Creditors Remedies - DOC

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					                              Creditors’ Remedies
                              LAW 443, Section 1
                            Professor Tony Sheppard
   Lecture Notes, Tuesday, March 4, 2003 [revised March 6, 2003 to correct p. 2]

Note: On Tuesday, March 4, the law building was picketed, and picketers marched
outside classroom 157 to the uplifting accompaniment of drum[s?] and cymbals.
Because of the noise, the class was moved to room 102 and started late. These notes
are not a verbatim transcript of the class discussion. Perhaps they are an
improvement on the lecture ( I hope so). These notes are being sent to the students
in my e-mail group and will be posted on the Faculty of Law’s website.

In the previous class, we were discussing various stages in the life of a writ of seizure and
sale (Form 45 in the B.C.S.C. Rules). The writ’s life is short (one year subject to
renewal). Before being entitled to apply for a writ, a creditor must have been awarded a
monetary judgment. Having obtained a judgment, the [now] judgment creditor can apply
to the court registry for issuance of the writ.

Delivery of the writ to the court bailiff authorizes the court bailiff to seize the execution
debtor’s goods, chattels and effects, money and other securities for money, and
investments in corporate stock.

In determining competing claims to goods of the debtor under s. 35 of the Law and
Equity Act, the date of issuance of the writ pales in comparison to the critical dates and
times of delivery of the writ to the court bailiff and actual seizure of goods by the court
bailiff. Delivery and actual seizure are the two moments of legal significance, when
sorting out conflicting claims to goods in execution.

Delivery of the writ authorizes the court bailiff to seize the judgment debtor’s goods not
only from the debtor, but also from any third person to whom the debtor gave the goods
or sold them dishonestly, if the debtor did so after delivery of the writ to the bailiff.
Assume the court bailiff received the writ on Monday morning, and made the seizures on
Wednesday. If on Monday afternoon or Tuesday, the debtor either gave goods to a
family member (say), or sold them to a dishonest purchaser who knew the bailiff would
be coming for them, s. 35 says the title acquired is as good as the debtor’s was [nemo
dat] but is vulnerable to the claim of the court bailiff, who can seize the goods. These
folks have a vulnerable title because they acquired goods by gift or dishonest purchase
after delivery of the writ to the court bailiff.

On the other hand, s. 35 protects the innocent purchaser of the goods as long as the
purchase occurred before actual seizure of the goods. If, after the writ has been
delivered to the court bailiff and before actual seizure, the debtor sells the goods to the
bona fide purchaser for value without notice, the court bailiff cannot seize the goods
from the innocent purchaser. Section 35 protects the innocent purchaser who acquires
goods from the execution debtor anytime up to actual seizure, but not afterwards. If the
innocent purchaser bought the goods from the debtor on Monday or Tuesday, the court
bailiff could not take them. However even the innocent purchaser loses out to the court
bailiff’s right of seizure if the purchase took place after actual seizure on Wednesday.

Lloyds and Scottish Finance interprets “actual seizure” broadly in s. 35 to include not
only physical removal of the debtor’s goods by the court bailiff from the debtor’s custody
but also “walking possession,” or “constructive seizure,” whereby the court bailiff
indicates to the debtor that the goods are seized, but leaves them in the debtor’s
possession temporarily prior to removal and execution sale. Silva says “walking
possession” is accepted practice in B.C. Following actual seizure the debtor has the
privilege within 2 days to claim exemptions over the goods, or pay off the court bailiff,
otherwise execution sale of the goods will be forthcoming.

Following through on milestones in the life of a writ, execution sale would rank up there
with delivery and actual seizure. Even after seizure the debtor retains ownership of the
goods, and can pass title [subject to nemo dat] to third persons by gift or sale, but the title
is vulnerable to the superior right of seizure held by the court bailiff. The execution
debtor can dispose of goods even after seizure with civil and criminal consequences and
pass a title. The third persons acquiring title can be either innocent purchasers or
        Innocent purchasers: Under s. 35, actual seizure gives the court bailiff the right
        to take the goods from third persons including an innocent purchaser whose title
        is chronologically later than the actual seizure of the goods by the court bailiff.
        [italicized phrase contains a correction of first version]

       Others: Under s. 35, the court bailiff can take goods from anyone else whose title
       was acquired after delivery.

Lloyds and Scottish states the debtor remains owner of the goods after seizure, but sale
makes the debtor liable for the consequences of fraud, and no matter how many innocent
purchasers’ hands the goods pass through, the court bailiff’s right of seizure sticks like
glue to the goods [caveat emptore.].

Whether seizure involves removal of the goods or leaving them with the debtor,
ownership remains with the debtor. At the execution sale, the debtor’s title or interest
passes directly to the execution purchaser: s. 62(2) of the Court Order Enforcement Act.
As previously discussed, caveat emptore applies to the purchaser at an execution sale.

Silva discusses the implications for the debtor of owning goods under seizure. The
debtor bears responsibilities for insuring the goods following seizure and prior to sale.
Whereas under the old common law concept of “seizure,” the sheriff had a duty to
remove the seized goods to a safe place where they could remain until sale, the
contemporary practice of walking possession means the goods can be left in the debtor’s
care. Who is responsible for looking after the goods and insuring them? Following
seizure the debtor would be in error to assume that the goods become only the court
bailiff’s problem to look after and insure. As Silva learned the hard way, the legal
position is the debtor retains the same ownership of the goods as was held prior to
seizure. The debtor has a financial interest in the process of execution sale of the goods,
because the net proceeds will help pay off the judgment debt, and any surplus on
execution sale goes to the debtor. Hence the debtor stands to lose big time if seized
goods are lost prior to sale, and the loss is uninsured.

Silva owed back income taxes to Revenue Canada in the amount of $30,000. RevCan
used its speedy collection techniques under the Income Tax Act to issue itself a certificate
and register it in the Federal Court in B.C, which gave it the status of a judgment. As a
judgment creditor in the Federal Court, RevCan obtained a writ of fi. fa. out of the
Federal Court Registry and delivered it to the Sheriff of Nanaimo County. [Under the
prior regime before privatization of civil execution and appointment of court bailiffs to
the role of sheriff for civil enforcement purposes]. The sheriff, a provincial official,
seized Silva’s luxury boat tied up at a wharf in Silva’s marina in Nanaimo. The boat was
valued at $220,000, exceeding the debt by almost $200,000, and Silva would have every
expectation that the execution sale of the boat should pay off the taxes owing, execution
costs, and leave a substantial surplus for Silva. Unfortunately, financial disaster ensued.

The sheriff took “walking possession” of the boat, leaving it tied up at the wharf in
Silva’s possession. The sheriff had a contemporary discussion with Silva about insurance
on the boat. Silva apparently said he couldn’t afford insurance premiums on his own. If
Silva hoped to avoid liability for the premiums, it was not to happen. The sheriff sought
insurance coverage for the boat, charging the premiums back to Silva as an addition to
the execution costs. The sheriff thought the policy was for the sheriff’s own protection,
but in the aftermath, Silva thought otherwise. Before issuing coverage, the insurer had
the boat inspected by marine surveyors, who made recommendations for improving the
boat’s seaworthiness, and reducing the insurer’s risk. The insurer made the
recommendations conditions of the insurance coverage. If the insured [the sheriff] did
not comply with the conditions, coverage would be denied in the event of loss
attributable to non-compliance. Among the conditions was the requirement to install
automatic bailing pumps in the boat. The sheriff obtained the coverage, but did not
perform any of the conditions. A snowstorm ensued one night, and the weight of snow
lowered the boat deeper into the water, until it was swamped and sank to the bottom. If
pumps had been installed, the loss would have been prevented, because they would have
started automatically and bailed out the water. The insurer denied the sheriff’s claim, and
returned some of the premiums to the sheriff.

Silva, having lost a valuable asset and facing the judgment debt with additional execution
costs to be paid in full, claimed damages for negligence against the sheriff and the
province. Silva won at trial, but the B.C.C.A. reversed the decision. The Court held the
sheriff did not owe a duty to an execution debtor to provide insurance coverage for seized
goods. With the passage of time Silva apparently reconstructed the events leading up to
the loss and became convinced that he was relying on the sheriff to look after insurance
for Silva’s protection, but at the time he did not want to pay for insurance and told the
sheriff so. The court thought Silva did not have any basis for expecting the sheriff to
provide free insurance. Silva’s failure to obtain insurance did not result from reasonable
reliance on the sheriff to get the necessary coverage, but from Silva’s own lack of funds.
The sheriff and the province were free from liability to Silva for the loss. Silva, however,
still had to pay the judgment debt and costs.

The writ of seizure and sale authorizes the court bailiff to “seize” and “sell.” If the
debtor’s goods are hidden or locked up, some preliminary steps might need to be taken
prior to seizure. The writ authorizes the court bailiff to enter the debtor’s home without
breaking in, but once inside the court bailiff can break into locked containers, vaults or
wall safes in the home. The debtor can open them for the bailiff, but if not, the court
bailiff can break them open. The writ also authorizes the court bailiff to break into [non-
residential] commercial premises. Commercial premises do not have the same degree of
sanctity as a home, which is as impregnable as the proverbial “castle” to the court
bailiff’s use of force under the writ

In Boyce, RevCan was pursuing collection of Boyce’s back income taxes in Manitoba.
The tax debtor’s safety deposit box was located in the vault of a bank in Winnipeg. To
open a safety deposit box requires two keys – one held by the holder of the box and the
other by the bank. Outside the context of debt collection, the relationship between bank
and safety deposit box holder is contractual, and if the holder loses the key or passes
away and the key cannot be found on death, the bank must drill the lock to open a safety
deposit box, requiring a locksmith, and payment of charges. In the context of
administering the estate of a deceased safety deposit box holder, the bank needs
documentation authorizing the drilling of the box, and listing of the contents. Perhaps
this practice began to creep into the bank’s approach to access to a debtor’s safety deposit
box because the bank did not think the writ was sufficiently explicit authority to drill the
debtor’s safety deposit box.

RevCan obtained a judgment and writ of fi. fa. from the Federal Court in Winnipeg
against Boyce for tax arrears, and on the authority of the writ sought entry into the safety
deposit box, as a potential treasure chest for Boyce’s valuables. Once into Boyce’s box
the sheriff could seize the contents under the writ – jewelry, gold, cash, investment
certificates, insurance policies, etc. Apparently Boyce was unwilling or unable to assist
RevCan’s entry into the safety deposit box. The sheriff in Winnipeg served the writ on
the branch of the bank to obtain forced entry into Boyce’s safety deposit box. The bank
refused, claiming that the sheriff required a “drilling order,” in addition to the writ. The
court held that such an order was unnecessary. As the writ fully authorized forcible
entry into non-residential premises of the debtor, it also included breaking open a safety
deposit box without further ado. The bank, however, was entitled to reimbursement
from the sheriff for the costs of drilling. The sheriff would look to RevCan as execution
creditor for the costs of drilling the box. In its turn RevCan could add the costs of
drilling to Boyce’s liability as an execution cost. Since Boyce ultimately bears the cost of
drilling, and has the option of opening the box with the key, the debtor holds the key to
preventing being charged back with additional drilling costs.

Boyce raises the prospect that an execution creditor might run up execution costs for
ulterior purposes, like punishing a perceived deadbeat, that will ultimately be added to
the debtor’s tab. What if an execution creditor incurs excessive or unnecessary
execution costs, and tries to charge these excesses back to the debtor, to settle some
perceived grievance? Does the debtor have any recourse?

In Cybulski v. Bertrand, a motor-vehicle accident occurred between Cybulski, the driver
of a motor-vehicle, and a Canada Post truck, driven by its employee, Bertrand. Cybulski
brought an action for damages in negligence, claiming she had sustained serious head
injuries. At the end of the trial, Canada Post was held 100% liable for negligence.
Cybulski was awarded judgment for $140,000 although the issue of damages was hotly
disputed during the trial. The conduct of the defence during pre-trial discoveries and at
the trial, including casting aspersions on the plaintiff’s character for honesty, and
dragging out the proceedings for 4 years, raised the ire of Cybulski and her counsel.

After judgment was handed down in Cybulski’s favour, plaintiff’s counsel requested
immediate payment. Defence counsel asked for time to arrange payment. Plaintiff’s
counsel said that because of the perceived misconduct of the defence, the plaintiff would
not extend concessions, demanded prompt payment, and threatened to commence
execution. Defence counsel replied that the deadline for payment could not be met, and
that since payment would be forthcoming in time, execution was unnecessary, and would
be opposed. Plaintiff’s counsel issued the writ and delivered it to court bailiff with
instructions to seize Canada Post trucks.

Defence counsel obtained an ex parte stay of execution, to prevent further seizures. The
stay was continued after an inter partes hearing. While the stay remained in effect, the
judgment was paid. Defence counsel then applied for an order that the costs of an
improper and unnecessary execution should be charged to the plaintiff, not the
defendants. The judge reviewed the conduct of the proceedings, and faulted plaintiff’s
counsel for an unwarranted tone in her communications with defence counsel, and for
instructing the court bailiff to carry out an illegal and unnecessary execution. The
execution was illegal because the trucks were owned by a third party, and only leased to
Canada Post, a Crown corporation. The trucks were exempt from execution because they
were leased to the Crown for its own use. Assets owned or leased by Canada Post
qualified for Crown immunity from execution.

Where a party abused the right of execution, the court said it had an inherent jurisdiction
to stay execution and to exonerate the defendant from costs. The stay was justified in the
circumstances. In its inherent jurisdiction to do justice the court could penalize the
execution creditor or its counsel for costs of unnecessary execution. The court said the
plaintiff should pay the costs of execution to the court bailiff, under s. 9 of the Sheriff’s
Act (B.C.), with no recovery from the defendants. However, the court added that the
plaintiff was at liberty to claim reimbursement of the costs from her solicitor, who would
bear them personally. Under the adversary system of trial, clients usually bear the
consequences of their lawyers’ tactics, and the imposition of costs on a solicitor
personally is an exceptional form of severe judicial sanction. [there’s more]
(ii) Money and securities for money

At common law the ancestors of the writ of seizure and sale authorized execution against
the debtor’s tangible chattels. Section 55 of the Court Order Enforcement Act captures
this aspect of the writ’s scope with the phrase “goods, chattels and effects.” In Vancouver
A & W Drive-Ins, the B.C.S.C. judge thought that the addition of the word, “effects” in s.
55 was broad enough to cover intangibles or choses in action such as the investments
held in a debtor’s R.R.S.P., but another judge of the same court disagreed in the Bank of
B.C., and said “effects” is confined to tangible chattels, excluding an R.R.S.P.

As forms of wealth change over time, the scope of the writ has to be adapted to keep up,
or become irrelevant. Adaptation can result from developments in the caselaw [e.g.,
Mortil, writ authorizes seizure and sale of tangible aspects of intellectual property with
court directions as to execution sale], or legislative amendment. Section 58 is a
legislative expansion of the scope of the writ to include intangibles listed there as money
or bank notes, cheques, bills of exchange, promissory notes, bonds, specialties, and other
securities for money. Form 45 authorizes seizure and sale. While this method of
realization might work well enough for “goods, chattels and effects,” it does not work for
these intangibles, and s. 58 authorizes the “sheriff or other officer” [read “court bailiff”]
to “seize,” “take” and “hold” intangibles.

In many cases, arrival of a court bailiff with a writ of seizure and sale on the debtor’s
doorstep might overcome a debtor’s reluctance to pay the judgment. If the debtor pays
cash to avoid execution against other assets, section 58 authorizes the court bailiff to pay
it to the execution creditor as monies levied by execution. In the case of a cheque or IOU
payable to the debtor, the court bailiff can seize it and notify the named payer in the
instrument to provide a new financial instrument payable to the court bailiff: s. 59.
Payment to the court bailiff instead of the debtor discharges the debt: s. 59. The court
bailiff has authority to collect from the third party through litigation: s. 58. Before
starting an action against the judgment debtor’s debtor, the court bailiff can require the
execution creditor to indemnify the court bailiff for costs: s. 61. The machinery
provisions are contained in ss. 59 –61.

As forms of wealth and financial products evolve rapidly, section 59 shows its age –
some terms listed there have fallen into disuse and new ones have emerged. Should s. 59
remain static or move with the times? The usual presumption of statutory construction is
that the “law is always speaking.” Section 59 contains the phrase “other securities for
money,” and the courts interpret it liberally to continually update s. 59, starting by
extending the scope of the writ to financial instruments that were closely analogous to the
listed items, but more recently expanding the scope of s. 59 by further and further leaps.
The cases in this area show this progression.

In the venerable Canadian Mutual Loan, the court interpreted the phrase “other
securities for money” to extend the writ of seizure and sale to authorize execution on
whole life insurance on the debtor’s life. Canadian Mutual Loan had made a loan to
Nisbit, the debtor, taking back as security for the loan a mortgage on Nisbit’s property
and an assignment of Nisbit’s life insurance policy with Canada Life. Nisbit defaulted on
the loan. Canadian Mutual did not recover the full amount of Nisbit’s indebtedness
from the assets covered by the mortgage and the collateral security agreement. Canadian
Mutual obtained a judgment against Nisbit to collect the balance owing.

Since Nisbit had paid all the premiums to Canada Life the policy was fully paid-up.
Whole-life insurance has fallen out of favour, but at the time it offered not only the
prospect of a payment of the policy proceeds on the death of the life insured, but also
rights to cash during the debtor/insured’s lifetime. Canada Life was obligated to pay out
policy bonuses or dividends during the lifetime of the policyholder. Canadian Mutual
Loan anticipated that Canada Life might pay a bonus to Nisbit, and wanted to catch it.
Unfortunately for Canadian Loan, its collateral security agreement with Nisbit excluded
bonuses and dividends on life insurance, so Canadian Loan had to go after the anticipated
bonus on the policy in its capacity as an execution creditor. The court said that ordinarily
the writ of seizure and sale would be effective to recover the bonus for the benefit of an
execution creditor, as the fully paid-up whole life policy qualified as “other securities for
money,” [The ordinary execution creditor might be more interested in authorizing the
court bailiff to cash in the whole-life policy for a bigger pay-off through its “cash
surrender value.”] The court went on to hold that this was a case for “equitable
execution,” because the collateral security agreement over Nisbit’s whole life policy
created what is known as “an impediment” to legal execution, that is, a debtor’s whole
life-policy was amenable to execution in principle, but in this case the collateral security
agreement prevented the court bailiff from seizing the policy. Canadian Mutual Loan had
a security interest in the policy that prevented seizure. Equity provided a remedy,
however, and the court appointed a receiver by way of equitable execution to collect any
bonus paid by Canada Life for Canadian Mutual Loan. The court commented that
Canadian Mutual Loan was misguided in going to a lot of unjustified expense for very
remote cash payment because the bonus, if any, would probably be insufficient to cover
the costs of the receivership to collect it. As in Cybulski, the court refused to charge the
execution debtor with the execution costs.

For our purposes, the case illustrates the courts’ attitude to the phrase, “other securities
for money” in s. 58. The Act is always speaking, and legislative intention was to extend
the scope of the writ to catch any sort of contemporary financial instruments of the debtor
that the court bailiff can derive money from.

Section 54 of the Insurance Act (BC) [Casebook, p. 9-1] contains a statutory exemption
over life insurance. Section 54(1) exempts life insurance policy proceeds on the death of
the policy-holder if any beneficiary has been designated. As long as some beneficiary
has been designated, the policy proceeds pass to the designated person on death, free
from claims of creditors. If the policy proceeds are payable to deceased’s estate,
however, they are not exempt on death and creditors of the deceased can recover them.

Section 54(2) provides that during a person’s lifetime life insurance is exempt from
creditors and can’t be cashed in if the designated beneficiary on death is the debtor’s
spouse, child, grandchild or parent. If Nisbit had made such a designation, his policy and
the case bonus would have been exempt from execution during his lifetime.

Patmore also illustrates the versatility of the phrase, “other securities for money,” in s.
58 to bring a range of financial instruments within the scope of the writ of seizure and
sale. Patmore says corporate shares in “street,” or “bearer” form qualify as “other
securities for money.” The ownership of shares in a corporation is reflected in the
register of shareholders maintained by the company or its transfer agent. The register
contains the names of the shareholders, classes and numbers of shares held by the
registered owner, the share certificate number corresponding to the entry in the register,
and the date. The registered owner is the person entitled to the rights attached to the
shares, as far as the company is concerned. The company would issue a share certificate
to the person named as registered owner on its books. The company would then pay
dividends and recognize voting rights to that same person.

 To record a transfer of shares, the person seeking registration would apply to the
company or its transfer agent presenting a share certificate with the name of the
registered owner on the front of the certificate and on the back of the certificate the
transfer form would be filled in and signed by the registered owner, authorizing the
change of registered ownership to the specified transferee. The old entry in the
company’s books would be cancelled and replaced by a new entry. A new certificate in
the name of the intended transferee would issue to the named person.

A share certificate with a completed transfer form on the back of the certificate all filled
in except for the name of the intended transferee is known as a share in “bearer” or
“street” form. Someone who acquires a share in bearer or street form could fill in their
name as the intended transferee in the transfer form and apply to the issuing company for
registration as owner. If a holder of the share certificate in bearer or street form prefers
they can sell the shares in that form to a purchaser. The name of the seller would not
match the name of the registered owner, but that is not a problem because the transfer
form has been completed by the registered owner. The name of intended transferee is not
a problem either, because a purchaser call fill it in later if they wish.

A purchaser of shares in bearer form can complete the blank transferee later, and present
the certificate to the corporation or its transfer agent for registration in that name. In
other words, share certificates in bearer or street form are all ready to be sold and
registered by anyone in possession of the certificate. The identities of seller and
purchaser do not need to be known, or to appear on the certificate to complete a sale.
As such the full rights of registered ownership are available to any person having
possession of the certificate, called “the bearer” of the certificate. The certificates easily
pass rights of ownership from seller to buyer informally over a stock exchange, or in
private transactions on the “street.”

Patmore obtained a loan from the Bank of Montreal. As collateral security for the bank
loan, Patmore put up various assets, including shares in a Delaware-based gold-mining
stock. Patmore gave the stock certificates to the bank in so-called “bearer” or “street”
form. Because the bank took the certificates in bearer or street form it could easily
dispose of the shares if Patmore defaulted and the bank needed to sell the shares to cover
Patmore’s debt. The bank did not need to sell the shares to cover Patmore’s loan,
however. Having no further use for the shares as collateral, a lender would normally
return the certificates to the borrower, Patmore. The bank was made aware that Patmore
owed money to judgment creditors, including RevCan. Patmore demanded return of the
the share certificates but the creditors objected to the bank.

The bank was unsure about the rival claims to the share certificates asserted by Patmore
and the creditors. Fearing a risk of liability for giving the certificates to the wrong party,
the bank decided that the safest route was a form of interpleader, whereby the bank put
the shares into the custody of the court for determination of the competing claims. The
court could decide which party could obtain the shares. The creditors claimed to have the
proper remedy for execution on the shares in court through a charging order. They
applied ex parte and were granted charging orders nisi. RevCan and Patmore argued the
creditors had used the wrong remedy, and applied to show cause why order absolute
should not be granted. The court decided the creditors were entitled to the shares and
granted order absolute. [These terms are explained later on.]

 In advising the claimants, the court said that shares in bearer or street form were similar
to cash or negotiable instruments, because rights of ownership passed by possession of
the certificate. As such shares in bearer or street form qualified as “other securities
money,” and were usually exigible by writ of seizure and sale. Ordinarily the writ of
seizure and sale would be effective to execute on shares of a judgment debtor in bearer or
street form. However the writ was ineffective against these share certificates because
they were property in the custody of the court [“in custodia legis”].

The court said the proper method of getting at the share certificates was by means of a
legal/statutory or equitable charging order. The creditors were held to have followed the
correct procedure in applying for execution on the shares by means of a charging order.
Referring to Brereton, decided in England in the 1880’s [p. 5-55] the court was
explaining that equity created a charging order to provide an execution remedy for a
judgment debtor’s money in the court registry. As shares in bearer or street form were
almost like money, the equitable charging order would be effective. The equitable
charging order was borrowed by the court of equity from the form of charging order
created by the Judgments Acts (UK) (1838-40). To differentiate the two types of
charging orders, nowadays each is referred to by its origin. The statutory charging order
is part of the received law in B.C. under s. 2 of the Law and Equity Act.

For money in court belonging to the judgment debtor, the execution remedy is the
equitable charging order. For corporate stock and other forms of financial instruments, a
charging order under the Judgment Act (1838) can be used, called a “legal” charging
order [as opposed to an equitable charging order], or a statutory charging order. In BC,
the writ of seizure and sale is preferable, and the charging order should only be used
where the writ is ineffective [pp. 5-63, 5-71]. The court said the legal charging order
would work just as well to get at corporate stock in court: p. 5-56.
The court had in mind the 1840 amendment to the Judgments Act of 1838 to extend
execution to a judgment debtor’s shares, and other financial instruments held by a trustee
or in the court registry [see the Casebook, p. 5-92 for the impenetrable provision].

The procedure for obtaining either form of charging order is the same: the execution
creditor must apply to court ex parte, for a charging order nisi to show cause, and serve
the order on the court registry holding the shares. Six months later, there is a second
“show cause” hearing to determine whether the order should be made absolute or
discharged, and if the execution creditor prevails, the creditor obtains order absolute for
the shares. Others can oppose the creditor’s application at the “show cause” – to
convince the court discharge the order nisi. Here Patmore and RevCan failed in that
regard. The creditors won the order absolute. The consequences were that the creditors
got the shares, and could sell them. In ranking charging orders priority is determined
according the rule of “first in time, first in right,” which means the chronological
sequence in which the judgment creditor obtained a charging order nisi over the
particular asset.

Bank of B.C. took the phrase “other securities for money” far from the listed financial
instruments in s. 58, to keep the writ up-to-date, and capable of meeting the task of
executing on the relatively new and pervasive form of wealth known as the R.R.S.P.
R.R.S.P’s are post-war income-tax favoured retirement phenomena to meet social and
financial conditions that the legislators could not have begun to contemplate when s. 58
was enacted. R.R.S.P’s do not bear the characteristics of the listed items in s. 58 – they
are not financial instruments, and cannot be sold. However, R.R.S.P.’s can be cashed in,
and that is the critical factor. Vancouver A &W said execution on R.R.S.P.’s required
receivership – a more costly and less inefficient remedy offered by equity where legal
remedies are inadequate. Since the writ, a legal remedy, is adequate to effect execution
on R.R.S.P.’s in most cases, the writ would be the usual remedy and receivership the

[To be continued on Thursday in class]

E.& O.E.