In 2008 the Legislative Assembly of British Columbia passed the
Economic Incentive and Stabilization Statutes Amendment Act, a bill
intended to protect registered savings plans of debtors from
creditors. Such assets may not be completely inaccessible to
creditors, however. In a section dealing with what the drafters
entitled "Asset Protection" the bill altered the Court
Order Enforcement Act. This amendment provided greater protection
for debtors' registered savings—in particular,
deferred profit sharing plans (DPSPs), registered retirement income
funds (RRIFs) and registered retirement savings plans (RRSPs).
Collectively, these are defined as "Registered
This amendment added to the protection already available for
certain investments governed by the Insurance Act, which are known
as segregated funds. Execution against such funds is restricted on
the basis that they include a life insurance component. In such
cases the individual policies need to be examined to determine
whether the money invested will be exempted from collection
measures by a creditor.
Section 71.3 of the Court Order Enforcement Act makes Registered
Plans exempt from enforcement processes, such as garnishment and
seizure. There are exceptions to the exemption, however, which
should be kept in mind by any unsecured creditor seeking to execute
a judgment against such assets. These include:
1. Any contributions to a Registered Plan within 12 months of
the debt becoming due are exigible.
2. Any payments out of Registered Plans to the planholder are
considered debts due to the holder for salary or wages and are
therefore subject to enforcement as if they were wages.
3. An enforcement process which arises out of a maintenance order
as defined under the Family Maintenance Enforcement Act, such as
amounts due for maintenance, child support or alimony.
4. An enforcement process initiated against a Registered Plan prior
to November 1, 2008.
A planholder's transfers from one Registered Plan to another
or transfers following the death of a planholder's to a spouse
or common-law partner are not considered payments out of the plan.
Therefore they are not covered by the exceptions and not accessible
The 2008 bill has ramifications in bankruptcy proceedings as
well. Section 67 of Canada's Bankruptcy and Insolvency Act
states that the property available to creditors of the bankrupt
does not include "any property that as against the bankrupt is
exempt from execution or seizure under any laws applicable in the
province within which the property is situated and within which the
bankrupt resides; . . ." This would include a debtor's
Registered Plan assets which are not subject to one of the
exceptions described above.
The intention of the Economic Incentive and Stabilization
Statutes Amendment Act was to protect the Registered Plans of
individual British Columbians. However, from the perspective of a
creditor, such as an unsecured judgment creditor, the Act seriously
limits the availability of assets that were paid into the
Registered Plan a year or more before the relevant debt became
One of the ways to avoid the effect of the Bill is to provide
that all debt instruments are due and payable on demand, as opposed
to becoming due on a fixed date. Many banks have already
implemented this policy with regard to their mortgage securities in
part to avoid limiting their ability to collect from Registered
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.
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On February 24, the Supreme Court of Canada heard the appeal in Teva Canada Inc. v. Bank of Montreal. The appeal concerns who bears the loss for cheques payable to fictitious or non-existing payees, which were fraudulently issued by an employee.
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