A-63-75
Champlain Company Limited (Appellant) (Garni-
shee)
v.
The Queen in right of Canada, as represented by
the Minister of National Revenue, Taxation
(Respondent) (Judgment Creditor)
and
Charles R. Stewart (Respondent) (Judgment
Debtor)
Court of Appeal, Jackett C.J., Pratte and Le Dain
JJ.—Toronto, March 8 and 12, 1976.
Income tax—Practice—Appeal from garnishee order abso-
lute—Appellant claiming that affidavit evidence not ade-
quate—Federal Court Rule 2300.
Appellant claims that a decision of the Trial Division making
a garnishee order absolute was wrong because (1) the affidavit
evidence was not adequate to support the order under Rule
2300(1), in that one of the affidavits did not contain an
affirmation of belief that a debt existed, and, as appellant was
not a person "in Canada", while it was essential that the
affidavits state that there was a debt owing by appellant to
judgment debtor for which appellant could be sued in Canada
by the judgment debtor, they did not; and (2) that the affidavit
evidence was not adequate to support the "garnishee order
absolute" because it did not establish a debt owing.
Held, allowing the appeal, the order is set aside. (1) The
affidavit in question does express therein that the "garnishee"
owed approximately $750,000 to the judgment debtor. It is not
necessary for the affidavits to expressly say that the debt was
one for which the garnishee might be sued in Canada. Rule
2300 does not expressly or impliedly require that an action for
the debt in Canada be one in which an order for service ex juris
could be obtained. (2) The affidavits before the Court, read
with the cross-examinations, do not establish even a prima facie
case for claiming the existence of a debt. While the application
by the judgment creditor for an order for payment to the Queen
of a debt owing by the garnishee to the judgment debtor was
not supported by evidence of such a debt, Rule 2300 does not
appear to authorize such an order. Alternatively, Rule 2300(1)
can be read as requiring that the supporting affidavits show
prima facie proof of a debt in a determined amount and as
authorizing an order requiring the garnishee to show cause why
he should not pay. Such interpretation seems to put the onus on
the garnishee. However, a conclusion regarding this view is
unnecessary. The Rule 2300(1) order did not put appellant on
notice that it was required to "show cause" why it should not
pay a specified debt to the judgment creditor, but followed the
form expressly referred to in the Rule, and required appellant
to attend on an application by the judgment creditor that the
garnishee pay to it the debt due by the garnishee to the
judgment debtor. The application that such order seems to
contemplate brings into play Rule 319(2). Such course of
action having been adopted, it cannot be argued that the onus
was cast on appellant. Without such onus and any prima facie
case against it, appellant's abstention from adducing evidence
cannot support an order against it, even though it was in a
position to establish that it was not indebted to the judgment
debtor, if such was the case. Such abstention is not evidence
against it where no case has been put forward for it to meet,
and the onus is on the judgment creditor as applicant.
Assuming that an order may be made under Rule 2300(1)
based on information and a general expression of belief of
indebtedness, an order against a garnishee for payment to a
judgment creditor is only authorized by that Rule where there
is evidence on which the Court can conclude that there was a
debt from the garnishee to the judgment debtor equal to or
greater than the amount of the order for payment at the critical
time. The decision in Vinall v. De Pass does not operate to
require an interpretation of Rule 2300 imposing on the garni
shee an onus that otherwise is not to be found in the Rule.
Finally, it is doubtful whether the power to make procedural
rules for the Court goes so far as to authorize the establishment
of a procedure under which a person who is under no obligation
to the judgment debtor may be required to satisfy his judgment
debt, and it is equally doubtful that a scheme under which a
person is required to come to court to answer an "application"
by another and finds himself required to disprove something of
which he has been given no notice accords with natural justice
concepts. A legal provision cannot attain a force it would not
otherwise have, because, in a certain case, the court fills in a
natural justice condition precedent to such force that is not
expressed or implied by the provision itself.
Donohoe v. Hull Bros. & Co. (1894-95) 24 S.C.R. 683,
considered. Vinall v. De Pass [1892] A.C. 90,
distinguished.
APPEAL.
COUNSEL:
J. A. Gamble for appellant (garnishee).
H. Erlichman for respondent (judgment
creditor).
SOLICITORS:
Atlin, Goldenberg, Cohen, Gamble & Armel,
Toronto, for appellant (garnishee).
Deputy Attorney General of Canada for
respondent (judgment creditor).
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is an appeal from a judg
ment of the Trial Division wherein "a garnishee
order absolute" was granted under Division F of
Part VII of the Federal Court Rules.
Division F reads, in part, as follows:
Rule 2300. (1) The Court, upon the ex parte application of a
judgment creditor, on affidavit showing that the judgment is
unsatisfied and
(a) that there is a debt owing or accruing from some person
in Canada to the judgment debtor, or
(b) that there is a debt owing or accruing from some person
not in Canada to the judgment debtor and that such debt is
one for which such person might be sued in Canada by the
judgment debtor,
may order that all debts owing or accruing from such third
person (hereinafter called the garnishee) to the judgment
debtor shall be attached to answer the judgment debt and that
the garnishee do at a time and place named show cause why he
should not pay to the judgment creditor the debt due from him
to the judgment debtor or so much thereof as may be sufficient
to satisfy the judgment. (Form 64).
(2) An order under paragraph (1) to show cause must, at
least 7 days before the time appointed thereby for showing
cause, be served
(a) on the garnishee personally; and
(b) unless the Court otherwise directs, on the judgment
debtor.
(3) An order under paragraph (1) binds the debts attached
from the time of service on the garnishee.
(4) If the garnishee admits his liability, he may, subject to
paragraph (6), pay into court the debt due from him to the
judgment debtor or so much thereof as may be sufficient to
satisfy that judgment and give notice thereof to the judgment
creditor.
(5) Where the garnishee has not made a payment into court
as authorized by paragraph (4), if he does not dispute the debt
claimed to be due from him to the judgment debtor, or, if he
does not appear pursuant to the show cause order, the Court
may make an order for payment to the judgment creditor or
payment into court of the debt. (Forms 65 and 66).
(8) Where the garnishee disputes liability to pay the debt
claimed to be due or accruing due from him to the judgment
debtor, the Court may summarily determine the question at
issue or order that any question necessary for determining the
liability of the garnishee be tried in any manner in which any
question or issue in an action may be tried.
Before outlining what led up to the judgment
under attack, it is expedient to summarize the
relevant part of Rule 2300. As I understand Rule
2300, it may be summarized, sufficiently for
present purposes, as follows:
1. Upon an ex parte application, the Trial Divi
sion is authorized, by paragraph (1), to make
what might be called a combined attachment
and show cause order whereby
(a) all "debts owing or accruing" by a third
person (called "the garnishee") to a judgment
debtor are "attached" to answer the judgment
debt, and
(b) the garnishee is required to "show cause"
at a specified time and place why he should
not pay to the judgment creditor the debt due
from him to the judgment debtor or so much
thereof as may be sufficient to satisfy the
judgment.'
Such an ex parte application must be supported
by affidavit showing that the judgment debt is
unsatisfied and that there is a "debt owing or
accruing" to the judgment debtor from the
It is to be noted that, while paragraph (1) of Rule 2300
read by itself authorizes such a "show cause" order, it contains
a reference in parenthesis to "Form 64", the relevant part of
which reads, in part:
And it is ordered that the said garnishee attend before
this Court at on the day of 19 , at
o'clock on an application by the said judgment
creditor that the said garnishee do pay to the said judgment
creditor the debt due from the said garnishee to the said
judgment debtor .... [The emphasis is mine.]
In this connection, see Rule 2(3), which reads:
(3) A reference in one of these Rules to a "form" shall be
construed as a reference to that form in the Appendix to
these Rules and as a direction that the document referred to
at the point where the reference occurs shall, unless the
Court otherwise directs, follow the form as nearly as may be.
"garnishee". 2
2. The Court may under paragraph (5), where
such an attachment and show cause order have
been made, make an order for payment of the
garnishee's "debt" to the judgment creditor or
into court. Such an order can only be made
where
(a) the garnishee has not, under paragraph
(4), voluntarily paid into court his debt to the
judgment debtor, and
(b) the garnishee
(i) does not dispute the debt claimed to be
owed from him to the judgment debtor, or
(ii) does not respond to the "show cause"
order.
3. By virtue of paragraph (8), where the garni
shee disputes liability to pay the debt claimed to
be owing from him to the judgment debtor, the
Court may, inter alia, summarily determine the
question; and, impliedly, if it determines that
question against the garnishee, the Court may
make an order of the kind contemplated by
paragraph (5).
What happened in this case may, as I appreciate
the matter, be summarized, sufficiently for present
purposes, as follows:
1. On December 12, 1974, there were filed by
the respondent (judgment creditor) a notice of
motion (for inter alia an ex parte order under
Rule 2300(1)) and supporting affidavits taken
by John M. Jarrell, Graham R. Garton and
Harold R. Browne.
2. On December 16, 1974, a judgment was
delivered in the Trial Division, the body of
which reads as follows:
ORDER
Upon reading the Affidavits of Harold R. Browne, John
M. Jarrell, and Graham R. Garton, all filed;
It is ordered that all debts due or accruing due from the
above mentioned Garnishee to the above mentioned Judg
ment Debtor be attached to answer a judgment recovered
against the said Judgment Debtor by the above named
Judgment Creditor on the 20th day of September, 1973 for
the sum of $208,429.61, together with additional interest
2 If the garnishee is not in Canada, there is the additional
requirement that the debt be one for which he might be sued in
Canada by the judgment debtor.
at the rate of 6% per annum on the sum of $147,928.08
from the 16th day of September, 1973 to date of payment
together with the costs of the Garnishee proceedings on
which judgment the full amount remains due and unpaid;
And it is ordered that the said Garnishee attend before
this Court at the New Court House, University Avenue,
Toronto, Ontario on the 27th day of January, 1975 at
11:00 a.m. o'clock on an application by the said Judgment
Creditor that the said Garnishee do pay to the said Judg
ment Creditor the debt due from the said Garnishee to the
said Judgment Debtor, or so much thereof as may be
sufficient to satisfy the said judgment together with the
costs of the Garnishee proceedings.
3. On January 15, 1974, Jarrell, Garton and
Browne were cross-examined on their affidavits
by counsel for the appellant (garnishee).
4. On January 21, 1975, a notice of motion was
filed by the appellant (garnishee) giving notice
that, on the return date fixed by the judgment of
December 16, 1974, an application would be
made for an order
1. striking out paragraphs (3) and (4) of the Affidavit of
Graham R. Garton filed on the 9th day of December,
1974, in this matter, on the grounds that they do not
comply with the requirements of Rule 332(1) of the Rules
of the Federal Court of Canada; and
2. rescinding the Order of this Court made on the 16th
day of December, 1974, in this matter, on the grounds that
the Judgment Creditor has failed to show the existence of
any indebtedness to the Judgment Debtor by the Garni
shee as of the 16th day of December, 1974, or at any time
subsequent thereto.
5. The affidavit material showed, inter alia:
(a) that, on September 20, 1973, Her Majes
ty had obtained a "certificate" judgment 3
against the judgment debtor for $208,429.61
plus interest, and that it was unsatisfied;
(b) that, in August, 1973, the judgment
debtor agreed to transfer to the appellant
(garnishee) the shares in another company for
$750,000 (subject to adjustment) payable "by
cheque ... on closing";
(c) that the judgment debtor had purported
to transfer such shares to the appellant
(garnishee);
3 See section 223 of the Income Tax Act.
(d) that, while officers of the respondent
(judgment creditor) had been informed by an
officer of the appellant (garnishee) that the
consideration had been paid, they had, not
withstanding investigation and requests, been
unable to obtain any documentary evidence
that the appellant (garnishee) had paid the
amount agreed upon for the shares.
6. Garton's affidavit is of special importance
and reads, in part:
I, GRAHAM R. GARTON, of the City of Toronto, Barrister
and Solicitor, make oath and say as follows:
1. I am employed in the Toronto Regional Office of the
Canada Department of Justice and as such have knowl
edge of the matters herein attested to.
2. I am informed by the Affidavit of Harold R. Browne
that a certificate having the same force and effect as a
judgment was obtained against the Judgment Debtor,
Charles R. Stewart, on September 20th, 1973.
3. I am informed by the Affidavits of Harold R. Browne
and John M. Jarrell that it appears that the proposed
Garnishee, Champlain Company Limited, owes to the said
Charles R. Stewart an amount of approximately
$750,000.00.
4. On the basis of the said Affidavits, I verily believe that
the Judgment Creditor is entitled to the amount evidently
owed by Champlain Company Limited to Charles R.
Stewart.
7. The Trial Division disposed of the matter on
January 27, 1975, as follows:
ORDER:
An ex parte garnishee order to show cause is interlocu
tory and as such may be granted on an affidavit based on
information and belief and need not be based on the
personal knowledge of the deponent.
As in all such cases the source of the information &
belief must be indicated. The affidavit of Garton in sup
port of the motion clearly states the source of his infor
mation & belief.
As to the order sought by the Garnishee in para. 2. of
his Notice of Motion:
The garnishee although specifically invited by the
Court at the hearing of the show cause, - to either request
an adjournment in order to adduce evidence or to furnish
the Court with some evidence that the debt was not owing,
refused to do so.
There is clear evidence that the debt of $750,000 was
created. There is no evidence whatsoever that it has been
paid. The Judgment Creditor had made extensive
searches and has been unable to come up with any indica
tion whatsoever that the debt has been paid. Agents of the
Judgment Creditor have invited an officer of the Garni-
shee to furnish some evidence that this debt has been
paid.—No such evidence has been forthcoming. In the
circumstances (The Judgment Debtor having left the
country) the Court has no difficulty in arriving at the
conclusion that on a balance of probabilities, the amount
of $750,000.00 is still owed to the Judgment Creditor by
the Garnishee.
The motion of the Garnishee is dismissed and an Order
Absolute pursuant to Rule 2300 (form 66) will issue. The
Judgment Creditor will be entitled to her costs as against
the Garnishee.
8. A formal judgment was delivered on January
27, 1975, the body of which reads as follows:
Upon hearing the solicitors for the Judgment Creditor
and the Garnishee, no one appearing for the Judgment
Debtor although duly served, and upon reading the Affida
vits of Harold R. Browne, John M. Jarrell and Graham R.
Garton filed herein, and the order to show cause made
herein dated the 16th day of December, 1974, whereby it
was ordered that all debts due or accruing due from the
above-named Garnishee to the above-named Judgment
Debtor shall be attached to answer a judgment recovered
against the said Judgment Debtor by the above-named
Judgment Creditor on the 20th day of September, 1973 for
the sum of $208,429.61 together with additional interest at
the rate of 6% per annum on the sum of $147,928.08 from
the 16th day of September, 1973 to the date of payment
together with the costs of the Garnishee proceedings on
which judgment the full amount remained due and unpaid.
It is ordered that the said Garnishee do forthwith pay to
the said Judgment Creditor $208,429.61 together with
additional interest at the rate of 6% per annum on the sum
of $147,928.08 from the 16th day of September, 1973 to
the date of payment together with the costs of the Garni
shee proceedings, being so much of the debt due from the
said Garnishee to the said Judgment Debtor as is sufficient
to satisfy the said judgment debt and that the said Garni
shee be at liberty to retain his costs of this application out
of the balance of the debt due from him to the Judgment
Debtor.
This appeal is from the aforesaid judgment of
the Trial Division.
The appellant (garnishee), by Part II of its
memorandum filed in this Court, summarizes its
objections to the judgment of the Trial Division as
follows:
13. The learned trial Judge erred in making the Garnishee
Order Absolute in that the affidavit of Graham R. Garton,
made in support of the Garnishee Order to Show Cause did not
comply with the provisions of Rules 332(1) or 2300(1) of the
Federal Court Rules in the following particulars:
(i) Paragraph 3 of the said affidavit did not show that a debt
was owing or accruing from the Appellant (Garnishee) to the
Respondent (Judgment Debtor) but rather showed that a
debt appeared or seemed to be owing;
(ii) The said affidavit expressed no belief that a debt existed;
(iii) Although the affidavits relied upon by the said Graham
R. Garton in the making of his affidavit of December 5, 1974
disclosed that the Appellant (Garnishee) was a person not in
Canada the said affidavit of Graham R. Garton made no
reference on information and belief that the alleged debt was
one for which the Appellant (Garnishee) might be sued in
Canada by the Respondent (Judgment Debtor).
14. The learned trial Judge failed to attach sufficient weight to
the evidence of the said Graham R. Garton on
cross-examination.
15. The learned trial Judge erred in holding that there was
clear evidence that a debt of $750,000.00 was created.
16. The learned trial Judge erred in holding that there was no
evidence whatsoever that the debt had been paid and failed to
attach any weight to the places where searches were undertak
en by officers of the Respondent (Judgment Creditor) in seek
ing evidence of payment of the purchase money.
In oral argument in this Court, as I understood
him, counsel for the appellant, in effect, argued:
(a) that the affidavit evidence was not adequate
to support the order under Rule 2300(1)
because
(i) Garton's affidavit did not contain an affir
mation of his belief that there was a debt
owing by the appellant (garnishee) to the
judgment debtor, and
(ii) the appellant (garnishee) not being a
person "in Canada", it was essential that the
affidavits say that there was a debt owing by
the appellant (garnishee) to the judgment
debtor for which the appellant (garnishee)
could be sued in Canada by the judgment
debtor and there was nothing in the affidavits
saying that the alleged debt was such a debt;
and
(b) that the affidavit evidence was not adequate
to support the "garnishee order absolute"
because it did not establish that there was any
debt owing by the appellant (garnishee) to the
judgment debtor.
In my view, the attacks made by counsel on the
adequacy of the affidavits to support the order
under Rule 2300(1) must be rejected. While the
Garton affidavit was not worded as felicitously as
it might have been, it does, in my view, express his
opinion, based on the other affidavits, that the
"garnishee" owed an amount of approximately
$750,000 to the judgment debtor. 4 That being so,
in my view, the affidavits did not have to state
expressly that the debt was one for which the
garnishee might be sued in Canada and no basis
was suggested for any bar to such a suit. 5 (The
Rule does not expressly require, and I do not think
that it can be read as implying that it must be
shown, that an action for the debt in Canada
would be one in which an order for service ex iuris
could be obtained. Such an order is almost always
discretionary and it is not apparent to me how it
can be established that a debt is of a class that an
order for service ex iuris would be made if such
debt were the subject matter of an action in
Canada. In any event, the appellant did not under
take to show us that such an order could not be
made in an action brought against the appellant
(garnishee) in Canada based upon the alleged
debt.)
I have more difficulty concerning the question
whether the so-called "garnishee order absolute"
can be supported in the circumstances of this case.
In the first place with reference to that question,
I am of opinion that the affidavit material that
was before the Court, read with the cross-exami
nations, does not establish even a prima facie case
for the proposition that there was any debt owing
by the appellant (garnishee) to the judgment
debtor. It seems clear that there was an agreement
for sale of shares under which the consideration
was to be exchanged for a transfer of the shares on
4 I was not contended that Rule 2300(1) required that the
affidavits establish facts upon which the Court would conclude
that there was a "debt" owing by the garnishee to the judgment
debtor and I refrain from expressing any opinion either on the
question that such a contention would raise or upon any effect
that such a view of paragraph (1) might have upon the effect to
be given to certain other parts of Rule 2300.
Generally speaking, as I understand it, there is no geo
graphical limitation on the subject matter jurisdiction of a
superior court; the problem, generally, is to find the defendant
within the jurisdiction or to otherwise effect legal service of the
originating document on him. No authority to the contrary was
cited to us.
"closing"; and, if that agreement were carried out
in accordance with its terms, there would never
have been a debt owing by the purchaser to the
vendor. Furthermore, it seems that the shares were
transferred and that an officer of the appellant
(garnishee) had told officers of the respondent
(judgment creditor) that the consideration had
been paid.' If that were all the evidence, it would
be clear in my view that there was no evidence of
any debt from the appellant (garnishee) to the
judgment debtor. As against this, the only evi
dence to which counsel for the respondent (judg-
ment creditor) could point was the fact that offi
cers of the respondent (judgment creditor) could
not obtain, notwithstanding attempts that they
made, any documentary evidence that the payment
had been made. In my view, such lack of documen
tary evidence does not tend to show that the
transfer of shares was not carried out in exchange
for the consideration in accordance with the only
agreement of which there is any evidence and, in
particular, does not tend to show that the transfer
was made in consideration of a promise to pay the
price at some future time. In the absence of some
such modification in the original agreement, I find
no indication of a debt having been created. Com
pare Donohoe v. Hull Bros. & Co.'
Where the application by the respondent (judg-
ment creditor) for an order for payment to Her
Majesty of a debt (or part thereof) owing by the
appellant (garnishee) to the judgment debtor was
not supported by evidence of such a debt, it would
not, as it seems to me, appear that Rule 2300
authorized such an order.
There is, however, another way of appreciating
the scheme in Rule 2300. Rule 2300(1) can be
read as requiring that the supporting affidavits
show prima facie proof of a debt in a determined
amount from the garnishee to the judgment debtor
and that it authorizes an order requiring the garni
shee to show cause why he should not pay that
debt (or a part of it) to the judgment creditor. On
that view of the Rule, it would seem to be open to
read it as imposing on the garnishee, upon the
6 This latter fact is not stated expressly but counsel for the
respondent (judgment creditor) indicated, as I understood him,
that the affidavits must be read as so showing.
(1894-95) 24 S.C.R. 683.
show cause proceeding coming before the Court,
the onus of showing that he did not, at the critical
time, owe the specified debt to the judgment credi
tor. In my view, however, the facts in this case do
not call for a conclusion as to the correctness of
that view. In the first place, the supporting affida
vits do not in my view, as I have already indicated,
show prima facie proof of such a debt. In the
second place, the Rule 2300(1) order did not put
the appellant (garnishee) on notice that it was
required to "show cause" why it should not pay
such a specified debt to the judgment creditor (as
it might have been required to do by the express
words of Rule 2300(1)) but followed the form
expressly referred to in the Rule and required the
appellant (garnishee) to attend before the Court
"on an application by the said judgment creditor
that the said garnishee do pay to thé said judg
ment creditor the debt due from the said garnishee
to the said judgment debtor ... to satisfy the said
judgment". The application that such order seems
to contemplate would, prima facie, bring into play
Rule 319(2), which reads:
(2) A motion shall be supported by affidavit as to all the
facts on which the motion is based that do not appear from the
record, which affidavit shall be filed; and an adverse party may
file an affidavit in reply.
Such course of action having been adopted, it
cannot, as it seems to me, be fairly argued that the
onus was cast on the appellant (garnishee) to rebut
the existence, at the critical time, of a debt from it
to the judgment debtor.
In the absence of such an onus and in the
absence of any prima facie case against it, the
deliberate abstention of the appellant (garnishee)
from adducing any evidence cannot, in my view,
support an order against it, even though it was
clearly the party that was in a position to establish
that it was not indebted to the judgment debtor, if,
in fact, there was no such indebtedness. Such
deliberate abstention from adducing evidence of
facts within its knowledge might well have been
weighed in the scales against it if there had been
evidence both ways; but it does not seem to me
that it is evidence against the appellant (garni-
shee) where no case has been put forward for it to
meet and the onus of proof was on the respondent
(judgment creditor) as applicant.
Assuming, as I do for the purposes of this appeal
having regard to the positions taken by the parties
as I understood them, that an order may be made
under Rule 2300(1) based upon information and a
general expression of belief of indebtedness, in my
view, as a matter of first impression on reading
Rule 2300, an order against a garnishee for pay
ment to a judgment creditor is only authorized by
that rule where there is evidence upon which the
Court can conclude that there was a debt from the
garnishee to the judgment debtor that was equal to
or greater than the amount of the order for pay
ment at the critical time. As I have already
indicated, there was, in my view, no evidence of
any such debt in this matter.
There is, however, a decision of the House of
Lords (Vinall v. De Pass) 8 which is based upon a
rule that would not appear to differ from Rule
2300 in so far as the question of onus of proof is
concerned and which can, as I read it, only be
explained on the basis that, where the garnishee
responds to a "show cause" order such as was
made under Rule 2300 in this case, there is an
onus on him to establish that he is not indebted to
the judgment debtor in any way. If the decision in
that case must be taken as governing the interpre
tation of Rule 2300, I would feel constrained to
conclude that under Rule 2300 also there is a
negative onus imposed upon a garnishee against
whom such a "show cause" order has been made.
However, notwithstanding the similarity of the two
Rules, they are different Rules made in quite
different times and the conclusion that I have
reached, with considerable doubt, is that that deci
sion of the House of Lords does not operate to
require us to interpret Rule 2300 as imposing on
the garnishee an onus of proof that, otherwise, is
8 [1892] A.C. 90.
not to be found in that Rule.'
In my view, the appeal should be allowed with
costs and the "garnishee order absolute" made
against the appellant (garnishee) on January 27,
1975, should be set aside.
Before parting with the matter, there are two
considerations that I should like to mention as
having, in my view, some importance in consider
ing what effect should be given to Rule 2300 in
circumstances such as those present in this appeal.
In the first place, it should be remembered that
Rule 2300 was not enacted by Parliament but was
enacted in the exercise of powers to make rules
with regard to practice and procedure of the
Court. See sections 46 and 56 of the Federal Court
Act. I have no doubt that such power extends to
the establishing of a procedure for making prop
erty of a judgment debtor (including debts owed to
him) available for satisfaction of the judgment. I
doubt that it goes so far as to authorize the
establishment of a procedure under which a person
who is not under any obligation to the judgment
debtor may be required to satisfy his judgment
debt. In the second place, it seems to me that there
is doubt that a scheme under which a person is
required to come to court to answer an "applica-
tion" by another person and finds himself fac d
with a requirement when he gets to court to d s-
prove something of which he has been given no
notice accords with our concept of natural justice.
Furthermore, a legal provision cannot, in my view,
attain a force that it would not otherwise have,
because, in a particular case, the Court fills in a
natural justice condition precedent to such force
that is not expressed or implied by the provision
itself.
* * *
9 My doubts are even greater having regard to the express
provision that is to be found in Rule 2300(5) for an order for
payment against a garnishee who does not appear.
The following are the reasons for judgment
delivered orally in English by
PRATTE J.: I agree that we should dispose of
this appeal in the way suggested by the Chief
Justice.
In response to the show cause order, the appel
lant's counsel appeared before the Trial Division
and asked for the rescission of the order on the
ground "that the Judgment Creditor had failed to
show the existence of any indebtedness to the
Judgment Debtor by the Garnishee". This appeal
was argued on the assumption that the appellant
had thus disputed, within the meaning of Rule
2300(8), its "liability to pay the debt claimed to be
due ... to the judgment debtor". 10 In those cir
cumstances, the Trial Judge had, under Rule
2300(8), either to direct the trial of an issue or to
determine summarily the question of the garni
shee's indebtedness. Having chosen to follow the
latter course, he had, in my opinion, to make that
determination on the basis of the evidence that was
thus before the Court. That evidence, as shown by
the Chief Justice, did not even suggest that the
garnishee was indebted to the judgment creditor.
Such being the case, in my opinion, no inference
could be drawn from the failure of the appellant
garnishee to adduce evidence showing that it was
not indebted to the judgment creditor. In my view,
the appellant garnishee did not have the onus of
establishing the inexistence of the debt. He merely
had the burden of refuting the evidence that had
been adduced against it.
For these reasons, I agree with the Chief Justice
that the evidence before the Trial Judge did not
warrant the making of the garnishee order
absolute.
While I also agree with the Chief Justice that
there is no substance in the very narrow argument
of the appellant that the affidavit evidence filed in
support of the application for the show cause order
did not comply with the requirements of Rule
2300(1)(b), I do not wish to express any opinion
10 If that assumption had not been made, I would have
entertained doubts that the appellant's conduct amounted to a
dispute of its liability. It is at least arguable that a garnishee
does not really dispute his liability to pay a debt by merely
pointing to the insufficiency of the evidence adduced against
him by the judgment creditor.
on the meaning of the requirement that the debt
be "one for which such person might be sued in
Canada by the judgment debtor". In order to
dispose of the appellant's argument on that point,
it is sufficient to say that the Rule does not require
that the affidavit contain an explicit statement
that, in the opinion of the deponent, the debt is one
for which the garnishee might be sued in Canada.
* * *
The following are the reasons for judgment
delivered orally in English by
LE DAIN J.: I agree that the appeal should be
allowed on the ground that there is no evidence of
a debt owing by the garnishee to the judgment
debtor to justify the garnishee order. All that can
be invoked to support an inference of indebtedness
is the failure of the garnishee to adduce evidence
of payment for the shares. I do not think that is
sufficient in the circumstances of the present case
to justify an order absolute. The garnishee in this
case had no evidence whatever of indebtedness to
meet on the order to show cause. Assuming, as I
do, that Garton's affidavit was, in form, a suffi
cient expression of a belief that a debt was owing,
the sources of information and the grounds of
belief disclosed by it and contained in the affida
vits of Jarrell and Browne do not show the exist
ence of a debt, but point, if anything, to the
probability that the closing took place as provided
for in the agreement of purchase and sale, and that
payment thereunder was made by the garnishee to
the judgment debtor at the time of closing, and, in
any event before the application for a garnishee
order to show cause. Browne's affidavit shows that
the Secretary Treasurer of the C.R. Stewart
Equipment Limited informed him that there had
been a transfer of the shares by the judgment
debtor to the garnishee on August 31, 1974, and
Jarrell's affidavit shows that Peterson, an officer
of the garnishee, indicated to him in April 1974
that payment for the shares had been made. In my
view, the fact that Peterson failed to furnish an
officer of the judgment creditor with documentary
evidence of such payment, although he said he
would do so in response to a request made to him
in the course of an interview, and the fact that an
officer of the judgment creditor was unable to find
any trace of such payment in the known bank
accounts of the judgment debtor in Canada and
the United States are not sufficient to support an
inference that the agreement of purchase and sale
was amended to provide for payment subsequent
to closing. Jarrell acknowledged on cross-examina
tion that no search had been made in any of the
banks in Grand Cayman, where the offer to pur
chase expressly provided that payment for the
shares was to be made. Unless there was such an
amendment of the agreement of purchase and sale
there could be no debt owing. Donohoe v. Hull
Bros. & Co. (1894-95) 24 S.C.R. 683. In my
respectful opinion, the learned Trial Judge was in
error in concluding, as he did, that "There is clear
evidence that the debt of $750,000 was created."
The difficulty in this case, as I see it, is the
effect to be given, in the light of the decision of the
House of Lords in Vinall v. De Pass [1892] A.C.
90, to the garnishee's failure, on the application
for an order absolute, to adduce evidence of pay
ment under the agreement of purchase and sale
although invited by the Trial Judge to do so. In the
Vinall case both the House of Lords and the Court
of Appeal were unanimously and strongly of the
opinion that the failure of the garnishee to dispute
liability by a sworn denial of indebtedness,
although he was invited to do so, justified an order
absolute because it created an irresistible inference
that he was indebted. As Lord Halsbury L.C. put
it [at page 96]:
Now, both before the master and before the Court of Appeal
which, I observe, postponed the argument for a week in order to
enable the present appellant to make an affidavit, if he thought
proper, that he did not owe any other debts and (1 am putting it
again in my compendious form) that there was no other
property in his possession which would satisfy the execution, he
deliberately declined to make any such affidavit. What, in good
sense, is the inevitable inference? Why, that there are other
debts by which he can satisfy this execution. He would rather
take the chance of the result of the very learned and ingenious
arguments of his counsel, who have addressed to us everything
that could be said on behalf of their client, than do the simple
thing of saying that he owed no other debts at all.
I have considered whether that passage might
not fairly describe the conduct of the garnishee in
this case. It is no doubt perplexing that the garni
shee did not offer proof of payment pursuant to
the agreement of purchase and sale, although
invited by the Trial Judge to do so. In my opinion,
however, it cannot be said that the garnishee did
not dispute liability. Counsel for the garnishee
cross-examined Browne, Jarrell and Garton on
their affidavits in support of the application for a
garnishee order to show cause, and the effect of
that cross-examination, in my judgment, was to
show that there were no grounds for the belief that
a debt was owing. Browne said, "I have a reason to
believe that it may not be paid." (Italics mine.)
Jarrell said, "On the same basis that I have no
proof that he was paid, I have no proof either that
he was indebted." Garton, whose affidavit is the
only one that can be said to have sworn to a belief
that a debt was owing—and that in somewhat
equivocal language ("On the basis of the said
Affidavits, I verily believe that the Judgment
Creditor is entitled to the amount evidently owed
by Champlain Company Limited to Charles R.
Stewart".)—said, "On the date of taking my
Affidavit it appeared to me that it was possible
that there was such a debt ...." (Italics mine.) On
such a record it was not unreasonable for counsel
for the garnishee to adopt the position on the order
to show cause that he had no evidence of indebted
ness to meet, and this, coupled with the fact that
he made an application to have the order to show
cause rescinded, makes it difficult in my opinion to
conclude that the garnishee failed to dispute its
liability. In any event, the Trial Judge appears to
have proceeded on the assumption that the garni
shee did dispute liability and to have determined
the issue summarily on a balance of probability.
Where, as here, the affidavit evidence in support
of the application does not, as required by Rule
2300, show that a debt is owing, that deficiency
cannot, in my opinion, be supplied, on a balance of
probability, by an inference drawn from the garni
shee's failure to adduce evidence of payment. To
conclude otherwise would be to hold that a burden
of proof is placed on the garnishee by a mere
allegation of indebtedness without at least prima
facie evidence to support it. I am not prepared to
hold that the reasoning in the Vinall case, however
persuasive it may be in the particular context of
that case, requires us to place such a construction
upon Rule 2300.
I express no opinion as to the meaning of the
requirement in paragraph (1) (b) of Rule 2300 that
the debt be one for which the garnishee might be
sued in Canada by the judgment debtor. With
respect to this requirement the submission of coun
sel for the appellant was that the affidavit must
contain a statement that the debt is of such a
nature. It is sufficient in my view if the affidavit
discloses facts from which one may conclude that
it is such a debt.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.