Executive Summary: Key Legal and Evidentiary Issues

• Defendant challenged a pre-judgment garnishing order as unjust and financially harmful.

• Plaintiff alleged breach of contract due to unpaid work completed for the defendant.

• Court scrutinized the validity of the plaintiff’s affidavit supporting the garnishment.

• Defendant successfully demonstrated solvency and potential for undue hardship.

• Judge evaluated applicability of section 5(2) of the Court Order Enforcement Act.

• Plaintiff's concerns under the Builder’s Lien Act were deemed speculative and unsupported.

Facts and outcome of the case

This case involved a commercial dispute between DuraWest Property Services Inc. (the plaintiff) and Great Bear Construction Group Inc. (the defendant). DuraWest claimed that it had completed work for Great Bear under a contract and had not been paid the agreed-upon amounts. As part of its civil claim, DuraWest sought and obtained a garnishing order before judgment in the amount of $133,509.99. This extraordinary remedy was granted ex parte and required the garnished funds to be held in court.

Great Bear responded with an application to set aside the garnishing order, arguing that it was unjust and caused undue financial hardship. The company submitted two affidavits from its general manager, Luca Sepe, detailing the impact of the garnishment on its cash flow and asserting the company’s overall financial health. These affidavits included evidence of revenue figures, asset holdings (such as cranes valued over $1 million), and a healthy balance sheet with over $5 million in assets and approximately $3 million in liabilities.

The defendant also pointed out multiple errors in the affidavit used by DuraWest to obtain the garnishment, including inconsistencies between the affirmation and sworn statement, calling into question its validity. Although the judge acknowledged the affidavit was defective, they found it unnecessary to rule on whether the defect invalidated the garnishing order because the defendant had already met its burden under section 5(2) of the Court Order Enforcement Act.

The court agreed that holding the garnished funds was unnecessary and was causing ongoing undue hardship to Great Bear. It found that the risk of a "dry judgment"—a situation where a judgment is won but uncollectible—was minimal due to the defendant’s financial position.

DuraWest also argued that releasing the funds would violate section 10 of the Builder’s Lien Act, which treats subcontractor payments as trust funds. However, the court found this concern speculative, as there was no direct evidence showing that the garnished funds would be used in breach of trust obligations.

Finally, the court declined to award special costs against the defendant’s counsel, noting that their conduct did not meet the threshold for such a penalty.

The judge ordered that the garnishing order be set aside and the funds released to Great Bear Construction Group Inc. Costs were ordered in the cause, meaning they would be determined based on the final outcome of the larger case.