Knutsford Artistic Ironworks v. Tyler and Spidercut CNC, 2018 BCPC 277

Citation: Knutsford Artistic Ironworks v. Tyler and Spidercut CNC 2018 BCPC 277 Date: 20181031 File No: 41707 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Small Claims BETWEEN: KNUTSFORD ARTISTIC IRONWORKS dba DISCOUNT DIRECT METALS CLAIMANT AND: KEVIN ALAN TYLER and SPIDERCUT CNC DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S.D. FRAME Appearing for the Claimants: Mr. B. Meints Appearing for the Defendant: Mr. K. Tyler Place of Hearing: Kamloops , B.C. Date of Hearing: October 15, 2018 Date of Judgment: October 31, 2018

[ 1 ] This is an application for a default hearing by the judgment creditor. The judgment debtor is Mr. Tyler and his proprietorship Spidercut CNC. [ 2 ] This file has a frustrating history for the judgment creditor. Judgment was obtained when the Defendant file no contest on May 29, 2018. That Reply proposed a payment schedule. A payment order to that effect was made by consent agreement on April 10, 2018. Mr. Tyler was unable to comply with that payment order. The matter came back on before Judge Cleaveley on July 16, 2018, at which time he ordered the full amount be paid in 60 days.

Evidently this was based on assurances that the debt could be paid, but not based on evidence led at the hearing or disclosure made to the judgment creditor at or before the hearing. A review was scheduled for September 4, 2018, before Judicial Justice Hughes who extended time for payment (then $12,070.92) to September 14, 2018. I am advised by the judgment creditor that Judicial Justice Hughes warned Mr. Tyler that he could be facing jail if he breached this payment schedule. Another review was set for October 11, 2018. It was adjourned to October 15, 2018. [ 3 ] On no occasion did Mr.

Tyler give evidence about his personal ability to pay this debt or about the ability of his proprietorship to pay the debt. The payment orders were based upon hopeful representations by Mr. Tyler that the business could pay the judgment, assuming certain contracts were secured and his business was able to continue. Good faith is corroborated by his no-contest filing. [ 4 ] As misfortune would have it, the contracts did not materialize and Mr. Tyler’s business is failing.

He now advises the court that he can only afford a $1,000 per month, which he has been paying. [ 5 ] While this has understandably frustrated the judgment creditor, it becomes a matter of squeezing blood from a stone. Perhaps in the hope that the consequences will prevail upon Mr. Tyler to make the judgment creditor a priority creditor, the judgment creditor now seeks jail time. Mr. Tyler asserts that if he is required to serve jail time, he will lose the last of his work and will not be able to pay even the $1,000 per month. [ 6 ] On a default hearing, the judge may confirm the terms of a payment

schedule or change the terms of a payment

schedule in any manner that the judge thinks is fair to the debtor and the creditor. The judge may also issue a warrant requiring the debtor be imprisoned for a specific period of time of not more than 20 days if the debtor has not obeyed a payment

schedule and the debtor’s explanation or failure to give an explanation for why the payment

schedule was not obeyed amounts to contempt of court . In other words, it is not enough to establish only that the debtor has failed to pay pursuant to a payment order. There must also be the absence of an explanation, which absence amounts to contempt of court or an explanation so poor that it amounts to contempt of court. In order to find contempt, there ought to be unequivocal evidence of same. [ 7 ] In this case, I do not have unequivocal evidence that Mr. Tyler made a payment arrangement merely to defer the consequences of non-payment of a judgment, which might in some cases amount to contempt.

I do not have unequivocal evidence that he misled either his judgment creditor or the court in obtaining the prior payment schedules. I do not have unequivocal evidence that Mr. Tyler is now attempting to mislead the court or his judgment creditor in an attempt to avoid payment of the debt at this time. [ 8 ] I do have evidence that Mr. Tyler’s proprietorship may be on the brink of insolvency. If that is the case, a bankruptcy of both Mr. Tyler and Spidercut CNC will result in no payment at all to the judgment creditor. That Mr.

Tyler has continued to make the payments he is best able to make belies contemptuous behaviour. [ 9 ] Furthermore, if the court is to find contempt of a payment order, the payment order ought to be founded upon solid evidence of an ability to pay the debt and in a specific time. This is not always necessary when the parties reach an informed consent or when the judgment debtor does not appear on a payment hearing to give evidence of its ability to resolve the debt.

Before the court can proceed to the extreme measures of contempt, there ought to be either full disclosure to the judgment creditor proving the viability of a consent arrangement or a proper hearing on the financial ability of the judgment debtor, followed by a reasonable order for repayment, and a subsequent breach of that payment order without the requisite explanation. [ 10 ] The judgment creditor has been frustrated in that front as well.

However, as desirable as it is to have parties reach consent for a repayment, that consent should be premised on the judgment creditor assuring itself of the viability of that plan. Absent that, it is hard to establish that the judgment debtor’s subsequent default amounts to contempt. At the same time, judgment debtors have an obligation to be forthright and fulsome in their disclosure regarding their ability to pay. Anything less bears the taint of desperation to put off the inevitable or the bad faith associated with “saying anything” to put off the judgment creditor from recovery.

Either course is a strong step along the path to finding the contempt necessary to impose incarceration for default. [ 11 ] I had indicated to the parties that they would be required to return to receive this judgment. That was in anticipation of the prospect that Mr. Tyler may have to serve some default time in jail. I am not making that order. [ 12 ] Consequently, I am ordering that Mr. Tyler attend to give evidence of his ability to pay the debt both personally and through his proprietorship. Mr.

Tyler must bring full documentation of all of his assets, income, expenses, and liabilities whether they are those of the proprietorship or those of his personally and whether they are jointly held or solely held. This must include, although they are exempt from seizure, any registered retirement funds. It is only with a fulsome disclosure of all of the income and assets as well as the burden of all expenses and liabilities that the court can make an order which properly suits the circumstances. Mr.

Tyler is warned that failure to pay this judgment pursuant to the next payment will not be viewed with leniency. [ 13 ] The next appearance is December 10, 2018. I am not seized of that hearing. ________________________________

S.D. Frame Provincial Court Judge