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→B. Unsecured Creditors
The secured creditor takes the secured goods subject to the security interest of the conditional seller or chattel mortgagee. Where the debtor is a conditional buyer or a chattel mortgagor, a sheriff or bailiff may seize secured goods. Sheriffs, however, are usually reluctant to seize collateral unless there is clearly equity in it. In such cases, the secured creditor cannot seize a greater interest than the debtor has.
'''Sections 71(2) and (3) set out three exceptions to the personal property exemptions provided in s 71(1) of the ''COEA'':'''
*a) the debtor cannot exempt goods identical to the goods that were the subject of the contract in question; and
*b) a trader cannot claim any goods that are part of their stock-in-trades.
*c) Corporate debtors cannot avail themselves of the personal property exemption.
In addition, s 54 of the ''Insurance Act'', RSBC 1996, c 226 allows for the exemption of certain insurance policies. Section 54(1) states that if insurance money has already been payable then it is exempt; essentially creditors cannot attach once money has been transferred. Section 54(2) states that insurance money and the rights and interests of the insured in a life insurance contract are exempt from execution or seizure, as long as there is a designation in favour of a preferred beneficiary (immediate family as defined by the act) of the person whose life is insured.
In a trilogy of cases, B.C.’s Court of Appeal held that Registered Retirement Savings Plans (RRSPs) in the form of delayed annuities could satisfy the requirements of s 54(2) of the ''Insurance Act'', and are therefore shielded from execution and seizure: see ''Smythe McMahon Inc v Sykes'' (1998), Vancouver CA016762 (BCCA); ''Robson v Robson'' (1995), Vancouver CA020118 (BCCA); and ''Thomson v Stock'' (1997), Vancouver CA020458 (BCCA).
'''The ''Bankruptcy and Insolvency Act'', 1985, s 67(1)(b.3) now shields all RRSP contributions from seizure in a bankruptcy, except those made in the 12 months prior to bankruptcy.'''
Certain interests have been held to fall outside s 71 and therefore are not exempt from seizure. Partial interest and equitable interests do not fall within s 71 and thus, for example, a purchaser under a conditional sales agreement cannot prevent seizure of the goods sold under the agreement. Similarly, the section does not apply to a charging order or a garnishing order since the section only refers to “forced seizure and sale”. Thus, monies in court and debts or wages being garnished cannot form part of the judgment debtor’s exemption under the ''COEA''.
a)Execution Procedure: Chattels, Money, Shares, Etc. The judgment creditor obtains an order for seizure and sale (Small Claims Court) or a writ of seizure and sale (Supreme Court) directing the sheriff or bailiff to seize and sell sufficient goods or securities to satisfy the debt plus expenses (COEA, ss 58 and 60). The seizure of shares involves particular problems: see ss 64 and 65; see also Peligren vAjac's Equipment (1982) Inc (1984), 56 BCLR 17, [1984] 5 WWR 563 (BCSC).Where the sheriff seizes goods, the sheriff’ s officers are entitled to assume that all the goods and chattels on the premises are the property of the judgment debtor at the time of the seizure. The judgment debtor has a duty to claim that some of the property is personal property or the personal property of others: see Supreme Auto Body v.British Columbia (1987), 21 BCLR (2d) 101 (CA). b)Execution Procedure: Land NOTE: LSLAP students cannot help with issues relating to land. These cases must be referred to the Lawyer Referral Service.
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