be imprisoned for breach thereof. It was argued that it was sufficient 
that the debtor had notice of the show cause proceedings at which the 
instalment order was made. Esson J. rejected this contention on the 
grounds of fairness, even though service of the order was not expressly 
required by the statute: 226 

So, it is argued, he had a kind of constructive notice. That approach is not sup- 
ported by the words of the section, by the common law as it relates to pro- 
ceedings for committal, or even by the pragmatic considerations which are 
said to justify a 'liberal construction'. The purpose of s. 67 is not to provide for 
punishment of those who do not make their maintenance payments but to pro- 
vide an effective machinery to enforce payment by those who have shown 
themselves laggard in meeting their obligations. With some people, the spec- 
ific threat of a jail term may be the most effective means of persuading them to 
meet their obligations. But, quite apart from considerations of fairness, the 
pressure created by the threat of imprisonment is most likely to have its effect 
if the person knows exactly what obligation must be met. 

In any event, considerations of fairness cannot be ignored in matters of 
this kind. The circumstances of this case illustrate how unfair the rule of 'con- 
structive notice' would be. The proceedings were carried on hundreds of miles 
from where Mr. Crossfield lived and worked. On being served in Prince 
George with notice of a proceeding in Richmond, he had to decide whether to 
attend the hearing at an expense of hundreds of dollars in travel costs and lost 
wages or to leave it to the Court to decide in his absence what order should be 
made with respect to the arrears. It was not unreasonable for him to assume 
that, in due course, he would be advised what order had been madeJ 227 ! 



223 Darbonne v. Darbonne, 379 N.Y.S.2d 350 (Sup. Ct. 1976). It is interesting to note 
that, in Garland v. Garland, 321 A. 2d 808 (Ct. App. Maryland 1974), the Court con- 
cluded that it was not a denial of the debtor's right of due process that the notice failed 
to indicate that the court could consider failure to pay after the date of the creditor's 
application. See Das v. Das (1978), 21 O.R. (2d) 701, 93 D.L.R. (3d) 638 (Prov. Ct. 
(F.D.)) for a similar result. 

224 Rules of the Provincial Court (Family Division), supra, note 82. 

225 (1982), 133 D.L.R. (3d) 408 (B.C.S.C). 

226 Ibid., at 416-17. 

227 The comments of Esson J., it may be argued, are equally applicable to the kind of 
notice received by the maintenance debtor and approved by the Court in Das v. Das, 
supra, note 84. 



125 

Esson J. also commented as follows on the need for a hearing before a 
warrant of committal could issue in the circumstances of this case: 228 

I do not decide, because the question does not arise on the facts of this 
case, whether there must be a further hearing before a warrant of committal 
can issue. There must be proof that the specified amount of arrears was not 
paid by the specified date, and of knowledge of the existence of the obligation 
to make that payment. Having in mind the policy of the legislation, and the 
traditional approach to committal for breach of civil obligations, there are 
strong arguments in favour of the view that the person allegedly in default 
should have an opportunity, before committal, to contest the facts or show 
that, by reason of illness or unemployment or other change in circumstances, 
the default was not wilful. It is true that any person has the right to apply to 
vary an order to meet changed circumstances, but that right may be of limited 
value to a person unfamiliar with legal procedures, particularly one who lives 
hundreds of miles from the Court. Furthermore, that right does not meet the 
case where the apparent default results from an error in the Court registry, a 
cheque being lost in the mails or some other breakdown in the system. 

There may be additional grounds upon which to challenge the consti- 
tutional validity of the postjudgment arrest and imprisonment provisions 
of the Fraudulent Debtors Arrest Act. For example, section 10(6) of the 
Charter provides that everyone has the right on arrest or detention "to 
retain and instruct counsel without delay and to be informed of that right". 
It may be argued that this provision not only gives everyone the right to 
employ counsel, but also imposes an obligation on the state to provide 
counsel to those who are indigents. This right would be similar to the right 
to counsel under the Sixth Amendment to the United States Constitution. 
Recently, courts in Alaska, 229 Washington, 230 and Ohio 231 have held that 
there is a right to counsel both in civil contempt and in criminal contempt 
proceedings. The courts saw no reason to distinguish between civil and 
criminal contempt, since both can result in a loss of liberty. On the other 
hand, courts in Michigan, 232 Ohio, 233 Maine, 234 New Hampshire, 235 and 
North Carolina 236 have concluded that civil contempt proceedings do not 
give rise to a right to counsel. 

Another avenue of attack would be reliance upon section 11(d) of the 
Charter, which entitles any person charged with an offence "to be pre- 
sumed innocent until proven guilty according to law in a fair and public 
hearing by an independent and impartial tribunal". Of course, the first 



228 Supra, note 225, at 417. 

229 Otton v. Zaborac, 525 P. 2d 537 (Sup. Ct. Alaska 1974). 

230 Tetro v. Tetro, 544 P. 2d 17 (Sup. Ct. Wash. 1975). 

231 Mastin v. Fellerhoff, 526 F. Supp. 969 (S.D. Ohio 1981), and Young v. Whitworth, 522 
F. Supp. 759 (S.D. Ohio 1981). 

232 Sword v. Sword, 249 N.W.2d 88 (Sup. Ct. Mich. 1976). 

233 Retz v. Retz, 405 N.E.2d 313 (Ct. App. Ohio 1978). 

234 Meyer v. Meyer, 414 A. 2d 236 (Sup. Ct. Me. 1979). 

235 Duval v. Duval, 322 A. 2d 11 (Sup. Ct. N.H. 1974). 

236 Jolly v. Wright, 265 S.E.2d 135 (Sup. Ct. N.C. 1980). 



126 

hurdle that would have to be overcome would be to convince the court 
that failure to comply with a maintenance or support order, thereby sub- 
jecting the defaulting debtor to a term of imprisonment, constitutes an 
"offence" for the purposes of section 11. While it may be strongly argued 
that imprisonment for non-payment of a maintenance or support order is 
an attempt to enforce compliance rather than to punish the debtor, from 
the imprisoned debtor's point of view this is a distinction without a differ- 
ence, If a court were to find that section 11 is applicable, it might be con- 
tended that the "reverse onus" provision found in section 29(1) of the 
Family Law Reform Act is unconstitutional. 

An argument based on section 12 of the Charter - proscribing cruel 
and unusual punishment - may also be relied upon as a basis for challeng- 
ing the constitutionality of postjudgment arrest and imprisonment provi- 
sions. It may be contended, for example, that less severe penalties could 
elicit payment, 237 or that the penalty of imprisonment for non-payment of 
a judgment, maintenance order, or support order is disproportionate to 
the "wrong" committed. 238 These arguments, it is suggested, are less likely 
to be successful than those discussed above. 239 

Assuming that the Fraudulent Debtors Arrest Act or the Family Law 
Reform Act contravenes one or more provisions of the Charter, it must be 
remembered that this need not necessarily mean that the Act, or some of 
its provisions, will be rendered inoperative, for the legislation may be 
saved by section 1 of the Charter, which provides as follows: 

1 . The Canadian Charter of Rights and Freedoms guarantees the rights and 
freedoms set out in it subject only to such reasonable limits prescribed by law 
as can be demonstrably justified in a free and democratic society. 

It may be argued, for example, that it is a reasonable limit on the right to 
liberty and on the right not to be deprived thereof except in accordance 
with the principles of fundamental justice to permit a debtor to be arrested 
and imprisoned without prior notice where the arrest is to prevent the 
debtor from leaving the jurisdiction without appearing to be examined or 



237 This argument was used in Furman v. Georgia, 408 U.S. 238 (1972), at 342, the 
famous decision of the United States Supreme Court concerned with capital 
punishment. 

238 See, for example, Weems v. U.S. , 217 U.S. 349 (1910), and Rummel v. Estelle, 100 S. 
Ct. 1133(1980). 

239 See, for example, Grimes v. Miller, 429 F. Supp. 1358 (D.N.C. 1977), aff d 98 S. Ct. 
600, where the Court concluded that a term of imprisonment of 49 days to compel dis- 
closure under the North Carolina postjudgment body execution legislation, pursuant 
to a finding of fraud, was not cruel and unusual punishment. See, also, Kelly v. 
Schoonfield, 285 F. Supp. 732 (D. Maryland 1968), and State v. Hampton, 209 So. 2d 
899 (Sup. Ct. Miss. 1968), where imprisonment for 60 days and two years, respec- 
tively, for non-payment of fines was held not to be cruel and unusual punishment. 

For some Canadian cases in which the cruel and unusual punishment prohibition 
of the Canadian Bill of Rights, R.S.C. 1970, Appendix III, s. 2(b), was relied upon, 
see R. v. Natrall, [1973] 1 W.W.R. 608, (1972), 9 C.C.C. (2d) 390 (B.C.C.A.), and R. 
v. Jung (1976), 1 C.R. (3d) S.-l (B.C.C.A.). The challenge to imprisonment for 
default in paying a fine was rejected in both cases. 



127 

with the intent of defrauding his creditors. The balancing of interests in 
such cases may result in the rights of the debtor being sacrificed to some 
extent, for not to do so could result in rendering meaningless the efforts to 
arrest the debtor. Giving an absconding debtor notice of an application for 
his arrest may simply encourage him to leave the jursidiction sooner than 
he planned. The same kind of reasoning might apply to permit the arrest 
and imprisonment of a debtor, without a hearing, where it is alleged that 
the debtor "has parted with his property or made some secret or fraudu- 
lent conveyance thereof in order to prevent its being taken in execution". 
If, for example, the debtor has transferred only some of his property 
before the application for his arrest, notice to the debtor of the application 
may enhance the possibility that he will dispose of the rest of his property 
so as to frustrate his creditors. 

In the family law context particularly, it may be argued that there is a 
"compelling state interest" in imprisoning defaulting debtors without pro- 
viding them with all the safeguards of fundamental justice. However, in 
Yoder v. County of Cumberland,™ referred to earlier, the Court rejected 
the contention that imprisonment of a defaulting support debtor without a 
hearing is justified because of the need to ensure the support of one's 
spouse (or ex-spouse) and children. The Court commented as follows with 
respect to this issue: 241 

To the extent that §722 makes irrelevant the reason for non-payment of the 
'support' and thereby is sufficiently broad to authorize summary incarceration 
of persons who are truly powerless to provide 'support' because of honest indi- 
gency - as the instant case strikingly demonstrates, - a State interest of ensur- 
ing family support is unfulfilled by summary incarceration. It is more likely to 
be defeated since during the period of incarceration the person intended by 
the State to be the family 'provider' is denied any opportunity to make himself 
able to be a provider .... The statute thus cuts a swath much beyond the 
legitimate necessity of the State's interest to ensure family support and main- 
tenance. 

Furthermore, there is missing a rationally close connection between mere 
non-payment of 'support' and those special factors which the law of Maine 
recognizes as justifying incarceration of the body relative to adjudicated civil 
obligations to pay money - availability of assets and refusal to allow their use 
of payment, or the dishonest manipulation of assets to make them unavail- 
able. Mere non-payment of 'support' fails to yield a rational conclusion that 
the non-payment probably resulted from dishonest handling of assets or obsti- 
nate refusal by 'debtor' to make assets, which he in fact has, [available] to sat- 
isfy the obligation of 'support'. Thus, a compelling State interest requiring 
incarceration prior to hearing is absent generally under §722; . . . 

We shall discuss in more detail below the effectiveness of postjudgment 
arrest and imprisonment as an enforcement remedy. 

In summary, insofar as the use of imprisonment as an enforcement 
remedy is concerned, the issue is not one of traditional constitutionality, 



240 Supra, note 219. 

241 Ibid., at 387-88 (emphasis in original). 



128 

but rather the procedural safeguards that must be guaranteed to a default- 
ing debtor in such a case by the Canadian Charter of Rights and Freedoms. 
Generally speaking, it can be argued strongly that, before he is imprisoned 
for non-payment of his judgment debt, the debtor should have a right to 
be heard, and in some cases a right to notice. Conditional imprisonment 
orders, such as those available under section 29(2) of the Family Law 
Reform Act, which result in imprisonment upon non-compliance without a 
further hearing, may be suspect under section 7 of the Charter. It is also 
possible to argue that section 10(6) requires that an indigent judgment 
debtor be provided with counsel. A "reverse onus" provision, such as that 
found in section 29(1) of the Family Law Reform Act, may be in contra- 
vention of section 11(d) of the Charter. In short, postjudgment arrest and 
imprisonment of defaulting judgment debtors, whether or not mainten- 
ance debtors, gives rise to serious questions under the Charter, the 
answers to which, at this time, are far from certain. 

9. POSTJUDGMENT ARREST AND IMPRISONMENT: THE 
EVIDENCE 

It would be remiss to turn to recommendations for reform concerning 
the law of postjudgment arrest and imprisonment without considering the 
available evidence concerning its impact and effect. In this section, we 
shall examine the evidence referred to by the English Report of the Com- 
mittee on the Enforcement of Judgment Debts 242 and the Australian Gov- 
ernment Commission of Inquiry into Poverty Report, Debt Recovery in 
Australia 243 which contains, inter alia, statistical information on the use of 
imprisonment in the State of South Australia. Both of these studies deal 
with postjudgment arrest as a method of enforcing judgments other than 
maintenance or support orders. With respect to imprisonment for non- 
payment of a maintenance or support order, we shall review the expanding 
body of literature and empirical data - both Canadian and American - 
dealing with the efficacy of this enforcement remedy. 

The Report of the Committee on the Enforcement of Judgment Debts 
examined in some detail the evidence available concerning the use of 
imprisonment for debt. It will be recalled that the Committee concluded 
that a great many of the debtors who are imprisoned are "inadequate, 
unfortunate, feckless or irresponsible persons". 244 It should be pointed 
out, however, that, prior to 1970, the remedy of arrest and imprisonment 
under The Debtors Act, 1869, at least on its face, seems to have been 
somewhat broader than the "inability to pay" language of section 29 of the 
Ontario Family Law Reform Act 245 While the Payne Committee under- 



242 Payne Committee Report, supra, note 116. 

243 Australian Report, supra, note 118. 

244 Payne Committee Report, supra, note 116, para. 282, at 252. 

245 Section 5(2) of The Debtors Act, 1869, supra, note 17, it will be recalled, permits 
imprisonment "where it is proved . . . that the person making default either has or has 
had since the date of the order or judgment the means to pay the sum in respect of 
which he has made default, and has refused or neglected, or refuses or neglects, to pay 
the same" (emphasis added). 

In practice, however, it seems that some Ontario provincial court (family divi- 
sion) judges order imprisonment in cases where the debtor had the means to pay and 



129 

took no statistical survey of its own, it relied on existing sources indicating, 
for example, that imprisoned debtors, "[a]part from knowing little or 
nothing about the details of their indebtedness or their financial position 
generally . . . were often unable to give coherent accounts of their employ- 
ment history". 246 The Payne Committee Report set out the following sum- 
mary of the views of the governors of prisons receiving debtors imprisoned 
under The Debtors Act, 1869: 241 

[T]hey present an almost unanimous view that the majority of civil debtors in 
prison are social inadequates, people incapable of managing their affairs and 
overwhelmed by a burden of debt. Investigators say that they are left with an 
over-riding impression of the low mental calibre of these debtors who are peo- 
ple unable to understand how and why they were found in prison. The gover- 
nors describe them as physically, mentally and socially inadequate, 
unreceptive and unresponsive. Some of them report that imprisonment had no 
deterrent effect and that trading concerns should be compelled to investigate a 
debtor's credit-worthiness before accepting him as a customer. The view is 
also expressed that, whilst a first term might, in a few cases, be successful in 
persuading an individual to pay, in the majority of cases the sanction is of no 
value. The general view is that imprisonment for debt is uneconomic and 
futile. The expenditure in time, work and money on the debtor part of the 
prison population is out of all proportion to the size of their individual debts. 
In many cases the amount of the debt for which a man has been imprisoned is 
astonishingly small compared with the expenditure of public money and offi- 
cial work involved in the few days of imprisonment. 

The Committee noted that during the years 1962 to 1967 the number 
of debtors imprisoned under orders of the county court decreased from a 
high of 7,913 in 1962 to 3,329 in 1967. The lowest number of imprison- 
ments was registered in 1966 - 3,155. 248 An analysis of some 2,500 commit- 
tal warrants issued in 1965 revealed the following information. Slightly 
more than one-quarter of the debtors either avoided imprisonment by pay- 
ing "at the prison gates" or were imprisoned more than one time. Over 
half of those imprisoned had an outstanding judgment debt of less than 
£20. The full term was served by most of those imprisoned. 249 

The figures amassed by the Payne Committee respecting imprison- 
ment for non-payment of maintenance orders were startlingly different. 
The following statistics were gathered for a twelve month period in the 
High Court in London: 250 



refused to do so, even though at the time of the committal hearing the debtor no 
longer is able to pay. 

246 Payne Committee Report, supra, note 116, para. 980, at 251, quoting from Morris, 
Prisoners and their Families (1965). 

247 Ibid., para. 981, at 252. 

248 Ibid., para. 991, at 255. 

249 Ibid., para. 992, at 255. 

250 Ibid., para. 1063, at 272-73. 



130 



Applications for maintenance etc. in the Divorce Division of the 
High Court in London. (This figure includes 818 applications for ali- 
mony pending suit, so that there may be some duplication) 2,591 

Maintenance orders made in London and registered for enforce- 
ment in a magistrate's court 433 

Judgment summonses issued in the High Court 125 

Committal orders made 38 

Committal orders issued by leave of the registrar 10 

Respondents arrested 1 

(Of the remaining 9 judgment debtors, 7 paid the debt, one was 
not traced and in the last the order was suspended pending appeal.) 

Number detained in prison 1 for 

26 days 

As in England, the rate of imprisonment for debt declined in South 
Australia between the years 1962-63 and 1973-74. The following table is 
set out in the Report on Debt Recovery in Australia: 251 





TABLE 3.8 




Debt imprisonment, 


Adelaide Gaol, 


1963-74 








Number of debtors 








imprisoned at 








Adelaide Gaol 


Fiscal year 






(Males) 


1962-63 






304 


1963-64 






234 


1964-65 






278 


1965-66 






250 


1966-67 






245 


1967-68 






234 


1968-69 






206 


1969-70 






147 


1970-71 






58 


1971-72 






93 


1972-73 






81 


1973-74 






75 



The total number of warrants for imprisonment issued in 1973-74 relating 
to the Adelaide Gaol was 158; obviously, some debtors, at the last minute, 
found the wherewithal to pay their debts. 252 The Debt Recovery in 



251 Australian Report, supra, note 118, at 51 (footnote references omitted). 

252 Ibid. 



131 

Australia Report sought to break down the warrants by the amounts in 
issue. The results are reflected in the following table: 253 



Amounts in 
dollars 


0- 

20 


21- 
50 


51- 
100 


101- 
150 


151- 
200 


201- 
300 


301- 
400 


401- 
500 


501- 
1000 


Over 

1000 Totals 


Number of 
warrants 


12 


40 


30 


21 


16 


12 


14 


5 


6 


2 158 


Percentage 
of warrants 


7.6 


25.3 


19.0 


13.3 


10.1 


7.6 


8.9 


3.2 


3.8 


1.3 



It is interesting to note that most of the warrants pertain to debts under 
$100. 

Other information gleaned by those investigating imprisonment in 
South Australia included the following: generally speaking, debtors 
showed relatively low standards of comprehension, both of enforcement 
procedures and of the advice facilities available to them; as in the case of 
the Payne Committee, the Australia Government Commission of Inquiry 
into Poverty indicated that imprisoned debtors, as a class, had a high level 
of unemployment, in part as a result of imprisonment; and the income of 
those imprisoned was at the low end of the income scale. 254 Based on the 
above information, the Commission concluded, like the Payne Committee 
before it, that "[t]he vast majority of those gaoled by the debt enforce- 
ment system in South Australia are at the lower economic and educational 
levels and are subject to high rates of unemployment. Once in debt they 
are among the least equipped in society, both financially and in other 
ways, to deal with their problems." 255 

The literature and studies respecting imprisonment for non-payment 
of maintenance or support orders are useful in a number of respects. They 
indicate the complexity of the problems inherent in the enforcement of 
maintenance orders, the extent of the resort to the remedy of imprison- 
ment, and contain some evidence of the effectiveness of this remedy in 
securing payment. 

A recent study by the Alberta Institute of Law Research and Reform, 
entitled Matrimonial Support Failures: Reasons, Profiles and Perceptions 
of Individuals Involved, 256 contains useful information concerning the 
nature of the problems surrounding the enforcement of support orders. 
The description that follows is taken, for the most part, from Volume 1 of 
the study, the Summary Report. 

The study conducted by the Alberta Institute of Law Research and 
Reform examined the family court records in four Alberta cities, Edmon- 
ton, Calgary, Lethbridge, and Grande Prairie, and the Supreme Court 



253 Ibid., at 60. 

254 Ibid., at 62-64. 

255 Ibid., at 65. 

256 Alberta Institute of Law Research and Reform, Matrimonial Support Failures: Rea- 
sons, Profiles and Perceptions of Individuals Involved (1981) (hereinafter referred to 
as "Alberta Matrimonial Support Report"). 



132 

records in Edmonton and Calgary. In addition, three other subsidiary 
studies were carried out involving door-to-door surveys of men and 
women involved with matrimonial support orders, and a study of default- 
ers. With respect to the findings, the Summary Report stated as follows: 257 

— The survey of women indicated that about half of all maintenance orders 
in Calgary were paid up at the time of the study. However only about a 
third of the ex-husbands paid their orders every month and in the full 
amount. About 30% of the women interviewed said that their hus- 
bands/ex-husbands had paid nothing in the past year. 

— Thirty-eight percent of the Edmonton and Lethbridge cases had made all 
their payments over the duration of the case. Twenty-three percent of the 
Edmonton and 7% of the Lethbridge cases had made no payments at all 
over the duration of the cases. 

— Enforcement proceedings are commonly initiated in Family Courts: 87% 
of the cases in Edmonton and 74% in Calgary showed evidence of some 
enforcement. 

— There was some evidence that enforcement proceedings are [not] fol- 
lowed through in many instances. Forty percent of the Edmonton cases 
contained unserved summonses [and] 14% contained unserved warrants. 

— About 70% of a random sample of defaulters in Edmonton and Calgary 
were traced without using extensive tracing procedures. 

— There was some evidence that poor record-keeping affected enforcement. 
The initiation of enforcement was more common in the 54% of cases in 
which researchers were able to locate ledger cards in Calgary than the 
cases for which no ledger card could be found. 

— The survey of women indicated that there is a lack of faith in the effici- 
ency of enforcement among many women and that this may cause some 
not to file a complaint. 

— Comments made by men suggest that better enforcement may lead to 
considerable resistance. 

— Low income appeared to be associated with irregular payment of main- 
tenance orders but not with non-payment in the survey of men. 

— Maintenance orders for marriages of long duration were better paid than 
for marriages of short duration. 

— There was some evidence that larger maintenance orders were better paid 
than smaller orders. 

— There was no statistical evidence that dissatisfaction with access arrange- 
ments was associated with irregular or non-payment. However there were 
some respondents in the men's survey who gave this as their most impor- 
tant reason. 



257 Ibid., Vol. 1, at 3-4. 



133 

The majority of both men and women interviewed gave a continued sense 
of responsibility for the children as the main reason for regular payment. 

Fear of enforcement proceedings was not a major reason for payment 
among men. 

Inability to afford payments was a major reason given by men for non- 
payment. However, the question of 'affordability' is relative: it depends 
upon the priority accorded by men to maintenance obligation[s] relative 
to other financial obligations. 



— There was widespread dissatisfaction with the legal proceedings con- 
nected with the granting of awards and enforcement by both men and 
women. 

These findings indicate that the problem of matrimonial support failures is 
a complex one that is not necessarily amenable to simple solutions. 

Turning to the findings of the study in more detail, and particularly as 
they relate to the use of imprisonment as an enforcement remedy, some of 
the information revealed by the Alberta study is very interesting indeed. 
For example, it would appear that there is resort to the remedy of impris- 
onment in a significant number of cases: "[e]ight percent of Calgary cases 
and 12% of those in Edmonton contained at least one prison committal 
order in addition to the issuance of summonses and warrants. Fifteen per- 
cent and 11% of the Edmonton and Calgary cases had at least one warrant 
issued (but no prison committal order)." 258 In the case of the family courts 
in each of these two cities, a majority of cases resulted in the issuance of 
summonses, many of which, however, remained unserved. 259 

The Alberta study also found that a significant percentage of the res- 
pondents to one of the questionnaires was unwilling to initiate one or more 
enforcement measures. Approximately twenty- five percent to forty per- 
cent were unwilling to have the amount of maintenance owed deducted by 
means of garnishment proceedings; over sixty percent of the women ques- 
tioned were unwilling to resort to jailing for non-payment of 
maintenance. 260 The conclusions drawn from these responses and other 
comments were "that there is a lack of faith among many women concern- 
ing the effectiveness of enforcement proceedings. About one half of the 
women reported that their ex-husbands had not paid their orders regular- 
ly. When asked why this was the case, over a quarter said that the court 
would not be able to make him pay or that it was too much trouble for 
her." 261 On the other hand, there is also evidence that some of the women 
questioned believed that payments were forthcoming on a regular basis 
because of the husband's fear of legal proceedings. 262 



258 Ibid., at 16. 

259 Ibid. 

260 Ibid., Vol. 2, Technical Reports, Table 12, at 181-82. 

261 Ibid., Vol. 1, at 18. 

262 Ibid., Vol. 2, at 202 and 206. 



134 

In the survey of men conducted by the Alberta Institute, there is also 
some interesting data concerning the reasons given by the respondents for 
payment or non-payment of maintenance. Tables 12.3 and 12.4 of this sur- 
vey set out the responses: 263 





TABLE 12.3 






Why Maintenance Orders were Paid 




The reasons 


for paying maintenance orders are ranked below by way of 


summary: 






Percentage 
Agreeing 




Percentage 
Disagreeing 


76 


Close to Children 


11 


75 
60 


Reponsibility for children 
Preserve Goodwill 


11 
11 


47 


Doesn't like wife on social assistance 


22 


25 
23 
20 
19 


Ex-wife's standard of living lower 
Fear of Legal Proceedings 
Responsible for marriage breakdown 
Fear of Garnishee 


48 
31 
64 
35 


19 
18 
18 


Wife always after him to pay 
Fear of Imprisonment 
Responsibility for ex-wife 


57 
40 

73 





TABLE 12.4 






Why Maintenance Orders were not 






Paid Regularly and Promptly 




Again, to summarize the feelings briefly, the reasons for nol 


t paying orders 


regularly are 


ranked below: 




Percentage 




Percentage 


Agreeing 




Disagreeing 


63 


Ex-wife has enough money to support herself 12 


46 


Can't afford to pay the Order 


29 


44 


Money paid for children goes to ex-wife 


19 


44 


Ex-wife was responsible for marriage 






breakdown 


26 


41 


Standard of living lower than ex-wife's 


32 


34 


Ex-wife spends money foolishly 


21 


34 


Ex-wife has enough money to support 






herself and children 


27 


32 


Provides for children in other ways 


30 


30 


Never gets to see children 


49 


28 


No longer feels close to children 


46 


15 


Ex-wife agrees that she no longer 






needs money 


41 



263 Ibid., at 293. 



135 

From Table 12.3, it would seem that fear of legal proceedings - either in 
the form of garnishment proceedings or in the form of committal proceed- 
ings - played a less than major role in motivating payment. In the case of 
those who did not pay regularly, a lack of funds was a major reason for 
non-payment. In questioning those who did not pay, "[r]oughly a third of 
those answering said they would pay if threatened with legal proceedings 
or imprisonment, and only 21% said they would pay if threatened with a 
garnishee order. In each case, however, more said they would not pay 
when threatened with such enforcement than would pay." 264 Indeed, over 
forty percent disagreed that they would pay if threatened with imprison- 
ment. The Summary Report summarized the responses of those who do 
not pay maintenance regularly as follows: 265 

In summary, the findings with respect to the effectiveness of enforcement 
proceedings are inconclusive. Taking initial action is very common. The evi- 
dence seems to suggest that enforcement is less effective with each additional 
step in the process. If measures are taken to tighten enforcement when a 
default continues to occur, there is not [sic] indication in the findings that com- 
mensurate increases in payment will occur. If the opinions of the men sur- 
veyed were to be taken seriously, better enforcement may result in further 
resistance. 

A 1981 British Columbia study of show cause enforcement of mainten- 
ance orders, prepared under the joint auspices of the Social Planning and 
Research Committee of the United Way of the Lower Mainland, and the 
Research and Evaluation Unit of the Policy Planning Division of the Brit- 
ish Columbia Ministry of the Attorney General, also sheds some interest- 
ing light on the enforcement process in the family law context. 266 As in the 
case of Alberta maintenance orders, the study under discussion disclosed 
that "the large majority, about two-thirds of the cases, were in arrears". 267 

The degree of reliance upon show cause hearings for maintenance 
orders in default can be discerned to some extent from the fact that an 
average of 4.2 show cause summonses were issued per case in the sample; 
thirty-six percent of these summonses, slightly more than a third, could 
not be served. 268 It is interesting to note the average court time per show 
cause hearing - 9.3 minutes; where the hearing resulted in an order to pay, 
the average court time was slightly longer, averaging 16.4 minutes per 
hearing. 269 

Another interesting statistic found in the British Columbia study con- 
cerns the defaulting spouse's agreement or disagreement with the amount 
of alleged arrears: forty-five percent claimed (sometimes indirectly) that 
they were partly or wholly inaccurate. 270 This is not to suggest that the 



264 Ibid., Vol. I,atl8. 

265 Ibid. 

266 Wachtel and Burtch, Excuses: An Analysis of Court Interaction in Show Cause 
Enforcement of Maintenance Orders (April, 1981). 

267 Ibid., at 1. 

26S Ibid., <it\6. 

269 Ibid., at 23. 

270 Ibid., at 28. 



136 

defaulters challenged that they were in arrears; the question, rather, was 
the extent of the arrears. 

The British Columbia study, while concluding that show cause hear- 
ings fulfil many goals, nonetheless proposed that the jail sanction be 
replaced as the major lever in enforcement with other mechanisms, such 
as garnishment, attachment, and recourse to bankruptcy, "which attempt 
to motivate the maintenance debtor to rearrange his financial affairs". 211 It is 
not clear why imprisonment does not serve this same function. Nor is there 
any indication why these other remedies should be utilized in place of jail- 
ing. 

One point made in the British Columbia study that is worth repeating 
is the court's ambivalence to the argument made by many defaulters that 
they are overburdened by other large debts: 272 

The court could be seen as affirming three general propositions: a) that res- 
pondents not beggar themselves to avoid their maintenance obligations; b) 
that support payments have first priority among debts; and c) that persons 
without the ability to manage their debts should be directed to counselling and 
legal relief. Nevertheless, some men countered successfully that it was in no 
one's interests to pauperize them or ruin their chances of future income by 
forcing them to liquidate their remaining assets. So long as the business code - 
which stresses that a man must meet his business obligations - takes social pre- 
cedence over (and has more severe personal consequences than) private family 
responsibilities, the court should expect some resistance. Certain defaulters 
clearly see it as in their best interests to choose the less threatening road of 
neglecting family obligations. At present, maintenance enforcement hardly 
compares with general debt collection, restricted credit, and so forth in its per- 
sonal implications. The court's only option to restore the family to its prefer- 
red creditor position, if personal bankruptcy seems warranted, is to put the 
respondent in touch with financial counsellors. 

With respect to the effectiveness of imprisonment as a means of 
enforcing maintenance orders, Chambers, in a study of the use of impris- 
onment in the State of Michigan, concluded that, given a certain set of cir- 
cumstances, imprisonment was a valuable enforcement tool. 273 He 
commented: 274 

[T]he lesson of our study appears to be that given the opportunity, many men 
will not pay, but that if a state sets up a system that is well organized and per- 
sistent and that relies on a substantial level of jailing, lots of money can be col- 
lected. When there is a policeman at everyone's elbow, fewer candy bars are 
shoplifted. 

Chambers' study suggested that there were three factors that were cru- 
cial to the level of debt collection in any particular Michigan county. "The 



271 Ibid., at 69 (emphasis in original). 

272 Ibid., at xii-xiii (emphasis in original). 

273 Chambers, "Child Support Collections in Michigan - A Study of the Effects of Tenac- 
ity and Terror", in Baxter and Eberts (eds.), The Child and The Courts (1978) 129 
(hereinafter referred to as "Chambers"). See, also, Chambers, "Men who Know They 
Are Watched: Some Benefits and Costs of Jailing for Non-Payment of Support" 
(1977), 75 Mich. L. Rev. 900, and Chambers, Making Fathers Pay: The Enforcement 
of Child Support (1979). 

274 Chambers, supra, note 273, at 130. 



137 



first factor was population - the larger the county, the lower the 
collections." 275 A second factor pinpointed by Chambers as having a sig- 
nificant impact on the level of collection was the nature of the enforcement 
process, that is to say, the existence or non-existence of the equivalent to 
our system of automatic enforcement. 276 And finally, the rate of jailing 
affected the rate of collection. "Counties that jailed more, collected 
more." 277 These three factors, to some extent, were interrelated: "a self 
starting enforcement policy seems to lead to the apprehension of more 
nonpaying men who are then brought before the judges and jailed". 278 The 
following table sets out the findings of Chambers in this regard: 279 



Interrelation of Three Most Important Factors 
Relating to Collections in Twenty-Eight Michigan Counties 

How much the county jails, whether Friend of the 

Court initiates enforcement without awaiting complaints, 

and county population 



Counties that 
were both high- 
jailing and 
self-starting 



Counties that Counties that Counties that 

were self- were high- were neither 

starting but jailing but not high-jailing nor 

low- jailing self -starting self-starting 



Mean portion 
collected 
during sur- 
vey period 
of all that 
was ordered 



82% 



69% 67% 62% 57% 59% 66% 57% 



5 small 3 large 5 1 

coun- coun- small large 

ties ties coun- coun- 

(under (over ties ty 
100,000) 100,000) 



13 2 8 
small large small large 
coun- coun- coun- coun- 
ty ties ties ties 



Mean collections: 

13 small counties (under 100,000) — 72% 

15 large counties (over 100,000) — 60% 

12 high-jailing counties — 71 % 

16 low-jailing counties — 61% 

14 self-starting counties — 71 % 

14 non-self-starting counties — 60% 

5 small, high-jailing, self-starting counties — 82% 
8 large, low-jailing, non-self-starting counties — 57% 



275 Ibid., at 133. 

276 Ibid. 

277 Ibid. 

278 Ibid. 

279 Ibid., at 134 (footnote references omitted). 



138 



Insofar as jailing itself was concerned, Chambers concluded that "[n]o 
index . . . that combined average sentence length with the rate of jailing or 
measured jail lengths alone helped to sort high from low paying counties in 
a way not fully and more adequately explained by the rate of jailing 
alone". 280 Nor did the evidence support the conclusion that long sentences 
were more likely than short sentences to induce the debtor to pay in order 
to secure early release from jail. Indeed, Chambers suggested that "length 
of time served remains a strong predictor of poor performance after 
release". 281 

With respect to the use and efficacy of imprisonment in Ontario, Baar 
and Moore, in a study published in 1981, examined the enforcement of 
child support orders in one family court in a large metropolitan area prior 
to the enactment of the Family Law Reform Act. 1%1 Their findings are rele- 
vant to the question whether imprisonment is necessary in a system 
employing automatic enforcement. 

Only a small portion of the study was devoted to the use of imprison- 
ment as a method of enforcing child support orders; the major focus of the 
study was an examination of the comparative effectiveness of automatic 
enforcement (introduced in Ontario in 1974) and self-initiated enforce- 
ment. For example, the following table compared the two types of 
enforcement regime by payment patterns: 283 



Type of Enforcement by Payment Patterns 






Type of Enforcement 




Automatic i 


Non-Automatic 


Number of Defaults 


(N = 100) 


(N = 100) 


None 


11.3% 


14.6% 


4 or fewer 


65.6% 


59.5% 


More than 10 


20.6% 


8.3% 


Never paid 


7.2% 


11.5% 


Length of Maximum Default 






One year or more 


30.2% 


36.7% 



The only two areas in which automatic enforcement proved to be better 
were the last two; that is to say, where automatic enforcement was 
employed, there were fewer support orders in respect of which no pay- 
ment was ever made, and fewer support orders where the length of default 
was one year or greater. These statistics, Baar and Moore suggested, indi- 
cated "that the automatic enforcement program is directed more toward 
limiting flagrant deviations than toward achieving a regular payment 



280 Ibid., at 136. 

281 Ibid. 

282 Baar and Moore, "Ineffective Enforcement: The Growth of Child Support Arrears" 
(1981), 1 Windsor Yearbook of Access to Justice 94. 

283 Ibid., at 105. 



139 

pattern". 284 Baar and Moore also discovered that the amount of accumu- 
lated arrears was likely to be less where self-initiated enforcement was 
employed. 285 

Automatic enforcement of support orders was more likely to result in 
the laying of informations. However, informations were more likely to be 
laid only after substantial arrears had accumulated. 286 

The evidence gathered by Baar and Moore concerning the efficacy of 
imprisonment in ensuring compliance with a support order supports their 
conclusion that there is "a considerably higher rate of compliance ... at 
least on a short term basis, when there was certainty and severity of 
sanction". 287 However, the evidence indicated that reliance on imprison- 
ment "resulted in irregular sanctioning of accumulated debt. Judicial 
effort . . . was directed toward the collection of lump sum payments rather 
than toward the achievement of a consistent payment pattern." 288 The 
authors concluded as follows: 289 

Neither judgments based on the conflict model nor committals to jail that 
resulted from non-compliance, had the desired effect: neither process pro- 
vided either a clear definition of the boundaries of the support obligation or 
certainty that the obligation was consistently binding. In fact, the judicial 
emphasis on lump sum payments coupled with administrative practices simi- 
larly focused, conveyed the message to the payor that consistent payment 
behaviour was not required. Thus the enforcement practices redefined the 
parameters of obligation. The nature of the obligation was to pay an indeter- 
minate amount at a randomly defined point in time, hence a lottery system 
that may function in the interest of the payor was inadvertently created. 

The same authors, Baar and Moore, have also examined the enforce- 
ment of child support orders following the enactment of the Family Law 
Reform Act. In an as yet unpublished study, they note that imprisonment, 



284 Ibid., at \06. 

285 Ibid. To explain the lack of success of automatic enforcement when compared with 
self-initiated enforcement, Baar and Moore examined a number of factors, such as the 
time between the making of the support order and the first warning letter or default 
notice, the amount of arrears at the time of the first warning letter or default notice, 
and the number of informations laid. From the evidence gathered, they concluded, for 
example, "that while those on automatic enforcement were more likely to receive a 
warning at some point during delinquency than those on non-automatic enforcement, 
this occurred only after a pattern of default had been well established": ibid., at 109. 
They sought to explain this result in part by the possibility that court clerks perceived 
no need for a notice where the amount in default was less than $100. Consequently, 
they suggested, "[t]here may have been a tendency then, to assign such orders low pri- 
ority with the consequence that the court placed less emphasis on prompt action that 
might have produced fruitful results. That is, a payor who had accumulated only a 
small debt may have been more likely to have the required funds and would be 
prompted to pay by notice from the court": ibid., at 109. Account review, they sug- 
gested, was sporadic and, therefore, significant arrears were allowed to accumulate 
and a pattern of habitual delinquency was developing. 

m Ibid., at U2. 

287 Ibid., at 119. 

288 Ibid., at 117. 

289 Ibid. 



140 

as a method of enforcement, has decreased since the introduction of the 
new legislation. This is ascribed in part to the case law concerning section 
29, which has resulted in that provision being strictly construed by the 
courts, thereby making imprisonment more difficult. Default in payment 
of support orders, on the other hand, has increased since the enactment of 
the Family Law Reform Act: twenty-eight percent of support orders do not 
result in any payment whatsoever. 290 

To gather some additional information concerning postjudgment 
arrest and imprisonment in the matrimonial context in Ontario, an in- 
depth study of the use of this remedy in the Provincial Court (Family Divi- 
sion) of the County of Kent and in the Provincial Court (Family Division) 
of the Judicial District of Waterloo was undertaken with the assistance of 
those courts. These two courts were selected in order to determine the 
incidence of resort to the remedy of postjudgment arrest and imprison- 
ment and whether the remedy was used more frequently in rural or rela- 
tively small urban centres than in a large metropolitan centre. The study 
conducted involved final support orders made during the 1980 calendar 
year. 

The results of the study conducted by the Provincial Court (Family 
Division) of the County of Kent are as follows. Of the 110 support orders 
issued under the Family Law Reform Act during 1980, ninety-seven were 
in default (defined as at least two consecutive payments in arrears) at some 
time from the date of their issuance to July 31, 1982. The vast majority of 
these orders were in default on only one occasion. In the case of fourteen 
orders, two defaults were registered. One 1980 support order was in 
default on seventeen different occasions. The total number of defaults in 
respect of the 1980 support orders examined was 149. 

Default proceedings were taken in the case of seventy of the support 
orders in default, resulting in 132 different show cause proceedings. In 
nine cases, the default proceedings were dismissed on the ground of inabil- 
ity to pay. In a similar number of default proceedings (9), a committal 
order was issued. No support debtor was subject to more than one com- 
mittal order. All nine committal orders were conditional. Each of these 
nine orders resulted in payment, thereby allowing the debtor to avoid 
imprisonment. In only one case was it necessary to resort to arrest of the 
support debtor. The average term of imprisonment ordered was twenty- 
seven days. 

The amount of arrears outstanding in these nine cases ranged from $20 
to $4,030, the median being $425. The average arrears outstanding was 
just over $1,000. 

In every case, the debtor was present during the proceedings resulting 
in a committal order. In five of the nine cases, the debtor was not repre- 



290 Thj s information was provided to the Commission by Professor E. Baar, with the 
approval of the Attorney General for Ontario and the Chief Judge of the Provincial 
Court (Family Division). 



141 

sented by counsel. In only one case that resulted in a committal order did 
the creditor first employ some other enforcement remedy (attachment of 
wages). 

Unfortunately, the results of the study undertaken by the Provincial 
Court (Family Division) of the Judicial District of Waterloo were unavail- 
able at the time of publication. 

The statistics outlined above suggest that the remedy of postjudgment 
arrest and imprisonment is not resorted to with any great degree of fre- 
quency in Ontario. Moreover, the data obtained from the Provincial Court 
(Family Division) of the County of Kent, as well as the study by Cham- 
bers, suggest that arrest and imprisonment can be used effectively to 
ensure payment of arrears of support or maintenance. 

Finally, we should point out that every provincial court (family divi- 
sion) judge with whom we consulted, without exception, was of the opin- 
ion that arrest and imprisonment, or the threat thereof, is an effective and 
necessary remedy of last resort. They believed that it was the only remedy 
to which some recalcitrant debtors responded. In addition, at the request 
of the Commission, the Ontario Family Court Judges Association circu- 
lated among its members a questionnaire with respect to retention of the 
remedy of postjudgment arrest and imprisonment. The response was over- 
whelmingly in favour of retention, with a majority of those responding, 
however, expressing the view that this remedy should be resorted to infre- 
quently. 



10. CONCLUSIONS AND PROPOSALS FOR REFORM 

Having surveyed the literature and available empirical data concern- 
ing the need for, and the efficacy of, postjudgment arrest and imprison- 
ment as an enforcement remedy, the question that must now be addressed 
is what changes, if any, should be made to the present law. The first, basic 
issue that the Commission must consider is whether postjudgment arrest 
and imprisonment should be (a) abolished as an enforcement remedy, 
(b) available as a method of enforcing all judgments or orders for the pay- 
ment of money, or (c) retained as a remedy for the enforcement of main- 
tenance and support orders only. 

Most of the arguments supporting either the abolition of the remedy 
of postjudgment arrest and imprisonment or its retention have been out- 
lined in previous sections of this chapter. In the following section, we pro- 
pose to summarize and evaluate briefly these arguments. 

(a) Arguments Respecting Abolition: An Evaluation 

One of the main arguments relied upon by the Payne Committee in 
support of its recommendation for abolition of postjudgment arrest and 
imprisonment other than in the family law context was the redundancy of 
this remedy. It was contended in the Report of the Committee on the 
Enforcement of Judgment Debts that, given the recommendations increas- 
ing the efficacy of other enforcement remedies and the recommendation to 



142 

make nearly all the property of a judgment debtor subject to enforcement, 
imprisonment was no longer needed. 291 If a debtor had non-exempt prop- 
erty, it could be reached by either execution, garnishment, or the appoint- 
ment of a receiver. Judgment debtor questionnaires and examinations 
would be available to determine the debtor's means and the whereabouts 
of any property liable to be taken in satisfaction of a judgment debt. 

It will be recalled that this Commission, like the Payne Committee, 
has sought to ensure that, subject to reasonable exemptions, all the prop- 
erty of a judgment debtor would be subject to enforcement. 292 The Com- 
mission has also recommended numerous changes designed to make exist- 
ing enforcement remedies more effective. 293 Like the Payne Committee, 
this Commission has also made recommendations designed to improve the 
procedure for ascertaining whether a debtor has the means to pay his judg- 
ment debt and the whereabouts of the debtor's exigible assets. 294 Given 
these and other recommendations, it may be asked, what need is there for 
authority to arrest and imprison recalcitrant debtors? 

In response to this argument it may be contended that changes in the 
law of execution, garnishment, and equitable execution cannot deal satis- 
factorily with the debtor intent on frustrating his creditors; only the ulti- 
mate sanction of imprisonment, it is argued, will be successful against such 
debtors. Besides, since the Commission's recommendations are not yet 
implemented, and their effectiveness is not yet established, it may be too 
early to do away with postjudgment arrest and imprisonment as an 
enforcement remedy. Indeed, this argument was accepted by the Commis- 
sion when it considered abolishing imprisonment in the family law context 
in its Report on Family Law, Part VI, Support Obligations. 295 In that 
Report, the Commission commented as follows: 296 

In principle, we find the power of committal for maintenance debt to be 
objectionable and inconsistent with our view of the methods by which legal 
order should be restored to discordant family relations. We are confident that 
the methods of enforcement which we have proposed, recognized civil meth- 
ods of enforcing judgment debts, will be effective. We do not have the same 
confidence, however, that these recommendations can be implemented over- 
night, or that the support services so essential to their effectiveness will be uni- 
versally available on a timely basis. The existing enforcement scheme is 
working, as we have said, better than ever before. However, maintenance 
debts are not ordinary debts; default in their payment frequently causes 
extraordinary hardship to family dependants. We are, therefore, hesitant to 



291 See discussion supra, thisch., sec. 7(a). 

292 Supra, note 3. 

293 For example, the Commission proposed the introduction of a continuing garnishment 
remedy. It recommended significant changes to the law respecting equitable execution 
that would have the effect of making the appointee a receiver-manager in some cases. 
In addition, the Commission recommended a reduction in the time that a creditor 
would have to wait before the sale of land seized under a writ of enforcement. 

294 See Commission Report, supra, note 1, Part I (1981), ch. 4. 

295 Ontario Law Reform Commission, Report on Family Law, Part VI, Support 
Obligations (1975). 

296 Ibid., at 208-09. 






143 

recommend the immediate abolition of the existing power of committal. With- 
out this power, and in the absence of an effective working alternative, the 
existing automatic enforcement program would crumble. 

We recommend that the power of committal in the family court be 
retained only for such time as is required to implement the alternative propos- 
als contained in this Report for the enforcement of maintenance orders and to 
establish their effectiveness. As an interim reform measure the provisions for 
committal contained in section 12 of The Deserted Wives' and Children's 
Maintenance Act should be amended to make the sanction applicable to both 
spouses or parents, to reduce the maximum period of imprisonment from 
three months to six weeks, and to restrict the power to make any committal 
order to cases where it has been established that the spouse or parent is able to 
pay, but has wilfully refused to comply with the order by applying his or her 
money for the support of the other spouse or children as directed by the order; 
and finally, that safeguards should be introduced to preclude absolutely the 
exercise of the committal power against any spouse or parent who has, or may 
have, responsibility for the care of any children. 

The Commission's recommendations in this regard were not fully imple- 
mented by the Family Law Reform Act. 297 

A second major argument supporting abolition of the power to arrest 
and imprison defaulting judgment debtors, and one that is frequently cit- 
ed, is the belief that, for the most part, only debtors who are in fact unable 
to pay are imprisoned. This justification has found favour with those who 
believe that imprisonment, or the threat of imprisonment, can be an effec- 
tive remedy, as well as with those who have doubts as to the efficacy of this 
enforcement remedy. The Payne Committee concluded, for example, that 
those who are imprisoned are "feckless" and "inadequate". 298 Chambers, 
who recognized the effectiveness of jailing as an enforcement remedy, 
nevertheless supported its abolition because, inter alia, "jailing was being 
used inappropriately ... to reach a class of persons for whom payment 
was currently beyond their control". 299 There are, on the other hand, those 
debtors who have the means to pay, but who refuse to pay as a matter of 
principle, although this kind of debtor would seem to be the exception, 
rather than the rule. In such a case, imprisonment, or the threat of impris- 
onment, may result eventually in payment of the outstanding judgment 
debt. 

A third argument for the abolition of postjudgment arrest and impris- 
onment as an enforcement remedy flows from a cost-benefit analysis of the 
remedy. It is argued that the cost of the remedy to the community exceeds 
its benefits. On the cost side of the scale, one can put the cost of incarcera- 
tion, the cost to the economy of non-productivity of those who are impris- 
oned, and the cost to the community of embittered relations between 



297 The maximum term of imprisonment under the Act is ninety days: see Family Law 
Reform Act, supra, note 78, s. 29(l)(a). The Commission's recommendation for an 
absolute prohibition against the committal of "any spouse or parent who has, or may 
have, responsibility for the care of any children" has not been implemented. 

298 See discussion supra, this ch., sec. 7(a). 

299 Chambers, supra, note 273, at 139. 



144 

debtor and creditor, whether arising out of a commercial relationship or a 
marriage. In the family law context at least, there is some evidence to sug- 
gest that jailing, rather than creating a more compliant debtor, may result 
in a more recalcitrant debtor. 300 On the benefit side of the scale, one can 
put the payments received as a result of imprisonment or the threat of 
imprisonment, and the deterrence factor of imprisonment. However, as 
Chambers has pointed out, jailing as an enforcement remedy is only effec- 
tive in securing payment if it is certain and sufficiently frequent to leave a 
mark on the relevant community. 301 Consequently, in the short run, the 
cost of the remedy may increase in direct relation to its effectiveness. 

A further argument justifying abolition of imprisonment as an 
enforcement remedy is also related to the cost-benefit analysis. It may be 
contended that the additional safeguards that might have to be built into 
the remedy to ensure compliance with the Canadian Charter of Rights and 
Freedoms will increase its cost while perhaps rendering it somewhat less 
effective. 302 At this time, however, it is still uncertain what effect the Char- 
ter might have on the postjudgment arrest and imprisonment provisions of 
the Fraudulent Debtors Arrest Act and the Family Law Reform Act. More- 
over, if the case were made for postjudgment arrest and imprisonment as 
an enforcement remedy, it might be argued that necessary safeguards 
could be incorporated at a reasonable cost without interfering unduly with 
the effectiveness of the remedy. 

Turning to the arguments in support of retaining an imprisonment 
remedy, one argument is the lack of any practical distinction between 
money judgments and non-money judgments. It may be asked why wilful 
refusal to comply with the latter type of order should be treated as con- 
tempt, whereas wilful refusal to pay should not. The danger, it is suggest- 
ed, is that those who do not have the ability to pay will, for one reason or 
another, be the persons who will be sent to jail. On the other hand, suffi- 
cient safeguards may be provided to ensure that this does not happen. And 
while substantive and procedural safeguards may render the remedy some- 
what less effective, this result does not justify the remedy's abolition. 

The strongest justification for having an imprisonment remedy is that 
it appears to work. This point is established by Chambers in his study con- 
cerning the enforcement of child support orders. 303 Chambers' findings are 
supported by the statistics gathered for the Commission by the Provincial 
Court (Family Division) of the County of Kent. It is also significant that 
provincial court (family division) judges, generally speaking, are of the 
view that imprisonment, or the threat of imprisonment, is an effective 
enforcement remedy, and the kind of ultimate sanction necessary to 
ensure that the support system does not break down. Although we have 



300 See Alberta Matrimonial Support Report, supra, note 256, Vol. 2, at 294. While a sig- 
nificant percentage of those surveyed indicated that enforcement efforts might result 
in less, rather than more, co-operation, one wonders whether this would, in fact, be 
the response of those confronted with arrest and imprisonment. 

301 See discussion supra, this ch., sec. 9. 

302 The procedural implications of the Charter are canvassed supra, this ch. , sec. 8. 

303 See discussion supra, this ch., sec. 9. 



145 

referred to other studies that indicate that, in a significant number of 
cases, postjudgment arrest and imprisonment will result in payment of 
ordinary judgment debts, we know of no study as persuasive as Chambers' 
respecting the efficacy of imprisonment in the context of commercial and 
tort judgments. 

We would note that the trend in other jurisdictions would certainly 
seem to be in favour of abolition of imprisonment as an enforcement rem- 
edy for non-maintenance creditors. Certainly, in the majority of jurisdic- 
tions that have examined this area of the law, abolition has been 
recommended in the non-family law context. 304 In Canada, at the present 
time, imprisonment is not available as a statutory remedy for the mere 
non-payment of an ordinary judgment debt in some of the provinces, 
although it should be noted that the contempt power can be used in some 
cases. 305 At the same time, it should be pointed out that, in none of the 
jurisdictions examined, has imprisonment been abolished in the family law 
context. In fact, abolition of this remedy in the family law context has not 
been advocated in any of the jurisdictions considered, although the mem- 
bers of the Payne Committee were divided on the issue. 306 

While it may be persuasively argued that imprisonment should be 
abolished in the case of non-maintenance debtors, the circumstances of 
maintenance creditors may be sufficiently different that abolition of the 
remedy in that context may not be justifiable. Unlike commercial credi- 
tors, maintenance creditors may be characterized as involuntary creditors. 
Of course, not all non-maintenance creditors are voluntary; tort claimants 
and the taxing authorities, for example, are involuntary creditors. Yet, 
despite the fact that they had recommended the abolition of imprisonment 
as an enforcement remedy available to taxing authorities, a number of the 
members of the Payne Committee voted in favour of retaining imprison- 
ment in the family law context. 307 Such a position may be justified on the 
ground that the moral obligation to one's spouse, or former spouse, and 
children is of a higher degree than one's moral obligation to pay other 
creditors, whether voluntary or involuntary. It perhaps may also be argued 
that imprisonment is necessary as a final sanction because of the fact that 
the societal pressures to pay are greater in the commercial context than in 
the family law context. 

(b) Conclusions 

The Commission has concluded that the arguments both for and 
against the remedy of postjudgment arrest and imprisonment for non- 
payment of a money judgment are closely balanced. Accordingly, we do 
not support any radical change in the availability of this remedy; in other 
words, we are of the view that postjudgment arrest and imprisonment 
ought to be retained as a remedy of last resort in the family law context, 



304 See discussion supra, this ch., sec. 7(a). 

305 See discussion supra, this ch., sec. 4. 

306 See discussion supra, this ch., sec. 7(b). 

307 Ibid. 



146 

but that, generally speaking, it should not be available as a means of 
enforcing ordinary judgments, that is to say, judgments other than those 
for maintenance or support. 

The Commission favours retention of the remedy in the family law 
context because all the evidence available to us suggests that postjudgment 
arrest and imprisonment is effective and necessary for the enforcement of 
maintenance and support orders. 308 While the evidence that we have refer- 
red to also suggests that the remedy may induce payment in the non-family 
law context, it would appear that those who are unable to pay sometimes 
are imprisoned. 309 We believe that the danger inherent in such a weapon - 
even with adequate procedural safeguards - militates against its use to 
enforce ordinary money judgments. Of course, similar dangers exist with 
respect to the use of postjudgment arrest and imprisonment in the family 
law context. Nonetheless, the Commission is of the opinion that the practi- 
cal disparity in the coercive powers of ordinary creditors and support or 
maintenance creditors, and the nature of the obligation owed by mainten- 
ance debtors when compared with that of most ordinary debtors, justify 
running the risks inherent in even the best-designed postjudgment arrest 
and imprisonment remedy. 

(c) Recommendations 

(i) Arrest and Imprisonment in the Family Law Context 

It will be recalled that arrest and imprisonment are available under 
sections 24, 28, and 29 of the Family Law Reform Act. Section 24 concerns 
arrest of an absconding debtor. Sections 28 and 29 empower a court to 
order the arrest and imprisonment of a maintenance debtor where there 
has been default in the payment of a maintenance order, and the debtor is 
unable to establish inability to pay. We deal with section 24 later in this 
section. 

Insofar as postjudgment arrest and imprisonment under sections 28 
and 29 of the Family Law Reform Act are concerned, the Commission 
believes that provincial courts (family division) should continue to enjoy 
these powers, subject to what is said below. However, we are also of the 
view that all courts from which a support or maintenance order may ema- 
nate, including the Supreme Court or a county or district court, should be 
empowered to enforce their own orders by means of arrest and imprison- 
ment of the defaulting debtor in similar circumstances. Of course, support 
or maintenance orders made by the Supreme Court or a county or district 
court may be registered 310 in the provincial court (family division) and 
enforced by means of arrest and imprisonment in this way. We know of no 
reason, however, why the Supreme Court and county and district courts 
should not be able to enforce their own orders in a manner similar to the 
provincial courts (family division). Accordingly, the Commission recom- 



308 See discussion supra, this ch., sec. 9. 

309 Ibid. 

310 See Family Law Reform Act, supra, note 78, s. 27(1). 



147 

mends that post judgment arrest and imprisonment should be available as 
an ultimate sanction for the enforcement of support and maintenance 
orders and should be available at all court levels. 

To give effect to this recommendation, section 12 of the Fraudulent 
Debtors Arrest Act m and Rule 569 of the Supreme Court of Ontario Rules 
of Practice 312 will have to be amended. We, therefore, recommend that 
section 12 of the Fraudulent Debtors Arrest Act should be amended to pro- 
vide that the prohibition against "arrest for contempt for non-payment of 
any sum of money or of costs, charges or expenses payable by a judgment 
or order of the Supreme Court or of a judge thereof, or of a county court 
or of a judge thereof "does not apply in the case of an order for support or 
maintenance. We further recommend that Rule 569 of the Rules of Prac- 
tice should be amended to provide that an order for maintenance or sup- 
port "may be enforced by attachment". 

Insofar as the nature of the postjudgment arrest and imprisonment 
remedy proposed by the Commission is concerned, we believe that the 
remedy is analogous to and should be characterized as a contempt power 
in the court to ensure compliance with judicial process, and we so recom- 
mend. In this way, non-compliance with a maintenance or support order 
and any other type of judgment or order would be treated similarly. 

While it may be argued that, because of section 96 of the Constitution 
Act, 1867, m a provincially appointed judge cannot constitutionally be 
empowered to commit for contempt not in the face of the court, we do not 
share this view. We would note that, even at the present time, judges of 
the provincial courts (family division) have power to commit for contempt 
in respect of acts not in the face of the court. 314 

One final point should be made regarding the scope of the postjudg- 
ment arrest and imprisonment remedy that we believe should be available 
to enforce orders for support and maintenance. Elsewhere in our Report 
on the Enforcement of Judgment Debts and Related Matters, we have made 
recommendations designed to give maintenance and support creditors an 
advantage over ordinary judgment creditors. Where this has been done, 
we have proposed that the benefit should be available equally to persons 
enforcing a maintenance order made under the Divorce Act, persons 



311 Supra, note 1. 

312 Supra, note 23. 

313 See supra, note 177. 

314 See the Family Law Reform Act, supra, note 78, s. 37, which provides as follows: 

37. -(1) In addition to its powers in respect of contempt, every provincial court 
(family division) may punish by fine or imprisonment, or by both, any wilful con- 
tempt of or resistance to its process, rules or orders under this Act, but the fine 
shall not in any case exceed $1,000 nor shall the imprisonment exceed ninety 
days. 

(2) An order for imprisonment under subsection (1) may be made conditional 
upon default in the performance of a condition set out in the order and may pro- 
vide for the imprisonment to be served intermittently. 



148 

enforcing a support order under the Family Law Reform Act, and persons 
enforcing the support provisions of a cohabitation agreement, marriage 
contract, separation agreement, or paternity agreement, as provided by 
the Family Law Reform Act? 15 We are of the view, and accordingly recom- 
mend, that the last-mentioned group should be able to resort to the rem- 
edy of postjudgment arrest and imprisonment wherever a person seeking 
to enforce a maintenance or support order could have resort to this rem- 
edy under the recommendations contained in this section. Of course, in 
the case of a cohabitation agreement, marriage contract, separation agree- 
ment, or paternity agreement, the creditor would have to obtain a 
judgment. 316 

Turning to section 24 of the Family Law Reform Act, it will be recalled 
that a maintenance debtor may be arrested following the initiation of show 
cause proceedings where "a judge of the court is satisfied that the . . . 
debtor is about to leave Ontario". Subject to the procedural safeguards 
proposed below, we believe that the provincial courts (family division) 
should continue to have such a power, and we so recommend. 317 

Under section 27(2) of the Fraudulent Debtors Arrest Act, 3ls a 
Supreme Court judge or a county or district court judge is empowered to 
order the arrest and imprisonment of a judgment debtor where it is sat- 
isfied "that there is good and probable cause for believing that the defen- 
dant, unless he be forthwith apprehended, is about to quit Ontario with 
intent to defraud his creditors generally or the plaintiff in particular". This 
power is exercisable in respect of maintenance and non-maintenance debt- 
ors alike. It should be noted, however, that the onus of proof under sec- 
tion 27(2) of the Fraudulent Debtors Arrest Act is considerably higher than 
that under section 24 of the Family Law Reform Act, discussed above. 
Under the latter, a creditor must show simply that the debtor is about to 



315 See, for example, Commission Report, supra, note 1 , Part II (1981), at 93 and 174. 

316 For a provision similar in effect to this recommendation, see Child and Family Services 
and Family Relations Act, S.N.B. 1980, c. C-2.1, s. 134, which provides in part as fol- 
lows: 

134. -(1) Any agreement that contains a provision with respect to the support of 
a dependant by a person upon whom an obligation to support is imposed by this 
Part, including the payment of an amount to the Minister in respect of assistance 
or financial support provided by him, and that conforms with requirements as to 
form that are prescribed in the regulations, may be filed with the court in the 
manner provided by regulation, and upon being filed has, for the purposes of 
enforcement, and subject to the provisions of this Part with respect to variation, 
the same force and effect as an order of the court made under this Part and shall 
be deemed to be an order made by the court. 

As a result, a support creditor with the benefit of a separation agreement, for exam- 
ple, could resort to show cause proceedings and ultimately arrest and imprisonment of 
the defaulting debtor: see ibid., s. 126, and Moulton v. Moulton (1982), 40 N.B.R. 
(2d) 693, 105 A.P.R. 693 (N.B.Q.B. (F.D.)). 

See, also, Family Relations Act, R.S.B.C. 1979, c. 121, s. 74, and Re Taylor and 
A.G.B.C. (1982), 40 B.C.L.R. 70 (S.C.). 

317 For a similar power in respect of Supreme Court and county and district judges in 
cases involving ordinary money judgments, see discussion infra, this ch., sec. 10(c)(ii). 

318 Supra, note 1. 



149 

leave Ontario; under the former, a creditor must also show that the debtor 
has the requisite intent. We can see no reason to have different tests 
depending upon the court in which the application for the maintenance 
debtor's arrest and imprisonment is made. In the case of maintenance 
debtors, we believe that the appropriate test is the one contained in sec- 
tion 24 of the Family Law Reform Act. Accordingly, we recommend that 
the Supreme Court and county and district courts should be empowered to 
order the arrest of a defaulting maintenance or support debtor where they 
are satisfied that the debtor is about to leave Ontario. 

Finally, there is one other instance in which the arrest and imprison- 
ment of a maintenance debtor should be possible, that is, where the debtor 
has dealt with his property to the prejudice of his creditor. The Supreme 
Court and county and district courts now enjoy such a power under both 
section 27(2) of the Fraudulent Debtors Arrest Act and Rule 594 of the 
Ontario Rules of Practice. 319 Section 27(2) of the Fraudulent Debtors 
Arrest Act, it will be remembered, provides that a judge may order a writ 
of capias ad satisfaciendum where he is satisfied that "the defendant has 
parted with his property or made some secret or fraudulent conveyance 
thereof in order to prevent its being taken in execution". Under Rule 594, 
a debtor may be committed for up to twelve months where it appears to a 
court from a judgment debtor examination that the debtor "has concealed 
or made away with his property in order to defeat or defraud his creditors 
or any of them". No similar provisions are to be found in the Family Law 
Reform Act. The Commission is of the opinion that a provision of this sort 
should be available to enable a maintenance creditor who learns of such 
actions on the part of his maintenance debtor to force him to reverse any 
voidable transactions or to reveal the whereabouts of property, as the case 
maybe. 

While the principle of these provisions is worthy of retention we 
believe that only one, uniform provision is necessary. The Commission, 
therefore, recommends that the Supreme Court, county and district 
courts, and provincial courts (family division) should be able to commit a 
maintenance or support debtor for contempt of court where they are sat- 
isfied that the debtor has removed his property from the Province, or has 
assigned, transferred, disposed of, encumbered or secreted his property 
with intent to defeat, defraud, hinder, or delay any of his creditors. 



(ii) Arrest and Imprisonment in the Non-Family Law Context 

For the reasons indicated previously in this chapter, the Commission 
recommends that arrest and imprisonment for simple non-payment of an 
ordinary money judgment should continue to be unavailable as an 
enforcement remedy. We would point out, however, that this recommen- 
dation does not preclude the use of arrest and imprisonment to deal with 
acts of a judgment debtor that are now subject to the remedy and that may 
be characterized more clearly as being in contempt of court. 



319 See discussion supra, this ch., sec. 3. 



150 

As was pointed out in the previous section, at the present time a judg- 
ment debtor may be ordered arrested and imprisoned under section 27(2) 
of the Fraudulent Debtors Arrest Act where a court is satisfied "that there 
is good and probable cause for believing . . . that the defendant, unless he 
be forthwith apprehended, is about to quit Ontario with intent to defraud 
his creditors generally or the plaintiff in particular". Subject to the proce- 
dural safeguards proposed below, we see no need to alter section 27(2) in 
this respect. In our opinion, this provision helps to ensure that debtors do 
not resort to the expedient of departing the jurisdiction, thereby making 
enforcement of a money judgment more difficult and, in some cases, prac- 
ticably impossible because of the additional time, energy, and cost that 
will have to be devoted to enforcing the judgment in a foreign jurisdiction 
or to obtaining a foreign judgment against the debtor. Accordingly, we 
recommend that the Supreme Court or a county or district court should be 
able to commit for contempt of court where it is satisfied that there is good 
and probable cause for believing that the debtor, unless he is apprehended 
forthwith, is about to depart from Ontario with intent to defeat, defraud, 
hinder, or delay his creditors generally or the applicant in particular. It will 
be noted that, unlike our earlier recommendation in the family law con- 
text, we would retain, as a requirement, proof of the debtor's intent to 
prejudice his creditors. In the view of the Commission, the interests of 
debtors and creditors are somewhat differently balanced in the non-family 
law context, and the intent requirement will help to ensure that the power 
to arrest and imprison in the circumstances under consideration will not be 
abused by the ordinary judgment creditor. 

The other circumstance in which we believe ordinary judgment credi- 
tors should be able to resort to the remedy of postjudgment arrest and 
imprisonment is where the debtor has dealt with his property to the detri- 
ment of his creditors. As discussed in the previous section, the Supreme 
Court and county and district courts now enjoy such a power under both 
section 27(2) of the Fraudulent Debtors Arrest Act and Rule 594 of the 
Ontario Rules of Practice. For the reasons mentioned earlier, we believe 
that ordinary judgment creditors also should be able to resort to arrest and 
imprisonment where it can be shown that the debtor has removed his 
property from the Province, or has assigned, transferred, disposed of, 
encumbered or secreted his property with intent to defeat, defraud, hind- 
er, or delay any of his creditors, and we so recommend. 

(iii) Procedural Safeguards 

Having determined the nature and scope of the courts' power to arrest 
and imprison a debtor for non-payment of a money judgment as well as for 
actions taken to frustrate the enforcement efforts of his judgment creditor, 
we turn to the procedural safeguards that should be put in place in order to 
prevent abuse of this ultimate enforcement remedy. 

a. Committal for Non-Payment of a Support or Maintenance 
Obligation: Inability to Pay as a Defence 

As was pointed out earlier, a support or maintenance debtor may be 
ordered to be imprisoned under section 29 of the Family Law Reform Act 
where he is in default and he "fails to satisfy the court that the default is 



151 

owing to his . . . inability to pay". 320 In our view, the defence of inability to 
pay should continue to be available where arrest and imprisonment is 
sought for simple non-payment of a support or maintenance order, and 
should be available whether committal proceedings are brought in the pro- 
vincial court (family division), the Supreme Court of Ontario, or a countv 
or district court. We so recommend. As the purpose of arrest and impris- 
onment for non-payment of a maintenance or support order is to enforce 
the order, and not to punish a defaulting debtor, a debtor who does not 
have the means to meet his support or maintenance obligations should not 
be subject to arrest and imprisonment. To permit a creditor to resort to 
this enforcement remedy in the circumstances just described would be to 
return to the notion of debtors' prison, a feature of the administration of 
justice long ago abandoned in this Province and most other common law 
jurisdictions. 

It may be contended that requiring the debtor to establish "that the 
default is owing to his or her inability to pay" is an infringement or contra- 
vention of section 11(d) of the Canadian Charter of Rights and Freedoms, 
which provides as follows: 

11. Any person charged with an offence has the right 

(d) to be presumed innocent until proven guilty according to law in a fair 
and public hearing by an independent and impartial tribunal; . . . 

At this stage in the life of the Charter, it is unclear, however, whether the 
words "[ajny person charged with an offence" will be interpreted to 
include provincial criminal offences and civil arrest and imprisonment 
powers, whether or not characterized as contempt of court committal 
powers. Even assuming that section 11(d) of the Charter will be inter- 
preted broadly, we are not satisfied that requiring a defaulting debtor to 
establish inability to pay would violate section 11(d). Section 29 of the 
Family Law Reform Act requires proof of a default before the debtor must 
establish inability to pay as a defence to the "charge". In our opinion, a 
provision like section 29 of the Family Law Reform Act is very different 
from the kind of provision that the Supreme Court of Canada has found to 
be in violation of the Canadian Bill of Rights equivalent to section 11(d) of 
the Charter, 321 and the kinds of provision that courts have found to be an 
infringement of the Charter's rights and guarantees. 322 Clearly, the default- 
ing debtor is in a position to prove inability to pay; indeed, he is the person 
best able to explain his financial circumstances. 

Even if section 11(d) of the Canadian Charter of Rights and Freedoms 



320 See, also, s. 51(1) of the Fraudulent Debtors Arrest Act, supra, note 1. 

321 See The Queen v. Shelley, [1981] 2 S.C.R. 196, [1981] 5 W.W.R. 481. 

322 Concerning s. 8 of the Narcotic Control Act, R.S.C. 1970, c. N-l, see R. v. Anson 
(1982), 1 C.R.R. 221 (B.C. Co. Ct.); R. v. Therrein (1982), 37 O.R. (2d) 641, 67 
C.C.C. (2d) 31 (Co. Ct.); and R. v. Stanger, unreported (June 10, 1982, Alta. Q.B.) 
(not in violation of s. 11(d) of the Charter). Compare R. v. Oakes, unreported (Febru- 
ary 2, 1983, Ont. C.A.); R. v. Hay (No. 1) (1982), 1 C.R.R. 232 (Ont. Dist. Ct.); R. 
v. Terlecki, unreported (July 30, 1982, Man. Prov. Ct.); and R. v. Carroll, unreported 
(July 14, 1982, P.E.I.S.C.) (s. 11(d) of the Charter contravened). 



152 

could be invoked in the circumstances under consideration, a provision 
imposing the onus of proof of inability to pay on the defaulting debtor, 
rather than requiring the enforcing creditor to prove ability to pay, could 
still be saved by section 1 of the Charter. It will be recalled that this provi- 
sion enables a legislature to subject rights guaranteed by the Charter "to 
such reasonable limits prescribed by law as can be demonstrably justified 
in a free and democratic society". It may be that the special nature of the 
legal obligation could be called upon as a justification for requiring the 
debtor to establish his inability to pay as the cause of his default. 

Regarding the circumstances that might justify a finding of inability to 
pay, it will be recalled that, under the Family Law Reform Act, this 
defence would seem to be unavailable where the debtor's difficulties are 
the result of voluntary unemployment. 323 It is unclear whether the defence 
of inability to pay would be established by evidence indicating that, 
although the debtor had the means to pay following the making of the 
maintenance or support order against him, he subsequently squandered 
his assets. 324 This scenario also raises the issue whether the relevant time to 
determine inability to pay should be the date of the hearing or at any time 
after the support or maintenance obligation arose. 325 Again, there is no 
clear authority on this point under section 29 of the Family Law Reform 
Act. There would also appear to be some question whether a debtor could 
rely on the inability to pay defence where he is able to borrow sufficient 
funds to satisfy his outstanding obligation. 326 

The Commission is of the view that, because it is impossible to foresee 
the myriad of different fact situations with which courts might be con- 
fronted in dealing with the question of ability or inability to pay, it would 
be unwise to prescribe by legislation what constitutes inability to pay. On 
this question, we believe that it is better to provide the courts with a broad 



323 See discussion supra, this ch., sec. 5. 

324 For a discussion of this issue, see Komar, supra, note 88. 

325 See ibid., at 540-41, where the following comment is made: 

Where a respondent has chosen to ignore the Court order when he was prosper- 
ous, does a recent reversal of fortunes now offer him a defence to a show cause 
hearing? In other words, is the Court interested in yesterday's inability to pay or 
only in today's inability? There may be a practical difficulty in gaoling a formerly 
prosperous person for his past sins, for it looks as if he is being imprisoned 
because he is poor. Yet this is a dangerous proposition to adopt, since it would 
effectively licence the respondent to eat, drink and be merry during periods of 
prosperity at the expense of his dependants and to avoid any accounting to the 
Court when he happens to be poor the next day. It is a defence which can be too 
easily contrived to coincide conveniently with the date of the show cause hearing. 
It is not surprising, therefore, that American Courts have tended to ignore 
today's poverty as an excuse for yesterday's failure to pay. 

326 Ibid., at 541 (emphasis in original): 

Inability to pay does not mean a lack of liquid assets. If a man can reason- 
ably be expected to borrow and has the facilities to borrow, then he has the 
ability to pay, even though he cannot do so without borrowing. Particularly 
where a respondent has property or capital assets, the onus is upon him to show 
that he could not reasonably be expected to borrow money with which to pay 
maintenance. A mere reluctance by a defaulter to put up his assets as collateral 
or security for a loan should not be accepted as a defence. 



153 

discretion, thereby enabling courts to take all relevant factors into account 
and giving courts sufficient flexibility to do justice in each individual case 
that comes before them. 

b. Resort to Other Practicable Methods of Enforcement as a 
Precondition to Arrest and Imprisonment 

As another safeguard against inappropriate resort to the proposed 
power to commit for contempt for non-payment of a maintenance or sup- 
port obligation, the Commission believes that a prerequisite to such relief 
should be a showing that there are no other practicable enforcement reme- 
dies available to the judgment creditor. Under section 29(1) of the Family 
Law Reform Act, imprisonment of a defaulting maintenance or support 
debtor cannot be ordered unless the court is satisfied "that all other practi- 
cable means that are available under this Act for enforcing payment have 
been considered". From the few reported cases in which this aspect of sec- 
tion 29 has been discussed, it is unclear whether it must be shown that 
other methods of enforcement have been tried without success. 327 In a 
number of cases, courts have indicated that it is sufficient to show simply 
that the other methods of enforcement have been considered. 328 

Given that the Commission has made a number of recommendations 
in earlier Parts of the Report on the Enforcement of Judgment Debts and 
Related Matters to ensure that almost all of a debtor's property will be sub- 
ject to enforcement and to make the various enforcement remedies more 
effective, we believe that a creditor seeking to enforce a judgment by 
means of arrest and imprisonment should be required to prove to the court 
that there are no other practicable enforcement remedies available, and 
we so recommend. 329 This would be a slightly higher standard than that 
now imposed by section 29 of the Family Law Reform Act. The creditor 
would be required to show more than simply that other methods of 
enforcement have been considered; he or she would be required to satisfy 
the court that other enforcement measures have been tried and have not 
succeeded in satisfying the creditor's judgment, or that other methods of 
enforcement would be inappropriate or futile in the circumstances of the 
case. The latter might be sufficient where, for example, the debtor is 
unemployed, has concealed his exigible assets, or where his assets are 
beyond the jurisdiction. 

c. Early Release upon Payment 

The Family Law Reform Act contains no provisions entitling the 
debtor to release from prison upon payment of the outstanding judgment, 
although it would appear that, in practice, a debtor who pays his outstand- 



327 See Mol v. Mol (1980), 18 R.F.L. (2d) 253 (Ont. Co. Ct.). 

328 See Mol v. Mol, ibid.; Coomber v. Coomber (1981), 21 R.F.L. (2d) 382 (Ont. Co. 
Ct.); and Re Cserzy and Cserzy (1981), 33 O.R. (2d) 653, 23 R.F.L. (2d) 217 (Co. 
Ct.). 

329 There is some evidence to suggest that the courts have not made adequate use of the 
most important remedy available under the Family Law Reform Act, that is, wage 
attachment: see discussion supra, at 140. 



154 

ing arrears will be released from custody. 330 As the purpose of arrest and 
imprisonment for non-payment of a judgment debt is not punishment but 
enforcement, there would not seem to be any good reason for continuing 
to detain a debtor who is no longer in default. Accordingly, it is recom- 
mended that any legislation authorizing arrest and imprisonment should 
provide expressly that, upon payment of the amount stated in the order 
pursuant to which he has been arrested and imprisoned, the debtor should 
be released from custody. This recommendation should apply whether the 
debtor's imprisonment is founded on default and an ability to pay, on the 
fact that the debtor was about to leave Ontario, or on a finding that the 
debtor has dealt with his property with the intent of defeating, defrauding, 
hindering, or delaying his creditors. 

d. Imprisonment and its Effect on the Outstanding Judgment 

Although section 57 of the Fraudulent Debtors Arrest Act, like most 
legislation with a similar purpose, contains an express provision to the 
effect that imprisonment does not operate "as a satisfaction or extinguish- 
ment of the debt or [deprive] the creditor of the right to take out execution 
or other process against the property of the debtor", no similar provision 
is to be found in the Family Law Reform Act. It is recommended that any 
legislation authorizing arrest and imprisonment as an enforcement remedy 
should contain a provision similar to section 57 of the Fraudulent Debtors 
Arrest Act. Again, since the purpose of imprisonment is to effect compli- 
ance with an order for the payment of money, there is no justification for 
viewing imprisonment as an alternative to payment. 

e. Conditional Imprisonment Orders 

As has been pointed out, a court, under section 29(2) of the Family 
Law Reform Act, is authorized to make a conditional imprisonment order. 
That is to say, the court is authorized to order imprisonment, but to stay 
the order for a fixed period of time (for example, thirty days) to give the 
debtor an opportunity to pay the outstanding amount and thereby avoid 
imprisonment. In other words, the debtor is given an opportunity to purge 
his "contempt". No such power is to be found in the Fraudulent Debtors 
Arrest Act. There is some evidence to suggest that conditional imprison- 
ment orders have the desired effect - that is, encouraging payment without 
resort to actual imprisonment - with a resultant saving to the com- 
munity. 331 Given this evidence, there would seem to be every reason to 
give courts such a power. Accordingly, we recommend that wherever, 
under our recommendations, a court would have the power to imprison a 
debtor, it should be able to make a conditional imprisonment order. 

Assuming the debtor fails to fulfil the conditions imposed by the court, 
should he be liable to arrest and imprisonment without a further hearing 



330 Insofar as the Fraudulent Debtors Arrest Act, supra, note 1, is concerned, see ss. 34 
and 40, which would appear to apply to prejudgment arrest and imprisonment. 

331 See the information obtained from the Provincial Court (Family Division) of the 
County of Kent, supra, this ch., sec. 9. 



155 

and an opportunity to explain his default? Although there is no require- 
ment for a hearing in the Family Law Reform Act, it would appear that 
some courts have adopted such a procedure in fairness to the debtor. For 
example, it may be that, subsequent to the making of the conditional 
imprisonment order, the debtor has become incapacitated or unemployed 
and therefore is no longer able to pay. It would be unfair to imprison such 
a debtor, just as it would be unfair to imprison any debtor who is unable to 
pay the amount of the judgment outstanding. Given section 7 of the 
Canadian Charter of Rights and Freedoms and the right enshrined therein 
not to be deprived of the right to liberty "except in accordance with the 
principles of fundamental justice", it might be an infringement of this right 
to imprison a defaulting debtor without giving him or her an opportunity 
to explain the default. 332 

Accordingly, it is recommended that, where a debtor fails to fulfil the 
conditions imposed by a court in making a conditional imprisonment 
order, he should be given an opportunity to explain his default before he is 
ordered imprisoned. This right could be given effect to by requiring the 
court, when it makes a conditional imprisonment order, to adjourn the 
proceedings to a fixed future date. 

/. Ordering Imprisonment in the Absence of the Debtor 

The Fraudulent Debtors Arrest Act permits a judgment creditor to 
obtain an ex parte order for the imprisonment of his debtor. 333 While the 
Family Law Reform Act requires the debtor to receive notice of a show 
cause hearing, there is nothing to prevent the court from proceeding in the 
debtor's absence. The court is authorized under section 28(2) of the 
Family Law Reform Act to order a debtor who fails to appear to be 
arrested "for the purpose of compelling attendance". However, the court 
is not required to do so; it has a discretion whether to issue a warrant for 
the debtor's arrest. 

To avoid the possibility of imprisonment of those who are unable to 
pay, it is recommended that imprisonment of a debtor should never be 
ordered in the debtor's absence. It may be, for example, that the debtor 
does not understand the notice he has received, or he may never have 
been notified of the proceedings. If the debtor fails to appear at the initial 
hearing, or at the continuation of the hearing where a conditional impris- 
onment order has been made, it is recommended that the court should 
issue a warrant for his arrest; the debtor, then, should be brought before 
the court as soon as possible so that he has the opportunity to explain his 
default. In this way, the debtor will not be deprived of his right to liberty 
and security of the person under the Charter except in accordance with the 
principles of fundamental justice. On such an issue, it would seem best to 
err on the side of caution and the above proposal, it is suggested, would do 
precisely that. 



332 See the discussion supra, this ch., sec. 8, regarding imprisonment without the right to 
a hearing and the American "due process" guarantee. 

333 Supra, note 1, s. 27. 



156 

In the case of a debtor whose imprisonment is ordered on the ground 
that he is about to leave the jurisdiction or that he has dealt with his prop- 
erty to the prejudice of his creditors, the Commission believes that, in 
order to ensure compliance with the recently proclaimed Canadian Charter 
of Rights and Freedoms, the following procedure should be followed. The 
debtor should be required to be brought before the court as soon as pos- 
sible after his arrest. At such time, the judgment creditor should again be 
required to establish the grounds for arrest and imprisonment. Failure to 
satisfy the court that the debtor has been guilty of the conduct alleged 
should result in the debtor's immediate release. We so recommend. 

g. Term of Imprisonment 

The final issue concerning postjudgment arrest and imprisonment that 
needs to be addressed in this Report is the maximum term of imprison- 
ment that may be imposed under the Commission's various proposals. 
Insofar as the present law is concerned, the maximum term for which a 
debtor may be committed varies from two months, subject to extension, to 
twelve months, depending upon the grounds for the order of imprison- 
ment. Section 27(2) of the Fraudulent Debtors Arrest Act empowers a 
court to order the arrest and imprisonment of an "absconding" debtor as 
well as a debtor who has dealt with his property to the prejudice of his 
creditors. Section 27(3) of the Act provides that every writ of capias ad 
satisfaciendum issued in the circumstances described above "continues in 
force for two months from the day of its issue and no longer, but on its 
expiration another writ may be obtained". As was pointed out earlier, the 
Rules of Practice authorize imprisonment of a debtor who "has concealed 
or made away with his property in order to defeat or defraud his creditors 
or any of them" "for a term of not more than twelve months". 334 The 
absconding debtor provision of the Family Law Reform Act - section 24 - 
contains no limitation respecting the period of confinement that may be 
ordered thereunder. Finally, the "show cause" procedure contained in the 
Family Law Reform Act prescribes a term of imprisonment of "not more 
than ninety days to be served intermittently or as ordered by the court". 335 

The Commission, it will be recalled, has recommended that the power 
of the court to imprison a debtor for failing to pay a support or mainten- 
ance obligation when he has the ability to pay, preparing to abscond from 
the jurisdiction, or dealing with his property to the prejudice of his credi- 
tors should be characterized as a contempt power. The purpose of impris- 
onment under our recommendations is solely to encourage compliance 
with the orders and judgments of the courts. Imprisonment of defaulting 
judgment debtors is not intended to be used as punishment for nefarious 
conduct; the criminal law is available for this purpose. Consequently, we 
can see no justification for variations, based on the grounds for imprison- 
ment, in the maximum term for which a judgment debtor may be impris- 
oned. In our view, the maximum term prescribed by section 29 of the 



334 Rules of Practice, supra, note 23, r. 594. 

335 Supra, note 78, s. 29(1). 



157 

Family Law Reform Act - ninety days - is not inappropriate, and has the 
virtue of being a recent indication of an acceptable legal response to the 
matters under consideration in this chapter. By contrast, the two month 
maximum, subject to extension, under the Fraudulent Debtors Arrest Act, 
and the twelve month period of incarceration permitted by Rule 594 of the 
Rules of Practice are standards that were thought to be acceptable almost 
a century ago. Accordingly, the Commission recommends that, where 
postjudgment arrest and imprisonment may be used as an enforcement 
remedy under the Commission's recommendations in this chapter, the 
maximum term of imprisonment that may be imposed should be ninety 
days. 

Recommendations 

The Commission makes the following recommendations: 

1. (1) Postjudgment arrest and imprisonment should be available as an 

ultimate sanction for the enforcement of support and maintenance 
orders and should be available at all court levels. 

(2) Accordingly, section 12 of the Fraudulent Debtors Arrest Act 
should be amended to provide that the prohibition against "arrest 
for contempt for non-payment of any sum of money or of costs, 
charges or expenses payable by a judgment or order of the 
Supreme Court or of a judge thereof, or of a county court or of a 
judge thereof" does not apply in the case of an order for support 
or maintenance. Similarly, Rule 569 of the Supreme Court of 
Ontario Rules of Practice should be amended to provide that an 
order for maintenance or support "may be enforced by attach- 
ment". 

2. The remedy of postjudgment arrest and imprisonment should be char- 
acterized as a contempt power in the court to ensure compliance with 
judicial process. 

3. (1) The provincial courts (family division) should continue to be able 

to order the arrest of a defaulting maintenance or support debtor 
where notice of show cause proceedings has been issued and the 
judge of the court is satisfied that the debtor is about to leave 
Ontario. 

(2) The Supreme Court and county and district courts should also be 
empowered to order the arrest of a defaulting maintenance or sup- 
port debtor where they are satisfied that the debtor is about to 
leave Ontario. 

4. The Supreme Court, county and district courts, and provincial courts 
(family division) should be able to commit a maintenance or support 
debtor for contempt of court where they are satisfied that he has 
removed his property from the Province, or has assigned, transferred, 
disposed of, encumbered or secreted his property with intent to 
defeat, defraud, hinder, or delay any of his creditors. 



158 

5. Recommendations 1, 3, and 4 should apply where there is a default in 
the performance of the support or maintenance obligations of a coha- 
bitation agreement, marriage contract, separation agreement, or 
paternity agreement, as defined by the Family Law Reform Act. 

6. Arrest and imprisonment for simple non-payment of an ordinary 
money judgment should continue to be unavailable as an enforcement 
remedy. 

7. The Supreme Court and county and district courts should be able to 
commit an ordinary judgment debtor for contempt of court where 
they are satisfied that there is good and probable cause for believing 
that the debtor, unless he is apprehended forthwith, is about to depart 
from Ontario with intent to defeat, defraud, hinder, or delay his credi- 
tors generally or the applicant in particular. 

8. The Supreme Court and county and district courts should be able to 
commit an ordinary judgment debtor for contempt of court where 
they are satisfied that the debtor has removed his property from the 
Province, or has assigned, transferred, disposed of, encumbered or 
secreted his property with intent to defeat, defraud, hinder, or delay 
any of his creditors. 

9. The defence of inability to pay should continue to be available where 
arrest and imprisonment is sought for simple non-payment of a main- 
tenance or support order, and should be available whether committal 
proceedings are brought in the provincial court (family division), the 
Supreme Court, or a county or district court. 

10. A creditor seeking to enforce a maintenance or support obligation by 
means of arrest and imprisonment should be required to prove that 
there are no other practicable enforcement remedies available. 

11. Any legislation authorizing arrest and imprisonment should provide 
expressly that, upon payment of the amount stated in the order pur- 
suant to which he has been arrested and imprisoned, the debtor should 
be released from custody. 

12. Any legislation authorizing arrest and imprisonment should contain a 
provision similar to section 57 of the Fraudulent Debtors Arrest Act, 
stating that imprisonment does not operate as a satisfaction or extin- 
guishment of the debt or deprive the creditor of the right to enforce 
his judgment against the property of the debtor. 

13. Wherever, under our recommendations, a court would have the 
power to imprison a debtor, it should be able to make a conditional 
imprisonment order. 

14. Where a debtor fails to fulfil the conditions imposed by a court in mak- 
ing a conditional imprisonment order, he should be given an opportu- 
nity to explain his default before he is ordered imprisoned. 



159 

15. Imprisonment of a debtor should never be ordered in the debtor's 
absence. If, upon default in payment of a maintenance or support 
order, the debtor fails to appear at the initial hearing or at the continu- 
ation of a hearing where a conditional imprisonment order has been 
made, the court should issue a warrant for the debtor's arrest; the 
debtor, then, should be brought before the court as soon as possible so 
that he has an opportunity to explain his default. 

16. Where a debtor is ordered imprisoned on the ground that he is about 
to leave the jurisdiction or that he has dealt with his property to the 
prejudice of his creditors, he should be required to be brought before 
the court as soon as possible after his arrest. At such time, the judg- 
ment creditor should again be required to establish the grounds for 
arrest and imprisonment. Failure to satisfy the court that the debtor 
has been guilty of the conduct alleged should result in the debtor's 
immediate release. 

17. Where postjudgment arrest and imprisonment may be used as an 
enforcement remedy, the maximum term of imprisonment that may 
be imposed should be ninety days. 



CHAPTER 4 



THE LIABILITY OF SHERIFFS, 
CREDITORS, AND SOLICITORS 
IN THE ENFORCEMENT OF 
JUDGMENT DEBTS 



1. INTRODUCTION 

In the first three Parts of its Report on the Enforcement of Judgment 
Debts and Related Matters, the Commission emphasized that the "haphaz- 
ard and uncertain" nature of enforcement law necessarily requires that the 
present enforcement regime undergo "reorganization, rationalization and 
reform". 1 As it now stands, "the law often has left . . . enforcement per- 
sonnel in some confusion concerning the administration of the enforce- 
ment system as a whole . . .". 2 Not surprisingly, this confusion, in turn, has 
bred caution on the part of sheriffs in the exercise of their statutory and 
common law enforcement duties - a caution that, at times, has been some- 
what excessive and, therefore, potentially prejudicial to the interests of all 
parties and to the sound administration of justice. 3 

In light of the manifold deficiencies in the present law, the Commis- 
sion has attempted, in this Report, to rationalize that body of law dealing 
with the enforcement of judgment debts. A number of our proposals for 
reform relate directly or indirectly to the administrative role of the sheriff 
and the nature and scope of his enforcement duties, as well as his potential 
liability for acts or omissions in the course of those duties. For example, as 
we shall consider in more detail below, recommendations were made 
respecting the seizure and sale of property in the possession of the debtor. 4 
These recommendations, we believe, would bring considerably more cer- 
tainty to the role and obligations of the sheriff and thereby serve to mini- 
mize the potential for behaviour on the sheriff's part that would be 
prejudicial to interested parties and that might result in his liability. 

However, while the Commission's previous proposals - certainly those 
dealing expressly with the role of the sheriff - generally would go some 



1 Ontario Law Reform Commission, Report on the Enforcement of Judgment Debts and 
Related Matters, Parts I, II, and III (1981) (hereinafter referred to as "Commission 
Report"), Part I, at 5. 

2 Ibid., at 77. 

3 See, for example, ibid., Part II, at 32. 

4 See infra, this ch., sec. 6(b)(i). 



[161] 



162 

distance in reducing the vagaries surrounding the sheriff's duties and liabil- 
ity, they were not intended to be comprehensive. Consequently, we defer- 
red to this chapter a consideration of certain significant aspects of the 
sheriffs liability not hitherto dealt with in our Report. 

Moreover, we have left to this chapter a discussion of a separate, but 
related, topic. Not only might an aggrieved debtor, creditor, or third party 
feel disposed to sue the sheriff for an alleged wrong committed in the 
course of enforcing a money judgment, but a debtor or, for example, a 
true owner of property that allegedly has been wrongfully seized might 
wish to institute an action against the creditor or his solicitor for an exces- 
sive or wrongful seizure, particularly where the sheriff had been acting 
pursuant to explicit directions from the creditor or the solicitor. The liabil- 
ity of enforcement creditors and their solicitors also falls to be considered 
in this chapter. 

At the outset, two points should be noted. First, despite the existence 
of thousands of issued writs of execution, there is a paucity of modern jur- 
isprudence on the subject of sheriffs liability, and even less on the liability 
of creditors and their solicitors. What little case law there is arose, in the 
main, in the nineteenth and early twentieth centuries. And, except for 
some recent sporadic references, 5 commentary on the subject of sheriffs 
liability may be found only in early texts. 6 

Secondly, it should be emphasized that, relative to the very large num- 
ber of writs in force in Ontario at any one time, the incidence of claims 
against sheriffs is exceedingly low. In part, the general absence of com- 
plaints is a manifestation of the ability of sheriffs and parties to resolve dif- 
ferences by means of negotiation and compromise. But this modus vivendi 
is also a reflection of the relatively restrictive provisions of the Public 
Authorities Protection Act, 1 particularly prior to 1976. We now turn to con- 
sider the relevant portions of that statute. 

2. LIMITATION PERIODS RESPECTING THE LIABILITY OF THE 
SHERIFF 

Sections 11 and 16 of the Public Authorities Protection Act provide for 
limitation periods respecting, inter alia, actions against the sheriff. These 
provisions read as follows: 8 



5 See, for example, Dunlop, Creditor-Debtor Law in Canada (1981), at 379 etseq. 

6 See, for example, Anderson, A Treatise on the Law of Execution in the High Court 
and Inferior Courts (1889); Edwards, The Law of Execution Upon Judgments and 
Orders of the High Court (1888); Bingham, The Law and Practice of Judgments and 
Executions (1815); and Herman, A Treatise on the Law of Executions (1876). 

7 Public Authorities Protection Act, R.S.O. 1980, c. 406. 

8 Section 11(2) of the present Public Authorities Protection Act, ibid., was added by The 
Public Authorities Protection Amendment Act, 1976, S.O. 1976, c. 19, s. 1(2). In addi- 
tion, by s. 1(1) of the latter Act, the words "cause of action arose", contained in 
s. 11(1), were substituted for "act, neglect or default complained of". 



163 

ll.-(l) No action, prosecution or other proceeding lies or shall be instituted 
against any person for an act done in pursuance or execution or intended exe- 
cution of any statutory or other public duty or authority, or in respect of any 
alleged neglect or default in the execution of any such duty or authority, 
unless it is commenced within six months next after the cause of action arose, 
or, in case of continuance of injury or damage, within six months after the 
ceasing thereof. 

(2) Subsection (1) does not apply to an action, prosecution or proceeding 
against, 

(a) a sheriff for an act, neglect or default in certifying as to a writ of exe- 
cution that binds land; or 

(b) a land registrar for an act, neglect or default in connection with his 
duties under the Registry Act and the Land Titles Act. 

16. A sheriff or his officer acting under a writ of execution or other process 
shall be deemed to be a person acting in the discharge of a public duty or 
authority within the meaning of this Act. 

It bears emphasizing that, aside from the exception in section ll(2)(tf), the 
limitation period dealing with sheriffs is relatively short and, therefore, 
places a heavy burden on an aggrieved person to bring his action on time. 9 
Moreover, the protection afforded to sheriffs is absolute; it applies, for 
example, irrespective of whether they have acted "reasonably and pro- 
perly in the performance of their public duties". 10 

In its 1969 Report on Limitation of Actions, n the Commission dealt, 
inter alia, with several separate limitation periods that generally "were 
intended to cut down the time for bringing negligence actions and were 
enacted to protect the interests of some special group . . .". 12 One such 
limitation period was section 11 of the then existing Public Authorities 
Protection Act, 13 which did not include what is now subsection (2). 14 

The Commission recommended the repeal of section ll, 15 a move sim- 



9 Perhaps it may be argued that even s. ll(2)(a) is not of universal applicability with 
respect to the sheriffs duty to certify writs; that is, the provision may not apply where 
a person seeks information concerning writs that might bind personal property alone. 
The section certainly benefits persons involved in the conveyancing of land; indeed, 
the language of the provision - more particularly, the reference to the binding of 
"land" - makes it appear that this was the primary motivation for its enactment. But, 
in view of this explicit language, is s. ll(2)(a) applicable where the requisitioner is not 
interested in the sheriff "certifying as to a writ of execution that binds land", but is 
interested only in writs that bind personal property? However, to avoid any anomaly 
respecting limitation periods, a court would likely lean in favour of a broader interpre- 
tation of the provision to include the certification of writs binding either land or 
personalty, or both. 

10 Barry v. Rae, [1934] 1 W.W.R. 74 (Alta. S.C. , T.D.), at 77. 

11 Ontario Law Reform Commission, Report on Limitation of Actions (1969). 

12 Ibid., at 75. 

13 R.S.O. 1960, c. 318. 

14 See supra, note 8. 

15 Report on Limitation of Actions, supra, note 11, at 75, 78, and 171-72. 



164 

ilar to one made earlier in England. 16 The Commission stated that "[t]he 
most significant element in settling upon the time for making a claim must 
be the nature of the injury: it cannot be the nature of the person who is 
liable". 17 This recommendation was subsequently endorsed in a Discussion 
Paper containing a draft Limitations Act published by the Ontario Ministry 
of the Attorney General. 18 

The Commission sees no reason to depart from its earlier views 
respecting section 11 of the Public Authorities Protection Act. Consistent 
with our general predisposition that the Crown and its agencies should be 
bound in the same way as a private citizen, we remain of the view that per- 
sons exercising public duties ordinarily ought not to be granted special 
protection in respect of wrongs committed by them. Accordingly, we wish 
to reaffirm our earlier proposal that section 11 be repealed. If this proposal 
were implemented, the time for instituting an action against the sheriff 
would be no different than the time for instituting an action against any 
other person. 

Having, then, disposed of the more general matter concerning the lim- 
itation period in respect of actions against the sheriff, we turn to consider 
specific issues of liability in the enforcement of judgment debts. 

3. SEARCHES FOR WRITS OF EXECUTION: PRESENT LAW AND 
PROPOSALS FOR REFORM 

(a) Searches on Behalf of Purchasers and Mortgagees of Land, 
Credit Grantors, and Other Persons 

As indicated in Part I of this Report, the information kept by the sher- 
iffs office concerning existing writs of execution and the status of enforce- 
ment proceedings is of interest and importance to many persons and for 
various reasons. 19 For example, persons agreeing to purchase land or to 
accept land as security for the giving of credit will conduct a search of out- 
standing writs against the prospective vendor or mortgagor. 20 With respect 
to land registered under the Registry Act, 21 a search must be conducted by 
the purchaser or mortgagee for writs filed in the appropriate sheriffs of- 
fice; with respect to land registered under the Land Titles Act, 22 the search 
for writs filed with, and entered into the proper register by, the appro- 
priate land registrar will be conducted by an official at the land titles office. 

In Part III of this Report, the Commission discussed the effect of 



16 Ibid., at 78. See Law Reform (Limitation of Actions, &c. Act), 1954, 2 & 3 Eliz. 2, c. 
36 (U.K.). 

17 Report on Limitation of Actions, supra, note 11 , at 78. 

18 Province of Ontario, Ministry of the Attorney General, Discussion Paper on Proposed 
Limitations Act (September, 1977), draft Limitations Act, s. 18(2)13. 

19 See Commission Report, supra, note 1, Part I, at 145 etseq. 

20 See ibid. , Part III, at 78 et seq. , esp. 79-90. 

21 R.S.O. 1980, c. 445. 

22 R.S.O. 1980, c. 230, s. 137. 



165 

existing arrangements respecting searches for writs on persons in charge of 
maintaining the enforcement registers - that is, sheriffs and land 
registrars. 23 With respect to sheriffs, the Commission stated as follows: 24 

The sheriffs must maintain comprehensive facilities for the receipt, indexing 
and storage of writs of execution. These facilities are operated manually and 
account for much of the delay in the sheriffs' offices; this manual system also 
increases the risk of error and consequently the exposure to civil liability of 
the sheriffs and ultimately the Crown. 

Also in Part III of this Report, the Commission made several "short 
term" recommendations designed to assist persons, including sheriffs, 
involved in the conveyancing of land. 25 Most of the proposals were 
designed to ease what we have called the "similar name" problem for sher- 
iffs - that is, the problem confronting the sheriffs staff in making "judg- 
ments about the degree of similarity between the names on . . . writs and 
the names of persons in respect of whom execution certificates are 
sought". 26 For example, the Commission recommended that "the sheriff 
should be required to report the existence of a writ only where the sur- 
name and at least one full given name on the writ are identical with the 
surname and one full given name on the request form delivered to the 
sheriff. . ,". 27 

It was also recommended that "purchasers and mortgagees should be 
required to register with their deeds and mortgages a sheriff's certificate 
requested by and provided to them when they undertook their search for 
writs of enforcement". 28 The representations made in a registered sheriffs 
certificate could be relied upon by "the person to whom the certificate is 
actually issued" and "any person seeking to acquire any right, title or 
interest in the land subsequent to the registration of the certificate". 29 As a 
result of these proposals, "such persons would take free and clear of a writ 
of enforcement filed against an owner of land whose name appears on a 
registered sheriffs certificate (1) where the surname and at least one given 
name in full that appears on the certificate is identical to the surname and 
at least one given name in full that appears on the title documents of the 
land in question, and (2) where the sheriff does not note on the certificate 
the existence of any writs filed against the owner". 30 



23 Commission Report, supra, note 1, Part III, at 92-94. 

24 Ibid., at 93. 

25 Ibid., at 114 et seq. The Commission's "long term" proposals for reform are found 
ibid., at 95-114. 

26 Ibid., at 93. See, also, ibid., at 83-87. The sheriff must determine whether a clear cer- 
tificate should be given in respect of, for example, David P. Smith, where the sheriff 
has on file an execution against Paul David Smith or P. David Smith. As the Commis- 
sion noted, "[o]n such judgments will depend the liability of sheriffs for prejudicing 
creditors by failing to discover particular executions": ibid. , at 93. 

27 Ibid., at 139, Recommendation 21(9), in part. 

28 Ibid., at 140, Recommendation 21(12). 

29 Ibid., Recommendation 21(13). 

30 Ibid., at 130. 



166 

Having regard to the protection given to purchasers of land under the 
foregoing recommendation, the Commission also proposed the creation of 
a new assurance fund to protect creditors. The recommendations were as 
follows: 31 

[A] new assurance fund should be established and this fund, 

(a) should protect a creditor wrongfully deprived of his rights under a valid 
writ of enforcement because of the actions of a sheriff in erroneously pro- 
viding a clear certificate notwithstanding the existence of a writ affecting 
the land in question, 

(b) should be established and maintained by a levy added to the cost of lodg- 
ing writs of enforcement with the sheriff, and 

(c) should provide compensation to a creditor in all cases, regardless of 
whether the land is registered under The Registry Act or The Land Titles 
Act....W 

Clearly, then, the Commission's proposals respecting writs required to 
be reported by a sheriff would serve to reduce significantly, if not elimi- 
nate, actions by aggrieved persons against sheriffs in respect of execution 
searches. Moreover, the proposed fund, like The Land Titles Assurance 
Fund today, 33 would also deflect liability from sheriffs for the provision of 
erroneous certificates. 

With respect to developments subsequent to the publication of Part III 
of our Report, reference should be made to the new Guideline re Execu- 
tion Searches Under the Sheriffs Act, s. 11, effective May 1, 1982. This 
directive may serve to alleviate the "similar name" problem, to which ref- 
erence has already been made. The new rules - which, at least with respect 
to individuals, largely reflect the Commission's proposal concerning the 
reporting of writs, as described above - are as follows: 34 

1 . Searches for corporate or partnership names 

Only executions filed against corporations or partnerships with identical 
names to those against which searches are requisitioned will be reported. A 
clear certificate issued with respect to a corporation or partnership will indi- 
cate that there are no executions filed against a corporation or partnership 
with that exact name. The sole exception to this rule will be that such searches 
will include searches against the name plus corporate identifiers used (Lim- 
ited, Incorporated, Corporation) and as well against the name plus the abbre- 
viation of the particular corporate identifier used. 



31 Ibid., at 141, Recommendation 21(16). 

32 See discussion ibid., at 131-32. 

33 Land Titles Act, supra, note 22, ss. 60 et seq. See Commission Report, supra, note 1, 
Part III, at 87-90 and 94. 

34 Emphasis in original. 



167 

2 . Names of individuals 

When a search is requested against the name of an individual, only writs 
of execution filed against judgment debtors with an identical surname and at 
least one identical given name to the name against which the search was 
requested will be reported. . . . 

Under these rules, for example, it would be clear to sheriffs that, 
where a search is conducted against John A. Smith, they should report 
executions against Frank John Smith, John Frank Smith, and A. John 
Smith, but exclude executions against Jack A. Smith, Johan Smith, J. 
Andrew Smith, and Johnny A. Smith. Whatever one's views are of this 
result - and it has come under some criticism for the large number of irrel- 
evant executions reported - it does provide a substantial measure of cer- 
tainty not hitherto afforded to sheriffs. 

However, we are of the view that two further proposals need to be 
made respecting the position of the sheriff. First, to place the issue beyond 
all doubt, we recommend that, where the sheriff complies with the new 
rules respecting the reporting of writs on file at the enforcement office, he 
should be protected from liability. Therefore, the sheriff would continue 
to bear responsibility for negligent conduct where he does not comply with 
such rules. In respect of the remedy available to creditors aggrieved by the 
actions of a sheriff in erroneously providing information concerning writs 
of enforcement binding land, we again wish to draw attention to our pro- 
posals in Part III of this Report respecting the creation of an assurance 
fund to compensate such creditors. To avoid what we believe to be an 
unwarranted resort to the courts where the sheriff has not complied with 
the Commission's proposed new rules respecting the reporting of writs, we 
recommend further that a creditor aggrieved by the sheriff's actions should 
be required to look only to the new assurance fund if he seeks compensa- 
tion. He should have no cause of action against the sheriff. 

In addition to the use of registers of writs in the context of the convey- 
ancing of land, such registers provide a source of information to potential 
credit grantors. Accurate information concerning outstanding writs against 
prospective credit recipients provides a means of assessing the credit- 
worthiness of such persons. 35 For this and other reasons, 36 the Commission 
recommended in Part I of this Report that "each sheriff should be respon- 
sible for the establishment and maintenance in each county enforcement 
office of a comprehensive register of enforcement activities taken against 
debtors within the county". 37 Moreover, it was proposed that, if and when 
feasible, a province-wide enforcement register should be created. 38 

It should be clear, then, that under the proposed new regime a pre- 
mium would be placed on the maintenance of a reliable register of writs 
and enforcement activities and on the provision of accurate information by 
the sheriff to persons making inquiries concerning matters recorded in the 
register. 39 This expanded responsibility would inevitably generate some 



35 See, generally, Commission Report, supra, note 1, Part I, at 145 et seq. , esp. 147-49. 

36 See ibid., ch. 3, esp. at 123 et seq. 

37 Ibid., at 149. 

38 Ibid. 

39 Concerning the contents of the proposed register, see ibid., at 150-51. 



168 

complaints or civil actions against the sheriff for negligent failure to record 
or provide certain information. In light of this, the Commission wishes to 
make several recommendations in addition to those made earlier in the 
context of the conveyancing of land. Before doing so, however, we wish to 
emphasize that our previous recommendation protecting the sheriff from 
liability where he has complied with the new rules respecting the reporting 
of writs is intended to apply not only in the context of the conveyancing of 
land, but also in any other context where inquiries are directed to the sher- 
iff concerning writs lodged with him. 

Turning to further recommendations for reform, we recommend, first, 
that the class of claims that may be compensated by means of the proposed 
new assurance fund should include not only claims by a creditor wrong- 
fully deprived of his rights by the actions of the sheriff in erroneously pro- 
viding a clear certificate notwithstanding the existence of the creditor's 
valid writ, 40 but also claims for compensation by any other person preju- 
diced because of the provision of an erroneous sheriffs certificate. We 
believe that the right to compensation from the assurance fund in the latter 
context ultimately rests on the same foundation as the creditor's right to 
look to the fund. The wrongful activity is essentially the same in both situ- 
ations. We emphasize again the duty of the sheriff to establish and main- 
tain an efficient enforcement register and the existence of the new 
guidelines, reproduced above, concerning what names must be reported 
on a search for subsisting writs. As indicated, these guidelines virtually 
eliminate the element of discretion and judgment that has hitherto 
plagued the staff in sheriffs' offices. 

Our second recommendation concerns the avenue or avenues open to 
a person prejudiced by the sheriff's wrongful behaviour in providing an 
erroneous certificate. In this connection, we recommend - as we did in the 
case of an aggrieved creditor - that the person prejudiced should be 
required to look only to the assurance fund if he seeks compensation. 

Finally, in addition to the levy recommended to be added to the cost 
of lodging writs of enforcement with the sheriff for the purpose of estab- 
lishing and maintaining the assurance fund, 41 a levy should be required to 
be paid by all persons requesting from the sheriff information concerning 
writs of enforcement lodged in the enforcement office. We believe that the 
existence and solvency of the assurance fund is or ought to be a concern to 
all users of the sheriff's enforcement register. 

(b) Searches for the Purpose of Distributions under Creditors' 
Relief Legislation 

As we have seen earlier in this Part of our Report, subsequent to the 
completion of active enforcement proceedings, it is, and under our pro- 
posed new creditors' relief regime would continue to be, the duty of the 
sheriff to ascertain those creditors entitled to share in a distribution of the 



40 See Commission Report, supra, note 1, Part III, at 141, Recommendation 21(16)(a). 

41 See ibid., Recommendation 21(16)(b). 



169 

proceeds of enforcement. 42 Infrequently, the sheriff fails to include a cred- 
itor in the distribution list, so that the creditor is not paid the share to 
which he is entitled and the other creditors are, accordingly, overpaid. A 
question, therefore, arises concerning the remedy available to the creditor 
thus prejudiced. Is he restricted to an action against the sheriff? Can he 
seek and obtain an order setting aside the distribution or requiring the 
other creditors to return their portion of the windfall? Or must the 
aggrieved creditor await a subsequent distribution of enforcement pro- 
ceeds, if any, in order to satisfy his claim? Does the sheriff have jurisdic- 
tion to rectify the initial error upon any subsequent distribution? 

There is, unfortunately, a dearth of cases dealing with an overpayment 
to creditors. In the British Columbia case of North Arm Transportation v. 
Derrick Lake Contractors Ltd. , 43 the sheriff, knowing that a distribution 
was imminent, failed to inform the solicitor for a creditor of this pending 
development, although he had an opportunity to do so during a telephone 
conversation. The sheriff then distributed the proceeds of an execution, 
leaving out the abovementioned creditor. Hutcheon J., after noting the 
statutory scheme for contesting a proposed distribution, refused to set 
aside the distribution. During the course of an extremely brief judgment, 
he stated that, "[w]hatever the liability of the sheriff to the applicant, the 
proceedings taken by the two creditors have been proper and I cannot 
compel them to return the moneys paid to them". 44 

In the Alberta case of Giguere v. Pilon 45 the sheriff, acting as the 
court-appointed receiver, overpaid a certain creditor in a distribution 
under a receivership. The court, in making the initial receivership order, 
had required the money to be distributed "to the subsisting writ holders on 
a pro-rated basis". 

The debtor in respect of whose estate the receiver was appointed was 
stated in the order to be "Arthur A. Pilon". While the creditor who 
received the overpayment had issued his writ against "Arthur A. Pilon", 
two other writs, including one issued by the plaintiff, had named "Arthur 
Pilon" as the judgment debtor. All writs were, however, against one and 
the same person. Analogizing to what he believed to be the law under the 
Execution Creditors Act 46 - which did not apply here because the money 
was not received by the sheriff "in respect of an execution" - D.C. 
McDonald J. held that a creditor was entitled to be included in the receiv- 
er's distribution if his writ identified the debtor with reasonable accuracy, 
as was done in the case at bar. 47 



42 See, generally, supra, ch. 2. 

43 North Arm Transportation v. Derrick Lake Contractors Ltd. (1979), 14 B.C.L.R. 399 
(S.C.). 

44 Ibid., at 400. 

45 Giguere v. Pilon (1976), 66 D.L.R. (3d) 693 (Alta. S.C., T.D.). 

46 R.S.A. 1970, c. 128. See, now, R.S.A. 1980, c. E-14. 

47 For D.C. McDonald J.'s comments on the difficult task of the sheriff in determining 
whether a writ reasonably identifies the debtor - the "similar name" problem to which 
reference was made in the immediately preceding section - see supra, note 45, at 700 
et seq. 



170 

In addition to the $1,500 distributed solely to one creditor, a further 
sum of $1,100 was subsequently realized by the receiver. With respect to 
the $1 ,500, D.C. McDonald J. held that, if the money "had been received 
in respect of an execution" - an important point of distinction from the 
facts in Giguere - the sheriff would have had to prepare a distribution list 
showing all three writs. He then continued as follows, by way of obiter 
dicta, respecting the rights of an execution creditor prejudiced by an erro- 
neous distribution under creditors' relief legislation: 48 

However, if he [the sheriff] did not do so, no claim known to law thus arises 
against the judgment creditor Taskey, who received the entire $1,500. He 
would be entitled to retain the money. 

Nor could the Court exercise some sort of equitable jurisdiction to correct 
the situation as amongst the three execution creditors when further money is 
received in respect of the same execution or any of the three executions. 

It is critical to note that the above comments were made in respect of 
money that represented the proceeds of an "execution". However, in 
Giguere v. Pilon, the Court was not precluded from exercising "some sort 
of equitable jurisdiction to correct the situation" upon receipt of further 
money under the receivership. Where a court was exercising its equitable 
power to appoint a receiver, it could "correct the situation" by means of 
its "equitable discretion". 49 Accordingly, D.C. McDonald J. ordered that 
"the Sheriff is to distribute the $1,100 in such a manner that the ultimate 
result will be as if the sum of $1,500 previously distributed had been dis- 
tributed among" the three judgment creditors. 50 However, he cautioned 
that "[t]he latter condition would not necessarily follow in every case in 
which a problem like this arises". 51 It was, after all, an "equitable discre- 
tion" that was being invoked and exercised. 

The Commission has considered carefully the alternatives described in 
the preceding paragraphs - namely, setting aside a distribution, requiring 
repayment, or awaiting a subsequent distribution to correct an overpay- 
ment. We have also considered the alternative of giving the court a general 
power to make whatever order seems just and reasonable under the cir- 
cumstances, including any one of the above options. 

While the last-mentioned alternative appears, at least at first blush, to 
be a sound resolution of the problem, in some instances it might not be 
just or reasonable - although not impossible - to force the overpaid credi- 
tors to disgorge a portion of the proceeds, and it might be futile to expect a 
subsequent realization of proceeds in the near future. In such a case, the 
court might well find no satisfactory resolution to the problem faced by the 
aggrieved creditor. 

Accordingly, the Commission wishes to recommend the adoption of 



48 Ibid., at 702. 

49 Ibid., at 703. 

50 Ibid. 

51 Ibid. 



171 

another alternative. As we indicated in the preceding section, the Com- 
mission has already proposed the creation of a new assurance fund to pro- 
tect creditors and others prejudiced by the actions of the sheriff in 
erroneously providing a clear certificate. We are of the view that the activ- 
ity giving rise to culpability in the latter type of situation - that is to say, 
the sheriffs failure to discover and report a subsisting and registered writ - 
is essentially the same as the activity giving rise to culpability in the con- 
text of a distribution of proceeds under creditors' relief legislation. Conse- 
quently, we have decided to expand resort to the assurance fund, at least 
in some circumstances, where the sheriffs error has involved an overpay- 
ment. We recommend that, where the sheriff fails to include a creditor in a 
distribution of the proceeds of an enforcement measure, so that the cred- 
itor is not paid the share to which he is entitled under the proposed new 
creditors' relief legislation and the other creditors are therefore overpaid, 
the court, on application of the creditor, should be empowered to make 
whatever order seems just and reasonable under the circumstances, 
including setting aside the distribution, requiring repayment, awaiting a 
subsequent distribution to correct the overpayment, or entitling the cred- 
itor to compensation from the proposed new assurance fund. 

Having regard to the options that would be open to the court to cor- 
rect the sheriffs error, we see no reason why an aggrieved creditor should 
have a cause of action against the sheriff himself. Accordingly, we recom- 
mend that, under the circumstances described above, the sheriff should 
not be liable for his failure to pay the creditor his share of the proceeds. 

4. LIABILITY OF THE SHERIFF FOR SEIZURE AND SALE OF 
PROPERTY: PRESENT LAW 

(a) General 

The legal and practical position of the sheriff in Anglo-Canadian juris- 
dictions is a difficult one. Although he acts on behalf of judgment creditors 
who file writs of execution with him, he has, at the same time, duties to 
judgment debtors against whom such writs are directed and, as a public 
functionary, to the court. The sheriffs duties under a writ have been said 
to be threefold: (1) to the judgment creditor, to obey the writ and any law- 
ful instructions that have been given him; 52 (2) to the judgment debtor, not 
to do any act not authorized by the writ; and (3) to the court, to make a 
"return" to the writ, if required to do so. 53 



52 See In re Crook (1894), 63 L.J.Q.*B. 756. With respect to the sheriffs liability for fail- 
ure to withdraw pursuant to the creditor's instructions, see Walker v. Hunter (1845), 
2 C.B. 324 (C.P.). See, also, Turriff, "A Colloquy About Sheriffs and Nulla Bona 
Returns" (1980), 38 The Advocate 23. 

As to actions by the sheriff in respect of allegedly false information provided by 
creditors or their solicitors, see, for example, Jarvis v. The Commercial Bank (1842), 
6 O.S. 337 (Q.B.), the facts of which are described infra, note 132, and Moodie v. 
Dougall (1862), 12 U.C.C.P. 555. See, also, Graham-Green, Cordery's Law relating 
to Solicitors (7th ed., 1981), at 110-11 and 112. 

53 See Halsbury's Laws of England (4th ed., 1976), Vol. 17, para. 429, at 256 (footnote 
references omitted). Form 115 under the Supreme Court of Ontario Rules of Practice, 
R.R.O. 1980, Reg. 540 (hereinafter referred to as "Rules of Practice"), which is the 



172 

In McDonald v. Cameron, 54 Mowat V.C., citing Bethune v. Corbett, 55 
stated as follows: 

It is to be borne in mind that the Sheriff is not the agent of an execution cred- 
itor any more than of the execution debtor. His office is to execute the writ in 
a manner most for the advantage of both parties. He is bound to act, so far as 
it lies within his authority, as a provident owner would in disposing of his own 
property, and is to make all reasonable inquiries beforehand as to what prop- 
erty the debtor has, and what estate or interest in it he possesses. 

Thus, it is clear that the sheriffs duty is not simply to follow the creditor's 
instructions, but also to take into account the position of others, in partic- 
ular, the debtor. 

However, it must be borne in mind that, despite the apparently 
divided loyalties of the sheriff, the writ of execution is in the form of a 
royal command to the sheriff. Form 115 under the Supreme Court of 
Ontario Rules of Practice 56 opens with the following seemingly unambigu- 
ous direction to the sheriff: "We command you that of the goods and chat- 
tels and lands and tenements in your bailiwick of CD. you cause to be 

made the sum of $ . . .". On its face, this directive appears to be 

mandatory, ostensibly leaving the sheriff with no discretion whenever a 
writ is delivered to his office. 

Yet, notwithstanding the strict language of the writ, as we have 
already noted in Part I of this Report, "fi]n practice, at the present time, 
the mere delivery of a writ of fieri facias does not constitute a sufficient 
request to enforce the judgment by seizure and sale; rather, the sheriff 
ordinarily will await explicit instructions and information from the creditor 
or his solicitor". 57 In addition, "the sheriff usually will require from the 
creditor's solicitor an indemnification agreement intended to save the sher- 
iff harmless with respect to any loss or damage arising out of the enforce- 
ment of the judgment". 58 We shall return at a later juncture to the jurisdic- 



form of a writ of execution, contains, in part, a command to the sheriff that he must, 
"if required so to do, make appear to our Justices of the Supreme Court of Ontario in 
what manner you shall have executed this our writ". Rules 552-55 of the Rules of 
Practice govern the making of a return to a writ of execution. 

54 (1867), 13 Gr. 84, at 89. 

55 (1859), 18U.C.Q.B.498. 

56 Supra, note 53. 

57 Commission Report, supra, note 1 , Part I, at 136. See, also, Dunlop, supra, note 5, at 
385-86. Dunlop stated that, in the absence of any instructions by a creditor, "the sher- 
iff's responsibility is only to keep the writ on file and take it into account on any subse- 
quent distribution of funds as a result of an execution by another creditor" (ibid., at 
384, n. 96). However, he also stated that "it would appear to be wrong for the sheriff 
to refuse to seize simply because the creditor refuses to supply . . . information" con- 
cerning property in respect of which the debtor has some exigible right, title, or inter- 
est (ibid., at 385). 

58 Commission Report, supra, note 1, Part I, at 136-37 (footnote reference omitted). But 
see Harold v. Stewart (1864), 3 P.R. 335, dealing with execution in an ejectment 
action, where Adam Wilson J. stated (at 338) that "it is said that the Sheriff cannot 
refuse to obey the writ unless he is indemnified". Adam Wilson J. also said (ibid.) that 
earlier "it was supposed he [the sheriff] was entitled to require indemnity from the 
claimant before executing the writ . . .". See, also, Dunlop, supra, note 5, at 386 and 
393-94. 



173 

tion of a sheriff to initiate active enforcement measures subsequent to the 
filing of a writ. 59 Suffice it to note here that the sheriff is under no duty to 
execute the writ where it is not in proper form or is not properly endorsed. 

Where the sheriff does initiate active enforcement measures, it is clear 
that the writ is an absolute justification for what he does pursuant to it, 
provided his actions are authorized by the writ, 60 the writ is regular on its 
face, 61 the sheriff has no reason to question its regularity, 62 and the writ 
issues out of a court of competent jurisdiction. 63 The sheriff enjoys this 
protection even if the judgment on which the writ is founded is subse- 
quently set aside because of an irregularity or because it is in fact a 
nullity. 64 In McPhail v. McKinnon, 65 constables seized and sold the plain- 
tiffs horse under an execution issued after the debt had been paid. The 
execution, being regular on its face and within the jurisdiction of the mag- 
istrates who issued it, was held to justify the constables' actions. Young 
C.J. stated that "it would never do, if there be some latent irregularity, 
either in the judgment or the execution, of which the officer knows noth- 
ing, to subject him to an action". The constables had admitted, however, 



59 See infra, this ch. , sec. 6(b). 

60 The sheriff will not escape liability if he goes beyond what is authorized by the writ, 
for example, by seizing goods of the wrong person, remaining in possession of the 
goods for an unreasonable time, or seizing in an unlawful manner. See, for example, 
Dunlop, supra, note 5, at 383, and Moodie v. Dougall, supra, note 52, at 560-61. 

61 See Overn v. Strand, [1931] S.C.R. 720, at 730, [1932] 1 D.L.R. 490 (subsequent ref- 
erences are to [1931] S.C.R.). In the United States, see, generally, Freeman, A Trea- 
tise on the Law of Executions in Civil Cases (3d ed., 1900), para. 101. For an 
apparently broader statement of the law, see Gosset v. Howard (1845), 10 Q.B. 411, 
116 E.R. 158, at 173, discussed in Dunlop, supra, note 5, at 382-83. 

62 See Dunlop, supra, note 5, at 383. If the sheriff, for example, has notice of some 
error, but persists in executing, he may be found liable (Belshaw v. Marshall (1832), 
4 B. & Ad. 336, 110 E.R. 482 (K.B.)). This will also be the case where he executes 
with knowledge of a stay of proceedings (Cleghorn v. Des Anges (1819), 3 Moore C.P. 
83), or that the debt has been paid or the execution has been countermanded. See, 
also, Barker v. St. Quintin (1844), 12 M. & W. 441, 152 E.R. 1270 (Exch.), and 
Brewster v. Christian, [1939] 2 D.L.R. 128 (N.S.S.C). 

63 See Shergold v. Holloway (1735), 2 Str. 1002, at 1002, 93 E.R. 995, at 996 (K.B.), 
where it was held that the executing officer was liable, "there being no pretence for 
... a jurisdiction" to grant the warrant on the part of the judge. 

64 See Overn v. Strand, supra, note 61; Brown v. Watson (1871), 23 L.T. 745 (Exch.); 
Jones v. Williams (1841), 8 M. & W. 349, 151 E.R. 1073 (Exch.); Bourgeois v. Gilbert 
(1879), 19 N.B.R. 353 (S.C.); R. v. Monkman (1892), 8 Man. R. 509 (C.A.); Law v. 
Lovell (1915), 49 N.S.R. 282, 25 D.L.R. 37 (S.C.); R. v. Finlay (1901), 13 Man. R. 
383, 4 C.C.C. 539 (C.A.); R. v. Mudry, [1935] 4 D.L.R. 358, [1935] 2 W.W.R. 225 
(Man. C.A.); and King v. Harrison (1812), 15 East 612, 104 E.R. 974 (K.B.). How- 
ever, in the latter case, it was noted (ibid., at 15 East 615) by way of obiter dicta that, 
"in Philips v. Biron [(1722), 1 Str. 509, 93 E.R. 667 (K.B.)], the distinction seems to 
have been admitted by the Court between an erroneous judgment afterwards reversed 
by a Court of Error, and a judgment vacated for irregularity by the Court which gave 
it; considering that in the one case the fault was in the Court; in the other it was attrib- 
utable to the party or his attorney". In Philips, it was held that, "in the case of error it 
is no fault of the party, but of the court, and therefore binds till reversed" (at 1 Str. 
509). Presumably, then, in the latter case the sheriff would be protected if he acted on 
a writ issued pursuant to the judgment. In the United States, see Freeman, supra, note 
61, para. 101. 

65 (1868), 7 N.S.R. 168 (S.C.). 



174 

that they had notice of some objections to the execution prior to sale. 
Young C.J.'s views concerning whether they were nonetheless justified in 
selling are instructive: 66 

That a constable receiving such notice, and having reason to believe that it is 
true, should suspend the sale, will be readily admitted. But suppose the notice 
comes under suspicious circumstances, just before the holding of the sale, and 
that the constable does not believe it, has no evidence tendered of the fact, is 
he to pause, and render the levy[,] it may be[,] ineffective to the creditor? 
Here the plaintiff avers nothing but the simple fact of notice before the sale, 
how long before, how and by whom given, and under what circumstances is 
not stated. This is very different from the regular and formal notice of a doc- 
quet having been struck against a bankrupt, transferring the property, in the 
case cited from 1 B. & Ad. , 370. 

We are asked to decide that a mere notice from anybody, of an alleged 
defect in an execution, shall arrest the sale by a constable, - a privilege too 
large, and too liable to abuse, as we think, to be sustained. 

(b) Wrongful Seizure 

While it may be said that the sheriff is protected from liability where 
the writ of execution is regular on its face and issued by a court of compe- 
tent jurisdiction, he is clearly not protected where he acts beyond the 
authority given by the writ. For example, he may be held liable in trespass 
or conversion for a wrongful seizure - that is, where he seizes goods that 
do not belong to the debtor or in respect of which the debtor has no seiz- 
able right, title, or interest, or where he seizes goods of too high a value 
relative to the amount of the execution debt, or where he seizes goods in a 
manner that is unlawful. 

(i) Seizing the Wrong Person's Property 

It has long been orthodox law that, where the sheriff seizes property 
under a writ of execution, he does so at his peril, in that he renders himself 
liable to the owner or person entitled to possession 67 if he levies execution 
against goods that do not belong to the debtor. 68 Indeed, it appears that 
the sheriff will be held liable to the owner of the goods not only where the 
error is solely that of the sheriff, but also where the writ itself directs the 
sheriff to the wrong goods. 69 While the sheriff cannot escape liability 
simply by returning the goods to the owner - in trespass, the sheriff would 



66 Ibid., at 169-70. 

67 See Street v. Hamilton (1838), 3 O.S. 151 (Q.B.); Porter v. Flintoff (1857), 6 U.C.C.P. 
335; and Paterson v. Maughan (1876), 39 U.C.Q.B. 371. See, also, Dufftll v. 
Spottiswoode (1828), 3 Car. & P. 435, 172 E.R. 490 (N.P.); and Henderson v. Moodie 
(1847), 3 U.C.Q.B. 348. 

68 See Coote v. Lighworth (1596), Moo. K.B. 457, 72 E.R. 692; Oughton v. Seppings 
(1830), 1 B. & Ad. 241, 109 E.R. 776 (K.B.); and Overn v. Strand, supra, note 61. 

69 In Jarmain v. Hooper (1843), 6 Man. & G. 827, 134 E.R. 1126 (C.P.), the sheriff 
levied against the debtor's father, not the debtor; both father and son had the same 
first and last names, and the address of the father was endorsed on the writ. The sher- 
iff was still found liable. 



175 

be liable without proof of actual damage - such action can serve to miti- 
gate the damages otherwise recoverable. 70 

The difficult position of the sheriff may be alleviated, at least to some 
extent, by the following: the existence of indemnification agreements exe- 
cuted by instructing creditors' solicitors for the benefit of the sheriff; his 
apparently implied right to sue the instructing creditor for indemnification 
in the absence of a contractual agreement; and the sheriff's right to apply 
to the court for relief by way of interpleader. However, the right to 
require an indemnification agreement as a precondition to a levy cannot be 
maintained, at least in those jurisdictions, like Ontario, that have not legi- 
timized such an agreement by express legislation. 71 We shall return to this 
issue and to extra-contractual actions for indemnification in a subsequent 
portion of this chapter. 72 

With respect to the protection of sheriffs by means of the interpleader 
process - the process by which a sheriff may apply to the court for protec- 
tion from liability and to resolve disputes where a claim is made to prop- 
erty seized or about to be seized 73 - reference should be made to our dis- 
cussion in Part II of this Report. 74 Having regard to the previous consider- 
ation of the topic, we shall mention interpleader here only insofar as it 
relates to the protection of sheriffs. 

It should be emphasized that, in the main, the court's power to grant 
to the sheriff "relief by way of interpleader" under the Rules of Practice 75 
is discretionary; the sheriff will not invariably be protected from liability 
by means of interpleader proceedings. An exception to the principle that 
relief by way of interpleader is within the discretion of the court exists 
under Rule 644, although the exception is narrowly circumscribed. Rule 
644, which deals expressly with the protection of the sheriff, applies only 
where the property seized or to be seized is in the debtor's possession; it 
does not apply where the property is in the sole possession of a third party. 
The Rule provides for the procedure by which a claim to such property 
may be made, and states that, where the claimant's title is admitted by the 
execution creditor and notice is given under Rule 644, "no action shall be 
brought against the sheriff in respect of the seizure of the property". 

It has been suggested that the protection afforded under Rule 644 
"would appear to be absolute and unlimited". 76 Where "the rule applies, it 



70 See Paterson v. Maughan, supra, note 67. 

71 See, for example, Execution Creditors Act, R.S.A. 1980, c. E-14, s. 4(2), which 
expressly permits such agreements. 

72 See infra, this ch., sees. 5(a), 5(c)(ii), 6(b)(i)b., and 6(b)(ii). 

73 See Rules of Practice, supra, note 53, rr. 632-55. For bailiffs' interpleader, see small 
claims courts Rules of Procedure, R.R.O. 1980, Reg. 917, ss. 7-12. 

Some courts have noted in passing that the sheriff ought to have sought protec- 
tion by means of interpleader proceedings where a problem has arisen in respect of a 
seizure, since the alternative is courting an action for trespass or conversion. See, for 
example, Moodie v. Dougall, supra, note 52, at 558. 

74 Commission Report, supra, note 1 , Part II, at 259 et seq. 

75 See rr. 632 et seq. of the Rules of Practice, supra, note 53. 

76 Dunlop, supra, note 5, at 395. 



176 

is difficult to see what discretion remains in the court, no matter how real 
or substantial the grievance". 77 However, the protection afforded by Rule 
644 may not necessarily be "absolute and unlimited". The closing flush of 
Rule 644, quoted above, can reasonably be interpreted as giving protec- 
tion to a sheriff for the act of seizure alone, but may afford no protection 
where, for example, the sheriff has caused damage to the seized property 
or to the premises because of his negligence or recklessness. 

Regardless of the precise nature and scope of the protection given to 
sheriffs as a result of interpleader proceedings, 78 it would appear that, in 
many cases, no similar type of protection is afforded where an interpleader 
application has not been made, even though prior to a sale of seized prop- 
erty the sheriffs impugned actions, and the loss, if any, caused by such 
actions, are the same. Where, upon receipt of an undisputed claim to 
ownership, the sheriff returns the property to the claimant without inter- 
pleading, no real damage may be caused. Yet, the sheriff will be liable for 
trespass or, perhaps, conversion, although only nominal damages may in 
fact be awarded. Notwithstanding the potentially different results, 
depending on whether the sheriff has interpleaded, it is arguable that such 
results are not fortuitous; rather, the different rules may well be designed 
to encourage sheriffs to apply to the court before completing the enforce- 
ment process and causing possibly serious or irreparable harm to a third 
party. 

(ii) Excessive Seizure 

Rule 548(1) of the Supreme Court of Ontario Rules of Practice 79 pro- 
vides, in part, that "[e]very writ of execution for the recovery of money 
shall be endorsed with a direction to the officer to whom it is directed to 



77 Ibid. The reference to a "real" or "substantial" grievance is to the English inter- 
pleader practice which, Dunlop has argued, differs from that in Ontario. Dunlop 
stated as follows (ibid. , at 394-95 (footnote reference omitted)): 

In England, the grant of an interpleader order (or a protection order where the 
execution creditor has conceded the claim of a third party) is discretionary, and 
there is a line of cases suggesting that the order will be granted and the sheriff 
protected unless he has committed a 'real' or a 'substantial' grievance against the 
third person. 

For example, if there is no grievance beyond the mere entry onto the premises and the 
seizure itself - if the sheriff is not destructive or oppressive - then no liability will be 
forthcoming: see, for example, Smith v. Critchfield (1885), 14 Q.B.D. 873 (C.A.); 
Duncan v. Tees (1885), 11 P.R. 66; Cave v. Capel, [1954] 1 Q.B. 367, [1954] 1 All 
E.R. 428 (C. A.); and De Coppett v. Barnett (1901), 17 T.L.R. 273 (C. A.). 

78 Assuming that r. 644 does protect the sheriff for certain enforcement activities, there 
appears to be some inconsistency in the law. As we have seen, a sheriff who fails to 
interplead is liable in trespass without proof of actual damage for a wrongful seizure of 
property not belonging to the debtor, whereas where he does interplead, and where 
r. 644 applies, the sheriff appears to be automatically protected in respect of his tres- 
pass. Moreover, where r. 644 does not apply - that is, where the court's decision to 
grant "relief by interpleader" is discretionary (see, for example, rr. 634, 635, 642, and 
645 of the Rules of Practice, supra, note 53, respecting such "relief") - a sheriff might 
well be saved harmless. But, again, where no interpleader application is made, liabil- 
ity in trespass appears to be absolute, without proof of actual damage. 

79 Supra, note 53. 



177 

levy the money due and payable and sought to be recovered under the 
judgment, stating the amount, and also to levy interest thereon . . .". Rule 
550 provides that, "[u]pon every execution there may be levied, in addi- 
tion to the sum recovered by the judgment and interest thereon, the fees 
and expenses of execution". 80 These rules provide the general limits, 
regarding the quantum of property to be seized, beyond which a sheriff 
may not go when effecting a seizure. In Gawler v. Chaplin* 1 it was stated 
that "[t]he duty of the sheriff is confined to seizing goods that would be 
reasonably sufficient, if sold, to pay the sum indorsed on the writ - that is, 
the debt, interest upon the debt, poundage, and expenses; and if the sher- 
iff seizes more, prima facie he is a wrongdoer". The Ontario Creditors' 
Relief Act 82 is, however, unclear whether the sheriff, in assessing how 
much property to seize, must look only to the writ of the instructing cred- 
itor or to all existing, unsatisfied writs. In this connection, one commenta- 
tor has made the following observations: 83 

Some creditors' relief statutes have expressly changed the common law by 
requiring the sheriff executing one writ to seize sufficient property to satisfy all 
subsisting writs filed in his office and entitled to share in the proceeds. The 
same result is arguably a necessary implication of any such legislation, even if 
it has not been spelled out. 

It bears mentioning here that the Commission has in fact made proposals 
for reform that, if implemented, would require the sheriff to realize from 
the debtor's exigible assets an amount sufficient to satisfy the debts owing 
to all execution creditors. 84 

In order to determine whether the quantity of goods seized is reason- 
ably sufficient to pay the amount of the writ and other allowable amounts, 
courts have looked at the nature and marketability of the goods. If the 
debtor has but one exigible asset and it is indivisible - for example, a car - 
it is not an excessive seizure to levy execution upon it even if it is worth 
several times the amount of the debt. 85 Further, if it is doubtful whether a 
significant amount of money could be raised from the sale of the property, 
the court is less likely to find the seizure excessive. For example, in Watson 
v. Murray & Co. , 86 the Court chose not to find the levy excessive because 
of the hazards attending the execution sale of fashion and seasonal goods. 
Many courts have "[restricted] the sheriffs liability to cases where the sei- 



80 See, also, Form 115 under the Rules of Practice, supra, note 53, and the Creditors' 
Relief Act, R.S.O. 1980, c. 103, s. 4(7), dealing with the sheriffs entitlement to 
poundage. 

81 (1848), 2 Exch. 503, at 507, 154 E.R. 590. See, also, Pitcher v. King (1844), 5 Q.B. 
758, 114 E.R. 1436; Slade v. Hawley (1845), 13 M. & W. 757, 153 E.R. 318 (Exch.); 
Watson v. Murray & Co., [1955] 2 Q.B. 1, [1955] 1 All E.R. 350; and Overn v. Strand, 
supra, note 61 , at 732-33. 

82 Supra, note 80. 

83 Dunlop, supra, note 5, at 384 (footnote references omitted). See, also ibid., at 387. 

84 Commission Report, supra, note 1, Part I, at 189, Recommendation 145. See, also, 
discussion, ibid., at 142-43. 

85 See, for example, Wooddye v. Coles (1595), Noy. 59, 74 E.R. 1027 (K.B.), and Haw- 
kins, "What is an Excessive Levy?" (1961), 35 Aust. L.J. 71. 

86 Supra, note 81. 



178 

zure was clearly or obviously excessive, taking into account the difficulties 
in predicting the likely return at a sheriffs sale". 87 

There seems to be some uncertainty whether, and if so under what cir- 
cumstances, an aggrieved party must prove malice on the part of the sher- 
iff in an action for excessive seizure. The orthodox opinion appears to be 
that malice need not be shown. 88 

(iii) Failure to Seize and Insufficient Seizure 

In the preceding section, we considered the liability of a sheriff for an 
excessive seizure. However, the sheriff may also expose himself to an 
action by a creditor where he fails to seize exigible property or where he 
seizes property the value of which cannot satisfy the debt. In both cases, as 
in the case of an excessive seizure, the courts generally apply a standard of 
reasonableness to the actions of the sheriff. 

The valuation of property is, in many instances, an extremely subjec- 
tive exercise. Accordingly, the courts are apt to be more lenient where the 
sheriff has made an honest error. However, the courts are more reluctant 
to exonerate the sheriff where his inactivity or limited activity is the result 
of unjustifiable delay or a lack of knowledge of the existence or location of 
the debtor's property that may be attributable to the sheriffs indolence or 
neglect of duty. Once a writ is delivered to the sheriff with instructions to 
enforce it, it appears that his duty is to use reasonable diligence to search 
out, or make inquiries about, the assets of the debtor within his bailiwick 89 
and then to levy execution. 90 On the other hand, it has been said that the 



87 Dunlop, supra, note 5, at 387 (footnote references omitted). Dunlop cited Mandelin v. 
Stan Reynolds Auto Sales Ltd. (1961), 31 D.L.R. (2d) 697 (Alta. S.C., T.D.), and 
Moore v. Lambeth County Court Registrar (No. 2), [1970] 1 Q.B. 560, [1970] 1 
All E.R. 980 (C. A.) (subsequent reference is to [1970] 1 Q.B.). 

88 See Moore v. Lambeth County Court Registrar, supra, note 87, and Dunlop, supra, 
note 5, at 387. However, the Ontario case of Ventris v. Brown (1872), 22 U.C.C.P. 
345, has been cited as representing the contrary view: see Dunlop, supra, note 5, at 
387, n. 29. The latter view has been said to rest on a distinction in the case law 
between one kind of excessive seizure, where there is a seizure of goods whose value 
"clearly" or "obviously" exceeds the amount of the writ, and another kind of exces- 
sive seizure, where the creditor, having previously received partial payment, proceeds 
to issue execution for the full amount. 

The case of Ventris v. Brown, which falls into the second category, was an action 
against the execution creditors, not the sheriff, where a portion of the debt had been 
paid but where the creditors issued execution for the full amount. Gwynne J., for the 
Court, deciding for the creditors, held (at 347) that "the count here demurred to is 
insufficient, without the allegation that the Act complained of was done maliciously 
and without probable cause". While the issue of the sheriffs liability did not arise, 
presumably the sheriff could not be held liable for the excessive seizure if the writ was 
regular on its face and issued from a court of competent jurisdiction, unless the sheriff 
had knowledge, for example, that the debt had been partially paid or that the writ was 
in fact irregular. 

89 See Hutchings v. Ruttan (1857), 6 U.C.C.P. 452; Robinson v. Grange (1859), 18 
U.C.Q.B. 260; and Olsen v. Van Wart (1910), 13 W.L.R. 661 (Alta. S.C.). 

90 See Dennis v. Whetham (1874), L.R. 9 Q.B. 345; Massey Mfg. Co. v. Clement (1893), 
9 Man. R. 359 (C. A.); and Ayshford v. Murray (1870), 23 L.T. 470 (Q.B.). See, also, 
infra, this ch., sec. 5(a). 



179 

sheriff "is not expected to find assets which are not visible in the posses- 
sion of the debtor", 91 unless, of course, he has reason to believe that such 
assets exist and he has knowledge of their whereabouts. Nor is the sheriff 
required to take extraordinary measures, such as watching day and night 
for weeks in succession in order to gain admittance to a house in order to 
execute a writ. 92 

It has been held that "[a]n action against a sheriff for not levying 
under a writ of ft. fa. [or, presumably, for an insufficient levy] . . . will not 
lie unless the plaintiff has suffered actual and pecuniary damage by the 
sheriffs neglect"; in such a case, the plaintiff "is entitled to be placed in 
the same position, by means of damages, as if the sheriff has done his 
duty". 93 Prima facie, the measure of damages is the difference between the 
full amount of the writ and the amount realized from a sale of any goods 
actually seized. The sheriff is not liable for the full amount of the writ 
unless the whole amount is lost and, by the exercise of due diligence, the 
sheriff could have seized sufficient goods to satisfy the writ in full. While a 
heavy burden is placed on the sheriff to justify his failure to levy or his 
insufficient levy, the courts have often attempted to lessen the burden by a 
rather liberal use of the "due diligence" or reasonableness standard in 
favour of the sheriff. 

(iv) Sheriff's Application to the Court for Directions 

One cause of an excessive seizure or an insufficient seizure may be the 
sheriffs incorrect assessment of what goods are exempt. 94 The sheriff may 
either overestimate or underestimate the number or value of items that the 
debtor may retain, having regard to sections 2 to 7 of the Execution Act. 95 
However, the sheriffs difficulty is again partially alleviated, this time by 
section 8(2) of the Execution Act. Section 8(2) provides as follows: 

8. -(2) A sheriff may apply to the county or district court of the county or 
district of which he is the sheriff for direction on any matter arising under sec- 
tions 2 to 7. 

(v) Manner of Seizure 

Aside from the rather bewildering set of rules discussed in a previous 
Part of this Report, respecting the permissible use of force by a sheriff in 
the execution of a writ, 96 there are certain other prohibitions that, if not 
recognized, could lead to liability. For example, the sheriff will be held 
liable for trespass if he remains for an unreasonable length of time on the 



91 Dunlop, supra, note 5, at 384. 

92 See Finnigan v. Jarvis (1851), 8 U.C.Q.B. 210. 

93 Massey Mfg. Co. v. Clement, supra, note 90, at 369-70. 

94 See, generally, Commission Report, supra, note 1, Part II, at 79 et seq. See, also, 
Winn v. Ingilby (1822), 5 B. & Aid. 625, 106 E.R. 1319 (K.B.). 

95 R.S.O. 1980, c. 146. 

96 See, generally, Commission Report, supra, note 1, Part II, at 106 et seq. See, also, 
Dunlop, supra, note 5, at 388 et seq. 



180 

property on which the exigible goods are found. 97 Moreover, it appears 
that he will be liable if seizure is effected on a Sunday or beyond his 
bailiwick. 98 

(c) Safeguarding of Seized Property 

It is the duty of the sheriff to safeguard seized property until it has 
been sold. 99 But the sheriff generally will be liable only where he has been 
negligent in this regard. 100 The obligation to safeguard the property will, of 
course, be easier to fulfil where the property has been physically seized by 
the sheriff and placed in a location under his control. However, the sheriff 
frequently stores seized property in warehouses owned by others. In other 
cases, the sheriff may take "walking possession" of the seized property; 
that is, he may permit the debtor to retain physical possession of the prop- 
erty until the debt is satisfied or until the property is about to be sold at an 
execution sale. The debtor is required to sign an acknowledgment that the 
property is held for the sheriff and an undertaking that he, the debtor, will 
return the property to the sheriff on demand. 101 

In Part II of this Report, the Commission endorsed the practice of a 
sheriff taking "walking possession" of seized property where the sheriff is 
of the view that "it is not feasible or desirable to seize and remove prop- 
erty from the possession of the debtor or another person". 102 Under the 
Commission's proposals, the initial decision to take "walking possession" 
would rest with the sheriff, although the creditors and any person refused 
the right to retain possession would be entitled to appeal the sheriffs deci- 
sion to the county or district court. We believe that this right of appeal, as 
well as the continued right to sue the sheriff for negligence with respect to 
the taking of "walking possession", or indeed with respect to the safe- 
guarding of seized property generally, would be an adequate protection 
for the rights of all persons interested in the fate of such property. 

(d) Sale of Seized Property 

The Commission has already considered the law respecting the time, 
notice, location, and manner of sale of seized property. 103 In the course of 
that discussion, we outlined the duties of the sheriff - for example, the 
general duty to sell the property within a reasonable time, to give notice of 
the sale to the appropriate persons and in the appropriate places, to sell 



97 See Ash v. Dawnay (1852), 8 Exch. 237, 155 E.R. 1334, and Watson v. Murray & Co. , 
supra, note 81. 

98 With respect to seizure on a Sunday, see Sowell v. Champion (1838), 6 Ad. & E. 407, 
112 E.R. 156 (K.B.). With respect to seizure beyond the bailiwick, see Malouf v. 
Labad (1912), 3 O.W.N. 1235, 22 O.W.R. 99 (Div. Ct.), and Reliance Loan & Sav- 
ings Co. v. Goldsmith (1910), 3 Alta. L.R. 197, 15 W.L.R. 53 (S.C.). 

99 See, generally, Commission Report, supra, note 1, Part II, at 113 etseq. 

100 See McDonald v. Nupert (1859), 4 Nfld. L.R. 376 (S.C.), and Willis, Winder & Co. v. 
Combe (1884), Cab. & El. 353, 1 T.L.R. 36 (Q.B.). 

101 See supra, note 99. See, also, Dunlop, supra, note 5, at 391-92. 

102 Commission Report, supra, note 1, Part II, at 117. 

103 Ibid., at 119 etseq. 



181 

the property away from the debtor's premises, to sell by auction at least 
initially, to conduct the sale in such manner as to obtain a fair and reason- 
able price, and to adjourn the sale if no such price is attainable. The sheriff 
is also under a duty to distribute the proceeds of sale according to the 
Creditors' Relief Act, m and to return any surplus proceeds to the person or 
persons entitled to them. Not all irregularities or defects in respect of the 
sale of seized property will give rise to liability on the part of the sheriff; 105 
moreover, in an action against the sheriff, the plaintiff must prove that he 
has suffered actual damage. 106 

It bears noting that, at an execution sale, the sheriff ordinarily will not 
give any warranties concerning the title to, or the quality of, the goods to 
be sold; 107 consequently, persons purchase at their peril. 108 On the other 
hand, it may be that the sheriff impliedly promises that he does not have 
knowledge of any defect in title. 109 If the sheriff may be held liable on this 
basis, "[a] fortiori, where the sheriff departs from the normal practice and 
expressly warrants title, he will be liable in damages", 110 although there 
may be some question whether the sheriff is liable in respect of a repre- 
sentation where the purchaser is as able as the sheriff to judge the value of 
the property upon inspection. 111 



104 Supra, note 80. 

105 The issue of the sheriffs liability must be distinguished from the setting aside of a sale: 
a sale will not be set aside merely because there has been some defect or irregularity - 
for example, with respect to advertisements - that might give rise to liability on the 
part of the sheriff. Of course, in some instances, avoidance of the sale and liability will 
arise from the same act - for example, where the goods sold do not belong to the 
debtor (see Overn v. Strand, supra, note 61; Commercial Credit Corp. Ltd. v. Niagara 
Finance Co. Ltd., [1940] S.C.R. 420, [1940] 3 D.L.R. 1; and Davies v. Traders' 
Finance Corp. (1959), 18 D.L.R. (2d) 48 (Ont. C. A.)), or where the goods are exempt 
(see Fletcher v. Pendray (1916), 10 W.W.R. 444 (B.C.C.A.)). 

106 See Maple Leaf Lumber Co. v. Caldbick (1917), 40 O.L.R. 512 (App. Div.), and 
Hobson v. Thelluson (1867), L.R. 2 Q.B. 642. 

107 See Taugen (Tangen) v. Vanderburgh (Vanderberg) (1908), 1 Alta. L.R. 498, 9 
W.L.R. 269 (S.C.). See, also, Seizures Act, R.S.A. 1980, c. S-ll, s. 36, which provides 
as follows: "On the sale by the sheriff of goods pursuant to a writ of execution ... the 
sale shall be without warranty of title and the purchaser, on paying the purchase price, 
thereby acquires the precise interest and no more in the goods that are so sold and that 
are lawfully sold under execution . . .". 

108 For example, in Overn v. Strand, supra, note 61, at 733-34, it was said that a purchaser 
can obtain clear title only if "the court issuing the writ had jurisdiction to do so; . . . 
the writ is regular on its face, and . . . the goods sold by the sheriff are the goods of the 
execution debtor". An execution sale may be declared void in other circumstances as 
well - for example, where exempt goods are sold: see Fletcher v. Pendray, supra, note 
105. With respect to the position of the purchaser, see Dunlop, supra, note 5, at 402 et 
seq. Where the sale is declared void, the purchaser would have to account to the 
aggrieved party: see Overn v. Strand, supra, note 61, and Dunlop, supra, note 5, at 
403. 

109 See Taugen (Tangen) v. Vanderburgh (Vanderberg), supra, note 107. 

110 Dunlop, supra, note 5, at 402. See Mink v. Jarvis (1852), 13 U.C.Q.B. 54; Moritz v. 
Christopherson (1911), 18 W.L.R. 63 (Sask. Q.B.); and Shapiro v. Banque Canadi- 
enne Nationale, [1981] 4 W.W.R. 560 (Man. Q.B.). 

111 See Mink v. Jarvis, supra, note 110. 



182 

5. LIABILITY OF THE CREDITOR AND HIS SOLICITOR FOR 
SEIZURE AND SALE OF PROPERTY: PRESENT LAW 

(a) General 

As already indicated, sheriffs are generally loath to engage in active 
enforcement measures without receiving from the execution creditor or his 
solicitor information respecting the nature and whereabouts of the debt- 
or's property. However, as a matter of law, and in the absence of any stat- 
utory provision to the contrary, it would seem that the sheriff cannot 
refuse to act unless such information is provided. 112 

On the other hand, it would also appear that, as a precondition to any 
active enforcement measures taken by the sheriff, the creditor or his solici- 
tor must actually instruct the sheriff to proceed in the execution of the 
writ; notwithstanding the express language of the writ, the failure to direct 
the sheriff to execute it might well be a defence to an action against the 
sheriff by the creditor. 113 This apparently legal 114 and, more importantly, 
practical, 115 requirement to instruct the sheriff is a potential source of lia- 
bility for the execution creditor and his solicitor. 116 

In the first place, as mentioned earlier in passing, there may well be an 
implied indemnity agreement between the sheriff and the creditor, 
although the "principle underlying [the relevant] cases is not altogether 
certain" 117 and "[i]t is not clear whether this kind of imputed indemnity 
action could or should be extended to every tort committed by the [sheriff] 
in the course of a levy". 118 In the second place, the solicitor's ordinary sta- 
tus as agent for his client, the execution creditor, may well give rise to lia- 
bility on the part of the creditor for acts done by the solicitor. The general 
picture has been summarized as follows: 119 

It is not within the scope of the implied authority of the solicitor of a judg- 
ment creditor issuing a fi. fa. verbally to direct the sheriff to seize particular 
goods J 12 °l but this is a rule as to the scope of a solicitor's authority under the 



112 See Dunlop, supra, note 5, at 385-86. 

113 Ibid., at 386. 



114 Ibid. Some jurisdictions have expressly prohibited the sheriff from effecting a seizure 
in the absence of instructions from the creditor to this effect: see, for example, the 
Execution Creditors Act, R.S.A. 1980, c. E-14, s. 4(1). 

115 See Dunlop, supra, note 5, at 385. 

116 In some jurisdictions, legislation expressly provides for liability. Section 12 of the New 
Brunswick Sheriffs Act, R.S.N.B. 1973, c. S-8, provides that "(t]he solicitor who issues 
a process and the party on whose behalf he is acting are severally liable to the sheriff 
for executing it". 

117 Dunlop, supra, note 5, at 394 (footnote reference omitted). In some cases, the sheriff 
has sought an express indemnity agreement from the creditor: see, for example, 
Corbettv. O'Reilly (1850), 8 U.C.Q.B. 130, at 131. 

118 Dunlop, supra, note 5, at 394. 

119 3 C.E.D. (Ont. 3d) 16, §73 (footnote references omitted). The cases of Smith v. Keal 
(1882), 9 Q.B.D. 340 (C.A.) and Wilkinson v. Harvey (1888), 15 O.R. 346 (H.C.J.) 
were cited. See, also, Cordery's Law relating to Solicitors, supra, note 52, at 92, 102, 
and 106. 

120 But see Dunlop, supra, note 5, quoted at text to note 144, infra. In Taylor v. 
Robertson (1901), 31 S.C.R. 615, at 631, Davies J. noted the actions "of solicitors 
going beyond and outside of their duty and officiously pointing out to the sheriff spec- 



183 

ordinary instructions in a suit. If clients desire their solicitors to act for them as 
men of business, to travel and interview their debtors, to endeavour to make 
arrangments with them, and to serve process in aid of their endeavours, leav- 
ing it to them to act according to their discretion, an agency is established 
which takes the clients out of the protection of such rule, and leaves them 
liable for any and every act taken to further their interests, and to achieve the 
purpose for which the solicitors or agents were employed. Moreover, such acts 
may be ratified.^ 121 ! 

(b) Liability of the Creditor 

(i) Improper Issuance of a Writ 

It has been said that a person irregularly issuing a writ is personally 
liable for all costs of the sheriff arising from actions taken under it, even 
though they were taken after the sheriff had become aware that the writ 
had been set aside by the court. 122 If there is no judgment and the creditor 
issues a writ of execution, 123 or if he allows the writ to be executed once it 
has been set aside, 124 the creditor will be liable for trespass or conversion 
for a seizure made thereunder. Further, if the creditor is responsible for 
the issuance of an irregular writ of execution that is subsequently set aside, 
he will also be liable. After, for example, the judgment is paid in full, 125 or 
the creditor agrees to a composition arrangement, 126 any writ of execution 
issued will be irregular. 

Not only will a creditor be liable for excessive seizure if he issues the 



ific personal property as that of the defendant and requiring him to sell . . ." (emphasis 
added). 

121 With respect to the indemnification of a solicitor by his client, see Cordery's Law relat- 
ing to Solicitors, supra, note 52, at 102 (footnote references omitted): 

The relationship existing between a client and his solicitor may often be that 
of principal and agent, and where such relationship exists there seems to be no 
reason why the ordinary rule which obliges a principal to indemnify his agent 
should be rendered inapplicable merely because the agent is a solicitor. So, also, 
if a solicitor performs at the request of his client acts which are not in themselves 
manifestly tortious to the solicitor's knowledge but which turn out to be injurious 
to a third party, the solicitor should be entitled to an indemnity from his client. 

The relationship between the creditor and his solicitor, insofar as it affects the for- 
mer's liability for a wrongful seizure, is considered infra, this ch., sec. 5(b)(ii). For 
example, the sheriff may succeed in obtaining from the creditor's solicitor a personal 
indemnification agreement that, having regard to the solicitor's position vis-a-vis his 
client, may impose liability on the part of the creditor. In one case, Muirhead v. 
Shirreff (1886) , 14 S.C.R. 735, at 735, it was held that "a promise of indemnity to the 
sheriff by an attorney is binding on his client where the attorney had the conduct of 
the suit in the course of which such promise was made and the subsequent acts of the 
client showed that he had adopted the attorney's proceedings". 

122 Perkins v. Plympton (1831), 5 Moo. & P. 731, 7 Bing. 676, 131 E.R. 261 (C.P.). 

123 See Anderson, supra, note 6, at 65. 

124 See Jones v. Williams (1841), 8 M. & W. 349, 151 E.R. 1073 (Exch.), and Cobbold v. 
Chilver (1842), 4 M. & G. 62, 134 E.R. 26 (C.P.). However, liability will not be 
imposed merely because the judgment is reversed on appeal: see Robertson v. Miller 
(1904), 3 N.B.Eq.Rep. 494 (S.C. in Eq.). 

125 See Bates v. Pilling (1826), 6 B. & C. 38, 108 E.R. 367 (K.B.), and Mooney v. 
Maughan (1875), 25 U.C.C.P. 244. 

126 See Phillips v. General Omnibus Co. (1880), 50 L.J.Q.B. 112. 



184 

writ after the original debt has been paid, he will also be liable if he incor- 
rectly endorses the writ with an amount exceeding the original debt or 
exceeding the amount owed at the time and a seizure is made. 127 As we 
have seen, 128 it has been held that, where partial payment has been made, 
but the creditor nonetheless endorses the writ for the full amount, the 
debtor will succeed in his suit against the creditor only if he is able to 
establish malice or want of reasonable and probable cause. Where, how- 
ever, the writ is issued after full payment or is endorsed with an amount 
that exceeds the original amount due, the debtor apparently does not have 
to meet this requirement; nor, it seems, does he have to prove actual 
damage. 129 

(ii) Wrongful Seizure 

It has sometimes been said that, when the sheriff engages in active 
enforcement measures, he does so as an officer of the court and not as an 
agent or servant of the execution creditor. 130 On the other hand, it has also 
been stated or assumed on many occasions that the rationale for imposing 
liability on a creditor for the wrongful actions of the sheriff ultimately rests 
on the principle that, at least for the purpose of executing the writ, the 
sheriff acts as the agent of the creditor. 131 It seems likely that the denial of 
agency status in some of the cases is merely an attempt to describe the 
rather unique position of the sheriff and his many functions, rather than to 
characterize his position vis-a-vis the instructing creditor for the purpose 
of determining the basis for attaching any liability to the latter. 

In any event, it is clear that a creditor may be held liable for the 
wrongful acts of the sheriff. However, in order to impose liability upon the 
creditor for a wrongful seizure, the creditor must be connected to the sher- 
iff's actions in some way. It is not sufficient that the creditor is ultimately 
the impetus for setting the execution process in motion; before he incurs 
liability, the creditor must become further involved, for example, by inter- 



127 See Clissold v. Cratchley, [1910] 2 K.B. 244, [1908-10] All E.R. Rep. 739 (C.A.); 
Demers v. Desrosiers, [1929] 3 D.L.R. 401, [1929] 2 W.W.R. 241 (Alta. S.C.); Ventris 
v. Brown, supra, note 88; De Medina v. Grove (1846), 10 Q.B. 152, 116 E.R. 59; and 
Gilding v. Eyre (1861), 10 C.B.N. S. 592 (C.P.). 

128 See supra, note 88 and supporting text. 

129 See Demers v. Desrosiers, supra, note 127. 

130 See Woollen v. Wright (1862), 1 H. & C. 554, 158 E.R. 1005 (Exch.), and Dunlop, 
supra, note 5, at 395. 

131 See Williams v. Williams, [1937] 2 All E.R. 559, 81 So. Jo. 435 (C.A.), and Barclays 
Bank Ltd. v. Roberts, [1954] 1 W.L.R. 1212, [1954] 3 All E.R. 107 (C.A.). See, also, 
Graves v. Sprague (1920), 48 N.B.R. 36, at 38, 53 D.L.R. 337 (S.C., App. Div.), 
where it was stated: 

The authorities are clear that if a party or his attorney in any way intervenes, 
directs or takes part in the acts of an officer under an execution, then the party so 
intervening, directing or taking part constitutes the officer his agent for the pur- 
poses of that act, and is responsible for all matters ensuing as a result of the 
action of the officer. 

Other cases have held that, for the purpose of seizing property, the sheriff becomes 
the "servant" or "bailiff" of the creditor. See, for example, Morris v. Salberg (1889), 
22Q.B.D. 614(C.A.). 



185 

vening in or directing the execution process that results in a wrongful 
seizure. 132 In most cases, the creditor's mere presence at a seizure, as a 
silent spectator, has been held insufficient to warrant attaching responsibil- 
ity to the creditor. 133 In several cases, however, it has been said that, if a 
creditor attends with the sheriff who seizes a third party's goods, he is 
responsible for the sheriffs acts. But, in these cases, there was in fact evi- 
dence that the creditor was more than a silent spectator: he gave 
directions 134 or assisted in the seizure. 135 A creditor's failure to warn the 
sheriff about property that could not legally be seized does not amount to 
a tacit instruction to seize. In Williams v. Williams, 136 the landlord-creditor 
was present at an eviction of his tenants, but he did not tell the sheriff that 
part of the house was protected from such eviction. He was not held liable 
for trespass. 

Moreover, as indicated, 137 where the creditor directs his solicitor to 
instruct the sheriff to act in a certain manner, and the sheriffs actions give 
rise to liability on the part of the solicitor, the creditor ultimately must 
bear the burden. Where, however, no specific or detailed instructions are 
given by the creditor, there appears to be a large measure of uncertainty in 
the law respecting the creditor's liability. The relationship between the 
execution creditor, his solicitor, and the sheriff - both in law and in prac- 
tice - is an important one that deserves some further attention. The pres- 
ent English position, and the arguably different Canadian position, have 
been summarized as follows: 138 



132 The creditor, like the sheriff, may sometimes be in a rather difficult position. In Jarvis 
v. The Commercial Bank, supra, note 52, the sheriff had already seized property 
under a prior execution before seizing it again on behalf of the defendants (the credi- 
tors). An adverse claim to the seized property having been asserted, the first execution 
was withdrawn. However, the defendants refused to withdraw their execution or 
indemnify the sheriff, who was successfully sued by the claimant. The sheriff then sued 
the defendants, unsuccessfully, for deceit in representing that the property belonged 
to the debtor. Robinson C.J. noted (at 339) that the agent of the defendants' solicitor 
"gave no new information to the sheriff, nor did he lead him then to take any step". 
Robinson C.J. summed up the position of the creditor vis-a-vis the sheriff as follows 
(at 340): 

I cannot say that the negative acts of refusing to direct the goods to be given 
up, and of refusing to indemnify, can, when put together, amount to a misrepre- 
sentation and a legal fraud, and subject the defendants to an action for deceit. If 
it would, then in every case in which the sheriff asks for indemnity and is refused 
by the plaintiff, who, nevertheless, does not instruct him to forbear, a recovery 
against the sheriff by the owner of the goods might be followed by an action 
against the plaintiff for a deceit. 

See, also, Moodie v. Dougall, supra, note 52, where the defendant-solicitor argued, 
inter alia, that the sheriff should have brought his action for the alleged misrepresenta- 
tion of the solicitor against the creditor. 

133 See Moore v. Lambeth County Court Registrar (No. 2), supra, note 87, at 569, and 
Barclays Bank Ltd. v. Roberts, supra, note 131. The same rule applies in the case of 
solicitors: see Cordery's Law relating to Solicitors, supra, note 52, at 111. 

134 See Meredith v. Flaxman (1831), 5 C. & P. 99, 172 E.R. 894 (N.P.), and Menham v. 
Edmonson (1799), 1 B. & P. 369, 126 E.R. 958 (C.P.). 

135 See Park v. Taylor (1852), 1 U.C.C.P. 414. 

136 Supra, note 131. 

137 See supra, this ch., sec. 5(a), esp. text supporting note 119, supra. 

138 Dunlop, supra, note 5, at 395-96 (footnote references omitted). See, also, Cordery's 
Law relating to Solicitors, supra, note 52, at 111, where it is stated, for example, that 



186 

In these circumstances, the English cases have imposed very strict limits 
on the creditor's liability, based on their view of the solicitor's usual authority. 
The lawyer is regarded as having authority to endorse upon the writ the name 
and address of the debtor. If that address is erroneous (being the address of 
the claimant), and if the sheriff is induced thereby to seize the claimant's 
goods, the solicitor and the execution creditor will be liable. However, if the 
sheriff is not in fact induced by the endorsement or if the solicitor conveys the 
wrong address to him in any way other than by the endorsement, the solicitor 
but not the execution creditor will be liable. The reason is that the solicitor's 
usual authority is limited to completing the endorsement on the writ itself and 
does not extend to giving other written or oral instructions regarding the 
whereabouts of the debtor's goods. 

This peculiar rule seems to be fixed in English law, but it is submitted that 
Canadian courts can and should take a different approach, based on a broader 
view of the lawyer's usual authority in collection matters. In most situations, it 
is suggested that the client simply hands the collection file to his solicitor and 
asks him to collect the debt. Whether the solicitor communicates with the 
sheriff by endorsement on the writ or by attached letter or by telephone is a 
matter of indifference to the creditor as it should be to the courts. Add to this 
the fact that many Canadian sheriffs do not demonstrate the independence 
and initiative to search out the debtor's assets without considerable assistance 
from the creditor's solicitor, and it will be seen that the facts depart substan- 
tially from the relationship envisaged in the English cases. 

On this view, the creditor would be liable wherever a third person's goods 
were seized, whether or not he had given specific instructions to his solicitor. 
This is not an undesirable result where the creditor stands to gain (or at least 
cut his losses) by the execution, and where he has the means, particularly the 
examination in aid, to discover what property his debtor has. The Canadian 
courts have not yet locked themselves into the English cases which should be 
distinguished on the j)asis of different circumstances and practices in this 
country. f 139 l 

From the case law, it would seem that not merely the nature, but also 
the impact, of the creditor's instructions is important in ascertaining 
whether the creditor ought to incur liability. If, for example, the sheriff is 
not induced by an endorsement directing him to seize the goods of a third 
party, but he does so anyway, the creditor will not be liable. 140 If the cred- 
itor merely gives advice in respect of an intended seizure, ordinarily he will 
not be liable if it is followed by the sheriff; but he will be liable if he com- 
mands the sheriff to seize. There appears, therefore, to be a fine, but very 
important, line drawn between advice and a command. In Collins v. 
Evans, 141 a postjudgment arrest case, the creditor was not held liable for 
pointing out to the sheriff someone with the same name as the one on the 
writ of ca. sa., since he had not required the sheriff to act on it. In 



"it is not within the solicitor's authority to give verbal directions to the sheriff for the 
seizure of specific goods . . .". Accordingly, the solicitor is alone liable (ibid.). 

139 In Jarvis v. The Commercial Bank, supra, note 52, where an agent for the creditor's 
solicitor had instructed the sheriff, Robinson C.J. refused to consider "whether the 
[creditors] would be responsible for information of this kind given by their attorney in 
the cause, without any instruction from them" (ibid., at 338; emphasis added). 

140 See Jarvis v. The Commercial Bank, ibid., at 338-39, quoted, in part, supra, note 132. 

141 (1844), 5 Q.B. 820, 114 E.R. 1459. 



187 

Wilkinson v. Harvey, 142 the creditor's solicitor wrote a letter to the sheriff, 
who had refused to seize because there appeared to be no goods, stating 
that the sheriff had acted on insufficient information, insisting that he take 
immediate action, and threatening an action for damages if loss were occa- 
sioned through his delay. These acts amounted to a direction to seize. On 
the other hand, in Barclays Bank Ltd. v. Roberts, 143 a phone conversation 
with the creditor's solicitor advising an ejectment, which turned out to be 
wrongful, was not sufficient to attach liability to the creditor. 

A final issue respecting the liability of an execution creditor for a 
wrongful seizure concerns the effect of the creditor's conduct subsequent 
to the seizure. One commentator has offered these comments on the 
subject: 144 

Another oddity of English law in this area is that while meddlesome con- 
duct of the execution creditor before the seizure can render him liable to the 
third party, similar conduct after the event, even if it would amount to ratifica- 
tion in the ordinary case of principal and agent, will not make the creditor 
liable. The reasoning in Wilson v. Tumman} 145 ^ the leading English case, is 
not overwhelming, and there seems no reason in principle to attach differing 
consequences to meddling conduct occuring before or after the seizure. Here 
again the Canadian law has not irretrievably opted for the Wilson v. Tumman 
rule, and the creditor seems in policy to be a suitable person to bear the loss, 
especially as he can protect himself by getting such information as he can 
before instructing his solicitor to proceed. 

(c) Liability of the Creditor's Solicitor 

(i) General 

While there is a paucity of jurisprudence concerning the liability of a 
solicitor in the context of the enforcement of a judgment debt, it seems 
clear that, like the creditor, "if . . . [the] solicitor intervenes or meddles in 
the execution process, [he] may find himself liable to the claimant in tres- 
pass or conversion" where, for example, the claimant's property has been 
wrongfully seized. 146 The solicitor is liable where he endorses on the writ 
or in any other way communicates to the sheriff 147 the address of the claim- 
ant and the sheriff follows this direction to the prejudice of the claimant. 148 



142 (1887), 15 O.R. 346 (H.C.J. )• 

143 Supra, note 131. 

144 Dunlop, supra, note 5, at 396 (footnote references omitted). 

145 (1843), 6 M. & G. 236, 134 E.R. 879 (C.P.). 

146 See Dunlop, supra, note 5, at 395, and sources cited therein. 

147 With respect to the English and Canadian law concerning whether the liability of the 
creditor is affected by the manner by which the creditor's solicitor instructs the sheriff, 
see Dunlop, ibid., at 395-96, quoted supra, this ch., sec. 5(b)(ii). However, it should 
be borne in mind that, whatever the effect on the creditor's liability, the solicitor is 
liable irrespective of the manner by which he directs the sheriff to act. This is not, of 
course, to say that the creditor's solicitor is liable in all cases and for all purposes. For 
example, it was held in Corbett v. McKenzie (1850), 6 U.C.Q.B. 605, that the sheriff 
cannot sue the solicitor for poundage on an execution placed in the sheriffs hands by 
the solicitor. 

148 See Jarmain v. Hooper, supra, note 69, and Morris v. Salberg, supra, note 131. See, 
also, Cordery's Law relating to Solicitors, supra, note 52, at 110-11. 



188 

In addition, it has been said that, "when a writ of execution is set aside as 
illegally issued, or is issued and put in force after the debt has been paid or 
after a valid tender of the amount due, the client and solicitor are liable 
. . ,". 149 However, at least in England, "neither of them is liable if it is left 
to the sheriff to do what is right" 150 or "if the indorsement [on the writ] is 
correct, so that the sheriff, although he seized the wrong goods, was not 
misled by it". 151 Finally, it bears emphasizing that, as a matter of practice, 
indemnification agreements executed by the creditor's solicitor now serve 
to transfer responsibility to the solicitor in a great many cases. We now 
turn to consider such agreements. 

(ii) Indemnification Agreements 

As a general proposition, it would appear that, while sheriffs attempt 
to obtain indemnification agreements from solicitors, as a matter of law a 
sheriff cannot refuse to execute a writ on the ground that an oral or written 
indemnification agreement has not been forthcoming. 152 However, it has 
been suggested that "the sheriff is on stronger ground if he asks for such 
an indemnity before seizing goods, the title to which is in dispute". 153 
Indeed, in one such case, the Court in effect recommended that sheriffs 
obtain written agreements, calling into question the wisdom of relying on 
oral undertakings alone. 154 



149 Halsbury's Laws of England (4th e<±, 1976), Vol. 17, para. 431, at 257-58 (footnote 
references omitted). See, also, Cordery's Law relating to Solicitors, supra, note 52, at 
111. 

150 Halsbury's Laws of England (4th ed., 1976), Vol. 17, para. 431, at 258 (footnote ref- 
erence omitted). 

151 Ibid., para. 432, at 258 (footnote reference omitted). 

152 See Harold v. Stewart, supra, note 58. With respect to two statutory exceptions, see 
infra, this sec. In Jarvis v. The Commercial Bank, supra, note 52, the creditor refused 
- justifiably, in the Court's view - to indemnify the sheriff in respect of a seizure. 

As to the possibility of an implied indemnity from the creditor's solicitor to the 
sheriff, see Taylor v. Robertson, supra, note 120, esp. at 630-31 and 632-33. The 
Taylor case also dealt with express indemnification (ibid., at 633-34). The existence of 
an oral agreement was in issue in Corbett v. O'Reilly, supra, note 117. See, also, 
Cordery's Law relating to Solicitors, supra, note 52, at 111. 

153 Dunlop, supra, note 5, at 393. With respect to the seizure of property claimed by a 
third party, see s. 20 of the Execution Act, R.S.O. 1980, c. 146, discussed infra, this 
sec. 

154 See Corbett v. O'Reilly, supra, note 117, at 132-33, per Robinson C.J.: 

The principle of the protection designed to be given by the statute of frauds 
applies as well in regard to attornies as others, and there is the same justice in 
applying it; and though in a clear case the court does not allow the want of a writ- 
ten engagement to prevent their obliging an officer of the court to do what is just 
in a professional matter, yet it is salutary that the sheriff should be made to 
reflect upon the propriety of taking a precise written engagement from an attor- 
ney, when he meant to hold him liable in a case which he has nothing to do with 
except professionally. Attorneys have to act in a great number of cases, and it is 
not reasonable that they should be exposed to be attacked by applications of this 
kind, upon statements of mere conversation, in which a word or two more or less 
might shew the engagement to be intended to be binding or otherwise. By taking 
the trouble to obtain a written memorandum, the sheriff would be safe; attornies 
would know what they had to answer for, and would have no excuse for seeking 
to avoid their liability; and the court would be saved the unpleasant duty of hav- 
ing to determine between officers of the court who make contradictory state- 
ments upon oath. 



189 

The indemnification agreement used, for example, in the Judicial Dis- 
trict of York provides that the creditor's solicitor "shall be liable for any 
costs, liens, chattel mortgages, expenses and damages which the Sheriff or 
his officers may be put to by the seizure or attempted seizure and subse- 
quent proceedings if any, in the execution of [the solicitor's] instructions". 
Yet, notwithstanding the ostensibly broad coverage, a question arises 
whether the agreement would save the sheriff harmless in respect of, for 
example, negligent, wilful, or otherwise unauthorized wrongful acts. Some 
of the language used in the Alberta case of Mandelin v. Stan Reynolds 
Auto Sales Ltd. 155 lends some support to the proposition that the agree- 
ment would not cover such acts. In Mandelin, a chattel mortgagee pro- 
vided the sheriff with an indemnification agreement under a distress 
warrant. In the agreement, the mortgagee undertook "to indemnify you 
[the sheriff] against any action which may be brought against you by rea- 
son of your acting under the authority of the foregoing". The sheriffs bail- 
iff removed chattels located outside the sheriff's jurisdiction and 
exemplary damages were awarded in respect of the wrongful seizure. In 
holding that the bailiff was protected by the agreement, Mr. Justice Riley 
stated, by way of obiter, that he was "not suggesting that the indemnity 
agreement covers the bailiff for negligence or unauthorized action or wil- 
ful wrongdoing". 156 

Although Mr. Justice Riley's statement in Mandelin is, of course, only 
an interpretation of the particular contractual agreement in that case, it is 
not unreasonable to suggest that the traditionally narrow judicial interpre- 
tation of exclusionary and other similar clauses would lead an Ontario 
court to reach the same conclusion with respect to the indemnification 
agreements in use in Ontario. It seems likely that the sheriff is protected 
only from honest, non-negligent errors made as a result of following the 
instructions of the creditor. Whether a more comprehensive agreement, 
specifically covering, for example, negligent conduct by the sheriff, would 
be upheld by the courts is another matter. 

In Ontario, statutory provisions deal with indemnification of a sheriff 
in two limited circumstances. First, section 19(6) of the Execution Act pro- 
vides that the "sheriff is not bound to sue any person liable upon [a] 
cheque, bill of exchange, promissory note, bond, mortgage, specialty or 
other security unless the party who sued out the execution enters into a 
bond with two sufficient sureties to indemnify the sheriff against all costs 
and expenses to be incurred in the prosecution of the action, or to which 
he may become liable in consequence thereof . . .". 

Secondly, by virtue of section 20(1) of the Execution Act, the "sheriff 
is not, without written instructions and a bond . . . obliged to seize prop- 
erty in the possession of a third person claiming it and not in the posses- 
sion of the debtor against whose property the execution was issued". 
Under section 20(4), "[t]he bond shall be assignable to the claimant, and 
shall be conditioned that the persons executing it shall be liable for the 



155 Supra, note 87. 
156 /&/</., at 701. 



190 

damages, costs and expenses that the sheriff or the claimant may be put to 
by the seizure and subsequent proceedings, including interpleader pro- 
ceedings, if any, and which he does not recover from other persons who 
ought to pay them". 157 

The legislation of several other Canadian provinces contains provi- 
sions similar to section 20. 158 However, the Alberta Execution Creditors 
Act 159 would appear to be unique in granting the sheriff a general right to 
demand security before he is required to make a seizure. Section 4(2) of 
the Act reads: 

4. -(2) A sheriff is not bound to make a seizure under a writ of execution 
until he has been furnished with security which he considers to be reasonably 
sufficient for indemnity in respect of 

(a) his fees, charges and expenses, and 

(b) any claims for damages that might be incurred by him in making the 
seizure and levy and anything done in relation thereto. 

6. ACTIVE ENFORCEMENT OF A JUDGMENT DEBT: PREVIOUS 
COMMISSION RECOMMENDATIONS AND FURTHER 
PROPOSALS FOR REFORM 

(a) General 

As already indicated, in Parts I, II, and III of this Report the Commis- 
sion made several recommendations that either explicitly or implicitly 
dealt with the liability of the sheriff in respect of the enforcement of judg- 
ment debts. Our general aim was to reorganize, rationalize, and reform 
the law and practice, with a view, in part, to clarifying the role of the sher- 
iff and rendering the rules governing his duties less amorphous and ambi- 
guous. In many cases, we proposed the enactment of express statutory 
duties for the sheriff. In some instances, we specified that no liability 
should attach where the sheriff fulfils these duties. However, in other 
instances, we have said nothing respecting the liability of the sheriff. In the 
remaining sections, we shall review some of the more significant recom- 
mendations that relate to the liability of the sheriff and an instructing cred- 
itor in respect of seizure and sale of a debtor's property 160 and, having set 



157 It bears mentioning here that the Commission has recommended that "the sheriff 
should no longer be empowered to require 'written instructions and a bond', as is now 
the case under section 20(1) of The Execution Act": see Commission Report, supra, 
note 1, Part II, at 288, Recommendation 11. 

158 See, for example, s. 34 of the Nova Scotia Sheriffs Act, R.S.N.S. 1967, c. 282, and 
s. 38 of the Alberta Seizures Act, R.S.A. 1980, c. S-ll. 

159 R.S.A. 1980, c. E-14. 

160 Not all previous recommendations dealing directly or indirectly with the liability of the 
sheriff will be dealt with in this chapter. For example, we shall not consider our pro- 
posals respecting the seizure of property in the sole possession of a third party, nor 
those respecting the protection of a sheriff at interpleader proceedings. A discussion 
of these issues, and the resulting proposals, may be found in Commission Report, 
supra, note 1, Part II, at 33-39 and 259-86, respectively. 

We also shall not consider our Part II proposals respecting the liability of the 
sheriff where property is seized in the sole or joint possession of the debtor. However, 



191 

the stage by means of this background material, we shall then offer further 
proposals for reform. While we do not propose to offer recommendations 
in respect of every type of activity or conduct for which the sheriff conceiv- 
ably might be held legally responsible, we do wish to make recommenda- 
tions in respect of certain matters of more significant concern. 161 In addi- 
tion, we shall deal with the liability of execution creditors and their solici- 
tors. 

(b) Proposals for Reform 

(i) Liability and Protection of the Sheriff 

a. Liability Where the Sheriff Follows Directions from the 
Creditor or His Solicitor 

What should be the position of a sheriff who, in enforcing a judgment 
debt and causing injury thereby, has followed the express directions of the 
execution creditor or his solicitor? In this connection, reference should be 
made to several Commission recommendations appearing in Part I of this 
Report respecting the duty of a sheriff to follow the instructions of an exe- 



we wish to clarify here the relationship between these proposals and our Part I propos- 
als respecting the duty of the creditor to provide information to the sheriff and the 
sheriffs duty where such information is or is not obtained. In Part II, the Commission 
recommended as follows (Commission Report, supra, note 1, Part II, at 32 (footnote 
references omitted)): 

We recommend that, upon a creditor's instructions, the sheriff should be 
required to seize property in the sole or joint possession of the debtor. This duty 
should arise, and the sheriff should be protected from liability, unless the sheriff, 
acting in good faith, has some reasonable basis for believing that the property is 
not property in respect of which the debtor has some exigible right, title or inter- 
est. 

In Part I, the Commission recommended (at 141) that, "upon his request to the 
sheriff to initiate enforcement measures, a creditor should be required to give, to the 
best of his knowledge, information concerning the debtor's property in respect of 
which the enforcement measure or measures are requested". The Commission then 
made several proposals that imply that, without the requisite information, the sheriff 
would not be obliged to seize. For example, the Commission stated (at 141) that "the 
absence of sufficient information concerning the debtor and his property may restrict 
or preclude active enforcement". 

We wish to make it clear that, contrary to the impression that may have been 
given in Part I, the Commission is of the view that the sheriff should be required to 
seize property in the sole or joint possession of the debtor. No discretion would be 
permitted unless, of course, the sheriff, acting in good faith, reasonably believed that 
the property was not that of the debtor. Because the Commission did not wish to 
encourage uninformed seizures, we recommended that the creditor would be obliged 
to conduct public register searches and inform the sheriff of any encumbrances on the 
debtor's property. Moreover, the sheriff would conduct judgment debtor and third 
party examinations in aid of execution. Information might well arise that would alert 
the sheriff to the existence or likelihood of a claim to property in the sole or joint pos- 
session of the debtor. However, generally speaking, the absence of information would 
not affect the sheriffs duty to seize property in the sole or joint possession of the 
debtor. 

161 y^e w { s h to note hgj-g t j iat t h e Commission is also engaged in a Project on Remedies 
for Wrongful Intentional Interference with Goods. This Project deals, in part, with 
certain topics - such as trespass and conversion - related to the liability of a sheriff for 
a wrongful seizure. 



192 

cution creditor. The recommendations read as follows: 162 

135. In the absence of any directions from a creditor, the sheriff should not 
commence active enforcement measures. The mere delivery of a writ of 
enforcement to the enforcement office should not constitute a sufficient 
direction by a creditor to the enforcement office to commence such mea- 
sures. 

136. Subject to the exceptions described in Recommendations 137 and 141, 
where a creditor has given express directions to the sheriff, the sheriff 
should be under a duty to follow those directions. 

137. The sheriff should not be under any duty to follow the creditor's direc- 
tions where the sheriff knows or has reasonable grounds for believing that 
in so doing he would breach the provisions of a statute or regulation or 
otherwise commit an illegality. 

138. A creditor should be entitled to authorize the enforcement office to use 
any and all enforcement measures essential to enforce the judgment, 
without necessarily specifying which particular measures ought to be 
employed. However, he should be required to make such an authoriza- 
tion expressly. 



141. Where two or more creditors give conflicting or inconsistent directions to 
a sheriff concerning enforcement methods, the sheriff should be empow- 
ered to choose which enforcement method appears to be most beneficial 
to all the creditors. In selecting the most appropriate method, the sheriff 
should be under a duty to act reasonably and in good faith and should 
have regard to all the circumstances of the case, including the amount 
that is likely to be collected using each enforcement measure under con- 
sideration, the probable costs of each measure, the nature of the debtor's 
assets, and the wishes of other creditors. 

Accordingly, initiation of enforcement measures against the debtor's 
property would have to await express directions from the creditor. The 
Commission was of the view that, once such directions were given, the 
sheriff should be under a duty to act, subject to the exceptions proposed in 
Recommendations 137 and 141. 

Before offering our recommendations for reform in connection with 
the liability of a sheriff who has followed the creditor's directions, the 
Commission wishes to clarify the ambit of Recommendation 137. We did 
not intend to give the impression that the sheriffs ignorance of the law 
could be used by him as a defence in any subsequent proceedings taken 
against him. Let us assume, for example, that the creditor instructed the 
sheriff to seize some specific items of personal property on the debtor's 
premises. The critical issue, we believe, is whether the sheriff was aware of 
any facts that would involve a breach of a statute or regulation or the com- 
mission of an illegality if he were to seize the property. We were of the 
view that, if he was aware that the property did not belong to the debtor, 



162 Commission Report, supra, note 1, Part I, at 187-88. 



193 

his ignorance of the law of conversion and trespass, for example, should 
not serve to justify any wrongful seizure. 

We turn now to our recommendations for reform. Given the proposed 
mandatory statutory duty of the sheriff to follow the creditor's instruc- 
tions, we believe that it would hardly be reasonable to saddle the sheriff 
with liability should loss be occasioned by his actions. Accordingly, we rec- 
ommend that, where the sheriff follows the express directions of the cred- 
itor or his solicitor and he is not aware of any facts that would involve a 
breach of the provisions of a statute or regulation or the commission of an 
illegality, no liability should attach to the sheriff merely because he has 
engaged in enforcement activities pursuant to such directions and has 
caused injury thereby. However, the sheriff should continue to be liable 
for wrongful acts committed in the course of such enforcement activities. 
Therefore, while the sheriff should not be held liable merely, for example, 
because he has seized property in respect of which the debtor has no exig- 
ible right, title, or interest, or has made an excessive seizure, he should be 
liable for criminal acts, negligent conduct, intentional torts, or excessive 
use of force 163 in effecting the seizure. 

The Commission believes that statutory protection ought not to be 
extended beyond what is reasonable. For example, an assault committed 
in the course of a seizure should continue to be actionable. On the other 
hand, it would not be negligent, for example, for the sheriff to fail to con- 
duct a search in respect of the registration of a motor vehicle or in respect 
of a personal property security interest, having regard to our earlier gen- 
eral recommendation that "[tjhe sheriff should not be responsible for the 
conduct of public register searches when enforcing money judgments 
obtained in any court". 164 

It bears emphasizing that the recommendations made in the preceding 
paragraph concerning the liability of the sheriff are of general application. 
The principles enunciated are not relevant solely in respect of wrongful 
seizure, but are equally applicable in the context of garnishment, an 
enforcement remedy that, except for wage garnishment in the provincial 
courts (family division), would come under the auspices of the proposed 
new enforcement office. 165 As in the case of a seizure, a creditor might 
specifically instruct the sheriff to garnish certain debts allegedly owing to 
the debtor. However, the creditor might be mistaken in his belief that any 
debt is owing or that a debt is owing by the putative garnishee. Or the 
creditor might misstate the amount owing to the debtor. Under these cir- 
cumstances, the sheriff should be protected from liability if he did not 
know and had no reasonable grounds for believing that, in following the 
creditor's instructions, he would be engaging in a wrongful garnishment. 166 



163 with respect to the use of force, see Commission Report, supra, note 1, Part II, at 
106-12. The relevant recommendations appear ibid., at 300-01, Recommendations 

81-85. 

164 Ibid., Part I, at 192, Recommendation 173. 

165 See ibid., Part II, at 307, Recommendation 135. 

166 It bears mentioning here that the sheriff would be far less likely to cause serious preju- 
dice to a garnishee for an erroneous garnishment than he would to a true owner of 
property for a wrongful seizure of that property. In the first place, service upon the 



194 

In addition to execution against real and personal property and the 
garnishment of debts, a judgment debt might be enforced under the Com- 
mission's proposals by means of receivership, the new remedy that we 
have proposed should take the place of the present remedy of equitable 
execution. 167 Our recommendations respecting the role and powers of the 
receiver - which would be the enforcement office, in the person of the 
sheriff, unless otherwise ordered by the court 168 - deal implicitly with the 
issue of the sheriffs liability. The relevant recommendations 169 need not 
be repeated here. Suffice it to say that, as in the case of execution and gar- 
nishment, we see no justification whatever for subjecting the sheriff to lia- 
bility where he has followed either the strictures contained in the proposed 
new legislation or the instructions of the creditor or his solicitor. Insofar as 
the potential liability of the receiver-sheriff in respect of his management 
activities is concerned, we are of the view that no special recommenda- 
tions are required; consequently, the ordinary law relating, for example, 
to liability for negligent acts or omissions, would apply to the sheriff in the 
same manner as it would to any other person in a similar position. 

We now turn to deal with two further matters respecting the liability 
of the sheriff where he has received instructions respecting the enforce- 
ment of a judgment debt. First, it will be recalled that, in Part I of this 
Report, we recommended that "[a] creditor should be entitled to author- 
ize the enforcement office to use any and all enforcement measures essen- 
tial to enforce the judgment, without necessarily specifying which 
particular measures ought to be employed". 170 The Commission wishes to 
supplement this recommendation with a further proposal, similar in princi- 
ple to the one that was made in Part I in the analogous situation where the 
sheriff would be empowered to select the most appropriate enforcement 
method after two or more creditors have given him conflicting or inconsis- 
tent instructions. 171 We recommend that, where the creditor authorizes the 
sheriff to use any and all enforcement measures essential to enforce the 
judgment, without specifying which particular measures ought to be 
employed, the sheriff, in selecting the most appropriate measure or mea- 



garnishee of a notice of garnishment would bind only those debts actually owing by the 
garnishee to the debtor (see ibid., at 309, Recommendation 150); if no debt was 
indeed owing, then the garnishment notice would not affect the garnishee's financial 
affairs. 

In the second place, the garnishee would have the right to file with the enforce- 
ment office a dispute, setting forth the basis of his objection to the garnishment notice 
(see ibid., at 309, Recommendation 151). In many cases, the dispute would be 
resolved informally, without the expenditure of any significant amount of money by 
the garnishee, particularly where the garnishment notice has been sent to the wrong 
person. But, it is conceivable that the alleged garnishee in such a case would have 
incurred certain administrative and other costs; in other cases, the garnishee would 
have expended certain sums on disputing the amount stipulated in the garnishment 
notice. However, for the reasons advanced, we are of the view that legal responsibility 
for such amounts should not be borne by the sheriff under the circumstances posited 
above. 

167 Ibid., at 311, Recommendations 165 and 166. 

168 Ibid., Recommendation 171. 

169 Ibid., at 311-12, Recommendations 168-170 and 176-80. 

170 Ibid., Part I, at 188, Recommendation 138. 

171 Ibid., Recommendation 141, reproduced supra, this sec. 



195 

sures, should be under a duty to act reasonably and in good faith. The 
sheriff should have regard to all the circumstances of the case, including 
the nature of the debtor's assets, the amount that is likely to be collected 
under various enforcement measures, and the probable costs of such mea- 
sures. 

The second matter relates to the liability of the sheriff where, pursuant 
to Recommendations 138 and 141, reproduced above, the sheriff has ful- 
filled his statutory duties in selecting the most appropriate enforcement 
measure or measures. The Commission believes that it would clearly be 
impossible to justify liability under such circumstances. Accordingly, we 
recommend that the sheriff should not be liable where he has acted in 
accordance with the recommendations made in the previous paragraph or 
where he has acted in conformity with our Part I proposal respecting the 
selection of the most appropriate enforcement measure after the sheriff 
has received conflicting or inconsistent directions from two or more credi- 
tors. 

b. Indemnification Agreements 

We now turn to the practice of sheriffs requiring, or at least seeking, 
before executing the creditor's writ, an indemnification agreement from 
the execution creditor's solicitor or, occasionally, from the creditor 
himself. 172 

Whatever the present justification, whether legal or otherwise, for the 
use of indemnification agreements by a public official - a matter to which 
reference will be made below - we are of the view that, leaving aside 
indemnification respecting the costs and expenses of enforcement, our pre- 
vious proposals concerning the liability of sheriffs would largely render 
such agreements functionless. Indemnification agreements are designed, 
at least in part, to save the sheriff harmless for acts done in the course of 
executing a writ. Even today, it is questionable whether such agreements 
would serve to protect a sheriff for negligent acts or intentional torts caus- 
ing injury. If indemnification agreements do not cover these acts, they 
offer protection mainly where, in effect, the sheriff has acted reasonably 
and in good faith, and also in respect of the costs and expenses of enforce- 
ment by the sheriff. However, it will be recalled that, running through our 
proposals respecting the protection of the sheriff, either explicitly or 
implicitly, is precisely the principle or limitation that the sheriff should be 
saved harmless where he has acted reasonably and in good faith. Accord- 
ingly, the sheriff would not need to transfer liability to a creditor or his 
solicitor pursuant to an indemnification agreement. 

In addition to the fact that the purpose of indemnification agreements 
would be dramatically circumscribed under the Commission's proposed 
new enforcement regime, it is submitted that there are philosophical 
objections to their continued use, at least insofar as they deal with indem- 



172 With respect to the request for a type of indemnity directly from the creditor, see, for 
example, Corbett v. O'Reilly, supra, note 117. 



196 

nity beyond the costs and expenses of enforcement. The practice of seek- 
ing, and generally receiving, such agreements raises serious questions con- 
cerning the proper role of the sheriff, acting as a public official, in the 
enforcement of judgment debts. The Commission strongly believes that 
the present practice is inconsistent with the fact that the sheriff is a provin- 
cial official, neutral as between the contending parties and charged with 
enforcing money judgments obtained under a publicly-funded court sys- 
tem. It is also inconsistent with a proposed new regime expressly intended 
to remove unwarranted impediments to the enforcement of judgment 
debts. 

The Commission is not unaware that, as a practical matter, the exac- 
tion of indemnification agreements does not appear, in itself, to have had a 
chilling effect on execution as a remedy for judgment creditors. However, 
it is not unlikely that most persons involved in the execution process have 
simply resigned themselves to certain practices, however bothersome or 
legally suspect, in order to have the sheriff get on with the business at 
hand. While this may well be the reason for the continued, although by no 
means universal, compliance with the sheriffs request for full indemnity, 
it ought not to be regarded as a satisfactory justification for the retention 
of the practice. 

Having regard, therefore, to the broad scope of the Commission's pro- 
posals protecting the sheriff from liability, the very limited role of such 
agreements under our proposed new enforcement regime, and the philo- 
sophically and legally suspect practice of seeking and obtaining indemnifi- 
cation agreements to protect the sheriff as a public official, the 
Commission recommends that, subject to one exception, the sheriff should 
be precluded from requiring or accepting from a creditor, his solicitor, or 
any other person acting on the creditor's behalf, an indemnification agree- 
ment or any other kind of agreement, undertaking, or bond designed to 
save the sheriff harmless from liability in respect of any of his activities in 
the enforcement of a judgment debt. However, we do believe that the 
sheriff is justified in seeking to protect himself in respect of the costs and 
expenses of enforcement. Accordingly, as an exception to the general rule 
proposed above, we recommend that the sheriff should be entitled to 
require either a deposit or an indemnification agreement or any other kind 
of agreement, undertaking, or bond covering all or part of the anticipated 
costs and expenses to be incurred by him in the enforcement of a judgment 
debt. 

In an effort to delineate clearly the role of the sheriff under our pro- 
posed new enforcement regime, and, therefore, to reduce the area of a 
sheriff's discretion in the enforcement of money judgments, we have rec- 
ommended expansion of the protection to be afforded to the sheriff. His 
present position is precarious - straining to follow the command of the writ 
and the directions of the execution creditor, while at the same time, as a 
public official, attempting to remain impartial between the creditor and 
the debtor. The very nature of the enforcement process may give rise to 
honest errors of judgment. We do not believe that the sheriff should be 
held liable under these circumstances. Nor should the sheriff be held liable 
for merely following statutory or regulatory prescriptions. 



197 

c. Sale of Seized Property 

As indicated earlier in this chapter, 173 the Commission has already 
made several proposals for reform in respect of the sale of seized property. 
Many of the recommendations - for example, those dealing with the time 
and location of sale and the manner of sale where the initial attempt to sell 
by public auction has been unsuccessful - empower the sheriff, acting rea- 
sonably and in good faith, to exercise his own discretion. Other recom- 
mendations - for example, the notice and advertising proposals - would 
impose certain mandatory duties on the sheriff. Where the sheriff is per- 
mitted to exercise discretion and is enjoined to act reasonably and in good 
faith, we believe that, if he acts in this manner, he should be protected 
from liability in any action by a person aggrieved by his activities. With 
respect to his mandatory duties, we also are of the view that the sheriffs 
performance of them should protect him from liability. Accordingly, to 
reflect these views - which conform to those enunciated earlier, for exam- 
ple, in the context of the seizure of property, garnishment, and receiver- 
ship - we recommend that the sheriff should not be liable where he acts in 
accordance with the Commission's recommendations concerning the sale 
of seized property. 

d. Application to the Court for Directions 

In order to protect all parties involved in the enforcement process - 
sheriffs, creditors, debtors, and, for example, persons claiming an interest 
in property seized or about to be seized - we wish to make a further rec- 
ommendation. While, under our proposals, the sheriff would have a clear 
idea of his duties in most cases, these proposals do envisage some residual 
discretion in the sheriff to refuse to act or, where he receives either gen- 
eral or conflicting instructions, to choose which enforcement method 
appears to be in the best interests of all creditors. In some instances, the 
sheriff may be in a quandary concerning which course he ought to follow. 

At the present time, section 8(2) of the Execution Act provides that 
"[a] sheriff may apply to the county or district court of the county or dis- 
trict of which he is the sheriff for direction on any matter arising under sec- 
tions 2 to 7" - that is, the sections dealing with chattels exempt from 
seizure. Section 8(2) is, then, a provision with a limited, although impor- 
tant, focus. 

In connection with the sheriffs resort to the court for guidance, ref- 
erence should be made to legislation in Alberta. Alberta has enacted a 
provision that, although it places a mandatory obligation on the sheriff to 
seek the court's guidance, is similar in principle to Ontario section 8(2) ; 174 
however, it also has analogous legislation that is more comprehensive in 
scope. Section 39(1), (3), and (4) of the Seizures Act m provides as follows: 



173 See supra, this ch., sec. 4(d). 

174 See Exemptions Act, R.S.A. 1980, c. E-15, s. 9: "If a claim is made for exemptions 
and a dispute arises in respect of the claim, the sheriff on his own motion shall refer 
the matter to the Court of Queen's Bench for summary determination, on such notice 
as the Court may direct." 

175 R.S.A. 1980, c. S-ll. Subsection (2) deals with distress. 



198 

39. -(1) When the sheriff has any doubts as to the exercise by him of any 
power, duty or authority conferred or imposed on him by this Act, he may on 
his own motion apply to the Court for directions. 



(3) On an application under subsection (1) . . . the Court may, on whatever 
notice and to whatever parties it thinks proper, and after hearing any evidence 
that it considers necessary, make an order giving any directions consistent 
with this Act that it considers proper and convenient. 

(4) No action or proceeding of any kind lies against the sheriff for anything 
done pursuant to or in conformity with any directions so given. 

A similar type of provision appears in the Execution Creditors Act m con- 
cerning "any question, doubt or difficulty [that] arises with regard to the 
exercise by the sheriff ... of any power, duty or authority conferred upon 
him by" that statute. 

The Commission believes that it would be in the best interests of all 
concerned if an actual or anticipated difficulty could be resolved by the 
court at an early stage rather than give rise to even more substantial prob- 
lems later. Accordingly, we recommend that, where the sheriff has any 
question, doubt, or difficulty, or where any dispute arises, in connection 
with the exercise or intended exercise by him of any power, duty, or 
authority conferred or imposed on him by any enforcement legislation, or 
with any matter that arises in the enforcement of a judgment debt, he 
should be entitled to apply to the court for directions. The court should be 
empowered to hear the application with or without notice to all or some of 
the persons interested in the application, and to give whatever directions it 
deems proper. The sheriff should, of course, be protected from liability for 
acts done in conformity with the court's directions. Finally, it should be 
made clear that legislation implementing the above proposals should not 
affect the sheriff's right to interplead, as recommended in Part II of this 
Report. 

(ii) Liability and Protection of the Creditor and His Solicitor 

We have already seen that, although the law in the area is, at least in 
part, somewhat unclear, at common law liability may attach to a creditor 
and his solicitor for the wrongful acts of the sheriff. 177 In addition, some 
jurisdictions have enshrined certain aspects of this liability in legislation. 178 
Finally, liability may be imposed upon a creditor by implication or upon 
his solicitor pursuant to an indemnification agreement. 

Given the present law governing the liability of sheriffs, creditors, and 
solicitors, it is rare that an aggrieved person - for example, the true owner 
of property wrongfully seized - is without adequate recourse to compensa- 



176 R.S.A. 1980, c. E-14,s. 39. 

177 See supra, thisch., sec. 5. 

178 See supra, note 116. 



199 

tion. Under our proposals, however, the nearly complete removal of lia- 
bility from the sheriff - and, therefore, the Crown in most cases - would 
likely have a considerable negative impact on the ability of aggrieved par- 
ties to recover compensation for their losses. Eliminating the sheriff as a 
source of compensation would place liability, at least for the most part, 
squarely on the creditor or his solicitor. But, whereas, at present, the 
aggrieved party would normally have reasonable certainty that he could 
collect his judgment debt where he successfully sued the sheriff - given the 
fact that the Crown would ordinarily assume financial responsibility - no 
such certainty would exist where the defendant was the creditor, or even 
his solicitor, for they might well be impecunious or otherwise unable to 
pay the judgment debt. The proposed expanded immunity for sheriffs 
raises, therefore, significant issues concerning the person or persons who 
ought to bear the loss caused by a wrongful seizure. 

The range of situations in which the issue of liability may arise is var- 
ied; in some instances, the creditor, his solicitor, and the claimant will 
have acted honestly and as reasonably as possible, whereas, in other cases, 
there will be differing degrees of negligence, carelessness, inadvertence, or 
even deceit. Quite clearly, it is difficult, if not impossible, to envisage leg- 
islation that will meet all these situations expressly. 

Having examined the existing law respecting the liability of the cred- 
itor and his solicitor, and having considered several possible proposals for 
reform, we have come to the conclusion and, accordingly, recommend 
that, subject to one exception, to be discussed below, there should be no 
legislative intervention in this area of debtor-creditor law. Of course, the 
previous recommendations made by the Commission, including those con- 
cerning the liability of the sheriff, would apply. Therefore, while the sher- 
iff would be protected where, basically acting reasonably and in good 
faith, he follows the strictures of the legislation and the instructions of the 
creditor or solicitor, under the new regime the court could continue to 
impose liability on creditors and solicitors in those cases in which liability 
is now imposed on them. For example, an express direction to seize a 
specific asset would result in liability if the asset belonged to a third party 
and not the debtor. We believe that any movement toward a stricter 
regime respecting liability would be manifestly unfair to creditors and their 
legal advisers, while a more lenient regime could place an aggrieved party 
in an untenable position, since he would no longer be able to seek redress 
against the sheriff in many situations. 

In the vast majority of cases, the proposed statutory protection of the 
sheriff and the continued imposition of liability on creditors and solicitors 
in appropriate circumstances would not likely alter the present state of 
affairs in any material way, at least from the point of view of the latter two 
parties; as we have seen, the existing widespread use of indemnification 
agreements, the apparently implied indemnification of sheriffs by credi- 
tors, and the common law liability of creditors and solicitors independent 
of express or implied indemnification, now serve to place these persons at 
considerable risk, at least in theory, in a great many situations. It is cer- 
tainly not clear that our recommendation would dramatically change this 
picture. 



200 

By the same token, the absence of any new statutory provision 
respecting the liability of creditors and solicitors would permit the courts 
to interpret and develop the law in a flexible manner. For example, in 
determining the liability of creditors and solicitors - and even claimants to 
seized property - the courts might look to the contribution provisions of 
the Negligence Act. 179 In assessing the degree of negligence exhibited by 
each of the parties, the court might have regard to such matters as whether 
a judgment debtor questionnaire, judgment debtor examination or, if 
appropriate, third party examination has been requested by the creditor 
and whether the creditor has conducted the relevant searches in public 
registers - such as the personal property security register - for security 
interests, liens, or other encumbrances. Or the court might consider 
whether a claimant who has lent the debtor the wrongfully seized property 
has been negligent in extending generosity to a debtor known by him to be 
financially reckless and hounded by creditors and the sheriff. Or the court 
might be influenced by the fact that the creditor and his solicitor have 
ignored certain obvious indications that the seized property was not owned 
by the debtor. 

As stated above, the general recommendation that there should be no 
legislative intervention with respect to the law governing the liability of 
creditors and solicitors is subject to one exception. The genesis of this 
exception is the previously noted change in the position of an aggrieved 
party should our proposals regarding the liability of the sheriff be imple- 
mented. The Commission has given careful consideration to the situation 
where an aggrieved party, successful in whole or in part against, for 
example, the creditor or his solicitor, or both, is unable to collect all or 
part of his money judgment because the defendant or defendants is or are 
without sufficient financial resources. 

On the one hand, it may be said that the absence of a real remedy 
arising from the unsound financial status of a defendant is hardly novel in 
debtor-creditor relations. The law does not normally come to the rescue of 
successful plaintiffs stymied for this reason. However, it does bear repeat- 
ing that the Commission's earlier proposals protecting the sheriff would 
remove from the picture a significant source of compensation for 
aggrieved parties. This alteration would bring in its train a potential reduc- 
tion in the chances of aggrieved parties receiving full, or even partial, com- 
pensation for their losses. 

Having regard to this not improbable state of affairs, the Commission 
recommends that the class of claims that may be compensated by means of 
the proposed new assurance fund, described earlier in this chapter, 180 
should be expanded to include claims for compensation by a plaintiff who 
is successful in an action arising out of a wrongful act by the sheriff in the 
context of the enforcement of a judgment debt and who, as a result of the 
financial status of the person held to be liable in that action, is unable to 
obtain full payment of the money judgment rendered in his favour against 



179 R.S.O. 1980, c. 315. 

180 See supra, this ch., sec. 3(a). 



201 

such person. We are of the view that the use of the assurance fund is war- 
ranted where an aggrieved party is unable to collect the full amount of his 
judgment debt, having regard to the fact that, in most cases, he would not 
have access to the sheriff and, therefore, the Crown. The fund, however, 
would remain a secondary source of compensation, available only where 
the defendant - or his insurer, in the case of a solicitor, for example - did 
not satisfy the full measure of the judgment debt. 

Recommendations 

The Commission makes the following recommendations: 

1. (1) Where the sheriff complies with the new rules respecting the 

reporting of writs on file at the enforcement office (see Part III, 
Recommendation 21(9)), he should be protected from liability. 

(2) Where the sheriff has not complied with such rules, a creditor 
aggrieved by the sheriff's actions should be required to look only 
to the proposed new assurance fund (see Part III, Recommenda- 
tion 21(16)) if he seeks compensation; he should have no cause of 
action against the sheriff. 

2. (1) The class of claims that may be compensated by means of the pro- 

posed new assurance fund should include not only claims by a 
creditor wrongfully deprived of his rights by the actions of the 
sheriff in erroneously providing a clear certificate notwithstanding 
the existence of the creditor's valid writ (see Part III, Recommen- 
dation 21(16)(a)), but also claims for compensation by any other 
person prejudiced because of the provision of an erroneous sher- 
iff's certificate. 

(2) The person prejudiced because of the negligent provision of an 
erroneous sheriffs certificate should be required to look only to 
the assurance fund if he seeks compensation. 

(3) In addition to the levy recommended to be added to the cost of 
lodging writs of enforcement with the sheriff for the purpose of 
establishing and maintaining the assurance fund (see Part III, 
Recommendation 21(16)(b)), a levy should be required to be paid 
by all persons requesting from the sheriff information concerning 
writs of enforcement lodged in the enforcement office. 

3. Where the sheriff fails to include a creditor in a distribution of the pro- 
ceeds of an enforcement measure, so that the creditor is not paid the 
share to which he is entitled under the proposed new creditors' relief 
legislation, and the other creditors are, therefore, overpaid, 

(a) the court, on application of the creditor, should be empowered to 
make whatever order seems just and reasonable under the circum- 
stances, including setting aside the distribution, requiring repay- 
ment, awaiting a subsequent distribution to correct the 
overpayment, or entitling the creditor to compensation from the 
proposed new assurance fund; and 



202 

(b) the sheriff should not be liable for failure to pay the creditor his 
share of the proceeds. 

4. (1) Where the sheriff follows the express directions of the creditor or 

his solicitor and he is not aware of any facts that would involve a 
breach of the provisions of a statute or regulation or the commis- 
sion of an illegality (see Part I, Recommendations 136 and 137), 
no liability should attach to the sheriff merely because he has 
engaged in enforcement activities pursuant to such directions and 
has caused injury thereby. 

(2) However, the sheriff should continue to be liable for wrongful acts 
committed in the course of such enforcement activities, such as 
criminal acts, negligent conduct, intentional torts, or the use of 
force that goes beyond that proposed by the Commission in Rec- 
ommendations 81-85 of Part II. 

5. (1) Where the creditor authorizes the sheriff to use any and all 

enforcement measures essential to enforce the judgment, without 
specifying which particular measures ought to be employed (see 
Part I, Recommendation 138), the sheriff, in selecting the most 
appropriate measure or measures, should be under a duty to act 
reasonably and in good faith. 

(2) The sheriff should have regard to all the circumstances of the case, 
including the nature of the debtor's assets, the amount that is 
likely to be collected under various enforcement measures, and 
the probable costs of such measures. 

(3) The sheriff should not be liable where he has acted in accordance 
with the recommendations contained in the preceding paragraphs. 

6. The sheriff should not be liable where, in selecting the most appro- 
priate enforcement method after receiving conflicting or inconsistent 
directions from two or more creditors, he acts reasonably and in good 
faith and has regard to all the circumstances of the case, including the 
amount that is likely to be collected using each enforcement measure 
under consideration, the probable cost of each measure, the nature of 
the debtor's assets, and the wishes of other creditors (see Part I, Rec- 
ommendation 141). 

7. (1) Subject to Recommendation 7(2), the sheriff should be precluded 

from requiring or accepting from a creditor, his solicitor, or any 
other person acting on the creditor's behalf, an indemnification 
agreement or any other kind of agreement, undertaking, or bond 
designed to save the sheriff harmless from liability in respect of 
any of his activities in the enforcement of a judgment debt. 

(2) The sheriff should be entitled to require either a deposit or an 
indemnification agreement or any other kind of agreement, 
undertaking, or bond covering all or part of the anticipated costs 



203 

and expenses to be incurred by him in the enforcement of a judg- 
ment debt. 

8. The sheriff should not be liable where he acts in accordance with the 
Commission's recommendations concerning the sale of seized prop- 
erty (see Part II, Recommendations 95-104). 

9. (1) Where the sheriff has any question, doubt, or difficulty, or where 

any dispute arises, in connection with the exercise or intended 
exercise by him of any power, duty, or authority conferred or 
imposed on him by any enforcement legislation, or with any mat- 
ter that arises in the enforcement of a judgment debt, he should 
be entitled to apply to the court for directions. 

(2) The court should be empowered to hear the application with or 
without notice to all or some of the persons interested in the appli- 
cation, and to give whatever directions it deems proper. 

(3) The sheriff should not be liable for acts done in conformity with 
the court's directions. 

(4) Legislation implementing the recommendations in the preceding 
paragraphs should not affect the sheriff's right to interplead (see 
Part II, Recommendations 192-219). 

10. (1) Subject to Recommendation 10(2), and to the previous recom- 
mendations made by the Commission in this Report, there should 
be no legislative intervention with respect to the law governing the 
liability of creditors and their solicitors. 

(2) The class of claims that may be compensated by means of the pro- 
posed new assurance fund should be expanded to include claims 
for compensation by a plaintiff who is successful in an action 
arising out of a wrongful act by the sheriff in the context of the 
enforcement of a judgment debt and who, as a result of the finan- 
cial status of the person held to be liable in that action, is unable 
to obtain full payment of the money judgment rendered in his 
favour against such person. 



CONCLUSION 



The publication of Part V of the Report on the Enforcement of Judg- 
ment Debts and Related Matters brings to an end the Commission's 
Enforcement of Judgment Debts Project. The reforms proposed in chap- 
ter 2 of this final Part of the Report seek to ensure that the conclusion of 
the enforcement process is marked by equity and fairness to all concerned. 
The simplified scheme of rateable distribution of proceeds of enforcement, 
along with a clearly established scheme of priorities, will do much, in our 
view, to alleviate the uncertainty and, in some cases, injustice, that per- 
meates this stage of the enforcement process. The recommendations in 
chapter 3 respecting postjudgment arrest, we believe, would retain the 
benefits of this ultimate sanction while safeguarding the rights and free- 
doms of debtors. Given our earlier recommendations respecting the reme- 
dies of seizure and sale and garnishment, for example, the Commission is 
of the view that arrest and imprisonment of defaulting debtors who are 
able to pay, or who have taken steps to frustrate the enforcement efforts 
of their creditors, will become truly a remedy of last resort. The proposals 
for reform contained in chapter 4 concerning liability of sheriffs, creditors, 
and solicitors in the enforcement of judgment debts - for example, the use 
of the proposed assurance fund to compensate aggrieved creditors and 
others, and the clarification of the liability of sheriffs - would enhance the 
effectiveness of the enforcement process while, at the same time, protect- 
ing the interests of all concerned. 

This Part of the Report on the Enforcement of Judgment Debts and 
Related Matters, like the first four Parts of the Report, is the culmination 
of many years of research and study by two of the Commission's legal 
staff, M.A. Springman, Senior Legal Research Officer, and E. Gertner, 
Legal Research Officer. Their contribution to the Enforcement of Judg- 
ment Debts Project in general, as well as to this Part of the Report, has 
always been of the highest quality and, once again, we would like to 
express our deepest appreciation to them for a job well done. Similarly, 
we are grateful for the excellent guidance and assistance to this Part of the 
Report and the Project as a whole provided by M.P. Richardson, Counsel 
to the Commission. The quality of the Report on the Enforcement of Judg- 
ment Debts and Related Matters is in no small measure attributable to her 



[205] 



206 



efforts. Finally, we would like to thank once again David E. Baird, Esq., 
Q.C., for the practical wisdom he imparted unsparingly to the Commis- 
sion throughout the Project. 



All of which is respectfully submitted. 

^*1l fy<^L^ sU-dot 

Derek Mendes da Costa 
Chairman 




H. Allan Leal 
Vice Chairman 




Richard A. Bell 
Commissioner 




<f^~£ 



William R. Poole 
Commissioner 



ySZ^Z- 




Barry A. Percival 
Commissioner 



March 31, 1983 



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