Statutes Amendment (Civil Enforcement) Bill

Second Reading

The Hon. J.K. SZAKACS (Cheltenham—Minister for Police, Emergency Services and Correctional Services) (12:26): I move:

That this bill be now read a second time.

I rise to introduce the Statutes Amendment (Civil Enforcement) Bill 2022. This bill amends the Enforcement of Judgments Act 1991 and the Sheriff's Act 1978 to implement a number of recommendations of a review undertaken by the Courts Administration Authority into civil enforcement processes here in South Australia.

The courts review was undertaken in 2017 by a review panel which included representatives of the judiciary and the Courts Administration Authority, representatives of the Sheriff's Office and the then president of the Law Society, representatives of the Attorney-General's Department and relevant solicitors with experience and expertise in civil enforcement proceedings. A further supplementary report was also prepared by the Sheriff's Office.

The courts undertook the review with the intention of modernising and streamlining civil enforcement procedures here in South Australia in line with other Australian jurisdictions. An earlier version of the bill was passed in the other place in 2021 but, further to that, lapsed in the other place. This bill differs from the 2021 bill in two important respects: to afford protection for vulnerable judgement debtors, and a matter the government expressed concern about during debate in 2021. These additional protections for judgement debtors sensibly and equitably balance the interests of both debtors and creditors.

The reforms progressed by this bill are as follows: the bill inserts a new provision into the Enforcement of Judgments Act to enable a judgement creditor to serve a notice to be termed an investigations notice on a judgement debt or prior to an investigation summons. Where monetary judgement has been ordered by a court against a judgement debtor, section 4 of the Enforcement of Judgments Act allows for the court, upon application by a judgement creditor, to investigate the judgement debtor's means of satisfying the debt.

The investigation hearing is usually the first stage of enforcement proceedings and requires the court to issue a summons for the debtor to appear before the court for examination and to produce any documents relevant to assessing the debtor's capacity to repay the judgement debt. Failure to appear for an investigation hearing may render the debtor liable for arrest.

The courts review of civil enforcement procedures considered the use of investigation hearings to be unnecessarily adversarial and an inefficient use of the court's time and resources as the initial stage of the enforcement process. It was recommended that investigation hearings be replaced wherever possible with an informal process to allow creditors to attempt to directly obtain information about the financial circumstances of the debtor without the need for court attendance.

The proposed investigation notice is modelled on part 38 of the Uniform Civil Procedure Rules of New South Wales. Unlike the New South Wales examination notice, the investigation notice will not be a compulsory first step before a court-summonsed investigation proceeding. Rather, the incentive for debtors to comply with the informal notice will be reduced court costs, since the costs of formal court investigation proceedings are otherwise added to the amount of a judgement debt under section 3 of the Enforcement of Judgments Act.

It is anticipated that introducing the investigation notice option will encourage a collaborative approach to resolving the judgement debt, reduce costs of parties and their use of court resources, as well as expedite the enforcement process. As a protection for the privacy of information provided in investigation notices, the bill has been amended in the other place to include an offence of using this information for a purpose other than the purpose for which it was provided. The bill will also amend the Enforcement of Judgments Act to expand the scope of garnishee orders as a means of enforcing judgement debts, but with further threshold protection for a judgement debtor.

Subsection 6(2) of the Enforcement of Judgments Act only permits garnishee orders to be made against a debtor's salary or wages with the debtor's consent. The courts review considered this requirement to be outdated and inconsistent with current civil enforcement procedure in other jurisdictions, noting that South Australia remains the only jurisdiction to require a debtor's consent to a garnishee order attaching salary or wages.

In relation to concerns about potential financial hardship being caused to low-income earners and welfare recipients as a result of garnishee orders, section 6(4) of the Enforcement of Judgments Act requires the court, before making a garnishee order, to take into account evidence of the necessary living expenses of the debtor and any dependents and other liabilities that may affect their means of satisfying the debt. It is appropriate that section 6(4) be retained to preserve the court's discretion to set an appropriate amount for a garnishee order, which has regard to the individual circumstances of the debtor.

However, to provide additional threshold protection for a judgement debtor in circumstances where the requirement for their consent to the garnishee order is removed, this bill provides that the debtor must be left with an amount that is at least 90 per cent of the national minimum weekly wage, as fixed from time to time by order under the commonwealth's Fair Work Act 2009. Since the national minimum wage is a before-tax amount, the bill provides that the threshold protected amount is 90 per cent of that amount in order to approximate the after-tax equivalent amount. This is an improvement on the 2021 bill, and one that will provide the most vulnerable members of our society, where they find themselves judgement debtors, with a baseline level of protection.

As a further protection for judgement debtors with fluctuating income, the bill has been amended in the other place to insert an express provision to require the court to take into account the fluctuating nature of a debtor's income and ensure that any garnishee orders do not reduce the net weekly amount of any wage or salary received by the judgement debtor from the garnishee to less than the designated safety net amount prospectively during the period to which the order or orders relate.

A further amendment is made to section 6 of the Enforcement of Judgments Act to make it clear that garnishee orders may be made against funds held in a term deposit, regardless of whether the term deposit has matured. While the bill makes it clear that a garnishee order attaches to the term deposit amount at the time of making the order, it also provides that the payment of the garnished amount need not be made before the term deposit matures.

Section 6(5) of the Enforcement of Judgments Act allows the court to authorise the garnishee to retain an amount from the money subject to a garnishee order as compensation for the garnishee's expenses in complying with the order. This will ensure that in cases where a financial institution, the garnishee, incurs costs in terminating a term deposit early, the financial institution is able to recover the costs of complying with that order.

These provisions strike the right balance in respect of section 6, clarifying that the garnishee orders can attach and so giving certainty to judgement creditors but staving off the unduly harsh effects that forced early maturation of term deposits could visit on judgement debtors.

The bill amends section 7 of the Enforcement of Judgments Act to empower the Sheriff by written notice to require a judgement debtor or third party to provide relevant information or documents disclosing the interests of third parties in real or personal property subject to a warrant for seizure or sale.

Section 7 of the Enforcement of Judgments Act enables the court, upon application by a judgement creditor, to issue a warrant of sale, authorising seizure and sale of a judgement debtor's real or personal property, or both, to satisfy a judgement debt. However, before a warrant for sale can be executed, the Sheriff must establish the extent of the defendant's interests in the property and the proprietary interest of any other third parties as well as their written agreement as to the proportions in which the net proceeds of the sale will be divided.

Despite these requirements, the Sheriff has advised that financial institutions, for example, a bank that holds a mortgage over a property, are increasingly refusing to provide details of their proprietary interests due to breach of privacy concerns. This has made it extremely difficult for the Sheriff to establish the judgement debtor's interest in the property subject to the sale order. This amendment to section 7 should address this problem.

The bill also amends section 7 of the Enforcement of Judgments Act to clarify and broaden the Sheriff's powers to eject persons from, and proactively direct persons not to enter, land where the Sheriff is exercising a warrant for the sale of the land to enforce a judgement. At present, section 7(3)(a) authorises the Sheriff to eject a person not lawfully entitled to be on the land but does not authorise the Sheriff to issue a direction to prevent a person from entering the land that has been seized for sale.

The Sheriff advises that this had led to situations whereby the Sheriff, having already ejected a person from the land at the time of seizure, has been unable to lawfully direct a person to stay off the land or remove the person from the land until the person has re-entered the land, for example, during an open inspection. These amendments will address this deficiency in the Sheriff's powers.

This bill also amends the Sheriff's Act 1978, as requested by the Chief Justice, to give the Sheriff an express power to request the Commissioner of Police to provide assistance with respect to any enforcement of judgement. The amendment, inserting a new section 9DA into the Sheriff's Act, will also provide for a police officer rendering such assistance to have all the powers of a Sheriff under the Enforcement of Judgments Act.

While reservations about the Sheriff's Office have been expressed in the past, the new Sheriff and State Courts Administrator have the government's full confidence. The new reporting practices of the State Courts Administrator to increase accountability, transparency, and visibility to parliament have gone a long way to throwing light on the practices of the Sheriff's Office. The government has confidence that the new leadership team will continue to work to restore trust in the Sheriff's Office, which provides a vital service for South Australia.

The amendments in this bill will impact positively on the administration of justice and are long overdue. They strike the appropriate balance between judgement creditors who have had their day in court and won, and judgement debtors who may be in perilous financial situations. The efficiencies and modernisations that the bill offers will contribute to the swift and effective operation of our courts. I commend the bill to members and seek to have the explanation of clauses inserted without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

Part 2—Amendment of Enforcement of Judgments Act 1991

3—Insertion of section 3A

This clause inserts proposed section 3A into the principal Act.

3A—Investigation notices

Proposed clause 3A makes provision for an investigation notice requiring a judgment debtor to answer material questions and provide for inspection by the judgment creditor of specified documents.

It also states that if information or a document is provided to a person in accordance with an investigation notice, a person who uses the information or document for a purpose other than assessing a judgment debtor's means of satisfying a judgment is guilty of an offence.

4—Amendment of section 6—Garnishee orders

This clause amends section 6 to provide for the making of certain payments (including in the form of salary, wages or money held in a term deposit) to the judgment creditor.

5—Amendment of section 7—Seizure and sale of property

This clause amends section 7 of the principal Act so that a warrant may include a requirement for the judgment debtor to provide the sheriff with information relating to the interests of third parties in property owned by the debtor as well as a requirement for any such third party to provide relevant information to the sheriff.

The proposed amendments to section 7 also set out a series of powers (including powers of direction) that the sheriff may exercise in relation to a warrant.

Part 3—Amendment of Sheriff's Act 1978

6—Insertion of section 9DA

This clause inserts proposed section 9DA into the principal Act.

9DA—Sheriff etc may be assisted by police officers

Proposed section 9DA provides that the sheriff or deputy sheriff may be assisted by a police officer in the performance or exercise of their statutory functions. Proposed section 9DA makes specific provision for a police officer to be taken to have the powers of the sheriff under the Enforcement of Judgments Act 1991.

Mr TEAGUE (Heysen) (12:40): I rise to indicate the opposition's support for the bill and also that I am the lead speaker for the opposition. Given the circumstances of the bill and its life in the previous parliament, the opportunity to rehearse the circumstances in which the bill was developed and the subject matter of the bill has been taken by a number of speakers both here and in another place. Going back to May 2021, as has been observed, the bill in substantially identical terms, with the exception of the two significant changes that the minister has just adverted to, was introduced and passed in the other place in June 2021 and was introduced in this place and spoken to in the second reading by the Attorney in June 2021 but did not progress further.

We know that it arises as the result of the CAA's review, with the objective of streamlining, modernising and making more practical the enforcement processes in South Australia and to line it up with other jurisdictions, so it is important to recognise that good work, leading as it has to these, hopefully, practical reforms to improve the process for parties seeking enforcement.

It has been observed that this new regime is based largely on part 38 of the Uniform Civil Procedure Rules as applied in New South Wales, with the exception that there is a voluntary step and that the practical importance of that is that one would expect there to be an opportunity to take up a step prior to a court-enforced process where the opportunity is to avoid incurring costs.

Of course, in the civil jurisdiction, parties are, if not wholly then certainly in most circumstances, as concerned to conduct themselves expeditiously with a view to minimising mutual attrition by taking advantage of processes that will minimise costs and provide an opportunity to get to an end of whatever the entanglement might be, and that extends to dealing with the process of enforcement.

I note the additions, the two changes, that have been made, one with a view to providing a baseline or bottom line in terms of the capacity for somebody to retain at least 90 per cent of the national minimum weekly wage from time to time, and what appears to be a measure for the avoidance of economic waste perhaps, insofar as not requiring the early termination of a term deposit in circumstances where that might lead to avoiding benefits to either party because of the measures that might be taken by the financial institution on the early termination.

I perhaps just note that, in terms of enforcement, where a judgement creditor is well within their rights to expect that the judgement debt be paid, that should be recognised as hopefully auguring in favour of the interests of the creditor and mutually in the interests of actually achieving the outcome of meeting the relevant judgement. We will see how that works in practice.

The point that I would emphasise is that, wherever we are talking about the role of the civil courts dealing with disputes that are at one level or another about money, and between civil parties, then the process itself should be characterised, as far as possible, by practical measures that can empower parties to behave reasonably to avoid the use of court resources, but also to avoid the court getting in the way of achieving reasonable and practical outcomes.

We in the 21^st century ought be a million miles away from comparisons to a Bleak House analysis of civil procedure, but somehow we are not. We are, not only in terms of this discrete aspect of the work of the court, but in the more substantial work that goes on in civil litigation, too often still seeing the process loom as the deciding or heavy factor in circumstances where there is a genuine dispute around contested facts. Wherever possible, we ought to be looking for ways to provide those practical mechanisms by which the process does not get in the way of coming in to land at a practical outcome that serves both litigants and, in the interests of all South Australians, provides an efficient use of those scarce resources of the court.

It is with those words perhaps that I hopefully add something to what is already on the public record in terms of the debate in 2021, and what we have already seen here in this new parliament. I continue to indicate that I offer my wholehearted commitment to more practical measures being applied and investment being made towards more practical outcomes, particularly in this area of civil procedure. With those words, I endorse the bill and look forward to its passage through this house.

The Hon. A. MICHAELS (Enfield—Minister for Small and Family Business, Minister for Consumer and Business Affairs, Minister for Arts) (12:48): I also rise today to speak in support of the Statutes Amendment (Civil Enforcement) Bill. As has been mentioned, it seeks to amend the Enforcement of Judgments Act 1991 and the Sheriff's Act 1978. Civil enforcement in Australia involves a process of enforcing or executing a court order or judgement. That can include enforcing orders for the payment of money or transfer of property or goods, or the specific performance of an obligation.

The South Australian civil court system obviously has different courts and tribunals with jurisdiction over different civil matters. The civil courts in the South Australian jurisdiction to which this bill applies are the Magistrates Court, the District Court and the Supreme Court. The civil enforcement process involves several steps, including issuing of a warrant of execution or an order to seize property, registering, and enforcing an interstate judgement and enforcing foreign judgements. The civil enforcement actions in South Australia can also involve alternative dispute resolution methods, such as mediation or conciliation. These methods provide options for parties to resolve disputes outside of court and can be less costly and time-consuming than going through the courts system.

This bill implements recommendations from the review of the civil enforcement processes undertaken in 2017 by the Courts Administration Authority. As has been mentioned, it seeks to balance the interests of judgements awarded to creditors after winning their day in court against debtors who might find themselves in positions of severe financial hardship.

These amendments follow on from the previous government's introduction of a similar bill in May 2021, where it was proposed that some of these legislative changes proceed. Two changes have been made to the bill that differ from the previously introduced bill. They put in place steps to ensure that a judgement debtor is not disproportionately disadvantaged.

The term 'judgement debtors' refers to individuals or entities who have been ordered by a court to pay a sum of money to a judgement creditor because of a court order. A judgement debtor is a person or a company that is legally obligated to pay the judgement amount to the judgement creditor. Judgement debtors may have failed to pay a debt or may have been found liable in a legal proceeding, and the court has ordered them to pay an amount.

In terms of the changes, the first removes the requirement to obtain the judgement debtor's consent to garnishee orders over wages, which is consistent with other Australian jurisdictions. When talking about garnishee orders it is probably worth mentioning how they work in practice. A garnishee order is serious, as it is a court order that has been made to allow creditors to recover debts from a third party, such as a bank or an employer. The debt can be repaid in a number of ways, including taking money directly from a debtor's bank account or from their salary.

The process usually works by an applicant who is owed a court-ordered debt, known as a judgement creditor, applying for a garnishee order to be made to retrieve the debt against the judgement debtor. The court can make the garnishee order, which is then served by the applying party to the garnishee. The garnishee is not the judgement debtor; it is usually their bank, or their employer or a third party that owes money to that judgement debtor.

Essentially, the order compels the garnishee to pay the judgement creditor money to make good the debt owed to them by the judgement debtor. A garnishee order can enable the judgement creditor to recover debt from the judgement debtor's wages and salary. That is the most common type of garnishee order.

Once a court makes the garnishee order, the judgement creditor serves the order on the debtor's employer. The employer then takes that sum of money from the debtor's wage to pay the creditor. This wage withdrawal may continue until the entire debt has been repaid or until the court orders otherwise. The employer is required to leave the judgement debtor with an amount of money to live on. That amount is called the weekly compensation amount.

The court can also make a garnishee order to recover debt lump sum payments from bank accounts. Unlike garnishee orders for wages, this type of order usually directs the garnishee, being a bank or other financial institution, to repay the debt outstanding in a single lump sum. The banking institution can put a freeze on the bank account as it processes the garnishee order, which means the judgement debtor may be unable to access their account for a period of time, usually two or three working days. This bill seeks to legislate a minimum amount of weekly wages that must be preserved for the judgement debtor. The minimum amount must be equal to 90 per cent of the national minimum weekly wage.

Another amendment within the bill makes it clear that garnishee orders may be made against funds held within the judgement debtor's term-deposit accounts. However, the amendment provides clauses that payment cannot be required before the term deposit has matured, as that may incur charges and fees, therefore disadvantaging the judgement debtor further.

Other amendments remaining unchanged from the previous bill include, in relation to the Enforcement of Judgments Act 1991, an amendment enabling judgement creditors to serve an investigation notice on a judgement debtor, therefore ideally avoiding the need for a court-summonsed investigation proceeding.

There is an amendment to empower Sheriffs by the issuance of a written notice to require a judgement debtor or a third party to provide information or documentation disclosing interests of third parties or property subject to a warrant for seizure or sale. There is also an amendment to broaden the Sheriff's powers to eject and direct persons not to enter land that has been ordered under a warrant for sale. An amendment to the Sheriffs Act, to allow the Sheriff to enter into arrangements with the Commissioner for Police to enable and empower police officers to assist and/or exercise the Sheriff's duties, is also in this bill.

The government moved an amendment in the other place, with the support of the Greens, to ensure courts take into consideration the circumstances where the judgement debtor's income may vary, such as casual or seasonal workers. The government have also supported the Greens' amendment in the other place to create an offence provision where a person uses the information obtained through an investigation notice for an improper purpose, thereby ensuring greater protections for litigants' personal and financial information.

As the Minister for Small and Family Business, I am actually quite encouraged that some of these protection measures are in place. Some small businesses, particularly sole traders, can find themselves in very difficult situations leading to judgement debts. Being able to get these amendments through the parliament assists those sole traders in not necessarily being pushed to the point of closing their businesses, which are obviously their livelihoods, so I am certainly in favour of these amendments. I commend this bill to the house.

Ms STINSON (Badcoe) (12:56): I rise to support the Statutes Amendment (Civil Enforcement) Bill 2022. This is a bill that seeks to find some balance between the interests of creditors and the interests of debtors. In part, there are some benefits in these changes for creditors, but there are equally some elements of this bill that tilt favour, or display some nuance or compassion, towards those who are debtors and find themselves before the courts with rulings against them.

As previous speakers have mentioned, this bill would amend the Enforcement of Judgments Act 1991 and the Sheriff's Act 1978 to implement recommendations that arose out of a review of civil enforcement processes in the state, undertaken way back, now, in 2017 by the Courts Administration Authority. It is important, of course, that we do review what is going on in our courts from time to time, because efficiency is all-important in our courts.

We all know all too well that in both the criminal and the civil jurisdiction there are longer waits than those who are using the courts would like, and so it is incumbent upon our court system, but also us here, to look at what sort of efficiencies we can deliver, and also to review what is fair for people participating in the court system. Those things do change. Certainly when we are talking about matters of finances, we have seen great change over the years in the way that finances are delivered with the advance of technology. So it is fitting that that review was conducted way back in 2017 and that we are now standing here to implement some of those recommendations.

As has also been mentioned, the previous government introduced the previous version of this bill, the 2021 bill, which of course lapsed with the closure of parliament. I thank those opposite who put their time and effort into this, including those who are no longer here serving in this parliament, and also those public servants under the previous government who put time and effort into putting these changes together and forming this bill that comes before us now. The bill, of course, lapsed. It passed the Legislative Council in 2021 but did not progress beyond the second reading stage in the house prior to the election.

As I mentioned, the approach taken in this bill seeks to balance the interests of judgement creditors, who have had their day in court and won, and judgement debtors, who sometimes may find themselves in a position of financial hardship. I seek leave to continue my remarks.

Leave granted; debate adjourned.

Sitting suspended from 13:00 to 14:00.