Part 1: Pension Funds
If the time, cost, and overall frustration involved in enforcing a judgment you’ve already won weren’t enough for you, a disputed garnishment will add another layer.
While often the debtor raises the objection, it’s possible for the garnishee in the equation (i.e. the debtor’s bank or employer, or another party served with your Notice of Garnishment) to do so as well.
If the funds targeted originated from government social assistance, for example, they may be protected under Ontario law.
Statutory exemptions may legitimately protect what a judgment creditor may recover.
However, it is important to be cognizant of the fact that a garnishee’s assertion of an exemption does not necessarily establish that it applies. Through the appropriate legal procedure, the court will have the final word.
This is the first post in a series on garnishment exemptions in Ontario: what they protect, where disputes arise, and what judgment creditors should examine before accepting that funds are beyond reach.
Our first exemption: pension funds.
What Does the Pension Exemption Protect?
Money payable under a pension is exempt from “execution, seizure, or attachment” per Section 66(1) of the Ontario’s Pension Benefits Act (the “Act”). Canada Pension Plan benefits have their own parallel protections under Section 65 of the Canada Pension Plan.
Where a garnishee bank responds that account funds are exempt “because they are pension funds,” it’s necessary first to establish which pension(s) the debtor receives, and which legislation protects it. Without this information, the exemption cannot be sufficiently evaluated.
An Account May Contain Money From Several Sources
While a debtor’s account may receive pension deposits, it’s possible that they receive income from other sources alongside that pension. An account may contain a recent pension deposit, for example, an earlier balance, and a transfer from another account. Moreover, an account balance may change substantially between the pension payment and service of the notice of garnishment, when the debtor becomes alert to the creditor’s pursuit.
A garnishee bank disputing a garnishment on pension grounds must explain why the particular funds in question are protected. Supporting documentation will likely be required.
What Documents Should a Creditor Seek?
In a garnishment pursued through the Small Claims Court, your starting point is the Garnishee’s Statement (Form 20F), which a bank disputing garnishment must file within 10 days of your service of the Notice of Garnishment (Form 20E). Depending on the details the bank provides supporting their reliance on the pension exemption, you may (or may not) need to ask for more.
Does their Form 20F identify the pension, the amount it is withholding, and why these particular funds are protected? Or does it simply state “pension funds,” without explaining the source or composition of the account balance?
A detailed response may narrow the questions requiring further investigation. Whereas a vague or incomplete response may leave you unable to assess whether the exemption applies. The creditor should also ask the garnishee to identify the statutory provision relied upon and explain how the exempt amount was calculated. If the statement says that the entire balance is protected, the explanation should address that entire balance; and not merely state that the debtor receives a pension. While Form 20F is not an unrestricted right to the debtor’s financial records, if a necessary explanation and/or documents are not provided voluntarily, you may need to seek a production order at a garnishment hearing (requested by way of Form 20Q).
Useful supporting records may include:
- Pension statements or confirmations identifying the plan, administrator, and amounts paid into the account;
- Bank statements for the relevant period, showing the opening balance, deposits, withdrawals, and transfers;
- Transaction details identifying deposits whose source is unclear; and
- Records explaining transfers between accounts, where necessary to trace the funds claimed to be protected.
The Bank’s Position Can Be Brought Before the Court
A bank may have a legitimate basis for raising an exemption. However its response to a garnishment is not a judicial determination. If the creditor disputes the alleged exemption, the appropriate forum to resolve the issue is the court.
In Small Claims Court, a garnishment hearing provides a procedure for addressing disputes relating to the garnishment. Superior Court enforcement proceeds under a separate set of rules, so the appropriate steps depend on whose jurisdiction the enforcement is under.
As judgment creditor, your challenge should address the specific gap in the bank’s exemption claim: an unidentified pension, an unexplained deposit, an unsupported calculation, or a legal question about protection after payment. The presence of a pension deposit in the debtor’s bank account is not sufficient to stop a validly issued garnishment.
Need help enforcing an Ontario judgment or addressing a disputed garnishment? Contact Northgate Legal to discuss your options.
