Statutes Amendment (Civil Enforcement) Bill

Introduction and First Reading

The Hon. K.J. MAHER (Minister for Aboriginal Affairs, Attorney-General, Minister for Industrial Relations and Public Sector) (18:07): Obtained leave and introduced a bill for an act to amend the Enforcement of Judgments Act 1991 and the Sheriff's Act 1978. Read a first time.

Second Reading

The Hon. K.J. MAHER (Minister for Aboriginal Affairs, Attorney-General, Minister for Industrial Relations and Public Sector) (18:08): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and explanation of clauses inserted in Hansard without my reading them.

Leave granted.

Mr President, I rise to introduce the Statutes Amendment (Civil Enforcement) Bill 2022.

The 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 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, the then President of the Law Society, representatives of the Attorney-General's Department and relevant solicitors with expertise in civil enforcement proceedings. A 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 in this State, in line with other Australian jurisdictions.

An earlier version of this Bill was passed by the Council last year, but lapsed in the other place. The Bill differs from the 2021 Bill in two important respects to afford protection for vulnerable judgment debtors, a matter on which I expressed my concern when I spoke to the 2021 Bill in the last Parliamentary term. These additional protections for judgment debtors, as I will explain, sensibly and equitably balance the interests of 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 judgment creditor to serve a notice, to be termed an 'investigation notice', on a judgment debtor prior to an investigation summons.

Where monetary judgment has been ordered by a court against a judgment debtor, section 4 of the Enforcement of Judgments Actallows for the court, upon application by a judgment creditor, to investigate the judgment 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 judgment 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 judgment debt under section 3 of the Enforcement of Judgments Act.

It is anticipated that introducing this investigation notice option will encourage a collaborative approach to resolving the judgment debt, reduce costs of parties and the use of court resources, and expedite the enforcement process.

The Bill will also amend the Enforcement of Judgments Act to expand the scope of garnishee orders as a means of enforcing judgment debts, but with further threshold protection for judgment debtors.

Sub-section 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 remained the only jurisdiction to still 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 of any 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 judgment debtor (in circumstances where the requirement for their consent to the garnishee order is removed) the 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 Fair Work Act 2009. Since the national minimum weekly 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 that the most vulnerable members of our society, where they find themselves judgment debtors, with a baseline level of protection.

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 account, regardless of whether the term deposit has matured. While the Bill makes it clear that a garnishee order attaches to the term deposit account at the time of making the order, it also provides that payment of the garnished amount need not be made before the term deposit matures. This is the second variation from the 2021 Bill. Early maturation of term deposits often attracts fees or penalties, which in some instances are quite significant. If judgment debtors' term deposits were required to be matured early and incur significant fees and penalties, this could amount to undue hardship.

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 the order.

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

The Bill amends section 7 of the Enforcement of Judgments Act to empower the Sheriff, by written notice, to require a judgment 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, on application by a judgment creditor, to issue a warrant of sale authorising seizure and sale of a judgment debtor's real or personal property (or both) to satisfy a judgment debt. However, before a warrant for sale can be executed, the Sheriff must establish the extent of the defendant's interest 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 which holds a mortgage over the 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 judgment 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 judgment.

Presently, section 7(3a) 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 has led to situations whereby the Sheriff, having already ejected a person from the land at the time of the 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, 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 judgment.

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 this place in the past, the new Sheriff and State Courts Administrator have my 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. I have 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 judgment creditors who have had their day in Court and won, and judgment 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 I seek leave to have the Explanation of Clauses inserted in Hansard without my reading it.

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.

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.

Debate adjourned on motion of Hon. L.A. Curran.