A judgment debtor examination is often a judgment enforcement method of last resort. There are usually better ways to collect a small claims court judgment if you have information about the assets of the debtor.
However, if you have no information about a debtor other than an address, the judgment debtor examination hearing, if done correctly, can help the creditor immensely.
A judgment debtor examination like most enforcement action must take place in the court’s jurisdiction where the debtor lives or where they carry on business. A Notice of Examination is issued by the court giving a specific date and date to attend the hearing. The Notice of Examination must be served on an individual debtor either personally (handing it directly to the named debtor) or by leaving a copy of the Notice of Examination in a sealed envelope addressed to the debtor at the residence of the debtor, with a person who appears to be an adult resident of the same address, and then mailing or sending another copy by courier the next day.
If an individual debtor is being examined you must also serve a black financial information form on the debtor. Both the Notice of Examination and the black financial information form must be served on the debtor at least 30 days before the scheduled hearing.
If your judgment is against a corporation you must obtain a Corporate Profile Report of the company. This will list all directors of the corporation. You must name a director that you intend to bring to into court to be examined about the corporation’s ability to pay the judgment. The Notice of Examination may be served on the corporation by leaving a copy with any officer or director of the corporation or with a person at a place of the business of the company who appears to be in control or management of the business.
Searches are also needed in the case of a debtor who is against a sole proprietorship or a partnership.
Judgment debtor examinations are held in private unless a judge orders otherwise. The judgment debtor examination is done under oath, and is recorded.
There was a case I was involved in at the Toronto Small Claims Court where I spent about two hours examining the debtor over two days. At a later time my client was able to prove that the debtor had intentionally lied under oath. She obtained a transcript of the examination hearing, and when to a Justice of the Peace to lay a criminal perjury charge.
Small Claims Court Rule 20.10(4) sets out what a person can be examined about. It states:
“20.10 (4) The debtor, any other persons to be examined and any witnesses whose evidence the court considers necessary may be examined in relation to,
(a) the reason for nonpayment;
(b) the debtor’s income and property;
(c) the debts owed to and by the debtor;
(d) the disposal the debtor has made of any property either before or after the order was made;
(e) the debtor’s present, past and future means to satisfy the order;
(f) whether the debtor intends to obey the order or has any reason for not doing so; and
(g) any other matter pertinent to the enforcement of the order. O. Reg. 258/98, r. 20.10 (4)”
An experienced paralegal conducting a judgment debtor examination can spend a lot of time asking the debtor questions. The above rule is so broad that they can ask about all income and assets of the debtor, debts owed to the debtor, and the debtor’s past, present and future ability to pay the judgment.
Don’t be afraid to ask the debtor anything and everything that may be helpful to you in gathering information to enforce the judgment. You must take careful notes of all the information you obtain.
At the conclusion of the judgment debtor examination a creditor or their Ontario paralegal may ask the court for several orders. Rules 20.10(7) and 20.10(8) are important. They state:
“Order As To Payment
(7) After the examination or if the debtor’s consent is filed, the court may make an order as to payment. O. Reg. 258/98, r. 20.10 (7); O. Reg. 461/01, s. 20 (1).
Enforcement Limited while Order as to Payment in Force
(8) While an order as to payment is in force, no step to enforce the judgment may be taken or continued against the debtor by a creditor named in the order, except issuing a writ of seizure and sale of land and filing it with the sheriff. O. Reg. 258/98, r. 20.10 (8).”
The creditor or their paralegal can ask the judge to make an order for monthly payments. However, while that order is in place, the creditor is limited in taking other enforcement action other then issuing a writ of seizure and sale of lands and filing it with the sheriff.
If the debtor defaults on the monthly payments as ordered by the court the creditor cannot take other enforcement action until the Notice of Default of Payment and Affidavit of Default of Payment forms have been properly served and filed with the court with proof of service. See Small Claims Court sub-rules 20.02(3)(4).
Your Ontario paralegal will advise you whether asking for an order for monthly payments is a wise thing to do under all the circumstances.
The court also has the ability to order a review hearing, if requested, and to make specific orders for the debtor to produce documents which are generally related to the debtor’s assets, income, and living expenses.
If the person to be examined attends the judgment debtor examination but refuses to answer questions, or attends but refuses to produce documents as ordered, they can be ordered to attend a contempt hearing. This could lead to a warrant for their arrest to issue.
At the end of the day you should be able to either obtain a court order for monthly payments, or have information necessary to take other enforcement action to collect the judgment. If you obtain an order for payments, and the debtor defaults on payments as ordered, you should still have information to take other judgment enforcement action.
If you are in Toronto or the GTA and you need to hire a paralegal for a judgment debtor examination at the Toronto Small Claims Court, Richmond Hill Small Claims Court, or Brampton Small Claims Court, or for other judgment enforcement action, contact Marshall Yarmus of Civil Litigations at 416-229-1479 or visit https://civilparalegal.com/home_services/judgement-enforcement/