The Supreme Court of British Columbia has ordered that $600,000 in assets held in RRSPs and tax-free savings accounts seized by Okanagan Court Bailiffs Inc. should go to the “director of maintenance enforcement” to collect child and spousal support arrears the original owner of the accounts, Andrew Hokhold, owed rather than to pay back other secured debts.

The bailiff sought an order from the court determining who was entitled to the funds. In addition to the spousal support claim, a law firm, Davidson Lawyers LLP, and Hokhold’s sister, Clara Adele Hokhold, both had agreements with Hokhold that give them security interests over substantially all of his assets. Specifically, Hokhold owed the law firm more than $170,000 and he owed his sister approximately $275,000 in unpaid loans.

The director sought to seize the RRSPs to collect on support arrears owing as a result of ongoing litigation between Hokhold and his former common law partner, Laurie Darlene Gerbrandt, with whom he has two children. The director obtained a warrant of execution from the Provincial Court of British Columbia against Hokhold for $469,115.

TD Waterhouse Canada Inc. has been holding the funds until the determination of the competing claims by court order. The decision notes that “at its core, this case is simply a priority battle between secured creditors … and a specific unsecured creditor.”

Ultimately, the court ruled that “allowing secured creditors to seize RRSP monies whenever an RRSP is collapsed by a person seeking to enforce a maintenance order would be an absurd result,” states Justice F.W. Cole in the decision.

“It would allow the secured creditors to avoid a restriction on their already-broad seizure powers, while simultaneously depriving an especially vulnerable party of their unique remedy,” he adds. “Further, this exception would allow secured parties to seize funds only when a maintenance order was being enforced. It would be perverse logic to find that the legislature intended to prevent secured creditors from seizing RRSPs in ordinary circumstances, but to allow them to seize RRSPs when a dependent or other recognized debtor had a competing claim.”

Ultimately, the B.C. court ruled that the director is entitled to the RRSPs to enforce the maintenance order and that neither the law firm, nor the sister, has a right to seize the registered savings.