Me Stéphanie Destrempes
« Can I seize my debtor’s goods in case of non payment? ». We are often asked this question and it might be appropriate to enlighten creditors, by indicating them the good time and circumstances in which they may reasonably seize their debtors’ goods..
Unfortunately for creditors, their debtors’ goods cannot be seized for the sole reason that they are in default of paying their due. Nevertheless, it is sometimes possible to seize a debtor’s movable and immovable goods before a judgment is rendered against him. Also, it is almost always possible to execute a judgment rendered against a debtor by seizing his goods. Notwithstanding the above, certain goods remain privileged from seizure.
The Seizure Before Judgment
Certain laws applicable in the Province of Quebec provide for and enumerate the circumstances in which a creditor may seize his debtor’s goods before obtaining a judgment against him, and this, without the authorization of a judge (it is then necessary to obtain the authorization of a Court Clerk). The creditor may:
- Seize the movable goods he is in right to claim.
For example: An employer may seize from one of his ex-employees the listing of the company’s clients the later has brought with him when leaving the company. - Seize the movable good on the value of which he occupies a preferred rank and which is being used in a manner that jeopardizes the realization of his right of priority
For example: The buyer of a good has not paid said good and sells it to a third party. - Seize a movable good he his legally allowed to seize to insure that his rights on said good are exercised.
For example: A mortgagee or creditor may exercise his rights on a movable or immovable good with respect to his rights provided for by the applicable legislation. (Art. 734 of the Code of Civil Procedure)
However, the right to seize before judgment does not allow a creditor to sell or resell the goods he has seized. This disposition allows him to protect his debt, salvage his rights and protect the goods. The main goal of this is to avoid that the debtor squanders his goods in order to become insolvent.
It is important to add that, in this era of modernity where access to personal information is well protected by many specific laws, the right to seize may be refused to a creditor even though said creditor is in a position to claim property rights over given goods, if said goods are composed of software or if they are believed to contain confidential information.
What happens when a creditor does not qualify under the terms of the legislation applicable in the Province of Québec that allows the seizure before judgment without the authorization of a judge?
Said creditor may then require authorization from a judge to seize his debtor’s movable and immovable goods. However, the application of this alternate method is much more limited, as it requires that certain conditions be respected in order to obtain such an authorization. The creditor will have to prove that without the permission to seize the goods before judgment, he fears the recovery of his debt could be jeopardized. It is the qualification of “fear” and the interpretation the Courts have given it, that complicates the application of this disposition and may cause the request for permission to seize before judgment to be rejected.
The jurisprudence qualifies fear as being objective, reasonable and serious, that is to say that a reasonable person placed in the same circumstances would also believe that the debt is at risk. Considering many reasons separately is not always sufficient to obtain the right to seize before judgment, but combining many reasons, facts and circumstances, may create a favorable situation allowing a judge to grant a request for seizure.
For instance, the fact that a payment is late or the debtor is insolvent does not give grounds to a seizure; however, situations where a debtor purposely squanders his good in order to become « judgment-proof » and/or acts in a disloyal, dishonest or fraudulent manner, may, if combined together, become elements that could enable a judge to consent to a seizure.
The Seizure After Judgment
The seizure after judgment is useful, as it allows the creditor to execute a judgment on the goods of a debtor who shows to be unable to respect his obligations. This arises from the principle that a debtor’s goods constitute a common surety for all of his creditors. However, it is important to underline the fact that executing a judgment is not always an easy process, as the seizing officer is submitted to a specific process provided for by the Code of Civil Procedure. Indeed, he must inquire about possible liens attached to the goods, as any third party detaining such a lien is entitled to claim his rights on the seized goods.
Goods Privileged From Seizure
Notwithstanding the above, certain goods are legally privileged from seizure. (Among others, but not limited to, articles 552 and 553 C.C.P.) For instance, but without limitation: furniture garnishing a residence, up to a market value of $6,000; tools and equipments necessary to the conduct of the debtor’s professional activities; allowances to a complementary retirement found to which the employer participates; a portion of the debtor’s salary; any other items declared privileged from seizure by law.
If he does not respect these conditions, the seizing creditor could be sued by the seized debtor, who could present a Motion claiming the annulment in part or in whole of the seizure. (Art. 596 (2) C.C.P)
Conclusion
Finally, it could be useful to reiterate the importance of seeking legal advice before considering going ahead with a seizure. A legal advisor will evaluate the possibility and the opportunity of seizing before judgment, and insure that this process will be the most efficient and appropriate under the circumstances, considering the applicable legislation. The same principle applies to the seizure after judgment, as the possibility a debtor be insolvent could render this process pointless.
The present article is not a legal opinion and is published for information purposes only. For more information concerning this subject or any related subject, please do not hesitate to contact the writer or one of our professionals.