Difference between revisions of "Creditors' Remedies against Debtors (10:III)"

If however, the cause of action occurred prior to the coming into force of the revised ''Limitation Act'', the previous limitation periods remain in effect.  Therefore, if the debtor’s acknowledgement in writing of the cause of action, or the last payment on the debt occurred prior to June 1, 2013, then the limitation period for the commencement of proceedings for the collection of debt is 6 years from that time.  

== A. Secured Creditors ==

For agreements that are subject to the ''PPSA'', Part 5 of the ''PPSA'' outlines the creditor’s remedies (ss 56 - Rights and remedies, 57 - Collection of payments  under intangibles or chattel paper, 58 – Right of seizure or repossession, and 67 - Rights and remedies: consumer goods). For agreements that involve fixtures, crops or accessions, ss 36 – 38 apply. In addition, Part 6 contains some sections (i.e. ss 68(2) - Good faith and commercially reasonable, and 72 - Notice) that are of procedural importance.  

=== 3. What Does the PPSA  Govern? ===

The scope of the ''PPSA'' is defined in s 2 as including every transaction that in substance creates a security interest without regard to its form. As well, under s 3, a transaction involving either a transfer of an account or chattel paper, a commercial consignment, or a lease for a term of more than one year that  does not secure payment or performance of an obligation (i.e. does not create a security interest) is subject to the ''PPSA''. Section 55 provides that Part 5 does not apply to transactions brought within the ''PPSA'' by s 3. It is necessary to look to the terms and the common law.   

==== a) Perfection ====

=== 8. Notice of Intention to Dispose of Collateral ===

Subject to the circumstances where notice is not required as per s 59(17) (e.g. for perishable collateral, collateral requiring disproportionately high storage costs relative to its value, etc.), the requirements for notice are outlined in ss 59(6) and (10). These  sections require that the secured party, or receiver, as the case may be, must provide at least '''20 days’''' notice of their intention to dispose of the collateral to parties including the debtor and any other creditor.  

Under s 60(5), the debtor is responsible for any deficiency balance unless the secured party and the debtor have agreed otherwise and made provisionsas such in the security agreement.  

=== 10. Voluntary Foreclosure ===

*the secured party discovers after seizure that an accession that was collateral has been removed and not replaced by other goods of equivalent value and free from prior security interests, a claim may be advanced against the debtor for the value of the accession (s 67(8)).  

==== c) Consequences of Electing to Proceed Against Collateral ====

Exceptions to this principle of pro rata distribution allow preference to sheriff’s costs, costs to the creditor at whose instance the seizure and levy was made, and wage claims that do not exceed three month’s wages, or salary. Further, the ''Family Maintenance Enforcement Act'', RSBC 1996, c 127 provides that proceeds realized on execution  under that Act are not subject to distribution under the ''Creditor Assistance Act''. In addition, some statutory liens and charges may take priority over the rateable distribution under the Act.  

==== a) Money to be Levied by Execution ====

A “maintenance debtor” has the same meaning as a “debtor” in s 1(1) of the ''Family Maintenance Enforcement Act''.  

Any goods, chattels and effects of the judgment debtor (''COEA'', s 55), money, bank notes, cheques, or other securities for money, such as  shares of an incorporated company in British Columbia (s 64; ''Peligren v Ajac’s Equipment'' (1982) Inc (1984), 56 BCLR 17, [1984] 5 WWR 563  (SC)), and any legal or equitable present, future, executory or contingent interest in land (s 81) may be seized after the exemptions from s 71(1) of the ''COEA'' are applied.  

==== b) Execution Procedure: Land ====

If the judgment creditor registers a judgment in any Land Title Office, a lien is created against the interest in the real property of the  judgment debtor that is registered in the land registration district in which the judgment is registered (s 82). Once a lien is formed, the  judgment creditor may seek a court order to have the sheriff sell the land (ss 92 and 96), unless the land is held in joint ownership and the debt is in one party’s name only. In that case, an application must be brought for partition and sale of the property. The execution  procedure, however, is slow and potentially expensive. '''The judgment creditor must renew the judgment after two years or it is extinguished''', unless it is a non-expiring judgment (i.e. a judgment registered under the ''Family Maintenance Enforcement Act'').

==== c) Legal Advice on Execution Orders ====

=== 1. Liens on Land (Builder’s Liens) ===

Under the current ''Builder’s Lien Act'', a worker, material supplier, contractor, or sub-contractor who does or causes to be done any work  upon, or supplies material, or both, for an improvement, has a lien for the price of the work and material, upon the interest of the owner in the improvement, upon the improvement itself, upon the material delivered to the land, and upon the land itself (s 2). “Price” does not include interest on outstanding accounts: see ''Horseman Bros. Holdings Ltd v Lee'' (1985), 12 CLR 145 (BCCA).  

If the lien is valid and the debtor wishes to discharge the lien, but disputes the amount of the claim, the debtor may wish to make the payment to the lien-holder. The debtor should send an accompanying letter stating an intention to dispute the claim, and if they are required to sign documents acknowledging indebtedness before the chattels will be released, they should write the words “Without Prejudice” above the signature.  In every case, the debtor should always ensure that the proper steps have been taken to discharge the lien upon payment.