T-1031-77
The Queen (Seizing creditor)
v.
André Lelarge (Debtor)
and
Philippe Lelarge and Elise Lelarge (Garnishees)
Trial Division, Walsh J.—Ottawa, March 6, 1978.
Practice — Crown — Garnishment — Income tax owed by
debtor to Crown — By divorce judgment, debtor had obliga
tion to support two children, but judgment worded that obliga
tion owed to the mother, on their behalf — Property sold to
the children by father, subject to mortgage — Annual pay
ments required under mortgage set off by father against his
alimentary obligation — Whether or not sums in children's
hands allegedly due the father are subject to seizure
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 56(3),(4)
— Federal Court Rule 1900(3) — Quebec Civil Code, articles
553(4), 1169, 1170, 1171, 1174, 1188, 1190, 1194, 1234 —
Quebec Code of Civil Procedure, articles 637 and 639.
Garnishees contest the seizure in their hands of sums alleged
ly due to their father, the judgment debtor, in satisfaction of a
judgment obtained against him for income tax. Although the
judgment debtor and his wife, on their divorce, intended that he
provide a specified annual sum to support the two children, the
judgment was worded that that sum was to be paid to the
mother, for them. As a means of satisfying his obligation, and
with the consent of the mother and both adult children, the
father sold the children property subject to a mortgage. The
father allegedly told the children that they would not be
responsible for the annual payments for he would set payments
off against the amount he owed as alimentary allowance. No
annual payments were made for the property. At issue is the
interpretation of the facts and their legal consequences.
Held, the motion is dismissed. Under the circumstances and
by virtue of the understanding between the parties, if any
payments were made by the father to the mother, she was
satisfied to accept them as merely mandatary for her children.
Whether or not there is a strict interpretation of the law,
novation can be said to have taken place since there was at all
times both prior and subsequent to the judgment a voluntary
undertaking to the son and daughter, agreed to by all parties,
that the father provide for their support, notwithstanding the
wording of the divorce judgment. What is being seized is not
the alimentary allowance but payments due by the garnishees
to him. The sole question is whether the children's obligations
are still due or have been extinguished by compensation or
contractual undertaking. When the present garnishee proceed
ings were served, there was no longer any obligation for the
garnishees to make the two payments due before that date.
While the judgment debtor had every intention, no doubt, of
renouncing the payments as they came due, in return for his not
being pressed for the annual alimentary payment by his wife
and children, his renunciation could not be made in advance.
He could still change his mind and demand the payment called
for by the deed, and his wife could sue for the alimentary
payment. The sum of $4,483.19 still remains due by the
garnishees to the judgment debtor and the seizure by garnish-
ment will therefore be maintained against the garnishees.
MOTION in writing under Rule 324.
COUNSEL:
Patricia A. Gariepy for seizing creditor.
No one appearing for debtor.
Yves Bériault for garnishees.
SOLICITORS:
Deputy Attorney General of Canada for seiz
ing creditor.
No one appearing for debtor.
Courtois, Clarkson, Parsons & Tétrault,
Montreal, for garnishees.
The following are the reasons for judgment
rendered in English by
WALSH J.: Garnishees contest the seizure in
their hands of sums allegedly due to their father
the judgment debtor in satisfaction of a judgment
obtained against him on March 18, 1977, for
income tax for the years 1968, 1969, 1970 and
1971 totalling $4,716.87 with interest at 6% a year
on $3,217.45 from March 1, 1977. By judgment
dated June 28, 1977, permission was given to serve
the judgment debtor, who is not contesting the
present seizure, by registered letter in France
where he now resides. Some difficulty was encoun
tered in serving the garnishees, Élise Lelarge not
being served until August 24, 1977, and Philippe
Lelarge until October 27, 1977. As a result the
declaration of the garnishees was postponed sever
al times. On January 9, 1978, the garnishees pre
sented a motion that their evidence on the com
plicated legal issues which they proposed to raise
be taken orally, which could not be done, no
stenographer being present, and in any event was
deemed by the Court to be undesirable, so it was
rejected, the declaration being adjourned to Janu-
ary 16, 1978. Supplementary affidavits of the two
garnishees were produced on January 9, 1978, to
supplement earlier affidavits which had been
sworn on December 22, 1977, and produced in the
record on January 4, 1978. On January 16, 1978,
the Court rendered judgment reading as follows:
[TRANSLATION] The attorney of the seizing creditor having
decided that it is not necessary for her to cross examine on the
affidavits the parties have agreed to accept the suggestion of
the Court to submit their arguments by means of Article 324 of
the Rules of this Court.
As indicated difficult legal questions are
involved and by consent the matter was submitted
for adjudication under Rule 324, 28 pages of
written argument having been submitted on behalf
of the garnishees and a reply of 13 pages on behalf
of the seizing creditor. An additional affidavit of
Edwige Bobryk mother of the garnishees, pro
duced on January 12, 1978, is also referred to in
the written notes submitted. The issue arises in the
Province of Quebec and is governed by the
application of Rule 1900(3) and subsections (3)
and (4) of section 56 of the Federal Court Act
which subsections read respectively as follows:
56. ...
(3) All writs of execution or other process against property,
as well those prescribed by the Rules as those hereinbefore
authorized, shall, unless otherwise provided by the Rules, be
executed, as regards the property liable to execution and the
mode of seizure and sale, as nearly as possible in the same
manner as the manner in which similar writs or process, issued
out of the superior courts of the province in which the property
to be seized is situated, are, by the law of that province,
required to be executed; and such writs or process shall bind
property in the same manner as such similar writs or process,
and the rights of purchasers thereunder are the same as those
of purchasers under such similar writs or process.
(4) Every claim made by any person to property seized
under a writ of execution or other process issued out of the
Court, or to the proceeds of the sale of such property, shall,
unless otherwise provided by the Rules, be heard and disposed
of as nearly as may be according to the procedure applicable to
like claims to property seized under similar writs or process
issued out of the courts of the province.
The facts are not in dispute, the issue being the
interpretation to be given to them and the legal
consequences thereof. André Lelarge the judgment
debtor and his wife Edwige Bobryk, the parents of
the garnishees, were divorced by judgment of the
Superior Court in Montreal dated September 18,
1973, at which time the father André Lelarge took
up residence in France. Both the garnishees were
already of the age of majority at the time of the
divorce but were students and Philippe Lelarge is
still a student and Élise Lelarge has only recently
commenced work. According to the statements in
the affidavits which are not contradicted the father
had indicated his intention to continue to assist the
children by a payment to them in the amount of
$5,000 annually and had indicated that he would
see that this was incorporated in the divorce judg
ment. This was confirmed by the mother. Unfortu
nately the judgment in which the father was peti
tioner and the mother respondent, and in which
she was not awarded any pension for herself, con
firmed this offer in the following words:
[TRANSLATION] Accords the offer of the petitioner to pay to
respondent for the maintenance of the two children of the
marriage Philippe and Élise an alimentary allowance of $5,000
per annum.
In her affidavit the mother states:
[TRANSLATION] I have always considered with regard to the
payment of this alimentary allowance that I would at most only
be reçeiving the money for my children.
and she adds:
[TRANsLATIoN] I have never considered that the alimentary
allowance was due to me considering always that it was for the
children and, moreover I have never received any support
whatsoever from my former husband.
As to the garnishees they never did know the
precise terms of the divorce but always considered
that this allowance was for them and was due to
them as long as they required this support. A first
payment of this $5,000 was made by the father in
the autumn of 1974, to his ex-wife and she
immediately turned it over to the garnishees, stat
ing in her affidavit:
[TRANSLATION] since this was for my two children.
Prior to this in the autumn of 1973 immediately
following the divorce the father had paid 10,000
francs directly to Élise stating that it was in partial
payment of the alimentary allowance provided for,
and she immediately turned one-half of this over to
her brother. When they told their mother of this
she stated that she was delighted as it showed that
the father intended to acquit at least in part his
obligations toward them. The second payment in
the autumn of 1974 tended to confirm this but this
was the last payment made to them either directly
or to them through their mother.
The reason for this, according to the garnishees,
is that by notarial deed on March 13, 1975, the
fattier sold to the garnishees a property at 4885
Jean -Brillant Street in Montreal. The price was
$45,000 including the hypothec of $32,516.81
which the garnishees assumed, leaving a balance of
price due in the amount of $12,483.19 which was
payable by consecutive annual payments of $4,000
the first to be due a year after the date of the
deed—that is to say on March 13, 1976, without
interest until due but interest at 8% for any delay
thereafter. No additional hypothec or vendor's
privilege was created with respect to these pay
ments. The father allegedly told the children that
they would not be expected to make these annual
payments of $4,000, however, but they would be
compensated against the amount he owed as ali
mentary allowance. Allegedly, and it must be
pointed out that none of this evidence is con
tradicted, at the time of the sale the notary
indicated to them that their father had discussed
this with him during a trip to France where he had
met the father and that it was agreed that compen
sation would take effect; furthermore their father
told them about this by a telephone call from
France when he was with the notary. Accordingly,
they never made the annual payments nor were
they asked for them by the father. Prior to the sale
they told their mother about the proposal and she
indicated her delight that as a result of this they
would be guaranteed at least for three years the
major part of the alimentary allowance due to
them. They had no knowledge of their father's
debt for taxation, nor of the precise terms of the
divorce until the seizure was made, and when they
told their father of the problem which had arisen
he told them to attend to it themselves. On these
facts a number of legal issues have been raised by
garnishees, some anticipating the arguments to be
made by the seizing creditor.
1. In answer to the argument that the alimentary
allowance was not specified as payable to the
children but to the mother and therefore cannot be
the subject of compensation for a claim against
them by their father arising out of the sale it is
garnishees' contention that the mother was at most
their mandatary to receive the allowance for them,
and accordingly compensation took place so that
they owe nothing to their father as a result of the
deed of sale.
2. Subsidiarily that even if it is concluded that the
alimentary pension was due to the mother there
subsequently has been a novation so that by agree
ment it became payable to the children and com
pensation can take place.
3. The fact that article 1190(3) of the Civil Code
which provides that compensation cannot take
place with respect to a debt which has for its
object an alimentary provision not liable to seizure
is not applicable because this is only for the protec
tion of the creditor of an alimentary debt.
4. Subsidiarily that even if the Court concludes
that the alimentary pension was due to the mother
there has been a renunciation by the father of his
claim for payments due as a result of the sale and
the garnishees therefore do not owe the amounts
claimed by the seizing creditor.
5. That to adopt the position of the Crown would
be in effect to make a seizure directly of the
alimentary allowance which by article 553(4) of
the Quebec Code of Civil Procedure is exempt
from seizure.
In answer to the first of these arguments counsel
for the Crown points out that in Quebec civil law
the obligation of parents for the support of the
children is not extinguished when they attain the
age of majority or even when they marry. Not
withstanding the provisions of the divorce judg
ment therefore they had a claim against either
their father or their mother. The provision in the
judgment was merely judicial confirmation of an
agreement between the parents to transfer this
obligation of the father to the mother, in consider
ation of which the father undertook to pay the
mother $5,000 toward this. The Divorce Act'
defines "children" in section 2 as those under
' R.S.C. 1970, c. D-8.
sixteen years of age or over sixteen but unable to
provide themselves with necessaries of life by
reason of illness, disability or other cause, and
section 11 provides that the decree may order a
husband (or wife) to make payments for the main
tenance of the "children" of the marriage. The
only reason ,the provision for maintenance could be
included in the judgment in the present case was
because the father had offered to make this pay
ment and the court merely confirmed this offer.
There is nothing contrary to the law or public
order however to prevent the parties by agreement
from modifying the alimentary payment provisions
of the judgment provided the creditor consents to
it. In the present case both the father, mother and
the children of the age of majority were in full
agreement. The mother considered that if the pay
ments were made by the father to her in accord
ance with the express terms of the judgment she
would immediately turn them over to the children
as she did. She had no objection however to the
husband making the payments directly to them
and no intention of contending that if he did so he
would still owe her the amount ordered for the
support of the children. All the parties agree that
the debt was in effect one voluntarily assumed by
the father toward his said children. Under the
circumstances, and by virtue of the understanding
between the parties, if any payments were made by
the father to the mother she was satisfied to accept
them merely as mandatary for her children and
immediately turn the sums over to them.
This brings us to the second question as to
whether there was not in effect a novation of the
obligation created by the judgment.
Article 1169 of the Quebec Civil Code reads in
part as follows:
Art. 1169. Novation is effected:
3. When by the effect of a new contract, a new creditor is
substituted for a former one toward whom the debtor is
discharged.
Articles 1170 and 1171 read as follows:
Art. 1170. Novation can be affected only between persons
capable of contracting.
Art. 1171. Novation is not presumed. The intention to effect
it must be evident.
Article 1174 reads:
Art. 1174. The simple indication by the debtor of a person
who is to pay in his place, or the simple indication by the
creditor of a person who is to receive in his place, or the
transfer of a debt with or without the acceptance of the debtor,
does not effect novation. [Underlining is mine.]
All of the parties here were capable of contracting
and their intent was that the payments by the
father would be entirely to or for the benefit of the
children. While there was no formal transfer of the
debt from the mother as creditor of same to the
children certainly she had no objection if the pay
ments were made direct to them in place of to her
for their benefit in accordance with the terms of
the judgment. I am inclined to believe that wheth
er or not on a strict interpretation of the law
novation can be said to have taken place there was
at all times both prior and subsequent to the
judgment a voluntary undertaking to the son and
daughter, garnishees herein, by the father to pro
vide $5,000 a year for their support, presumably
until their studies terminated and they became
self-supporting, that they agreed to this and their
mother agreed to it so notwithstanding the word
ing of the judgment it is the garnishees who are
the real creditors of the obligation voluntarily
assumed toward them by their father to contribute
$5,000 a year to their support for an unspecified
period of time.
Turning now to the question of compensation
counsel for the Crown contends that because of the
provisions of article 1190 of the Civil Code which
reads in part as follows:
Art. 1190. Compensation takes place whatever be the cause
or consideration of the debts or of either of them, except in the
following cases:
3. A debt which has for object an alimentary provision not
liable to seizure.
therefore the obligation contracted by the father
toward the son and daughter for their support
cannot be compensated against the sums due by
them to him by virtue of the notarial deed of sale.
A number of authorities are cited to support the
principle that an alimentary obligation is a matter
of public interest and cannot be renounced, seized,
assigned, or otherwise disposed of. While the right
to support cannot be renounced, certainly the
amount or manner of payment of same can be
modified by agreement between the parties, pro
vided they have full capacity to contract as in the
present case. An examination of all the authorities
referred to merely confirms what is self-evident on
a reading of the article, which is clearly for the
benefit of the creditor of the obligation, who
cannot be deprived of the benefit of the alimentary
provision made in his favour. The debtor of the
obligation cannot therefore set up a plea of com
pensation against the alimentary allowance
claimed by his creditor. Here we have the converse
situation, however, where the creditors of the ali
mentary obligation are pleading compensation,
having voluntarily agreed that the amounts they
owe by virtue of the purchase of the property are
set off against their claims for alimentary allow
ance from their father, which might be difficult for
them to collect, in any event, while he remains in
France. Being of the full age of majority they are,
I believe, entitled to agree to accept payment in
kind, for example by the transfer of property to
them in place of sums due to them as alimentary
allowance, and the same of course applies to
accepting renunciation by their father of instal
ment payments due on the purchase price of the
property as they become due, and I do not believe
that the fact that the alimentary allowance itself is
inalienable prevents them from doing this.
In this connection reference might be made to
article 1194 of the Civil Code which reads as
follows:
Art. 1194. When compensation by the sole operation of law
is prevented by any of the causes declared in this section, or by
others of a like nature, the party in whose favor alone the cause
of objection exists, may demand the compensation by excep
tion; and in such case the compensation takes place from the
time of pleading the exception only.
While I do not therefore accept the seizing
creditor's argument that no compensation can take
place since the debt of the father toward the
children is an alimentary one while their debt
toward him is a commercial one, neither do I
accept the fifth argument of the garnishees that if
the seizure is maintained this would be equivalent
to indirectly seizing an alimentary allowance, since
it is clear that what is being seized is not the
$5,000 alimentary allowance itself due by the
father, but payments due by the garnishees to him,
and the sole question is whether they are still due
or have been extinguished whether by compensa
tion or contractual undertaking between the
parties.
Garnishees' strongest argument perhaps is that
set out in No. 4 above, namely that their father
renounces his claim to the sums due by virtue of
the deed of sale, whatever the reason for this
renunciation. Certainly the understanding of all
parties that neither the children nor the mother
would press him for payment of the $5,000 per
annum alimentary allowance constituted a valid
consideration for his undertaking to renounce
$4,000 per annum due to him for three years by
virtue of the deed of sale.
On the question of proof article 1234 of the
Civil Code reads:
Art. 1234. Testimony cannot in any case, be received to
contradict or vary the terms of a valid written instrument.
In the present case however I do not believe that it
can be said that the notarial deed of sale is being
contradicted or varied. It was understood even
before it was signed that payment of the $4,000
instalments called for in it would not be made by
the' purchasers to the vendor. The subsequent con
duct of the father in not claiming these amounts
and indicating that he does not intend to is not
strictly speaking a contradiction or variation of the
terms of the deed of sale but merely a renunciation
of the benefits due by virtue of it. It may well have
been that the father, the judgment debtor herein,
had ulterior motives for doing this. He was aware
or should have been aware of his tax liability,
which in the event that the property he disposed of
is his sole asset in Canada might well prove to be
uncollectible from him in France (see in this con
nection United States of America v. Harden
[1963] S.C.R. 366, which held that in no circum
stances will the courts directly or indirectly
enforce the revenue laws of another country, which
is one of public policy, by taking a judgment in its
own courts and bringing suit here on that judg
ment, as enforcement of the judgment would be
enforcement of a tax claim). Whether or not by
disposing of his real estate in Canada to his chil
dren in such a manner as to relieve himself from a
claim for alimentary allowance by them or on their
behalf, which claim might possibly be made in
France, he was doing so to defraud his creditors in
general and the seizing creditor in particular is not
an issue before me. Quebec law provides for what
is known as a Paulian action to set aside contracts
made in fraud of creditors, the rules being set forth
in articles 1032 and following of the Civil Code.
Since the certificate for taxes due having the effect
of a judgment was only registered against the
judgment debtor on March 18, 1977, however,
even if it was for taxes in the 1968 to 1971 period,
and the sale of the property to the garnishees took
place on March 13, 1975, it would appear that the
seizing creditor would encounter considerable dif
ficulties even if it had been decided to institute this
type of proceeding in the courts in the Province of
Quebec, which was not done. If it is argued that it
is not the contract which is in fraud of the seizing
creditor's right but the renunciation by the judg
ment debtor of the payments due under it, then
such an action by virtue of article 1040 of the Civil
Code has to be brought within one year from the
time the creditor obtained knowledge of this. Since
the issue has not been and could not have been
raised here, however, no fraudulent intent can be
ascribed to the judgment debtor in connection with
this, and certainly the garnishees were in good
faith and did not even know of the tax claim
against their father until the seizure was made in
the present proceedings.
This brings us to the final issue as to whether
the judgment debtor can, to the prejudice of his
creditors renounce in advance the payments due
under the deed of sale. By virtue of the deed
$4,000 was due on March 13, 1976, $4,000 on
March 13, 1977, both of which payments had been
renounced or compensated which comes to the
same thing, and $4,000 will become due on March
13, 1978, with presumably a small balance of
$483.19 becoming due on March 13 the following
year. The present garnishee proceedings were
served as indicated in the autumn of 1977, at
which time I have found there was no longer any
obligation for the garnishees to make the two
payments or any interest thereon due prior to that
date. For compensation to take place the debt
would have to be due and payable, however.
Article 1188 of the Quebec Civil Code reads as
follows:
Art. 1188. Compensation takes place by the sole operation of
law between debts which are equally liquidated and demand-
able and have each for object a sum of money or a certain
quantity of indeterminate things of the same kind and quality.
So soon as the debts exist simultaneously they are mutually
extinguished in so far as their respective amounts correspond.
Therefore it could not be applied to the March 13,
1978 and March 13, 1979 payments which were
not yet due at the time of seizure. If, on the other
hand, we look at it from the point of view of
renunciation by the father, as creditor of this
obligation, of his rights to payment under the deed
of sale the question arises as to whether he could
renounce to all payments in advance. He had
undertaken, as confirmed by the divorce judgment
to pay the sum of $5,000 per annum for their
support. Such obligation only became due annual
ly. The deed of sale called for annual payments
one of which and a small balance were not yet due
at the date of the seizure. While no doubt the
judgment debtor had every intention of renouncing
these payments as they became due, as had been
his practice, in return for which his ex-wife and/or
his son and daughter would not press him for the
$5,000 annual payment of alimentary allowance, I
do not believe that his renunciation could be made
in advance. He could change his mind prior to
March 13, 1978, 2 and demand the payment called
for by the deed of sale on that date, and his
2 It is important to note that although, as between him, his
wife, and the garnishees, the payments due had been
renounced, the title deed still shows them as being payable. A
prudent purchaser of the property might well require the
registration of a deed of discharge, although no additional
hypothec or privilege was created to guarantee these payments.
In the absence of this he would at least require a written
acknowledgment of payment signed by the father, or make it
clear in his deed of purchase that he was not assuming the
personal obligations of the garnishees. The seizing creditor is
not in this position however and cannot seize payments which
have been renounced, even though there is no written proof to
show that the payments called for by the deed have been
renounced.
ex-wife could then sue him for the alimentary
allowance for the maintenance of the garnishees in
accordance with the divorce judgment. Whether or
not payment could be collected from him in
France is of no concern to the Court. Article 639
of the Quebec Code of Civil Procedure reads in
part as follows:
639. If the debt of the garnishee is payable at a future time,
the prothonotary orders him to pay at maturity in accordance
with the provisions of article 637 or article 638, as the case may
be.
Article 637 reads as follows:
637. If the affirmative declaration of the garnishee is not
contested and does not show the existence of another seizure by
garnishment in his hands, the prothonotary, upon an inscription
by either party, orders the garnishee to pay to the seizing
creditor the amounts which he owes to the judgment debtor to
the extent of the amount of the judgment in capital, interest
and costs. To that extent the order of the prothonotary effects
an assignment, in favour of the seizing creditor, of the judg
ment debtor's claim, from the date of the seizure. Such order
must be served on the garnishee and becomes executory ten
days later.
I therefore conclude that the sum of $4,483.19
remains due by garnishees to the judgment debtor
by virtue of the deed of sale of March 13, 1975, of
which $4,000 will become due and payable on
March 13, 1978, with interest at 8% on said sum if
it is not paid at that date, and the balance of
$483.19 due on March 13, 1979, similarly with
interest at 8% from that date if said sum is not
then paid and that these sums are now payable by
garnishees to Her Majesty the Queen the seizing
creditor herein in partial satisfaction of the judg
ment obtained by her against André Lelarge the
judgment debtor by virtue of which this seizure
has been made. The seizure by garnishment will
therefore be maintained against the garnishees for
this amount but under the rather extraordinary
circumstances of this contestation and the partial
success thereof, the seizure is maintained without
costs.
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.