IN THE SUPREME COURT OF BRITISH COLUMBIA Azta Mgmt. Corp. v. Croft Agencies, 2010 BCSC 1191 Date: 20100331 Docket: S126109 Registry: New Westminster Between: Azta Management Corporation Plaintiff And: Croft Agencies Ltd. Defendant Before: The Honourable Madam Justice Humphries
Oral Reasons for Judgment In Chambers Counsel for the Plaintiff:
D. Magnus
Counsel for the Defendant:
S. Smith
Date and Place of Hearing:
March 30, 2010 New Westminster, B.C.
Date and Place of Judgment:
March 31, 2010 New Westminster, B.C.
2010 BCSC 1191 (CanLII)
Citation:
Azta Mgmt. Corp. v. Croft Agencies [1]
Page 2
THE COURT: The defendant brings an application to set aside a garnishing
order before judgment issued in this proceeding on March 15th, 2010. The
affidavit, is for $631,398.50. [2]
The plaintiff's claim arises out of an alleged agreement between it and the
defendant regarding the obtaining of financing for one of the defendant's clients, SouthPoint Gate Development Corporation. The parties disagree about whether there was an agreement at all and if there was, what the rate was. The agreement is -- from the plaintiff's point of view -- set out in some emails and also corroborated by some conversations that took place between the plaintiff and Mr. Croft of the defendant. The defendant disputes those conversations and the significance of the emails. [3]
Section 5(1) and (2) of the Court Order Enforcement Act provide that a
registrar or judge if he or she considers it just in all the circumstances, may make an order releasing all or part of a garnishment order. [4]
Counsel are agreed on the law which is set out in a couple of cases, Webster
v. Webster (1979) 12 B.C.L.R. 172 (BCSC); (1979) 101 D.L.R. (3d) 248 (BCCA) and Min-en Laboratories Limited (1983) 57 B.C.L.R. 259 (BCCA): the court must consider all the circumstances, and that includes some assessment of the merits of the case, whether the order causes undue hardship for the defendant, and whether the order is necessary or not. [5]
The defendant here takes the position that the case is of questionable merit
and that the order is of such a large amount that it will cause undue hardship for the defendant, and also the order is not necessary because they are a going concern and will be able to satisfy a judgment if required. [6]
At present, the order has been served on the Toronto-Dominion Bank and
there was $24,000 in the defendant's account at that point. The defendant does not contend that $24,000 is going to make or break them, but is concerned that the
2010 BCSC 1191 (CanLII)
garnishing order signed by the Registrar, in response to the application and the
Azta Mgmt. Corp. v. Croft Agencies
Page 3
plaintiff may continue to go after its bank accounts until the entire amount is satisfied by which time the defendant says it would be long out of business because it will not
order the TD Bank has frozen its account and will not let it access its line of credit. [7]
The plaintiff says the actions of the TD Bank are not their doing. They have
simply served the garnishment order and were willing at the close of argument yesterday to write a letter to the Bank explaining that they did not expect the accounts to be frozen or the garnishment order to affect the line of credit, but that they were just attaching the amounts due pursuant to the garnishment order. [8]
On the merits of the case, the plaintiff says that it does have a strong case as
reflected in the emails; it does acknowledge there are arguable issues but contends that its case has merit. [9]
On the issues of hardship and necessity, the plaintiff takes the position that
the defendant's arguments on that are somewhat in conflict because if the present order would be hard on the company how could the plaintiff be assured it would have resources to fulfil a judgment? [10]
As well, the plaintiff says it is speculative to say the order would be renewed;
also the company's financial statements and listings do not support a financially vigorous company therefore necessitating the order. [11]
But most importantly from the plaintiff's point of view is that SouthPoint, who
is the actual borrower of the money and also a garnishee under the garnishment order, has provided no information to the Court. The plaintiff would like to know if SouthPoint owes Mr. Croft money and asks how Mr. Croft can assert hardship or lack of necessity of the garnishment order without that information and how the Court could properly assess it. [12]
Counsel for Croft who also represent SouthPoint says the principal of
SouthPoint is out of town and he does not have instructions from SouthPoint.
2010 BCSC 1191 (CanLII)
be able to pay its employees or conduct its business. Apparently as a result of the
Azta Mgmt. Corp. v. Croft Agencies [13]
Page 4
On the merits of the case, there is a basis for the claim. There are also
arguable defences. At the heart of this transaction, however, is a loan of $6,000,000
finder's fee, although of course Mr. Croft takes issue with the nature of the fee and the existence of the agreement. [14]
The affidavit material before me is not entirely clear but I gather SouthPoint
did get the loan. Somehow Croft and SouthPoint are connected, whether strictly as a client and agent or more closely is not clear on the material. Both are represented by the same lawyer and SouthPoint is also a garnishee under the order as I have said. [15]
The defendant admits that the current order against Toronto-Dominion for
$24,000 is not of great concern, but the potential for recurring orders month after month is of concern so in a sense this application took the form of injunctive relief which is, I believe, why it was referred out of Master’s chambers. As I say, the plaintiff says that is purely speculation and the Court should not assume they would run the defendant's company into the ground by such a measure. [16]
But in any event, it is essential that full information be provided to the Court
as to what SouthPoint owes the defendant because the significance of ongoing garnishment, I gather, will depend on whether there is any money coming from SouthPoint or from other garnishees. As I say, the plaintiff has requested information on what SouthPoint owes to Croft and that information has not been forthcoming. [17]
I agree that without that information the Court cannot properly assess
hardship to Croft as a result of the present garnishment order. It may be that that information would provide insight into the necessity for the order or the extent of it, and I note that under s. 5(2) the Court can release all or part of the garnishment. It may be that the garnishment order could be limited to allow Croft to continue to pay employees but should not be lifted in its entirety.
2010 BCSC 1191 (CanLII)
to SouthPoint. The alleged agreement is between Croft and Azta, the plaintiff, for a
Azta Mgmt. Corp. v. Croft Agencies [18]
Page 5
There appears to be a strong case that something is owing, but obviously the
amount and the actual extent of the agreement is in issue. There may be perhaps
options are not before me at this time. [19]
As I say, it might be possible to limit the garnishment order in a way that
would ensure that Croft can continue to be a going concern but would still afford some satisfaction to the plaintiff. Without the information from SouthPoint or the other garnishees, I simply cannot deal with that right now. [20]
It would not serve anyone's purposes to have Croft's business dealings
essentially brought to an end by this order in its large amount and that may indeed be the result of it but I cannot really tell that unless I have more information. [21]
So, on the material before the Court right now I am not prepared to lift the
order. I am going to have to dismiss the application before me now but give liberty to apply on further material which obviously will include material from SouthPoint and any of the garnishees if money is coming to Croft as a result of that. However, I am prepared to hear counsel on -- I understand that Croft employees are expecting to be paid today -- I welcome further information as to the approach to the Bank or whether that can take place or whether there is a limited order that could allow the employees to be paid so that at least Croft can get its tackle together with the rest of the information. (SUBMISSIONS AND DISCUSSION) [22]
THE COURT: As far as costs go, unless there is something specific you want
to say about it, it seems to me that given the situation that the defendant was in and the deadline it was facing with regard to payment that it was not unreasonable to bring this motion and I would like to leave costs to the next judge if the motion is brought again, or in the cause if not.
2010 BCSC 1191 (CanLII)
an approach taken of posting security in a lesser amount that would suffice but these
Azta Mgmt. Corp. v. Croft Agencies I am not seized obviously because it would just hold you up.
Humphries J. 2010 BCSC 1191 (CanLII)
[23]
Page 6
