Area of Law: Fraud and Fraud Recovery
Answer # 1528
Enforcing a judgment for fraudRegion: Ontario Answer # 1528
Assets frozen under court order
If money has been frozen by court order at the beginning of a civil fraud case, then having the funds released to the victim is simply a matter of showing the final judgment.
After a civil judgment is obtained, the judgment must be enforced in order to recover funds for all other assets not frozen under court order. However, this can be a difficult and lengthy process, especially in cases where the fraudster has no assets.
Obtain a declaration before fraudster declares bankruptcy
Often, a fraudster will seek to escape paying a civil fraud judgment by going bankrupt and getting a fresh start. If the victim obtains a Declaration that the fraud judgment survives any assignment into bankruptcy by the fraudster, the debt remains payable by the fraudster for the rest of their life. Not only will the continued existence of the debt negatively impact the fraudster’s ability to obtain credit for things such as credit cards, mortgages, bank loans and so on, it will allow the victim to collect on the judgement at any time in the future if the fraudster accumulates any assets.
Writs of Seizure and Sale, and Garnishment Orders
There are two common procedures used to enforce judgments:
- Writs of Seizure and Sale, and
If applied for within a certain number of years from the date of judgment (determined by provincial laws) you do not need permission from the Court to apply for a Writ of Seizure and Sale or a Garnishment Order. Writs and garnishment orders remain in force for the amount of time legislated from the date the Writ or Order is issued, and for an additional number of years after each is renewed.
If either of these time periods has expired, the victim has two options: file for a motion for leave to issue a Writ or Order, or to issue a new action on the judgment.
Writ of Seizure and Sale
A victim may apply for one or more Writs of Seizure and Sale that must be filed with the sheriff in the jurisdiction where the fraudster’s assets are located. This allows the victim, with the assistance of the sheriff, to take possession of the fraudster’s assets and sell them in order to pay the debt.
Any individuals or corporations who possess any of the fraudster’s assets, or owe a debt to the fraudster, such as employees, banks, or trustees where the fraudster is a beneficiary under a Will or Trust, can receive a notice of garnishment.
Debtors without assets
When a fraudster has no current assets, but is likely to acquire assets in the future, for example through employment or from an inheritance, unless the fraudster enters into bankruptcy the judgment can continue to be enforced. If the judgment was obtained as a result of fraud, and a declaration was made by the Court that the judgment survive bankruptcy, the judgment can continue to be enforced notwithstanding the fraudster’s bankruptcy.
In addition, a restitution order made by the Criminal Court can also be filed as a civil judgment, and remain in force even if the fraudster has declared bankruptcy.
If Writ or Order expires
Apply for leave of the Court
If the time limit has passed and a Writ or Order has expired, the victim may have to apply to the Court to make it enforceable again. The Court will decide whether to make the Writ or Order enforceable again based on the interests of justice. It is the responsibility of the victim to provide some evidence to explain why it expired, but the evidence required is generally not too onerous.
Sue on the judgment
If the Court does not grant leave for the Writ or Order to be enforceable, or the victim provides little or no evidence as to why the Writ or Order expired, a victim still has the legal right to sue on the judgment.
In some provinces, such as Ontario, a limitation period to enforce a court order no longer exists. The removal of the limitation period for the enforcement of judgments can be of great assistance to victims of fraud and other judgment creditors where there is a likelihood that the fraudster has the immediate ability or incentive to earn income, or may otherwise accumulate assets or benefit under a Will.
Strategic delay in issuing Writ or Order
In some cases, the best strategy may be to delay issuing a Writ or Notice of Garnishment, such as if the fraudster has little or no assets when the judgment is issued but is able to earn money or accumulate other assets in the future.
Examinations in aid of execution
In an effort to execute the judgment (which means collect the debt), generally, the fraudster can be examined (questioned) under oath once every twelve months. During this type of examination, the victim or other judgment creditor can ask the fraudster questions about their employment, assets and repayment plans. Where enforcement proves difficult, the Court can order the examination of third parties.
If during examination it is discovered that the fraudster does have assets or income, or any monies owing, such as an inheritance:
- the victim can apply to the Court for leave to issue a Writ or Notice of Garnishment, or,
- a new action on the judgment may be issued, allowing for a summary judgment motion to be brought that may bring about a quick result.
To avoid problems arising from limitation periods, and to discuss a strategy for recovery on your judgment, contact a fraud recovery expert for advice.
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