To the chagrin of creditors – and delight of debtors – the civil enforcement process to collect debts can be time consuming, complicated and expensive. Creditors may discover that their efforts result in either no recovery or losses for the creditor seeking to enforce a debt or money judgment. Judgment creditors have a variety of byzantine tools to assist them in collecting a money judgment, including garnishment, debtor examinations, using bailiffs to seize and sell personal property, or forcing the sale of a judgment debtor’s interest in land. The province of British Columbia is currently drafting a new civil enforcement legislation – Enforcement of Money Judgments Act – to overhaul this system.
By way of brief background, in 2005, the BC Law Institute authored a report entitled “Report on the Uniform Civil Enforcement of Money Judgments Acts” (the “BCLI Report”) . The BCLI Report identified the policy rationales for an effective and just civil enforcement legal regime:
Just debts should be paid;
The law must balance this goal with protecting debtors and their dependents; and
Judgment creditors should provide for the orderly distribution of the judgment debtor’s estate. This would require any judgment creditors to share in the recovery on the basis of their judgments.
BCLI Report goes on to identify ways that the proposed legislation will attempt to modernize and streamline the process of enforcing money judgments in British Columbia. One of the proposed mechanisms is assigning an enforcement officer to the judgment creditor who will then direct enforcement actions against the debtor. This would remove the significant burden to make expensive and time consuming court applications for enforcement.
A second proposed method to modernize practices is to allow a judgment creditor to register a notice of judgment in the Personal Property Registry to allow a charge or interest in the judgment debtor’s present and after acquired personal property.
Effectively, this would permit the judgment creditor to become a secured creditor. It is foreseeable that this would then cause a myriad of priority issues between other secured creditors with charges or security. Any new legislation would need to account for the complex priority issues and balance rights between existing creditors, and previously secured creditors.
From June to July 2015, the province of British Columbia solicited public consultation from the public and other stakeholders to comment on the proposed legislation and BCLI Report . However, it has been largely silent since then. We will need to wait and see how Enforcement of Money Judgments Act will affect the debtor-creditor landscape in British Columbia.
Cody Reedman is an associate lawyer at Peak Law Group. He has a general civil litigation practice as well as practicing in bankruptcy and insolvency, collections, employment and strata law.