THE COURT OF APPEAL FOR SASKATCHEWAN BANK OF MONTREAL (Plaintiff) APPELLANT and I.M. KRISP FOODS LTD., PIMNICO MANAGEMENT LTD., ISRAEL STEEN, REGINA BUS DEPOT LUNCH LTD., REUBEN DAVID, MARK LONDON, SID'S SUNFLOWER SEEDS (1984) LTD. (Defendants) RESPONDENTS FIRSTLINE TRUST COMPANY, (Garnishee) RESPONDENT CORAM: The Honourable Mr. Justice Wakeling The Honourable Mr. Justice Lane The Honourable Madam Justice Jackson COUNSEL: Mr. G. Melfair and Mr. R. Van Beselaere for the appellant, plaintiff. Mr. C. Hadubiak for the garnishee, respondent No one appearing for the respondent/defendant DISPOSITION: Appeal heard: November 10, 1995 Appeal allowed: October 17, 1996 On Appeal From: Q.B. 7030/85 J.C. Regina Appeal File: 2200 Reasons by: The Honourable Madam Justice Jackson In concurrence: The Honourable Mr. Justice Lane In dissent: The Honourable Mr. Justice Wakeling JACKSON J.A. find myself in respectful disagreement with my colleague Wakeling's analysis and conclusion. Whether money owed under guaranteed investment certificate (“GIC”) is debt "accruing due" under subsection 5(1) of The Attachment of Debts Act, R.S.S. 1978, c. A-32 and therefore subject to garnishment cannot be determined by reference only to garnishability of promissory notes not yet due. Other cases pertaining to similar debts must also be rationalized. It is for this reason have embarked on my own analysis and arrived at different conclusion. On December 24, 1991 Reuben David purchased from Firstline Trust Company $10,000 GIC maturing five years later. On May 4, 1993 the Bank of Montreal obtained judgment against Mr. David and others for $65,753.50. On August 11, 1993 the Bank served garnishee summons on Firstline in an effort to garnishee the money owed to Mr. David under the GIC. On August 13, 1993, Firstline responded to the summons saying "there is debt [sic] to Reuban [sic] David, by Firstline Trust Company. Mr. David has year Guaranteed Investment Certificate maturing December 24, 1996 in the amount of $10,000 with interest paid annually at 8.50%. This instrument is not cashable and therefore cannot be redeemed prior to maturity." In January 1994 Mr. David died. Pursuant to Firstline's practice, it paid $10,100.14 to Mr. David's estate. (Firstline held $850 as interest earned on the GIC as compensation for early payment.) When the Bank learned of this, it applied in Queen's Bench chambers under s.18 of The Attachment of Debts Act for judgment against Firstline in the amount of $10,100.14. The learned chambers judge dismissed the application saying there was no obligation on Firstline to pay monies into Court and therefore, no judgment could issue. The applicable statutory reference is subsection 5(1) of The Attachment of Debts Act which provides: 5(1) Service of the summons on the garnishee shall bind any debt due or accruing due from the garnishee to the defendant or judgment debtor and all wages or salary that become due or payable at any time within five days after service of the summons. Thus, to successfully enforce its judgment, judgment creditor must be able to prove "debt due or accruing due" from the garnishee to the judgment debtor. Both sides to this dispute agreed there was debt owing from Firstline to Mr. David under the GIC, but that it was not presently due. The issue was whether it was "accruing due". As preliminary matter, this judgment’s scope should be clearly delineated. The main point before this Court was consideration of Firstline's claim that the debt under the GIC was not attachable because it was not accruing due when the garnishee summons was served, i.e., that service of the garnishee summons did not “bind” the debt within the meaning of s. 5(1) of The Attachment of Debts Act. subsidiary point was raised as to whether the Court can exercise discretion to refuse garnishment. The Bank's position was that the garnishee summons was sufficient to compel payment to it on the GIC's maturity date. It did not argue for payment as of the date of service, but said service of the garnishee summons prevented Firstline from paying the GIC to Mr. David's estate. The Bank submitted there were no conditions which were required to be fulfilled to complete the obligation other than the passage of time. The GIC should have been held and paid out to the Bank, barring proof of better claim, on the GIC's maturity date. Firstline's position was that the debt owing under the GIC was not accruing due primarily because Mr. David could assign his right to payment to someone else. This right of assignment, it was argued, either prevented the debt from accruing due or made it conditional one and therefore not garnishable. It was also said garnishment should not be permitted because practical difficulties would be encountered if creditor could attach long-term GIC. These arguments require consideration of what is meant by both the phrases "accruing due" and "conditional debt". 1. Meaning of "accruing due" Few phrases have been as problematic to define as "debt due or accruing due". The Shorter Oxford English Dictionary, 3rd ed. defines "accruing" as "arising in due course", but an examination of English and Canadian authority reveals that not all debts "arising in due course" are permitted to be garnisheed. (See Professor Dunlop's extensive research for the British Columbia Law Reform Commission's Report on Attachment of Debts Act, 1978 at 17 to 29 and his text Creditor-Debtor Law in Canada, 2nd ed. at 374 to 385.) This means that when court is asked to permit garnishment with respect to type of debt not previously considered, it is necessary to make comparisons with debts arising under similar instruments. Given the long history of attachment of debts law, this exercise reveals some inconsistencies in the law which must be rationalized each time new type of debt is considered. In addition, although Canadian authorities refer to and to some extent rely upon English attachment of debts law, there are some marked departures from the English common law approach. The leading authority is Webb v. Stenton (1883), 11 Q.B.D. 518 where the Court of Appeal considered whether money held in trust for the judgment debtor was "accruing due". The Court's principal concern was whether trustee who was not under duty to pay the beneficiary under the trust owed "a debt" to the beneficiary. Resolution of this issue required consideration of whether the words "accruing due" expanded the category of garnishable debts to include debt which may arise in the future. The most oft-quoted explanation of what is attachable comes from the judgment of Lindley, L.J. (at p. 527): should say, apart from any authority, that debt legal or equitable can be attached whether it be debt owing or accruing; but it must be debt, and debt is sum of money which is now payable or will become payable in the future by reason of present obligation, debitum in presenti, solvendum in futuro. An accruing debt, therefore, is debt not yet actually payable, but debt which is represented by an existing obligation. The Court held, in the result, that moneys which may or may not become payable from trustee to his or her beneficiary were not "debts". The addition of the words "accruing due" did not expand what could be considered debt, but in coming to this conclusion each judge concluded that existing debts payable in the future are attachable. Thus, if debt is in existence at the time the garnishee summons is served, it need not be presently payable to be attached. garnishee summons attaches debts payable in the future because of the phrase "accruing due". Without more, this should mean that the debt under GIC is attachable. It is clearly "debt" and, because it is payable in the future, it is "accruing due". Nonetheless, Courts have found certain debts payable in the future to be not capable of garnishment. The language used to deny garnishment usually relates to finding that the debt is conditional one and therefore not "accruing due". Here, the conditional nature of the debt under the GIC was said to arise because the right to payment could be assigned. For the sake of dealing with this argument, have assumed it to be possible to find debt to be conditional even though the parties have admitted there is debt owing. do have some difficulty with this in light of Webb v. Stenton. That case, which really is the origin of the idea of the conditional debt, considers the question of conditionality to determine whether there is debt at all and not whether an existing debt is accruing due. am however content to leave the point as nothing turns on it in this case and because of the many authorities subsequent to Webb v. Stenton which refer to separate category of debt known as conditional debt or which consider the question of conditionality to determine whether debt is accruing due. 2. Whether the assignability of GIC precludes garnishment? Paragraph of the GIC stated "it can be made assignable and transferrable any time upon completion of the form below, and with payment of the applicable fees". This, so the argument went, prevented the debt from being considered one which was "accruing due" to Mr. David because it was "conditional" upon him not having assigned the debt to third party before the maturity date. In my opinion this argument mixes two different streams of the law of garnishment the law pertaining to "conditional debts" and that dealing with the garnishability of notes. will first set forth the law in support of the proposition that note is not garnishable. Roblee v. Rankin (1886), 1884 CanLII 31 (SCC), 11 S.C.R. 137 is the starting point. The issue considered was whether an overdue note was garnishable. Of the five judges who heard Roblee, Henry J. and Gwynne J. went beyond the issue before the Court and expressed similar views about whether notes per se were garnishable. Henry J. said (at p. 152): The words of the statute are: "all debts owing by the garnishee to the judgment debtor shall be attached to answer the judgment recovered against them." Can it be for moment contended that debt is anytheless debt because it is secured and evidenced by promissory note overdue? It is not hard to appreciate the difference in such case between current note and one overdue. In respect of the former, there is really no debt due by the maker to the payee, and if endorsed to third party while current, he or some other holder would become the creditor therefor of the drawer. current note cannot therefore, be attached, or if the garnishee, as such, shall be called upon to pay the amount, such payment would be no defence to an action at the suit of an endorsee, or any subsequent holder, at all events, if the note were endorsed before falling due. Gwynne J. made similar comment (at p. 154): Now the reason why debt, secured and made payable by promissory note, is not attachable to satisfy judgment recovered against the payee while the note is still current not yet arrived at maturity is because the amount made payable by such note is not, before maturity, either debt owing by, or accruing due from, the maker to the payee within the words of the statute. The amount secured by the note, until maturity, is not debt owing by the maker and due to the payee or to any one. By the custom of merchants, which governs promissory notes, it is accruing due to the person who shall be the holder thereof at maturity, and therefore cannot be said to be accruing due to the payee, the judgment debtor, within the words of the statute. These comments were endorsed by Turgeon J.A. in McIlrath Lumber Co. Ltd. v. Shore, 1931 CanLII 254 (SK CA), [1931] W.W.R. 785 (Sask. C.A.) at p. 787: At the time the garnishee summons was served upon him the promissory note was not due. But this note is negotiable instrument. It was accruing due, not necessarily due to the defendant, but to the holder in due course at the time for payment, who might be the defendant or another person. The maker of such note who makes payment upon it to the person in whose favour it is drawn, without making sure that each person is still the holder, acts at his peril, as was illustrated recently in the case of Dealers Finance Corpn. Ltd. v. Sedgwick, decided by this Court (ante p. 598). Consequently the debt in question was not one due or accruing due to the defendant Frances E. Shore at the time of the garnishee proceedings within the meaning of The Attachment of Debts Act. Nothing in that Act can be so construed as to interfere with the incidents of promissory notes as regulated by The Bills of Exchange Act, R.S.C., 1927 c. 16. The majority of the Court in McIlrath said simply the note was not attachable because it was not yet due. McKay J.A. said (at p. 792): Considering now the objection that the note is not an attachable debt, the note not being due at the time it was attached, the weight of authority supports this contention: Jackson v. Cassidy (1883) O.R. 521; Roblee v. Rankin (1884) 1884 CanLII 31 (SCC), 11 S.C.R. 137, at 150, 152 and 154; Simpson v. Phillips (1896) Terr. L.R. 385; Halsted v. Herschmann (1908) 1908 CanLII 269 (MB QB), 18 Man. R. 103, W.L.R. 641 Lekas v. Zappas (1913) 1913 CanLII 172 (SK CA), W.W.R. 1148, Sask. L.R. 197, 23 W.L.R. 560; 14 Halsbury, 93. ..... On the authorities above first referred to on this subject, am of the opinion that the note herein referred to was not attachable. In my respectful opinion, I do not conclude that the garnishability of the debt owing under a promissory note is prevented because the debt is a conditional one and made so by reason of the possibility of assignment. None of the judgments in Roblee or McIlrath speak in terms of "conditional debt" or refer to the early leading cases pertaining to conditional debts: Howell v. Metropolitan District Railway Company (1881-1882), 19 Ch. D. 508; Heward Milling Company v. Barrett, (1909) Sask. L.R. 210 (S.C.); and Barsi v. Farcas, 1923 CanLII 175 (SK CA), [1924] W.W.R. 707 (Sask. C.A.). The first specific reference to conditional debt in the garnishment context appears in Howell where Chitty J. considered whether money owed by an authority which had expropriated land was garnishable by the land owner's creditors. The land had not yet been conveyed. The land owner had successfully sued the authority to receive the compensation, but it had not been paid nor had the land been conveyed. Chitty J. held that money due from the expropriating authority "did not constitute debt payable or accruing immediately the verdict and judgment were obtained, for the [landowner] was not entitled to the money, either at law or in equity, except on executing or tendering conveyance to the company" (at p. 515). Later, on the same page, he spoke in terms of the payment of the purchase-money being "conditional" upon the execution or tender of conveyance by the vendor: The purchase-money was not debt actually "due or accruing" within the meaning of the garnishee orders, for the right to it was conditional upon the execution or tender of conveyance by the vendor. Howell was followed in 1909 Saskatchewan case: Heward Milling Company v. Barrett, supra. In Heward contractor had abandoned construction project before completion. Monies were owed for work done, but the contract provided that the owner could take possession and complete the work, charging it against the amount due to the contractor, if the contract were to be abandoned. One of the contractor's creditors sought to garnishee the money owed to the contractor at the time of abandonment. Prendergast J. acknowledged the standard definition of what is attachable: debt payable now or in the future, and then said, referring to Howell (at p. 213): But it is not sufficient to look at the general nature of the debt itself; all the circumstances attaching to the contract creating the debt must be considered, and in Howell v. Metropolitan District Railway (1882), 51 L.J. Ch. 159, and 19 Ch.D. 508, it was held that "the true test is whether anything else has to be done by the judgment debtor as condition precedent to payment". He held that payment to the contractor was conditional upon completion of the contract and therefore could not be garnisheed. The next significant case was Barsi v. Farcas, supra. In Barsi, judgment creditor sought to garnishee money owed from the purchaser under an agreement for sale to the vendor/judgment debtor. After referring to early English authority, Lamont J.A., with whom Haultain C.J.S. agreed, defined "accruing due" in the same terms as Webb, supra (at p. 709): Under our Act, garnishee summons binds only "debt due" or "accruing due". To constitute an attachable debt, there must be an actual debt, legal or equitable, due from the garnishee to the judgment debtor. His debt must be either presently payable, or presently due though payable at future date. Then, in reliance on Howell and Heward he said the debt must also be perfected one, and not conditional. Lamont J.A. concluded (at p. 711) "it follows, therefore, that debt depending upon an unfulfilled condition is not attachable". Applying this law, Lamont J.A. found the debt owed by the purchaser under the agreement for sale to be conditional because the obligation to pay was dependent upon the vendor/judgment debtor being able to show he had good title. In coming to this conclusion Lamont J.A. contrasted the position of purchaser under an agreement for sale with that of mortgagor under mortgage. He said (at pp. 712-713): In my opinion there is clear distinction between moneys due or accruing under mortgage and those under an agreement of sale. Under mortgage, the debt becomes an unconditional liability at the time fixed for payment. Under an agreement of sale, the debt at the time fixed for payment is conditional upon the vendors being able to make title, and where he has no title the purchase-money never becomes payable. As indicated, neither Roblee nor McIlrath refer to the above cases. Roblee was decided just after Howell and Barsi v. Farcas predates McIlrath. also note there is significant debate about the basis upon which promissory note is not garnishable. See Geva, "Execution Against Negotiable Instruments", in Springman and Gertner, eds., Debtor-Creditor Law: Practice and Doctrine (1985) at 100 to 104 and Dunlop, supra at 383. This is not the case to delve too deeply into the garnishability of notes, but it is clear that simply saying the assignability of note creates conditional debt is not the complete answer to the issue at hand. Since Barsi v. Farcas, the question of what constitutes condition preventing debt from being considered "accruing due" has been considered on many occasions. In furtherance of the issue, propose to look at two types of debts: (i) monies owing under contract awaiting an architect's certificate; and (ii) monies owing under term deposit. Sandy v. Yukon Construction Co. Ltd. et al. (1960-61) 1960 CanLII 276 (AB CA), 33 W.W.R. 490 (Alta. C.A.) considered whether monies owing under construction contract awaiting the architect's certificate were garnishable. In Sandy subcontractor's creditors sought to garnishee money owed to him. contract term stipulated that the amount certified by the architect to be due in respect of sub-contract work would not become payable until fourteen days after receipt of the architect's certificate. It was argued that this clause prevented the debt from coming into existence until the certificate was given. The Court had to choose between two divergent English authorities: O'Driscoll v. Manchester Insurance Committee [1915] K.B. 499 and Dunlop Ranken Ltd. v. Hendall Steel Structures Ltd. [1957] All E.R. 344. The first held that monies awaiting an architect's certificate were garnishable. The second distinguished the first on the basis of the type of building contract. The Court in Sandy did not accept the distinction. Johnson J.A., speaking for the Court, said the only time monies owing under construction contract in such circumstances would not be garnishable is "if the giving of the certificate is condition precedent to any debt coming into existence and not merely condition precedent to there being any right to receive the debt" (at p. 494). This Court approved Sandy and O'Driscoll in Prince Albert v. Diehl (1985), 1985 CanLII 2646 (SK CA), 43 Sask. R. 296 (C.A.). Prince Albert was not an architect's certificate case, but Wakeling J.A. quoted from both Sandy and O'Driscoll and concluded that to determine whether debt is "accruing due", Court must decide whether "both the debt and its payment rest in the future" (at p. 298). The second type of debt not held to be subject to condition and held to be garnishable is that arising between financial institution and the holder of term deposit. The first Canadian decision permitting the garnishment of this type of obligation was Bel-Fran Investments Ltd. v. Pantuity Holdings Ltd. and Bank of Montreal (Garnishee), 1975 CanLII 917 (BC SC), [1975] W.W.R. 374 (B.C.S.C.). In Bel-Fran, the judgment debtor deposited $725,000 with the Bank of Montreal subject to the terms of "term deposit receipt" dated January 10, 1975 and maturing April 9, 1975. When the garnishee summons was served, the term deposit had not yet matured. The term deposit receipt was not transferable. Payment would only be made upon surrender of the term deposit at the issuing branch and completion of receipt provided for that purpose. The sum of the term deposit could be withdrawn in "whole or in part subject to the bank's right to require seven days prior notice thereof". To decide whether the term deposit was garnishable, Anderson J. considered Bagley v. Winsome, [1952] All E.R. 637 (C.A.) which held that deposit account was not garnishable. The terms of the deposit account in Bagley required 14 days' notice for all withdrawals. Personal application had to be made and the deposit book produced before any money could be withdrawn. Sir Raymond Evershed M.R. considered the deposit book to be document of title to the deposit account which meant that delivery of it to third person could operate as an effective donatio mortis causa. He said the bank was entitled to insist on fulfilment of the condition requiring production of the deposit book which "may or may not be satisfied at some indefinite future time, and in the meantime the judgment creditor cannot...be in better position than the party to the contract with the bank...". Bel-Fran did not follow Bagley. Instead, Anderson J. held that term deposit not yet matured could be attached under The Attachment of Debts Act. He said the conditions of the term deposit concerned only the bank and as such were mere matters of procedure and administration satisfied by the service of the garnishing order. In addition, he stated (at p. 382): It should also be noted that the principles enunciated in Bagley are no longer applicable in the United Kingdom because deposit accounts were made attachable by Parliament after the Bagley decision was handed down. doubt whether we should introduce into Canada the common law of England which no longer applies by reason of statutory intervention. The application to set aside the garnishee order was dismissed. Although Alberta has taken somewhat different course (see Provincial Treasurer of Alberta and R. in Right of Canada v. Hutterian Brethren Church of Smoky Lake et al. (1980), 1980 ABCA 101 (CanLII), 12 Alta. L.R. (2d) 368 (C.A.)), Saskatchewan courts have followed Bel-Fran and held that term deposit is attachable. See Melville District Credit Union v. Jeffers et al., (1982) 1981 CanLII 2361 (SK QB), 16 Sask. R. 254 (Q.B.); Farm Start v. Dagenais (1983), 1983 CanLII 2142 (SK QB), 31 Sask. R. 81 (Q.B.); and Spiritwood Credit Union v. Dagenais (1985), 1985 CanLII 2368 (SK CA), 40 Sask. R. 205 (C.A.). In Farm Start Maher J. dealt with term deposit in which the withdrawal of the full amount was permitted, provided the bank was given 24 hours notice. Maher J. held that there was no question but that the term deposit was attachable as it was debt due or accruing due within the meaning of s. of The Attachment of Debts Act. In Spiritwood Brownridge J.A. found no error in Maher J.'s decision in Farm Start. The only exception is Tradewinds International Inc. v. Saskatchewan Food Processors Association and Sherwood Credit Union (Garnishee) (unreported, Queen's Bench, September 22, 1994) which was relied upon by the learned chambers judge in this case. In Tradewinds the term deposit could not be withdrawn prior to its maturity which was to occur seven days after the judgment creditor served the garnishee summons. The learned chambers judge refused judgment saying first that the creditor could not stand in better position than the debtor and secondly that the term deposit represented contractual obligation to pay money at future date and was therefore not garnishable. The first part of this reasoning has been overtaken by case law subsequent to Donohoe v. Hull Bros. (1895), 1895 CanLII 56 (SCC), 24 S.C.R. 683. (See Dunlop, supra at 377 and the many cases referred to in this judgment where garnishment was permitted even though an action could not be maintained at the point of garnishment to recover the debt.) The latter part of Tradewinds overlooked that aspect of subsection 5(1) which permits attachment of debts which are "accruing due". Tradewinds is contrary to Spiritwood and misapplies the law summarized in Barsi v. Farcas. So what are we to make of all this? The early authority shows it is not just debts which are immediately payable which are capable of attachment. Debts existing as of the moment the garnishee summons is served, but payable in the future, are garnishable. (Indeed, the words "accruing due" were added to overcome the more restrictive phrase "due and owing" (See Dunlop supra at 372)). In addition, the historical review demonstrates that there have been some gradual but significant changes in the law of garnishment as applied in this province. Given the strong obiter comments in Prince Albert and this Court's treatment of garnishment of term deposits, it would be difficult to conclude debt owing under GIC is not accruing due and therefor not garnishable. Based on the above cases, the assignability of GIC is not the type of condition which has been held to affect the determination that debt is accruing due. In those cases where condition has been found to affect debt's status as accruing due it has been certain, when the garnishee summons was served, that further condition must be fulfilled: (a) conveyance of good title Howell and Barsi; (b) completion of the contract Heward; (c) success on appeal Prince Albert. Not only must the condition be certain; the consequence of the failure to fulfill it must be the garnishee will not have to pay the debt. condition must by its nature relieve the garnishee from its obligation to pay the judgment debtor and thereby prevent the debt from accruing due. When garnishee summons is served with respect to GIC, the judgment debtor may assign it. But that is true with respect to almost every debt, even those which are accruing due in relatively short time period. The Personal Property Security Act S.S. 1993, c. P-6.2 and The Choses in Action Act R.R.S. 1965, c. 395 contemplate and provide for the assignment of contractual debts. This may be done innocently before service of copy of the garnishee summons (see: s. 5(3) of the Act) or it may be done with intent to defeat the claim of the garnisheeing party. In either case, the possibility of interests conflicting has not prevented the Courts from consistently finding that debt accruing due at some distant time is garnishable. For example, money due under mortgage may be assigned after garnishee summons is served, but that has not prevented the courts from concluding that money due under mortgage is garnishable. (See Barsi v. Farcas.) And even in those cases where the instrument precludes assignment, it does not prevent the judgment debtor from granting security interest in the debt. agree that the judgment debtor in Bel-Fran could not assign the term deposit, but do not accept that this is significant. The significant feature of Sandy and Bel-Fran, as applied in Spiritwood, is that in this jurisdiction at least, there is shift in what constitutes condition. In both the term deposit cases and the architect certificate cases it would have been open to find condition which would have prevented garnishment, but the Courts did not. In my opinion, to now say that assignment makes debt conditional resists the changes which began with Bel-Fran and, for that reason, should not be approved. In many respects concern about the possibility of assignment relates to the possible length of GIC. There have been no reported cases that have required, as condition of garnishment, that the debt be paid shortly. By its definition, as elaborated upon in this judgment, debt accruing due is one which is payable in the future. Some jurisdictions have moved to continuing garnishee which permits garnishment of debt payable within six or ten years after the notice is served (see Dunlop, supra at 392). (See also The Enforcement of Maintenance Orders Act, S.S. 1984-85-86, c. E-9.2, s. 16.) From all this conclude there is nothing inherently wrong in attaching debt payable at some distant point in the future. note also that the legislature did not impose time limit in subsection 5(1) of The Attachment of Debts Act with respect to debts accruing due, but did so with respect to wages. It is not for the Courts to impose what by its nature must be an arbitrary limit when the legislature has not done so. In summary, service of the garnishee summons did “bind” the debt owing under the GIC. To use the language of Prendergast J. in Heward Milling, supra nothing else needed to be done by Mr. David before payment was required to be made. The money was not yet payable but, like the authorities in Barsi v. Farcas would say, it was debt which was subject to no conditions other than the effluxion of time. 3. Practical Considerations affecting the Garnishment of Debts under GIC Having found the debt owing under GIC to be debt accruing due, it remains to be considered whether the Court has the authority to refuse judgment because of the difficulties which may be caused to third parties. Firstline submitted that this Court should not permit the attachment of long-term GIC because the garnishee would potentially be required to pay several years after service of the garnishee summons. For third parties there is no system of registration which would advise them attachment had occurred. Therefore, nothing prevents someone in Mr. David's position from granting security interest in the GIC or transferring it to subsequent third party. Firstline argued that it could not have been the legislature's intent to contribute to such uncertainty. There are no Saskatchewan cases on point, but in Dunlop, supra at 400 to 404, the author presented line of authority where the courts have exercised discretion in determining whether garnishee summons would issue or an order would be set aside based on factors other than whether there was debt due or accruing due. None of these cases are authority for the proposition that court could declare an otherwise garnishable debt of particular type not to be garnishable. Each case represented an exercise of discretion with respect to the particular debt and facts before the court. If the authority exists in this jurisdiction which permits court discretion to deny in particular case the garnishability of debt, this is not the case to exercise that discretion. As indicated at the outset, the Bank did not say Firstline should have paid when the garnishee summons was served. According to the Bank, it wanted to assert its claim on the maturity date. At that time the issue of priorities would be determined. Because of the early payment to the estate, we know there were no intervening claims and no priority issue arose. It would be completely inappropriate to deny judgment in these circumstances. Speaking generally, do not believe the difficulties are as great as Firstline has described. Leaving aside the effect of the GIC, which purports to require filing of the assignment form with Firstline and paying fee, issues of priority can arise not only with respect to subsequent claims but with respect to claims arising prior to service of the garnishee summons. However desirable registration of an attaching order might be, no system of registration will prevent the possibility of conflict. It is for this reason the garnishee is directed to pay the money into Court and procedure has been developed to determine priority (see: ss. 10 to 17 of the Act). Long instrument life increases the risk of conflict with third parties, but the judgment creditor also assumes some financial cost in choosing to garnishee GIC maturing far into the future. The judgment creditor's risks include the same risk of conflict and the missed opportunity to pursue quicker enforcement mechanisms, if such exist. If the judgment creditor pursues other enforcement mechanisms while attempting to garnishee the GIC debt, it increases its costs and runs the risk of paying unnecessarily those of the garnishee. There are no doubt some potential problems arising from finding that GIC is garnishable, but this cannot dictate whether or not it is covered by the statute. The possibility of future problems must be balanced with the equities between unsecured creditors and debtors. An unsecured creditor should be able to use the more efficacious attachment remedy where possible to do so. Conclusion In conclusion, the GIC was attachable pursuant to s. 5(1) of The Attachment of Debts Act. The appeal is allowed. No other issues being raised, judgment will be entered against Firstline in accordance with section 18 of that Act. Execution shall issue to levy $10,100.14, or for so much as is sufficient to satisfy the judgment against Mr. David, together with the cost of the garnishee proceedings, and costs in the usual way in this Court and in the Queen's Bench. DATED at the City of Regina, in the Province of Saskatchewan, this 17th day of October, A.D. 1996. JACKSON J.A. LANE J.A. WAKELING J.A. The issue on this appeal is whether $10,000 payable under a GIC issued by First Line Trust Company (First Line) and maturing in December of 1996 is subject to garnishee as a “debt due or accruing due” within the meaning of s. 5(1) of The Attachment of Debts Act, R.S.S. 1978 c. A-32. The issue arose in this way. The Bank of Montreal (Bank) obtained judgment in May of 1993 for $63,668.50 against number of parties including the respondent Reuben David (David). In August of 1993, the Bank served garnishee summons upon the respondent First Line seeking to attach the sum of $10,000.00 owing by First Line to David under the above described GIC. By letter to the clerk of the court dated August 13, 1993, First Line acknowledged the existence of the indebtedness but paid nothing into court because the debt was not payable until its maturity. Nothing further was done by any of the parties until after David's death in January of 1994. In the course of the administration of his estate, First Line, based on policy of that company, paid $10,100.14 to the David estate. It now continues to hold the sum of $850.00 as interest that accrued on the GIC but was not payable to the estate as consequence of its election to receive payment prior to maturity. The Bank was not party to this payment to David’s estate and in June of this year brought an application for judgment against First Line based on the Bank's contention it had attached the money owing by First Line under the GIC and payment should not have been made to the estate as it was due to the Bank on its maturity. In dismissing this application, the chambers judge relied on the fiat in Trade Winds International Inc. v. Saskatchewan Food Processors Association and Sherwood Credit Union (garnishee) (unreported September 22, 1994) in which Sirois J. stated: The garnishee summons served on the Sherwood Credit Union on June 22, 1994 did not bind any debt due or accruing due from the garnishee to the association. The term deposits were non redeemable and could not be withdrawn at anytime prior to their maturity date on June 29, 1994. The garnishee attached nothing. The debt must be either presently payable or presently due though payable at future date. Neither situation existed here: See Barsi v. Farcus [1984] W.W.R. 707. The creditor could not stand in better position than the debtor. The term deposits here seemed like contractual obligation to pay money at future date. The Plaintiff did not dispute the garnishee's position in the two months after the notice of dispute was filed, to ascertain the validity of the garnishee summons. hold that the term deposits weren't attached under the garnishee summons. [Emphasis in original] The chambers judge dismissed the Bank’s application and went further to also indicate that instead of proceeding by way of garnishee the Bank could have seized the GIC under execution and then had it sold by the sheriff. This appeal from that order is brought by the Bank on the ground that First Line’s obligation under this GIC constituted “debt due or accruing due” within the meaning of s. 5(1) of The Attachment of Debts Act and therefore was subject to garnishee. However, before proceeding with consideration of this principal ground of appeal, it is useful to dispose of two other issues raised somewhat peripherally by the chambers judge. Firstly, there is no reason to deal with the comment in the Trade Winds fiat that the creditor cannot be in better position than the debtor to demand payment under the GIC. That statement is probably correct, but it is not factor here as the Bank was not seeking payment of the GIC before its maturity date. It was the position of the Bank the debt had been garnisheed and payment on maturity would be made to the Bank rather than to David or his estate. Second, nothing is gained by further consideration of the comment of the chambers judge as to the right of the Bank to seize the GIC under execution. That was merely obiter and does not bear on whether or not the debt owing under the GIC had been attached by the garnishee. Turning then to the principal ground of appeal, it seems generally accepted that any consideration of what constitutes “debt due or accruing due” has as its starting point review of the judgment of this Court in Barsi v. Farcus, 1923 CanLII 175 (SK CA), [1924] W.W.R. 707. The following head note provides sufficiently accurate summary of the result of that judgment: Under The Attachment of Debts Act, Sask., garnishee summons binds only "debt due or accruing due". To constitute an attachable debt there must be an existing obligation, payable either presently or at future date. It must also be perfected debt and not conditional one. This appeal turns on the resolution of the two issues that case has established, namely whether the indebtedness could be described as due or accruing due and whether it was an unconditional debt? The first of these questions seem to have reasonably straightforward answer. Barsi v. Farcas and those that follow it have consistently accepted that debt can be said to be accruing due if the due date of the existing obligation is presently identifiable. That is the case here as the debt was incontestably present debt due on its maturity date and therefore qualifies as one that was accruing due. (See Spiritwood Credit Union v. Dagenais (1985), Sask. R. 205 and Prince Albert Credit Union v. Diehl (1986), 1985 CanLII 2646 (SK CA), 43 Sask. R. 296). The answer to the second question as to whether or not it was conditional debt is not so readily apparent. It seems to be dependent upon whether the opportunity of assignment constitutes basis for the conclusion the debt is conditional obligation. It appears that at least since Roblee v. Rank (1886), 1884 CanLII 31 (SCC), 11 S.C.R. 137 only promissory note which was past due was attachable by garnishee. The following portion of the judgment of Gwynne J. indicates the reasoning applied by the Court (p. 154): Now the reason why debt, secured and made payable by promissory note, is not attachable to satisfy judgment recovered against the payee while the note is still current not yet arrived at maturity is because the amount made payable by such note is not, before maturity, either debt owing by, or accruing due from, the maker to the payee within the words of the statute. The amount secured by the note, until maturity, is not debt owing by the maker and due to the payee or to any one. By the custom of merchants, which governs promissory notes, it is accruing due to the person who shall be the holder thereof at maturity, and therefore cannot be said to be accruing due to the payee, the judgment debtor, within the words of the statute. No such reason however, exists for holding that debt secured by promissory note, when overdue and still in the hands of the payee, cannot be attached to satisfy judgment recovered against the payee, for in that case the amount does constitute debt owing by the maker, and due and payable to the judgment debtor. This view was endorsed by this court although by obiter comment, in Lekas v. Zappas (1913) 1913 CanLII 172 (SK CA), W.W.R. 1148 and was more specifically dealt with in McIlrath Lumber Company Limited v. Shore et al, 1931 CanLII 254 (SK CA), [1931] W.W.R. 785 in which Turgeon J.A., on behalf of the Court had this to say at p. 787: At the time the garnishee summons was served upon him the promissory note was not due. But this note is negotiable instrument. It was accruing due, not necessarily due to the defendant, but to the holder in due course at the time for payment, who might be the defendant or another person. The maker of such note who makes payment upon it to the person in whose favour it is drawn, without making sure that each person is still the holder, acts at his peril, was illustrated recently in the case of Dealers Finance Corpn. Ltd. v. Sedgwick, decided by this Court (ante p. 598). Consequently the debt in question was not one due or accruing due to the defendant Frances E. Shore at the time of the garnishee proceeding within the meaning of The Attachment of Debts Act. Nothing in that Act can be so construed as to interfere with the incidents of promissory notes as regulated by The Bills of Exchange Act, R.S.C., 1927 c. 16. It is true that the concern expressed in that judgment related to The Bills of Exchange Act, but am unable to see why statutory right of assignment by endorsement warrants greater degree of recognition and respect then does the common law right of assignment when both have the same legal consequence. It is apparent that so far as this Court is concerned, promissory note which is not due is not garnishable because of the prospect it may not be payable to the debtor when it becomes due. There may be decisions to the contrary in other jurisdictions, but the author of Creditor-Debtor Law in Canada expresses the view at p. 385 of his text that this approach “represents current Canadian law”. The concept as it relates to promissory notes is not dependant upon how much opportunity there is for endorsement, the note may be payable in year or day, the principle is that it is not subject to attachment until it is past due. This approach avoids the need to factor in the difficult judgment of how likely the chance of endorsement may be as it accepts any chance will serve to exempt the note from attachment by garnishee. Given this is the present state of the law as it relates to promissory note, have to ask if there is any significant difference between promissory note and GIC. They are certainly not the same but they do both contain the basic elements of promise to pay sum certain at designated date. If promissory note is not subject to garnishee before it is past due, for whatever reason, it seems to me the GIC must also fall into that category, at least cannot see any basis for logical distinction. Given virtually every obligation is subject to assignment one is led to wonder why the prospect of assignment is only applicable to promissory notes and obligations of similar nature. The best that can answer is that in most cases the debt is one that is due and the garnishee is effective immediately so no right then remains which would be subject to assignment. Had the debt been assigned previous to the service of the garnishee, then clearly the debt would not be attached. The concern for assignment is therefore only relative to those debts which are accruing due in the future with perhaps particular reference to those debts where commercial practice makes assignment rather more likely, which conclude could have application to this G.I.C. which contains no provision for early payment and by its own terms is assignable. also conclude that the validity of this concern regarding assignment is supported by the decisions where the right to garnishee bank deposit certificate has been upheld. In each case, the certificate has had provision for early payment and the judgments have held the garnishee was deemed to have triggered the request for early payment which in essence was means of eliminating the opportunity for assignment as the certificate was then payable to the holder and beyond subsequent assignment. These cases refer to include Bel-Fran Investments Ltd. v. Pantuity Holdings Limited and Bank of Montreal (Garnishee), 1975 CanLII 917 (BC SC), [1975] W.W.R. 374, Farmstart v. Dagenais (1981), 1983 CanLII 2142 (SK QB), 31 Sask R. 81, McGregor v. Bamerical International Financial Corpn. Ltd. et al, 1976 CanLII 1555 (BC SC), [1977] W.W.R. 653. None of these judgments provide the analysis have just made, but the only logical reason can put to the determination of early payment is that it avoided the need to address the question of whether the debt owing under the certificate was conditional obligation and like promissory note which was not yet due, was not garnishable. An approach which seems consistent with that taken in Provincial Treasurer of Alberta and R. in Right of Canada v. Hutterian Brethren Church of Smoky Lake et al (1980), 1980 ABCA 101 (CanLII), 12 Alta. L.R. (2d) 368 (Alta. C.A.) where garnishee was held to be an effective demand for an accelerated payment where the terms of the GIC provided for an earlier payment. In the final analysis, conclude that debt payable under promissory note which is not due is not garnishable, at least in this jurisdiction, and the same reasoning must apply to the debt accruing due under this GIC which has essentially the same characteristics as promissory note. am aware that in some jurisdictions, Ontario being one, the applicable rules have been changed to specifically provide that debt payable within six years of the service of the garnishee is garnishable. This leads me to believe that this area of the law may well benefit from review of The Attachment of Debts Act. It may be that the result have reached no longer adequately serves the business community especially since commercial paper of this nature is now much more prevalent then it was when the earlier decisions have relied upon were decided. In the result, while it is clear am not endorsing the reasons of the chamber judge, concur in the result he reached and the appeal is therefore dismissed with costs on double Column V. Dated at the City of Regina, in the Province of Saskatchewan, this 17th day of October, A.D. 1996. WAKELING J.A.
The issue was whether $10,000 payable under a GIC was subject to garnishee as a debt due or accruing due within the meaning of s5(1) of the Attachment of Debts Act. The Bank had served a garnishee summons on First Line seeking to attach money owing to David. First Line paid nothing because the debt was not payable until its maturity. When the debtor died First Line paid the money to his estate. Relying on Tradewinds, the chambers judge dismissed the Bank's application. The appeal turned on whether the debt was accruing due or whether it was a conditional debt because it could be assigned. HELD: The appeal was allowed. The GIC was attachable pursuant to s5(1) of the Attachment of Debts Act.  1)The main point was whether the debt was not attachable because it was not accruing due when the garnishee summons was served in that it did not bind the debt. 2)The leading authority, Webb v. Stenton, concluded that existing debts payable in the future are attachable. 3)The garnishability of the debt owing under a promissory note is not prevented because the debt is conditional by reason of the possibility of assignment.  4)Saskatchewan courts have followed Bel-Fran holding that a term deposit is attachable. The only exception is Tradewinds which overlooked the aspect of s5(1) which permits attaching of debts which are accruing due. Tradewinds is contrary to Spiritwood and misapplies the law summarized in Barsi v. Farcas. The historic review demonstrated that there have been gradual changes in the law of garnishment. Based on the cases reviewed the assignability of a GIC is not the type of condition which has been held to affect the determination that a debt is accruing due. 5)Because of the early payment to the estate there were no intervening claims and no priority issue arose. It would be inappropriate to deny judgment in the circumstances. DISSENT: The appeal would be dismissed for reasons other than those reached by the chambers judge. 1)The statement that the creditor cannot be in a better position than the debtor to demand payment under the GIC is probably correct but was not a factor as the Bank was not seeking payment before its maturity date. The Bank's position was the debt had been garnisheed and payment should have been made to the Bank on maturity. 2)The chamber judge's comment that the Bank could have seized the GIC under execution and then had it sold by the sheriff was obiter. 3)The debt was a present debt due on its maturity date and therefore qualified as one that was accruing due. 4)Whether it was conditional depended upon whether the opportunity of assignment constitutes a conditional obligation. There is no significant difference between a promissory note and a GIC as they both contain a promise to pay a sum certain at a designated date. 5)Some jurisdictions specifically provide that a debt payable within six years of the service of the garnishee is garnishable.