Articles
<< back to all ArticlesPreserving Assets Pending Judgment: A Guide to Attachment Orders in Alberta
For a successful plaintiff, their ability to recover damages will depend on whether the defendant has enough assets to satisfy the plaintiff’s judgment. For that reason, a plaintiff has an interest in preventing the defendant from disposing of their assets during the lawsuit. This is particularly pressing if there is reason to believe that the defendant, knowing they are in legal jeopardy, will take steps to move their assets out of their creditors’ reach.
Fortunately, there are ways a plaintiff can seek to preserve a defendant’s assets pending the outcome of their lawsuit. In Alberta, the primary mechanism used to preserve assets pending judgment is called an attachment order. Under the Civil Enforcement Act, claimants may apply to court for an attachment order if they have commenced or are about to commence legal proceedings in Alberta to establish their claim.[1]
Upon hearing an application for an attachment order, the court has broad authority to craft an order that is appropriate in the circumstances. The order can prohibit or impose restrictions on dealings with some or all of the defendant’s property. It may also require the defendant or some other person who has possession of the defendant’s property to deliver up the property to a person specified in the order.[2]
When crafting an attachment order, courts must exercise restraint. An attachment order should cause as little inconvenience to the defendant as necessary to achieve the purposes for which the order was granted.[3] Plus, the order cannot attach property that exceeds the amount that would be necessary to satisfy the plaintiff’s claim.[4]
To obtain an attachment order, a plaintiff must satisfy the court that:
- There is a reasonable likelihood they will establish their claim against the defendant; and
- There are reasonable grounds to believe that the defendant is or is likely to deal with their property in a manner:
a) Other than to meet their reasonable and ordinary business or living expenses, and
b) That would be likely to seriously hinder the plaintiff’s ability to enforce their judgment against the defendant.[5]
This is a high bar. Even if the above requirements have been met, the court may exercise its discretion to deny the application if it is not in the interests of justice.[6]
In addition to the above requirements, the court cannot grant an attachment order unless the plaintiff undertakes to compensate the defendant or any other affected person in the event the court orders them to do so. The court may even require the claimant to provide some form of security for the undertaking (e.g., paying money into court).[7] The need for an undertaking helps to deter claimants from seeking an attachment order for an improper purpose or without a reasonable likelihood that they will satisfy their claim.
A plaintiff may decide to give the defendant advance notice of their application for an attachment order. Alternatively, the plaintiff can proceed without notice to the defendant if there are concerns that giving notice would lead the defendant to shield their assets. An attachment order granted without notice to the defendant will expire automatically after 21 days (or some shorter period specified in the order) unless the plaintiff makes a further application to extend the term of the order on notice to the defendant.[8]
When a plaintiff applies for an attachment order without notice to the defendant, they have an obligation to make full, fair, and candid disclosure of all relevant facts, including those that are unfavourable to their position.[9] If it is found that the plaintiff failed to make full and fair disclosure, the court may terminate the temporary attachment order.[10]
Failure to comply with an attachment order can have serious consequences. A person who violates an attachment order may be found in contempt of court.[11] Penalties for contempt of court can include fines and even imprisonment.[12] In addition, if a person knowingly assists or participates in dealing with property in breach of an attachment order, the court may order that person to compensate the plaintiff for any resulting loss.[13]
Finally, an attachment order will not continue in perpetuity. Unless the court orders otherwise, an attachment order will terminate on whichever of the following occurs first:
- The plaintiff’s lawsuit is dismissed or discontinued;
- 60 days after the plaintiff successfully obtains a judgment.[14]
[1] Civil Enforcement Act, s 17(1)(a).
[2] Civil Enforcement Act, s 17(3).
[3] Civil Enforcement Act, s 17(5).
[4] Civil Enforcement Act, s 17(6).
[5] Civil Enforcement Act, s 17(2).
[6] 1482221 Alberta Ltd v Haney Farms (1985) Ltd, 2009 ABQB 760 at para 39.
[7] Civil Enforcement Act, s 17(4).
[8] Civil Enforcement Act, s 18(2).
[9] Secure 2013 Group Inc v Tiger Calcium Services Inc, 2017 ABCA 316 at para 46.
[10] Civil Enforcement Act, s 18(6)(c).
[11] Alberta Rules of Court, r 10.52.
[12] Alberta Rules of Court, r 10.53.
[13] Civil Enforcement Act, s 25(1).
[14] Civil Enforcement Act, s 19(1).
This post is meant to provide information only and is not intended to provide legal advice. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this post to be outdated.
