Morgan v. Guimond Boats Limited

Morgan v. Guimond Boats Limited

The court held that the monthly rents payable under the lease/sublease are debts owing to the judgment debtor and are attachable because (1) paragraph 7(b) of the collateral mortgage does not effect an immediate assignment without written direction by the mortgagee and no such direction was given; (2) the debenture is a floating charge that has not crystallized and therefore does not prevent garnishment; and (3) the garnishees failed to discharge the onus to show cause why the rents should not be paid to the judgment creditor; accordingly the rents from July 23, 2008 are attached and payable to the judgment creditor and costs are awarded.

Citation
2008 FC 1004
Parties
Judgment Creditor (applicant): Robert Morgan d.b.a. Kona Concept Inc.; Judgment Debtor (respondent): Guimond Boats Limited; Garnishee: Cory Guimond Holdings Inc.; Garnishee: Millenium Marine Inc.; Interested Third Party / Mortgagee: Caisse Populaire de Baie Sainte-Anne Ltée.
Court
Federal Court
Jurisdiction
Canada
Judgment Date
8 September 2008
Procedural Posture
Garnishment (enforcement of Judgment) / Show Cause Hearing Following Ex Parte Attachment (post Attachment Garnishment Hearing)
Outcome
Garnishment granted; sums owing or accruing from July 23, 2008 by the garnishees to the judgment debtor are attached and must be paid to the judgment creditor; costs awarded to the applicant.
Legal Topics
Garnishment, Attachment of Rents, Assignment of Rents, Mortgage Priority, Floating Charge, Costs
Source Language
English
Civil Procedure Judgment Enforcement Property Law Trusts and Security Interests Garnishment Attachment of Rents Assignment of Rents Mortgage Priority +2 more

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Parties

Robert Morgan d.b.a. Kona Concept Inc.

Judgment Creditor (applicant)

Guimond Boats Limited

Judgment Debtor (respondent)

Cory Guimond Holdings Inc.

Garnishee

Millenium Marine Inc.

Garnishee

Caisse Populaire de Baie Sainte-Anne Ltée.

Interested Third Party / Mortgagee

Procedural Posture

Garnishment (enforcement of Judgment) / Show Cause Hearing Following Ex Parte Attachment (post Attachment Garnishment Hearing)

Legal Issues

  1. 1 Whether rents payable under the lease/sublease are debts owing to the judgment debtor and therefore attachable by garnishment
  2. 2 Whether paragraph 7(b) of the collateral mortgage creates an immediate trust/assignment of rents in favour of the mortgagee absent written direction
  3. 3 Whether the existing debenture (floating charge) prevents garnishment prior to crystallization

Ratio Decidendi

The court held that the monthly rents payable under the lease/sublease are debts owing to the judgment debtor and are attachable because (1) paragraph 7(b) of the collateral mortgage does not effect an immediate assignment without written direction by the mortgagee and no such direction was given; (2) the debenture is a floating charge that has not crystallized and therefore does not prevent garnishment; and (3) the garnishees failed to discharge the onus to show cause why the rents should not be paid to the judgment creditor; accordingly the rents from July 23, 2008 are attached and payable to the judgment creditor and costs are awarded.

Court Disposition

Garnishment granted; sums owing or accruing from July 23, 2008 by the garnishees to the judgment debtor are attached and must be paid to the judgment creditor; costs awarded to the applicant.

Orders

  • All sums owing or accruing from and after July 23, 2008 from Cory Guimond Holdings Inc. and Millenium Marine Inc. to Guimond Boats Limited by virtue of the lease and sublease are attached and are to be paid to the judgment creditor up to the amount required to satisfy the judgment debt.
  • The said sums are to be paid in trust to Clark Drummie, 40 Wellington Row, P.O. Box 6850, Saint John, New Brunswick, E2L 4S3, or to such other person as the judgment creditor directs in writing.