Published Articles

CAN I SUE?

I have been asked this question numerous times over the last 22 years. The simple answer almost always is yes, you can sue. The fact is however, that this is really the wrong question to be asked of a lawyer. The better phrased question is a two part one - "should I sue and if I do, what are my chances of success?" When phrased this way, the answer is rarely simple. In order to advise a client, a lawyer needs to know the facts of a potential case and the current status of the law related to the issues raised by those facts. The initial source of the facts is always the client. Human nature being what it is, a lawyer must ensure that the facts as presented to him/her by the client are reviewed in detail and where possible corroborated by witnesses and/or documentation. Clients often remember events in a certain way but that does not necessarily mean that a Court will agree that they happened that way. Clients are often disappointed when a judge does not see the facts as clearly as the client wanted even if the client is ultimately successful in the lawsuit.

A successful civil lawsuit in Manitoba usually results in the Court ordering one party to pay the other some amount of compensation for damages suffered. These damages normally arise from the breach of a contract or as a result of a tort. A tort is a wrong done by one party to another which is either something contrary to the law or a failure to discharge a specific legal duty. Negligence is the best known tort. Generally speaking, to be successful in a case alleging negligence, one has to establish:

1. the party being sued had some duty recognized by law requiring him/her to conform to a certain standard of conduct;

2. failure on their part to conform to that standard of conduct;

3. resulting injury from such failure. In most cases, the aggravation, frustration, and upset the plaintiff has experienced is not particularly relevant for the Court's determination of compensation. A Court will not order an apology.

Aside from such matters as injunctions, orders requiring the return of specific items of property or and, most civil lawsuits really address the basic question - is the plaintiff (the party suing) entitled to damages and if so, in what amount?

Once a lawyer has obtained the essential facts of a case, he/she is in a position to advise the client as to whether there is a claim to be advanced. Most often, a claim is initially advanced simply by way of a letter from the lawyer and depending on the case, a settlement of a potential claim may be arrived at without ever involving the court process. If this is not possible, the client then has to decide whether to incur the costs of having a formal claim prepared and filed with the Court.

To start a lawsuit in Manitoba, one usually files a document called a Statement of Claim. It is then served on the party being sued (defendant). The defendant has a set period of time in which to file a statement of defence which is designed to explain why he/she should not be liable to the plaintiff.

Parties to a lawsuit are required to disclose the documents they have in their possession and control related to the lawsuit by way of a sworn affidavit. Each party is entitled to inspect and obtain copies of the other party's documents. Certain documents are protected by law from disclosure. (Privileged) All communications and correspondence passing between a lawyer and client related to the lawsuit are privileged and are protected from disclosure to the other party.

Civil lawsuits provide for a pre-trial examination under oath. This is referred to as an examination for discovery. It normally takes place in a boardroom. Present are the parties, their respective counsel and a court reporter. The court reporter records all questions and answers and ultimately provides a written transcript of the examination. The examination for discovery allows a party to obtain admissions from the other side and to obtain information as to the other party's version of events and legal position in the lawsuit. Following the completion of examinations for discovery, a pre-trial conference is held between the lawyers and a judge. This judge will not be presiding over the trial of the lawsuit. The pre-trial conference is designed to explore the possibility of settlement and to make sure all pre-trial matters have been completed before the court will assign an actual trial date. If a matter is not settled, a trial date will be provided and the lawsuit will proceed to trial. The vast majority of civil lawsuits are settled well before trial. There are a number of reasons for this:

1. The risk associated with a trial. No competent lawyer will guarantee the outcome of a trial. There are simply too many variables involved. A witness who has told the same version of the events repeatedly in the comfort of the lawyer's office forgets a crucial fact while sitting in the witness box. A question is asked during cross-examination which results in a crucial admission. A judge does not believe the testimony he/she is hearing. All of these matters cannot be accurately predicted and have significant effect on the outcome of a trial.

2. The high cost of going to trial. Sometimes, a lawyer will take a civil case on what is known as a contingency fee. This is an arrangement by which the lawyer is paid a percentage of the damage award. If no damages are awarded, the lawyer charges no fee. The majority of the time however, lawyers charge for their time normally on the basis of an hourly rate. Senior counsel in Winnipeg may charge an hourly fee ranging between $175.00 to $275.00 per hour. Many will have a flat per day trial fee of between $1,500.00 to $2,500.00 per day. In addition, lawyers are required to charge and collect gst. At these rates a two or three day trial is a very expensive proposition.

3. What if I lose? The normal rule is that the successful party is awarded some amount towards his/her legal costs which have to be paid by the losing party. If you sue and lose, you will end up not only with your own lawyer's bill but with an order of the Court requiring you to pay a significant amount to the successful defendant to help offset his/her legal costs.

Faced with these harsh realities, many parties to a civil lawsuit decide somewhere along the line that a settlement is the best way to proceed. A settlement has definite terms that are agreed to between the parties and the element of risk associated with a trial disappears. This is not to say that cases should never go to trial. Sometimes it is obvious right from the start that the likelihood of a settlement is extremely rare. The decision to sue and to continue a lawsuit as opposed to settlement, is a decision that requires ongoing analysis by both the lawyer and client throughout the life of the lawsuit. The lawyer's role is to make sure that the client understands the process, the issues, and the potential costs, as those matters evolve during the course of the lawsuit and of course to advocate in the client's best interests.

RECOVERING A JUDGEMENT

While it may come as a surprise to many people, the sad truth is that even after successfully suing someone in the Court of Queen's Bench and obtaining a judgement ordering the defendant to pay money, that is quite often, not the end of the matter. The Court of Queen's Bench does not take steps on its own to enforce a civil judgement and there is no available administrative system which will force a defendant to pay the money ordered to be paid under the judgement.

It is important to remember, that we are talking about civil judgement. We are not referring to domestic cases (Family Law cases involving divorce, separation, maintenance/alimony and child support payments). In those situations, the Government of Manitoba does maintain a section entitled Maintenance Enforcement to assist in the recovery of family maintenance and support payments (telephone no. 945-7133).

In a case involving a civil judgement it is up to the successful party (the "judgement creditor") to continue to pursue the person who owes the money (the "judgement debtor") to obtain payment. In some cases, the judgement debtor will voluntarily make the payment. In many cases however, he/she will not make a payment unless further steps are taken by the judgement creditor.

Most of these additional steps require the assistance of a lawyer and result in further legal costs being incurred by the judgement creditor. These additional costs are partially recoverable in addition to the original judgement.

Usually, a judgement will provide for a certain rate of postjudgment interest to accrue after the date of judgement. If the lawsuit was based upon a contract which provided a specific rate of interest the Court will normally allow the rate of postjudgment interest to be charged. This will depend upon the specific wording of the contract. In other situations, a judgment normally will earn interest at the rate of five percent per year (often referred to as the "legal rate of interest"). This rate of interest does not compound annually but is simple interest that is, five percent of the original amount of the judgment per year.

A judgment ordering the payment of an amount of money is valid for 10 years from the date judgment. If it has not been recovered by that time, a judgment creditor may sue once more. The lawsuit is based upon the fact that the original judgment is still unpaid. A new judgment is then obtained which in effect provided a further 10 years to recover the judgment. No further extension may be obtained.

What then are the available means to recover a money judgment? While there are several, the most commonly resorted to are:

1. Garnishment;

2. Writ of Seizure and Sales;

3. Registration of a Certificate of Judgment in the Land Titles Office.

A judgment creditor is not restricted to choosing only one means of attempting to recover the judgment. All three of the above can be attempted. The decision on which way to proceed is in part determined by whatever knowledge a judgment creditor has as to the available assets the judgment debtor has that might be used to satisfy the judgment.

If a judgment creditor knows very little about the available assets of a judgment debtor, the judgment creditor can elect to have the judgment debtor examined in aid of execution. This is an examination under oath provided for in the Court of Queen's Bench Rules. A notice is served on the judgment debtor requiring him/her to attend (usually at a lawyer's office) at a specific time and requesting the judgment debtor to bring certain financial information and documents with him/her such as bank statements, income tax returns etc.. The judgment debtor must then appear to be questioned under oath as to his/her available assets, sources of income and property that he or she may have. If a judgment debtor does not appear, the assistance of the Court can be obtained to the point a Sheriff's officer will apprehend the person and bring him/her before a Master of the Court of Queen's Bench for the purpose of allowing the judgment creditor's lawyer to conduct the examination.

Once an examination has taken place, a judgment creditor will usually be in a much better position to determine what if any steps should be taken to attempt to recover the judgment.

Remember, the judgment creditor has 10 years in which to act and it may be that the financial circumstances of the judgment debtor are such that it is not worth while to spend anymore money at that time to attempt to recovery. It may be in the best interest of the judgment creditor to simply let the matter sit for a year or two in the hope that the judgment debtor's financial position improves.

A creditor has to be careful however, when making this determination, as the debt will normally be wiped out entirely should the judgment debtor go bankrupt.

Assuming that a decision has been made to take action the following is a brief description of the three methods referred to above:

Garnishment - Is a process whereby an Order of the Court of Queen's Bench is obtained (notice of garnishment) which is addressed to a third party (such as an employer, a bank, or someone else who owes the judgment debtor money) directing that person to pay some amount to the Court of Queen's Bench instead of to the judgment debtor. In the case of a bank or credit union, the notice of garnishment will require them to pay the full amount in a judgment debtor's bank account up to the amount of the judgment. In the case of employment, only a certain amount is deducted form each paycheque.

A notice of garnishment specifically provides that if, after having been served with the notice, the employer, bank or credit union pays the money to the judgment debtor instead and ignores the notice, they become responsible for the payment to the extent they paid the judgment debtor instead of the Court. Given this, very few employers ignore a notice of garnishment. Therefore, if a judgment creditor knows where the judgment debtor works, his/her wages may be garnished and periodic payments will be made into Court. The judgment creditor then applies to the Court to have the money paid our to him/her and to be applied against the outstanding judgment.

Writ of Seizure and Sale - This is a written direction issued by the Court (upon application of the judgment creditor) directed to the Sheriff. It advises the Sheriff that a judgment has been made in favour of the creditor and directs the Sheriff to seize and sell personal property of the debtor and to obtain from the sale the amount of the judgment and interest and costs together with the fees and expenses charged by the Sheriff.

Once the writ is issued the Sheriff usually attends at the residence of the judgment debtor to determine what if any assets are available to be seized and sold. It must be noted that under the Executions Act and the Judgments Act, the debtor has certain property which is exempt from seizure and sale and the Sheriff will therefore have to determine exactly what can be seized.

There are a number of complex rules regarding the seizure of personal property. The Sheriff is required to provide notice prior to paying out any monies recovered pursuant to a writ and other judgment creditors can apply to share in the sale proceeds. Where there is a dispute over the ownership of property (for example a wife claims that the home entertainment system does not belong to her husband, the debtor but is hers) the Sheriff has to make a determination as to the true ownership of disputed property.

Filing a Certificate of Judgment in the Land Titles Office - Where a judgment debtor has a registered interest in real property, a certificate of judgment may be registered against that interest in the appropriate land titles office. For example, if the judgment debtor owns a home (whether jointly or by him/herself) a certificate of judgment may be obtained and registered against the title. Once a certificate of judgment has been registered two further courses of conduct become available to the judgment creditor:

1. The judgment creditor may do nothing and simply wait (bearing in mind the 10 year validity of the judgment) to see if the debtor attempts to sell the property. If he/she does, the property will not be transferred without the certificate of judgment being removed by the judgment creditor. A typical situation would be where a judgment debtor, decides to sell his/her home. The new purchaser will insist that the certificate of judgment be removed from title prior to closing the sale. The judgment debtor wants to sell the house and has to therefore deal with the judgment creditor and pay the judgment in whole or make some other arrangement that is acceptable to the judgment creditor.
   
   

Under the Judgment Act, a judgment creditor may apply to the Court to have the judgment debtor's interest in the property sold after waiting one year from the date of registration of a certificate of judgment. This sort of application is only made, where the judgment creditor is satisfied that the judgment debtor has some equity in the house. For example, if there is a mortgage for $50,000.00 against the house, and the judgment creditor is satisfied that a sale of the house would bring a purchase price of approximately $75,000.00, then an application to have a court ordered sale should take place. While the mortgage would have to be paid out to the bank or credit union first, there would be sufficient money left afterwards (subject to several thousand dollars that are exempt and payable to the judgment debtor) so that there will be some money available to be paid to the judgment creditor and applied against the judgment.

In this sort of situation, most judgment debtors will deal with the judgment creditor rather than face the prospect of a court ordered sale of their home.

It should be remembered, that it is only the property of the judgment debtor which is available to satisfy the judgment. This becomes important in the case of a married judgment debtor. Even if the judgment debtor's spouse is working, has a sufficiently large bank account, owns a house, car, and other personal property, unless the judgment is against that spouse also, his/her assets cannot be touched and are not available to be seized, sold or otherwise encumbered to satisfy the judgment.

Sometimes, a judgment debtor will simply not have available assets to pay judgment. In some cases, he/she will voluntarily enter into an agreement with a judgment creditor to make installment payments. If you are a judgment debtor, it is best to deal with this matter directly as most judgment creditors will accept installment payments if satisfied there are not sufficient assets to pay the judgment in total at one time. When a judgment debtor simply ignores dealing with a judgment, it normally causes the judgment creditor to become much more aggressive in his/her attempts to recover and the likelihood of making some sort of arrangements for installment payments is reduced. Judgment debtors are best advised to try and deal with a judgment creditor early on following the pronouncement of judgment in the hopes of achieving some practical agreement for payment of the debt which allows as little impact on the judgment debtor's finances as possible.