Pre-judgment garnishing orders have been called "unique and extraordinary". They are
one of only two forms of pre-judgment execution available in B.C.,
the second being the far more onerous Mareva injunction.
What is a pre-judgment garnishing order and what does it do?
A pre-judgment garnishing order is a way of securing funds from
a debtor to satisfy a judgment you have yet to obtain. Courts treat
them as "an extraordinary remedy" because, as a general
rule, a plaintiff is not entitled to judgment execution against a
defendant without first obtaining a judgment. A pre-judgment
garnishing order can be obtained despite the fact that the
defendant debtor has not granted security over its assets to the
plaintiff creditor. Using a garnishing order, a plaintiff can cause
a person or institution (i.e., banks, credit unions, etc.) indebted
to a defendant to pay the amount the person or institution owes to
the defendant into court. That money is then held pending a
decision about the plaintiff's claim. If the plaintiff obtains
judgment, the money is used to satisfy it.
Garnishing orders are authorized by the Court Order Enforcement Act, R.S.B.C.
1996, c. 78 ("COEA"). To obtain a garnishing order, a
plaintiff must swear an affidavit setting out the nature of their
claim, the actual amount of the debt, claim or demand, that it is
justly due and owing and, most importantly, that all just discounts
have been made. The courts have held that a plaintiff's claim
must be for a "liquidated sum". That means the debt must
be readily capable of calculation. For example, a loan is a
"liquidated sum" because it is for a certain sum, but a
claim for general damages is not.
Provided the evidence in support is sufficient, the court will
issue a pre-judgment garnishing order, all without notice to the
defendant. The garnishing order is served on the garnishee (i.e.,
the bank) who is then compelled to pay any money owed to the
defendant (up to the value of the plaintiff's claim) into
court. The plaintiff must then give notice of the garnishing order
to the defendant. The garnished funds remain in court until either
judgment is given or the garnishing order is set aside.
If successful, a garnishing order is a powerful tool as it
deprives a defendant of the use of its property (i.e., its money).
It can provide a strategic advantage in subsequent negotiations
with a defendant. Unlike Mareva injunctions, a plaintiff
is generally not responsible for any resulting damage to a
defendant caused by an improper garnishment (i.e., if the plaintiff
Because of their extraordinary nature, the courts require
plaintiffs to strictly and meticulously comply with the
requirements in the COEA for the issuance of a garnishing order. A
common response to a garnishing order is for a defendant to apply
to set it aside. In general, a garnishing order can be attacked on
two grounds: the supporting materials were flawed in some way or
the court "considers it just in all the circumstances" to
set the garnishing order aside. When reviewing the evidence in
support of a garnishing order, the courts will not require
perfection by a plaintiff but there must not be any confusion or
uncertainty over the basis of the underlying claim. If the
garnishing order is set aside, the defendant gets some or all of
their money back.
If you are an unpaid creditor and are going to have to sue your
debtor in order to recover, then you might want to consider using
pre-judgment garnishment to assist you. As this form of
pre-judgment execution can be quite technical, it would be a good
idea to seek legal advice on how to do this properly.
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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This paper discusses contract law issues including decisions of relevance to commercial lawyers and business leaders giving a snapshot of particular principles of interest that arose in case law over the past 12 months.
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