CIVIL LITIGATION IN BC
How Creditors Can Seize Bank Accounts and Other Funds Before Judgment Under the Court Order Enforcement Act
George Lee | George Lee Law | Vancouver, BC | 604-681-1611
Introduction
Most people assume that a creditor cannot touch a debtor’s assets until after a court has decided the case and entered judgment. In most Canadian provinces, that assumption is broadly correct. But British Columbia is different.
Under the Court Order Enforcement Act, R.S.B.C. 1996, c. 78 (“COEA”), a plaintiff in BC can obtain a pre-judgment garnishing order that freezes a defendant’s bank accounts and other funds before the lawsuit is resolved—and even before the defendant knows they are being sued. This is an extraordinary remedy. Courts have repeatedly described it as such, and with good reason: it allows a creditor to seize a debtor’s money without ever stepping into a courtroom, and without the debtor having any opportunity to respond in advance.
This article explains how pre-judgment garnishing orders work, when they are available, what their limitations are, and how they compare to the more widely known Mareva injunction.
What Is a Pre-Judgment Garnishing Order?
A garnishing order is a court order that “attaches” debts owed to a defendant by a third party—known as the “garnishee”—and compels the garnishee to pay those debts into court rather than to the defendant. The most common target is a bank account: the bank owes the deposited funds to the account holder, and the garnishing order redirects that obligation to the court.
A pre-judgment garnishing order is exactly what it sounds like: this process is carried out before any judgment has been entered against the defendant. The plaintiff files an affidavit and a draft order with the court registry, obtains the order from the registrar as a desk order (no court hearing required), serves it on the garnishee (typically the bank), and only then notifies the defendant. By the time the defendant learns what has happened, the funds are already frozen.
The garnished funds are not paid to the plaintiff. They are held by the court pending the outcome of the litigation. If the plaintiff obtains judgment, the funds are applied to satisfy it. If the plaintiff’s claim fails, the funds are returned to the defendant.
| Key Point: BC is unique in Canada in permitting pre-judgment garnishing orders. This remedy is not available in other Canadian provinces, making it a particularly powerful tool for creditors litigating in British Columbia. |
The Statutory Framework: Section 3 of the COEA
The authority for pre-judgment garnishing orders is found in section 3(3) of the COEA. That provision allows a judge or registrar to make an order attaching debts owed to a defendant where the plaintiff has:
- Filed an affidavit in or to the effect of Form A in Schedule 1 of the COEA; and
- Issued a Notice of Civil Claim for the amount of the claim against the defendant.
The affidavit is the critical document. Under section 3, it must set out the nature of the plaintiff’s claim, state the actual amount of the debt or liquidated demand, confirm that the amount is justly due and owing after making all just discounts, identify the garnishee, and confirm that the garnishee is within the jurisdiction of the court.
Importantly, section 3(4) provides one significant restriction: a pre-judgment garnishing order cannot be used to attach wages or salary. Wage garnishment is only available after judgment has been obtained. This means the typical targets of a pre-judgment garnishing order are bank accounts, accounts receivable, and other non-wage debts owed to the defendant.
The Liquidated Claim Requirement
This is the single most important—and most frequently litigated—requirement. A pre-judgment garnishing order is only available for a debt or liquidated claim. It is not available for unliquidated claims, such as claims for general damages, pain and suffering, or loss of future income.
A liquidated claim is one for a specific sum that has either been ascertained or is capable of being ascertained as a matter of simple calculation. Common examples include unpaid invoices under a contract, a fixed sum owed under a promissory note, unpaid rent under a lease, a loan with a defined principal and interest rate, and money paid under a contract that has been rescinded.
The distinction matters because if the plaintiff’s claim is truly for damages at large—that is, a sum that requires the court to assess and quantify—a pre-judgment garnishing order is not available. This was reinforced in Shier v. Copper Mountain Mining Corporation, 2023 BCSC 152, where the court set aside a pre-judgment garnishing order for approximately $1.57 million because the plaintiff’s employment claim was, in substance, a claim for damages rather than a liquidated sum, notwithstanding the plaintiff’s attempt to characterize it otherwise.
| Practical Tip: If your claim includes both liquidated and unliquidated components, you can still seek a pre-judgment garnishing order — but only for the liquidated portion. Be precise in isolating the liquidated amount in your affidavit, and be careful not to inflate the claim by including unliquidated elements. |
Accounting for “All Just Discounts”
The COEA requires the plaintiff to “account for all just discounts” in the affidavit. This means the plaintiff must disclose any amounts that should be deducted from the claim—credits, set-offs, partial payments, or any other reductions that the defendant could reasonably assert.
Courts take this requirement seriously. In Nisa Holdings Inc. v. LMG Mgmt. Ltd., 2020 BCSC 11, the court set aside a garnishing order in its entirety because the plaintiff failed to account for approximately $1,700 in known overcharges that would reduce the debt—an amount representing less than 2.5% of the total claim. The court did not simply reduce the garnishing order by the undisclosed amount; it cancelled the entire order as a consequence of the non-disclosure.
The lesson is clear: the affidavit must be comprehensive and candid. Any amount that might reduce the claim—even a small one—must be disclosed and accounted for. Failing to do so is not treated as a minor technical deficiency; it goes to the integrity of the application and can be fatal.
The Procedure: Step by Step
Step 1: Prepare the Affidavit
The affidavit must follow Form A in Schedule 1 of the COEA. It should be sworn by the plaintiff or by the plaintiff’s solicitor or another person aware of the facts. While section 8 permits the affidavit to be sworn on information and belief as to the garnishee’s indebtedness, the substantive requirements of section 3 must be strictly observed. The affidavit should set out the nature of the claim with sufficient particularity to establish that it is a debt or liquidated demand, state the precise amount owed after all just discounts, identify the garnishee by name, address, and description, and confirm the garnishee is within the court’s jurisdiction. Supporting documents—contracts, invoices, loan agreements, promissory notes—should be attached as exhibits.
Step 2: Issue the Action
The plaintiff must have issued a Notice of Civil Claim for the amount of the claim. The garnishing order and the commencement of the action can be filed simultaneously, which is a common and effective strategy.
Step 3: Obtain the Order
The affidavit and draft garnishing order are filed with the court registry. The registrar reviews the materials and, if satisfied, issues the garnishing order. No court hearing is required, and no notice to the defendant is necessary at this stage. The filing fee is currently $80.
Step 4: Serve the Garnishee
The garnishing order is served on the garnishee first. This is deliberate: the point of the remedy is to freeze the funds before the defendant can move them. Once served, the garnishee is obligated to pay into court any debts it owes to the defendant, up to the amount specified in the order.
In the case of a bank, the garnishing order attaches funds held at the specific branch that is served. It does not automatically reach accounts held at other branches of the same bank. This is a point of significant practical importance—the plaintiff needs to know where the defendant banks and serve the correct branch.
Step 5: Serve the Defendant
After the garnishee has been served, the plaintiff must serve the defendant with the garnishing order and the originating pleading. This is when the defendant first learns of the action and the garnishment.
Step 6: Funds Held Pending Resolution
The garnished funds are paid into court and held until judgment is entered or the parties reach a settlement. If the plaintiff obtains judgment, the funds are applied to satisfy it. If the order is set aside, the funds are returned to the defendant.
Pre-Judgment Garnishing Orders vs. Mareva Injunctions
Both pre-judgment garnishing orders and Mareva injunctions serve a similar purpose: they prevent a defendant from dissipating assets before judgment. But they operate under fundamentally different frameworks, and understanding the differences is essential to choosing the right tool.
| Feature | Pre-Judgment Garnishing Order | Mareva Injunction |
| Statutory basis | Court Order Enforcement Act, s. 3(3) | Inherent jurisdiction of the court (common law) |
| Notice to defendant | Not required — obtained and served without prior notice | Generally requires notice, though ex parte applications are possible |
| Type of claim required | Debt or liquidated claim only | Any cause of action (liquidated or unliquidated) |
| Undertaking as to damages | Not required | Required — plaintiff must compensate defendant if injunction was wrongly granted |
| What is frozen | Specific debts owed to the defendant by identified third parties (e.g., bank accounts) | All or specified assets of the defendant (broader scope) |
| Threshold to obtain | Affidavit establishing debt/liquidated claim with strict compliance | Strong prima facie case, real risk of dissipation, balance of convenience |
| Cost if unsuccessful | Generally no liability to the defendant beyond wasted legal costs | Plaintiff may be liable under the undertaking as to damages |
| Availability across Canada | Unique to British Columbia | Available in all Canadian provinces |
The most significant practical difference is the undertaking as to damages. When a plaintiff obtains a Mareva injunction, it must undertake to compensate the defendant for any loss caused by the injunction if the court ultimately finds the injunction was wrongly granted. This can expose the plaintiff to substantial liability. No such undertaking is required for a pre-judgment garnishing order—making it, in many respects, a lower-risk option for the plaintiff.
However, the garnishing order’s limitation to liquidated claims means it is simply not available for many types of disputes. A plaintiff with a tort claim, a claim for breach of fiduciary duty, or a claim for unliquidated contractual damages will need to pursue a Mareva injunction instead, if asset preservation is required.
The Defendant’s Response: Setting Aside the Order
A defendant served with a pre-judgment garnishing order is not without recourse. Under section 5 of the COEA, the defendant may apply to the court for a release of the garnishment. There are two principal grounds for setting aside a pre-judgment garnishing order.
Technical Deficiencies
Courts require strict compliance with the COEA’s requirements. If the affidavit is defective—for instance, if it fails to account for all just discounts, misstates the amount owing, does not properly identify the garnishee, or fails to attach material documents—the garnishing order may be set aside. As noted above, even a minor omission in the disclosure of set-offs can be fatal.
“Just in All the Circumstances”
Even if the garnishing order is technically sound, the court retains discretion under section 5 to set it aside if it “considers it just in all the circumstances.” This is a broad equitable discretion. Factors the court may consider include whether the garnished funds are needed for essential purposes such as employee payroll, whether the claim is genuinely disputed on its merits, whether the garnishment causes disproportionate hardship, and whether there is evidence of bad faith or improper purpose in seeking the order.
If the court sets aside a pre-judgment garnishing order, the frozen funds are returned to the defendant. The plaintiff may face adverse cost consequences, particularly if the court finds the application was brought improperly or without proper disclosure.
Practical Considerations for Plaintiffs
You Need Banking Information
A garnishing order is only as effective as the intelligence behind it. You need to know where the defendant banks—and specifically which branch holds the funds. A garnishing order served on the wrong branch, or on a bank where the defendant has no accounts, produces nothing. Gathering this information in advance is essential.
The Account May Be Empty
There is no guarantee that the defendant will have funds on deposit at the time the order is served. If the account has been emptied, or if the defendant owes the bank more than the account balance (for instance, under a line of credit), the garnishment will capture nothing. The legal costs of the application are then wasted.
Joint Accounts Are Not Reachable
Money held in a joint account with a person who does not owe the plaintiff money generally cannot be garnished. If the defendant’s funds are held jointly with a spouse or business partner who is not a party to the claim, those funds may be beyond reach.
Timing Is Everything
Because the garnishing order and the commencement of the action can be filed simultaneously, and because the garnishee is served before the defendant, the element of surprise is a central feature of this remedy. If the defendant has any reason to believe a lawsuit is imminent, they may move their funds before the order can be served. Speed and secrecy in the preparation stage are critical.
Strict Compliance Is Non-Negotiable
Courts have consistently held that pre-judgment garnishing orders are an extraordinary remedy requiring strict observance of the statutory requirements. This does not mean perfection is required, but it does mean that every material requirement of section 3 must be met. The affidavit must accurately state the claim, the amount, and the discounts. Material documents should be exhibited. Cutting corners in the drafting stage creates a vulnerability that a well-advised defendant will exploit on an application to set aside.
When Is a Pre-Judgment Garnishing Order the Right Choice?
A pre-judgment garnishing order is most effective in a specific set of circumstances: where the plaintiff has a clear, quantifiable debt or liquidated claim, where the plaintiff has reliable information about the defendant’s banking arrangements, where there is a concern that the defendant may dissipate assets before judgment, and where the plaintiff wants to secure funds without the cost and risk of a Mareva injunction (and without the undertaking as to damages).
Common scenarios include unpaid loans, dishonoured cheques, unpaid invoices for goods or services delivered, amounts due under a contract that has been terminated, and refunds owed under a rescinded transaction.
Where the claim is unliquidated, where the defendant’s assets are not in the form of debts owed by third parties (for instance, where the concern is about real property), or where the plaintiff needs broader asset-freezing relief, a Mareva injunction or other remedy may be more appropriate.
Conclusion
The pre-judgment garnishing order is one of British Columbia’s most distinctive and powerful litigation tools. It allows a creditor to freeze a defendant’s bank accounts and other funds before any court hearing, before the defendant has been served, and before any judgment has been obtained. No other Canadian province offers this remedy.
But its power comes with constraints. It is available only for debts or liquidated claims. The affidavit in support must be drafted with precision and candour, strictly complying with the requirements of the COEA. Failure to account for even modest set-offs or credits can result in the entire order being set aside. And the remedy is only effective if the plaintiff knows where the defendant’s funds are held and acts before the defendant has reason to move them.
For plaintiffs with a clear debt claim and reliable banking information, the pre-judgment garnishing order provides a fast, cost-effective, and low-risk method of securing funds at the outset of litigation. For defendants who find their accounts suddenly frozen, it is essential to act quickly, obtain legal advice, and assess whether the order can be challenged on technical or equitable grounds.
In either case, the stakes are high and the margin for error is thin. This is an area where careful legal advice at the earliest possible stage makes a material difference.
Disclaimer: This article is intended for general information purposes only and does not constitute legal advice. Every case is different, and the law may have changed since this article was written. If you are considering a pre-judgment garnishing order or have been served with one, you should consult with a qualified lawyer to obtain advice specific to your circumstances.
Vancouver, BC | 604-681-1611 | English · Cantonese · Mandarin
Services: Family Law | Immigration | Civil Litigation