Garnishment (court order)

In Ontario, a seller’s bank balance, or the amounts its customers owe it, can be garnished by a creditor under an order for the payment or recovery of money. Whether a seller’s creditors can reach an asset buyer is a different question: see can the seller’s creditors come after me if I buy only the assets. This entry covers Ontario only; check the rules where you are.

How it works in Ontario

The creditor files a requisition with the registrar, who issues a notice of garnishment naming one debtor and one garnishee, the person who owes the debtor money. Under rule 60.08(6.2), a notice stays in force for six years from its issue and for a further six years from each renewal. Under rule 60.08(12), the garnishee’s debt includes a debt payable when the notice is served and one payable after service and within six years after it was issued; rule 60.08(13) excludes, among other things, money in an account at a financial institution opened after service.

What to check or ask

• Whether a notice of garnishment has been served on the seller’s bank or customers, and whether it is still in force.
• Whether any garnished money is wages: section 7 of the Wages Act exempts part of a person’s wages from seizure or garnishment, and a judge may vary the exemption.
• Whether the garnishee has disputed the garnishment: rule 60.08(15) requires a garnishee who wishes to dispute it to serve and file a garnishee’s statement within 10 days after service of the notice.