Canada: Garnishment/Assignment and Crown Debts

Last Updated: October 21 2010

By Alyssa Keon*

There has been a longstanding restriction on the garnishment and assignment of Crown debts in Canada. These restrictions have existed at common law and have been legislated. This has become a much litigated point, as creditors have attempted to oust such restrictions. There has been some success in the family law context as judges appear to be more lenient in cases where outstanding support obligations are in question.

This was the case in Daniels v. Daniels,1 where proceedings were initiated for the purpose of enforcing child support arrears. In this case, the Manitoba Court of Queen's Bench, on a motion for judicial review, determined that, although a garnishment order was out of the jurisdiction of the court, it was prepared to permit the appointment of a receiver for the collection of pension benefits and settlement funds from the Government of Canada for the benefit of the outstanding child support.

The finding that a receiver could be called upon to collect such funds raises the question of whether such an order was within the jurisdiction of the court and, if so, whether this opens the doors for trade creditors, banks or other lenders to attempt to use the same remedy in Ontario.

Legal Background

Garnishment, or the attachment of debts, is the primary mechanism used by judgment creditors to seize debts owed by a third party to the judgment debtor. Alternatively, assignments are used to assign to a third party debts owed to the judgment debtor.

There has been longstanding Crown immunity from both garnishment and assignment of debts. The restriction against garnishment of Crown debts existed at common law but has been modified by legislation. The general prohibition against the assignment of federal Crown debts is specifically set out in section 67 of the federal Financial Administration Act (the "FAA") which clearly states that Crown debts are not assignable.2 Across Canada similar limitations have been implemented by some of the provinces. However, it should be noted that the Ontario Financial Administration Act3 does not specifically set out such a limitation.

There are certain indicators that both garnishments and assignment of certain Crown debts may be permissible. The Garnishment, Attachment and Pension Diversion Act4 sets out limited circumstances where Crown debts may be garnished. Generally, most employment wages and some pension benefits are now accessible through garnishment; however, there are many other types of Crown debts that remain out of reach. Notwithstanding the prohibition against the assignment of Crown debts, section 68 of the FAA provides that Crown debts may be assigned where permitted in the FAA or by any other Act of Parliament. Section 68 also sets out that Crown debts may be assigned where there is an amount due or becoming due under a contract and where there is any other Crown debt of a prescribed class.5 The Income Tax Act provides another exception to section 67 of the FAA and permits a corporation to assign any amount payable by the Crown under the Income Tax Act.6 Furthermore, the Tax Rebate Discounting Act provides an opportunity for the purchase of a person's right to income tax refunds.7

In addition, a remedy pursuant to section 101 of the Courts of Justice Act has been used on occasion to evade these restrictions.8 This section provides the authority for the Ontario Superior Court of Justice to appoint a receiver, where it appears to a judge to be just or convenient to do so.9 A receiver is typically appointed as an officer of the court for the purpose of stepping in, gathering assets and finally distributing those assets to the creditor.

The Supreme Court of Canada in Canadian National Railway Co. v. Croteau explained that in the case of the appointment of a receiver by way of equitable execution, there is no order made against the Crown, it is simply the substitution of the person to receive and administer the benefits owed by a third party to the judgment debtor.10

There have been mixed reviews in case law of the use of section 101 of the Courts of Justice Act to circumvent the restrictions against the garnishment of Crown debts. Generally, courts have been unwilling to take a liberal approach to the application of this solution and have only done so in clear cases where there is a need for an equitable remedy. This remedy has been widely argued in the family law context due to the fact that the governing legislation specifically allows for the appointment of a receiver as an enforcement method.i

Review of Daniels Decision

The Facts

Daniels arose as a result of child support arrears and evolved into a claim for Daniels' benefits under settlement funds. David Daniels ("Daniels"), was a claimant who had become entitled to settlement funds from the Government of Canada as a result of a court ordered Indian Residential Schools Settlement ("IRSS"). The settlement funds consisted of Common Experience Payment and Independent Assessment Process Payment. These payments were designed to compensate claimants for physical and sexual assaults and other abuse experienced in residential schools. The Government of Canada had deposited the settlement funds in trust for the benefit of all the claimants under section 21 of the FAA.

In the initial proceedings, the master made a garnishment order against the Residential Schools Resolution Canada funds for the portion of Daniels' entitlement. Although the garnishment order was served on the IRSS Administrator ("Administrator"), the Administrator, nevertheless issued a cheque without trust conditions to Daniels' lawyer. Meanwhile, the Department of Justice moved to have the garnishment order set aside. It should be noted that the Designated Officer, responsible for the enforcement of child support arrears, chose not to participate in the proceedings. As a result, the court appointed an amicus curiae to address the issues raised by the Department of Justice.

The Decision

Among the many issues that needed to be resolved, the Manitoba Court of Queen's Bench had to determine whether the issues raised in the motion had become moot when the funds were paid out from the settlement funds, and whether to replace the master's order and instead appoint a receiver.

In determining the first issue, the court applied the factors discussed in the Supreme Court of Canada decision Borowski v. the Attorney General of Canada.11 The Manitoba Court of Queen's Bench decided that the issues had become moot when the funds were paid to Daniels' lawyer. This meant that there was no live issue left between the Designated Officer and the Administrator, as the funds were now out of the Administrator's control. The court explained that there was no good reason to decline jurisdiction to determine the issues and stated that there was judicial economy in determining the issues, as the court would not be departing from its traditional role. Therefore, the court explained that this was an exceptional case and that, even though the issues had become moot, it was still prepared to move forward and determine all of the issues before it.

In resolving the second issue, the Manitoba Court of Queen's Bench extensively applied the relevant legislative authorities and case law which set out the powers of the court in such situations. The court acknowledged the legislative authority of section 55(1) of the Court of Queen's Bench Act, which outlines the authority of the court to order a receiver where it appears to the judge to be just or convenient to do so.12 As previously mentioned, the equivalent section in Ontario can be found under section 101 of the Courts of Justice Act.

The court then applied The Family Maintenance Act which sets out the enforcement mechanisms available to the Designated Officer in the event of a default.13 Among the many enforcement methods, The Family Maintenance Act empowers the Designated Officer to seek both a garnishment order and the appointment of a receiver. Sections 60(1) and 60(2) of The Family Maintenance Act enable a judge or a master upon an application to appoint a receiver. The comparable legislative authority in Ontario can be found in the Family Responsibility and Support Arrears Enforcement Act, 1996 (the "FRSAEA").14 The FRSAEA permits the Director of the Family Responsibility Office to collect support arrears by employing any method of enforcement expressly or not expressly provided for by the Act.15 The Family Law Rules also set out the methods of enforcement for payment orders or any kind of order to include: garnishment and the appointment of a receiver under section 101 of the Courts of Justice Act.16

The Manitoba Court of Queen's Bench reviewed a variety of decisions where either a receiver has been appointed or where the courts have refused to take such action. In particular, the court focused on Fontaine v. Canada (Attorney General)("Fontaine") and distinguished it from the case before the court.17 Fontaine was a recent decision made by the British Columbia Court of Appeal concerning the validity of an order to pay that directed payments of a Common Experience Payment to a lender. The Court of Appeal noted that in Marzetti v. Marzetti, the Supreme Court of Canada determined that an assignment was ineffective pursuant to section 67 of the FAA as there was no express authorization by any statute for such an assignment.18 The Court of Appeal ultimately found that the settlement funds were made under a court order which resulted in them being Crown debts. Therefore, in effect, there was a prohibition on the assignment to the lender. More importantly, it was noted that the court order specifically sets out a prohibition on assignment of the funds and, as a result, the court dismissed the appeal. In distinguishing Fontaine from the case before it, the court explained that in Fontaine there was a voluntary act, whereas Daniels resisted the payment of the settlement funds towards his child support obligations. The court then relied on Roshdy v. Sultan19 where the Ontario Court of Appeal ordered the appointment of a receiver to collect funds forwarded to Canada by the United Nations Compensation Commission and to pay out such funds in fulfillment of support obligations. It was explained that although the court agreed with the British Colombia Court of Appeal that the assignment of the IRSS payment was prohibited, such prohibition did not extend to the appointment of receiver.

The court then referred to instances where a receiver had been appointed by courts. Among the cases listed were the Ontario decisions of Martin v. Martin20 and Roshdy v. Sultan. In both cases, the courts explained that the appointment of a receiver was just or convenient for the cases at hand. The court also referred to Beattie v. Ladouceur where a support arrears claim was made against federal tax refunds and pension benefits.21 The Ontario Court (General Division) determined that the order for the appointment of a receiver to take steps to enforce the garnishment exceeded the jurisdiction of the court due to the specific restrictions set out by Parliament in various Acts. The Manitoba Court of Queen's Bench distinguished the case before it from Beattie v. Ladouceur by noting that there were no specific restrictions set out on the appointment of receivers in the IRSS court order.

In coming to its conclusion, the Manitoba Court of Queen's Bench looked to the intent of the legislature and the objective of the IRSS court order. The court explained that Daniels' children were in a unique situation, different than that of other creditors, and that the court order did not intend to restrict their right of access. In fact, the court found that Daniels' children were parties to the court ordered settlement. The court acknowledged that the settlement funds are Crown debts and ultimately found that the garnishment order was out of its jurisdiction but instead appointed a receiver. The receiver was ordered pursuant to sections 60(2) and (3) of the Family Maintenance Act and was instructed to take control of the portion of Daniels' entitlement to the settlement funds and all pension benefits and credits that were payable to Daniels for the benefit of the outstanding child support.

Significance of Decision

Traditionally, there have been limitations in place restricting both the garnishment and assignment of Crown debts. These limitations were developed to prevent interruption to public services due to the impracticality of their administration by the government. There has already been development in the law as most wages and some federal pensions are now permitted to be garnished. As previously mentioned, section 68 of the FAA, the Income Tax Act and the Tax Rebate Discounting Act all provide some relief from the stringent restriction on assignments set out in section 67 of the FAA.

Professors Hogg and Monahan explain in their text "Liability of the Crown"; "Debts other than wages that are owed by the Crown to judgment debtors are still generally immune from attachment – but for no good reason."22 Although there has already been an erosion of Crown immunity, these outdated rules should be modernized. The government has become a key player in the economy and, as such, its roles should be expanded to accommodate such developments. It can be argued that, if such a recourse is available in the family law context, then the courts should be able to justify and make available such remedies to other creditors.

Although there is some uncertainty regarding the courts' application of legislation prohibiting the garnishment and assignment of Crown debts, Daniels v. Daniels demonstrates the courts' willingness to provide an equitable remedy in light of specific restrictions. In Daniels v. Daniels, the Manitoba Court of Queen's Bench rightfully intervened and provided a just remedy. Daniels v. Daniels also raises an interesting point that perhaps an equitable remedy could have been used in Fontaine. As previously noted, in distinguishing the case before it from Fontaine, the court found that there was an explicit prohibition set out on the assignment of the IRSS payments, but no prohibition on the appointment of a receiver. Perhaps in future cases the courts can extend their approach to other creditors who find themselves in situations where security has been exhausted or where there is no security at all, and the only asset remaining is a Crown debt. By permitting the attachment and assignment of Crown debts, creditors would be able to rightfully access the assets of parties that would otherwise be out of reach through regular enforcement measures.

Other creditors, like trade creditors, lenders and banks, are still able to argue, pursuant to section 101 of the Courts of Justice Act, for the appointment of a receiver. However, it is too burdensome and unpredictable to rely on legal technicalities to circumvent this restriction. There is some hope for the abolishment of such restrictions given that there is good reason to do so and given the fact that advancements have already been made towards such a direction.


Generally there has been a prohibition on the assignment, attachment or giving of security on amounts to be paid by the Crown to a judgment debtor. Daniels v. Daniels demonstrates the courts' willingness to use equitable remedies where they find it to be just or convenient to do so. This is good news for other creditors, banks or lenders who may wish to use the same remedy to access funds that are otherwise out of their reach. Parliament should not be restricting the attachment or assignment of Crown debts where a deserving party makes a rightful claim for funds to which they should ordinarily have access. This prohibition only serves to protect the judgment debtor and facilitates the avoidance of obligations.

* Alyssa Keon is an Articling Student at Aird & Berlis LLP.


i. In Ontario the Family Responsibility and Support Arrears Enforcement Act, 1996 permits the Director of the Family Responsibility Office to collect support arrears by employing any method of enforcement expressly or not expressly provided for by the Act. The Family Law Rules also set out the methods of enforcement for payment orders or any kind of order to include: garnishment and the appointment of a receiver under section 101 of the Courts of Justice Act.

1.Daniels v Daniels, 2010 MBQB 46, [2010] 249 ManR (2d) 233.

2.Financial Administration Act, RSC 1985, c F-11, s.67.

3. Financial Administration Act, RSO 1990, c F 12.

4. Garnishment, Attachment and Pension Diversion Act, RSC 1985, c G-2.

5. Supra note 2, s.68(1).

6. Income Tax Act, RSC 1985, c-1 (5th Supp), s.220(6).

7. Tax Rebate Discounting Act, RSC 1985, c T-3, s.2(2).

8. Courts of Justice Act, RSO 1990, c C43.

9. Ibid., s.101.

10 Canadian National Railway Co. v Croteau, [1925] SCR 384, at 388.

11 Borowski v the Attorney General of Canada, [1989] 1 SCR 342, 57 DLR (4th) 231.

12 Court of Queen's Bench Act, CCSM c C280, s. 55(1).

13 The Family Maintenance Act, RSM c F20, s.55(1).

14 Family Responsibility and Support Arrears Enforcement Act, 1996, SO 1996, c3.

15 Ibid, s. 6.

16 Family Law Rules, O Reg 114/99, Rule 26((2) & (3).

17 Fontaine v Canada (Attorney General), 2008 BCCA 329, [2008] 82 BCLR. (4th) 11.

18 Marzetti v Marzetti, [1994] 2 SCR 765, 116 DRL (4th) 577.

19 Roshdy v Sultan, [2001] 200 DLR (4th) 161, 144 OAC 258.

20 Martin v Martin, [1981] 33 OR (2d) 164, 123 DLR (3d) 718.

21 Beattie v Ladouceur, [1995] 23 OR (3d) 225, 54 ACWS (3d) 1130.

22 Peter Hogg & Patrick Monahan, Liability of the Crown 3rd ed (Toronto: Thomson Canada Limited, 2000) 57.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.