News & Insights

Overview

Tracking down assets in Canada takes strategy and timing. While courts limit pre-judgement snooping, smart litigants use discovery, registry searches, and investigative tools to map out what a debtor owns before it vanishes. From BC Online and PPSA filings to land title searches and the ICIJ database, knowing where to look, and what’s legal, is vital for successfully collecting on a judgement in BC rather than ending up with an empty win.

Introduction:

This article is Part One of a 3 part series on enforcing judgements in Canada. It focuses on how to identify, trace, and preserve assets before and after judgement. While Canadian courts restrict pre-judgement enforcement, strategic use of discovery, registry searches, and investigative tools can reveal where assets are held, and how to protect them before they disappear. These steps lay the necessary groundwork to eventually enforce a court order in BC under governing legislation like the Court Order Enforcement Act.

The Challenge of Finding Assets Before judgement

Identifying assets in the jurisdiction can be challenging. It is often the case that litigation can go on for years and the successful Plaintiff is left with a dry judgement – a judgement that cannot be collected.

In Canada, there is a general prohibition against pre-judgement execution, meaning aggressive pre-judgement remedies in BC are limited compared to other jurisdictions. This doctrine has expanded to the discovery phase. Our Courts dislike measures allowing a litigant to peek into the financial and other affairs of its opponents prior to a full hearing on merits, usually in the form of a Trial. The Trial is the culmination of usually years of pre-Trial procedures, including reciprocal disclosure of documents, examinations for discovery, demands for particulars, interrogatories and the like.

Discovery steps taken pre-Trial by a party that are obviously an attempt to locate assets to seize someday, and therefore unrelated to the liability claims in a Notice of Claim, will oftentimes be vigorously opposed by the target.

Sometimes, however, information comes to light in the discovery phase of the litigation that can be immensely useful in execution after the obtaining of a Judgement. In any commercial case of any degree of complexity, the parties will have pre-Trial access to their opponent’s banking, corporate tax records, property documentation as a natural consequence of discovery.

However, a wily opponent, thinking it has bad odds of victory at Trial, will often change its banking and other financial affairs at a late stage of the litigation, sometimes even in the midst of Trial.

There are other pre-Trial steps, other than discovery, which can be useful.

Searches:

Court Services Online (CSO):

In British Columbia for example, there is Court Services Online (CSO). Constantly updated, CSO is an online database containing thousands of separate cases, organized and searchable in various ways. The first two documents downloaded online are $6.00. All downloads following that are free.

CSO has copies of pleadings, Orders, Reasons for Judgement, Clerks Notes and procedural paraphernalia. Affidavits cannot be downloaded or even viewed. To view an Affidavit in the Vancouver Registry of the Supreme Court of British Columbia requires either a trip to the Registry or hiring a local firm such as West Coast Title Search. Be warned: either “in-person” Registry search is expensive – the Registry charges $1.00/per page and with any document numbering more than 10 pages, the wait is interminable.

BC Online:

For anyone with a credit card or BC Online account number, anywhere in the world, BC Online is an invaluable online repository for a wealth of information concerning many categories of property including:

• Business Registry
• Business Search
• Personal Property Registry
• Manufactured Home Registry
• Rural Property Tax
• Court Services Online
• Site Registry
• Wills Registry

Personal Property Registry (PPSA) Searches:

In British Columbia, the Personal Property Registry (PPR) is created by virtue of the PPSA, the Personal Property Security Act, RSBC 1996, c. 339. These security instruments cover almost all forms of debt other than real property i.e. land or a residence. The lender will take out a PPR registration against the debtor’s assets, including vehicles and “all present and after acquired” property. Banks and other lending institutions will ask for a PPR 100 times out of 100. These registrations are publicly available and can be a useful tool in litigation to determine the target’s debt load.

The PPR and the Land Title Registries, discussed below, used in tandem can also provide a rough and early picture of how indebted the target is and whether, even with a successful Judgement and other Orders in hand, the Creditor/victor must nonetheless get in line behind a number of other creditors with priority.

Land Titles (LTO):

Almost all provinces in Canada have a land title office (LTO). Here, originals of all official documents are stored on-site. Moreover, LTO registrations are also available online. The focus of an LTO search will involve a street address which will lead to a PID – Parcel Identifier. The PID identifies all parcels of land in British Columbia.

LTO searches of the title of a property will reveal key facts such as: what is the value of the property assessed for taxes; and what other parties (usually banks) have mortgages or other encumbrances registered against title?

Debtor-creditor law is outside the ambit of this article; however, this information is extremely important as, in Canada, by dint of federal legislation, banks have super-priority over all other creditors regardless of their security. So does Canada Revenue Agency (CRA).

Take the value of the tax assessment for the piece of property and then subtract the various mortgages, liens and other encumbrances. The equity that remains, if any, is your client’s target.

Fraudulent Conveyances and Preferences:

If there is no equity left in the target’s property, then the analysis becomes: did the debtor/target take any illegal steps to encumber itself to make itself judgement proof? In British Columbia, there is the Fraudulent Conveyance Act, RSBC 1996, c.163 and the Fraudulent Preference Act, RSBC 1996, c. 164.

A fraudulent conveyance is a transfer to a third party to “defeat one’s creditors”. A fraudulent preference is not a transfer but rather “preferring” a third party over one’s creditors with the same intent – to avoid the consequences of a Judgement. Usually, this takes the form of a suspicious mortgage that encumbers the property and the mortgagor (the purported Lender who now holds the mortgage) receives no valid consideration from the mortgagee. A sham mortgage in other words.

It is also notable that in this area of the law any transfer or preference is deemed to be a “fraud”, and the onus shifts to the defendant to demonstrate on a balance of probabilities that the transaction in question was legitimate i.e. not made with the intention to defeat creditors.

Other Searches:

There is of course the Internet. Very very few persons and entities are anonymous and live off the grid. LinkedIn is particularly useful. There are also bankruptcy registries; wills & estates registries; and registries for manufactured homes.

Investigative Tools:

The International Consortium of Investigative Journalists (ICIJ) is a laudable organization that has become invaluable to those of us in the field of prosecution or defence of international money laundering and business crime.

Online the ICIJ operates the Offshore Leaks Database, which exposes insiders in more than 810,000 offshore companies. The database includes: the Pandora Papers, Paradise Papers, Bahamas Leaks, Panama Papers, and the ongoing Offshore Leaks investigation.

The ICIJ website is extremely user friendly. Its graphics make wonderful court exhibits that are easily understand by a trier of fact. It is free, but donations are welcome.

For any kind of litigation with any kind of offshore component, or even without where for example the target a high net worth individual, the ICIJ database is an essential tool.

Gumshoes:

Prior to 9-11, and the many cyber crackdowns that followed it, a sophisticated firm of investigators such as Kroll & Associates (especially its Washington offices) could gather a shocking amount of information about a target without leaving their desks. Then things changed. Now, the Lisbeth Salanders of the world are very rare indeed. And worth their weight in gold.

Today, oftentimes when I engage a private investigator, the results are 1. expensive and 2. Little better than I could have done with a few hours on a desktop.

Where P.I.s do come in handy is surveillance. In Canada, surveillance is perfectly legal. If there is the budget, having for example the principal of the target watched and put on video over the period of a week or two can reveal further clues about the location of assets: unknown business address, location of banks and investments firms and the like.

There are also skip tracing firms. Sometimes, counsel are invited late to the party. The target has left the jurisdiction or was never in Canada in the first instance. This is especially so in the growing field of crypto coin and bit mining litigation. If there ever were assets, they are gone. In such cases, it can be a major challenge to even serve an individual litigant or their company with court documents.

There are creditable skip tracing firms such as In-House Receivable Services (IRS Collections) that can locate persons or firms who have skipped. Once located, IRS can be unleashed upon a target in an attempt to recover.

Conclusion

Effective asset identification is the foundation of any successful enforcement strategy. While Canadian law restricts aggressive pre-judgement tactics, well-planned discovery, registry searches, and discreet investigation can uncover the information needed to make a judgement enforceable in practice, not just on paper. Creditors who prepare early, before judgement is entered, are far better positioned to act quickly once the order is granted. In the end, finding the money is less about luck and more about disciplined, informed groundwork.

Related articles:

Enforcing Foreign Judgements and Arbitral Awards in Canada

Post-Judgement Execution in British Columbia: From Paper to Payment

Pre-Judgement Remedies in British Columbia: Securing Recovery Before Trial