Obtaining a monetary judgment is in many cases just the beginning of a lengthy enforcement process. The framework to collect on civil and tribunal judgments in British Columbia has been described as "archaic, fragmentary and inefficient".1 B.C.'s legal advocacy organizations have been live to this issue for decades, and have urged the Legislature to update the Province's legislation to better assist judgment creditors.
The Legislature eventually responded, and on October 26, 2023, the Money Judgment Enforcement Act (the "Enforcement Act") received Royal Assent. The defining feature of the Enforcement Act is the establishment of a "money judgment registry" (the "Judgment Registry"), which is in many respects similar to, and will operate in parallel with, the B.C. personal property registry (the "PPR").
To avail themselves of the remedies provided under the Enforcement Act, judgment creditors must register their judgment in the Judgment Registry within two years of the judgment being granted, or possibly less if the judgment is extra-provincial. That period may be extended if the judgment debtor provides written acknowledgement of the judgment debt during the two-year period. After registering their judgment in the Judgment Registry, judgment creditors may also register their judgments against the judgment debtor's lands by filing in the B.C. Land Title Office (the "LTO").
The Judgment Registry will be publicly searchable in the same way as the PPR and the LTO. The Enforcement Act incorporates definitions from the Personal Property Security Act, operates in a similar manner to facilitate the registration of charges against a judgment debtor's property, and sets out a comprehensive priority scheme. Under the Enforcement Act, judgment creditors who have registered a qualifying money judgment in the Judgment Registry shall have an "enforcement charge" in respect of all present and after-acquired property of the judgment debtor.2
Of note to commercial lenders, Part 4 of the Enforcement Act sets out the relative priorities among judgment creditors having enforcement charges, and secured lenders and mortgagees having interests in the debtor's real and personal property registered in the PPR and LTO. Subject to certain exceptions, priority as between security interests and enforcement charges will depend on the timing of registration of each charge in the applicable registry. Lenders will need to ensure that searches of prospective or existing borrowers include a search of the Judgment Registry.
Among other things, the Enforcement Act contemplates that:
- Enforcement charges will have the same priority as security interests in personal property perfected under the Personal Property Security Act (PPSA), except in respect of purchase money security interests and security interests in inventory.3
- A security interest registered in the PPR prior to the registration of an enforcement charge in the Judgment Registry will have priority over an enforcement charge with respect to advances made after the enforcement charge only to the extent of the reasonable costs and expenses incurred by the secured party for the protection of the collateral.4
- An enforcement charge will not be enforceable against a trustee in bankruptcy.5
- A mortgage registered after an enforcement charge on an interest in land will rank in priority to the enforcement charge only if registered within 14 days of the registration of the transfer by which the judgment debtor acquired the interest that is mortgaged, and if and to the extent that the mortgage secures the value used to acquire the interest.6
The foregoing features appear designed to make it more difficult for a judgment debtor to obtain credit. They also highlight the importance to lenders of conducting searches of the Judgment Registry, including with regularity where they have revolving credit facilities.
Other Key Features of the Enforcement Act
Other notable highlights from the Enforcement Act include the following:
- To register a money judgment, a judgment creditor must submit a "judgment statement" to the registrar of the Judgment Registry, and pay the applicable fee.
- A money judgment can be registered before the appeal period has expired and even if the debtor has filed an appeal.
- If charged property is sold, the enforcement charge will continue to attach unless the purchaser is a bona fide purchaser in good faith with no knowledge of the enforcement charge. Registration of a judgment in the Judgment Registry does not in and of itself constitute constructive or implied notice of that judgment to any person.
Parts 8 and 9 describe the rules around seizure and disposition, while Part 13 details exempt income and property. Transition provisions are provided for in The Money Judgment Enforcement Consequential Amendments and Transitional Provisions Act (Amended Act) including the ongoing availability of a writ of seizure and sale or garnishing order obtained before the Enforcement Act comes into force.
Of note to insolvency professionals, Part 12 of theEnforcement Act provides for the appointment of a receiver over a judgment debtor's property "if the court is satisfied that the property cannot otherwise be conveniently realized".
The Enforcement Act has received Royal Assent and will come into force by regulation of the Lieutenant Governor in Council sometime in 2025.
Creditors and lenders are encouraged to familiarize themselves with the Judgment Registry and add it to their searches performed and tools used when considering enforcement options and advancing loans, respectively.
1. The British Columbia Law Institute (2005), Report on the Uniform Civil Enforcement of Money Judgments Act (Report No. 37). https://www.bcli.org/sites/default/files/Unif_Civil_Enf_Money_Judgments_Act_Rep.pdf
2. Enforcement Act, section 13(1).
3. Enforcement Act, section 36(2), (3) and (4).
4. Enforcement Act, section 36(6), (7).
5. Enforcement Act, section 39.
6. Enforcement Act, section 40.
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.