Canadian Rental Service

Legalese: Getting your due

By Deryk Coward   

Features Business Intelligence

Occasionally, clients don’t pay their bills. This is nothing new in the business world, and likely will not change anytime soon.

Occasionally, clients don’t pay their bills. This is nothing new in the business world, and likely will not change anytime soon. Invoices will be sent out, followed by demand letters from lawyers or collection agencies. If the client ignores these demands and refuses to pay you, how can you collect on an outstanding debt?

One available option, and the most direct route, would be to go to court to attempt to recover the debt. If the debt is within your province’s Small Claims limit, then the Small Claims court would likely be your best option. Small Claims, as opposed to regular court allow for claims to be heard relatively quickly and efficiently. The downside, however, is that Small Claims carry an automatic right of appeal to the Queen’s Bench in many jurisdictions, including in Manitoba. This means that either side can appeal to the Queen’s Bench after their small claim hearing and then the matter will have to be heard all over again.

Many people represent themselves in Small Claims and having a lawyer is absolutely not necessary. This, some would say, makes matters more efficient.

If the amount of money being claimed is more than $10,000 (the Manitoba limit for Small Claims – your jurisdiction may differ) then the lawsuit will have to be initiated in the Court of Queen’s Bench. There are rules of court which specify time lines for certain documents to be filed, the rights to discovery and pre-trial process in general.


But let’s assume that you go to court to recover a debt, whether it is Small Claims or the Queen’s Bench, and you have now won. Now you have a judgment that says you are owed the money from the debtor. The task you now face is actually collecting upon that judgment.

This is where knowing as much as possible about your judgment debtor comes in handy. Do they own property? Where do they bank? Do they have an employer or someone they are doing contract work for? All of this information can help you collect your debt.

Garnishment is one method of recovery. You can garnish a person’s bank account if you know where they bank. You will have to go to court and file a notice of garnishment and get the court to give you an order allowing you to garnish. This order allows you to take money right out of their account in order to satisfy your judgment.

Wages can also be garnished. If you know who the employer of the judgment debtor is, you go through a similar process as you do for garnishing a bank account: a motion before the court to obtain an order. The order is then served on the employer who is obligated to provide you with a percentage of the debtor’s wage in order to satisfy the judgment.

If the debtor owns property, your judgment can be placed against that property. Once the judgment is put on the property, it will eventually be possible for the creditor to force a sale of the property to collect on the debt if the debtor continues to refuse to pay.

Property of the debtor can also be seized and sold under a writ from the court. A writ is granted from a master or a judge and allows a sheriff in your province to recover property on behalf of a creditor which can be used to satisfy a debt.

All of the above approaches are good ways to collect upon a judgment. There are more. In order to discuss all of your potential avenues of recovery, I would recommend that you consult an attorney in your provincial jurisdiction.

Remember, the information in this article is not intended as legal advice. If you have an outstanding debt that you wish to collect, should consult with an attorney in your provincial jurisdiction. The information in this article is based on Manitoba law only, and may differ from other jurisdictions.

Deryk Coward articled with D’Arcy & Deacon in 1996 and was called to the Manitoba bar in June of 1997. He is a partner with the firm, practising primarily in the area of general civil litigation, personal injury, insurance, debtor-creditor and labour and employment law. Coward is legal counsel for the Canadian Rental Association.

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