Mandates Upon Garnishee: Requirements to Participate Within the Process

Question: What must a garnishee do in Ontario after receiving a Notice of Garnishment, and what are the key deadlines?

Answer: In Ontario Small Claims Court, a garnishee must promptly complete, serve, and file the Garnishee’s Statement (Form 20F) and remit any garnishable funds to the court clerk within 10 days of service (or when the debt becomes payable, if later) under Rules of the Small Claims Court, O. Reg. 258/98 (Rule 20.08(7)).  DefendCharges.ca provides Ontario paralegal services to help employers and other third parties understand wage-garnishment limits, apply net-wage rules under Wages Act, R.S.O. 1990, c. W.1 (s. 7), and reduce the risk of becoming liable for the judgment debt due to missed steps or late payment.

Garnishees Must Participate With Timeliness

The garnishment process involves a Notice of Garnishment (Form 20E) being served upon the third party who owes money to the Judgment Debtor.  This third party is known as a garnishee.  Upon receiving a Notice of Garnishment, the garnishee is required to complete, serve, and file, a Garnishee Statement (Form 20F) within the prescribed period.  A garnishee that fails to properly adhere with the requirements of the garnishment process may become obliged to pay the debt of the Judgment Debtor.

Response Is Required

After the Garnishee receives the garnishment documentation as required served upon the Garnishee, being the Notice of Garnishment (Form 20E) with a Garnishee’s Statement (Form 20F), the Garnishee must then make proper payment to the Court Clerk within ten (10) days as per Rule 20.08(7) of the Rules of the Small Claims Court, O.  Reg. 258/98, which states:

All Means All

Immediately upon receipt of a Notice of Garnishment, a Garnishee becomes obligated to pay all sums of money to the Court Clerk which the Garnishee owes to the debtor.  It is noted that the reference to “… 10 days after service of the notice …” as within Rule 20.08(7) is in regard to when the sum must be remitted rather than when the sum must be accounted.  Accordingly, the moment the Garnishee receives the Notice of Garnishment (Form 20E), the debt due at that moment to the Debtor instead becomes the sum payable by the Garnishee to the Court Clerk and the Garnishee must make that payment within ten (10) days to the Court Clerk.

Exceptions

Legally Required Source Deductions

An exception to the sum payable to the Court Clerk are those sums that are prescribed as exempt per the Wages Act, R.S.O. 1990, c. W.1, whereas a debt due as wages and thus a sum that may be garnished is based upon a net wage rather than a gross wage; and accordingly, source deductions such as income tax, CPP contributions, and any other sum that an employer is required to deduct is exempt from garnishment.  As such, the employer is required to process and remit source deductions in the usual fashion regardless of receipt of a Notice of Garnishment (Form 20E).  The requirement to set aside source deductions and to remit only such monies as related to net income is prescribed at section 7(1) of the Wages Act, which states:

Maximum Wages Deduction

A Creditor may seek to garnish twenty (20%) percent of a debt for wages as owed by a Garnishee to the Debtor.  This sum may be varied, higher or lower, via an Order of the Court whereas such a variance would be sought at a Motion and would, presumably, involve a Creditor seeking more than twenty (20%) percent or involve a Debtor seeking less than twenty (20%) percent.  The rules specific to the garnishment limit applicable to wages is found at section 7(2) through section 7(5) of the Wages Act, where it is said:

Questions also often arise as to whether the twenty (20) percent of wages that may be garnished should be calculated from gross pay or net pay; however, that question was indirectly answered earlier whereas section 7(1) of the Wages Act exempted sums owed as a legally required source deductions are excluded from the definition of wage; and accordingly, when calculating the twenty (20) percent of a wage that must be garnished, such calculation can only be based upon what is defined as a wage.

Conclusion

A Garnishee, although merely a third party to the relevant legal matters, is mandated to act with prudence and integrity.  The Garnishee must respond promptly and must participate in the process despite the administrative imposition upon the Garnishee.  Accordingly, the Garnishee must become familiar with the law, documents, among other things, as relevant to the Garnishee.