Ask A Lawyer – Can I Do Anything At The Start Of The Lawsuit To Make Sure The Defendant Pays Me If I Am Successful?

Many clients that I speak to are disappointed to find out that there are very few options that allow you to take steps at the beginning of a lawsuit to help ensure that you recover a judgment should your lawsuit ultimately be successful. Generally speaking, we start with the principle that a person commencing a lawsuit, the Plaintiff, cannot take any steps against the assets of a Defendant in a lawsuit until that Plaintiff wins the lawsuit and obtains a court ordered judgment against the Defendant(s).

The only three exceptions to this general principle are:

  1. Registering a Certificate of Pending Litigation (CPL) and/or caveat against real estate property;
  2. Prejudgment garnishment orders; and
  3. Mareva injunctions.

Registration of a CPL or caveat against title to a Defendant’s land is, generally speaking, only permitted when the lawsuit relates directly to questions of ownership of the land.  The Plaintiff has to be claiming to have some kind of interest in that land in order to register these instruments.  If registered, these instruments effectively prevent a Defendant from dealing with their land prior to the outcome of a lawsuit.  If the lawsuit does not relate to a land dispute, they are unavailable to a Plaintiff.

Prejudgment garnishment allows a Plaintiff, after obtaining a court order, to compel the Defendant or someone who owes money to the Defendant (like a bank) to pay a certain sum of money into court prior to the lawsuit being decided either way.  This money paid into court then sits in court pending the outcome of the lawsuit.  If the Plaintiff is successful, he or she can then apply to have the money paid out to themselves.  If the Plaintiff is not successful in the lawsuit, that money will go back to the Defendant.

The Mareva injunction, put simply, prohibits the Defendant(s) in a lawsuit from disposing any assets prior the outcome of the lawsuit.   This order then ensures there are assets available to the Plaintiff to satisfy the judgment amount if the Plaintiff is successful in the lawsuit. Like the prejudgment garnishment remedy, the Plaintiff has to apply to the court for this sort of order.

Suffice to say that both prejudgment garnishment and the Mareva injunction are only available in very limited circumstances, if certain facts exist in a particular case.  Courts do not grant these types of remedies often and accordingly, in the vast majority of lawsuits, the Plaintiff can do nothing to access the assets of a Defendant until after the Plaintiff successfully obtains a judgment.

In light of the forgoing, it is important that prior to commencing any lawsuit, beyond discussing the legal issues and strengths and weakness of your case with your lawyer (which you should do in all cases), it is equally important to consider the financial circumstances of the Defendant(s) that you will be suing.  If the Defendant(s) that you are pursuing have no assets and little or no income, you may want to think twice about incurring the costs of a lawsuit.   Obtaining a judgment is only half of the equation because you still need to recover the amount of the judgment from the Defendant(s) and if the Defendant(s) do not have the means to pay then the judgment is little more than a fancy piece of paper.

It should be noted, however, that in British Columbia, a judgment is valid for 10 years and can be renewed thereafter, and as a result, even if a Defendant (whether individual or corporate) has no assets when the judgment is first obtained, if that Defendant begins to earn income and acquire assets, steps can be taken against those assets as long as the judgment is valid.  Despite this possibility that a Defendant may acquire assets down the road, it is still always a risk to spend time and money on a lawsuit against a Defendant who has no or limited assets.  This issue ought to be given some thought prior to commencing your lawsuit and can be discussed in detail with your lawyer.

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