ENFORCEMENT OF JUDGMENTS (GARNISHEE ORDERS) AMENDMENT BILL

Thursday 07 August, 2014

Mr TARZIA (Hartley) (10:45): I move:

That this bill be now read a second time.

We are all part of the legislature here, and I believe that we all in our respective communities have a duty to see loopholes in the law, to improve the law across the board and to reflect the community sentiments in laws, as we are part of the sovereign lawmaking body in this state. I rise today to introduce a bill to amend section 6(2) of the Enforcement of Judgments Act.

Mr TARZIA (Hartley) (10:45): I move:

That this bill be now read a second time.

We are all part of the legislature here, and I believe that we all in our respective communities have a duty to see loopholes in the law, to improve the law across the board and to reflect the community sentiments in laws, as we are part of the sovereign lawmaking body in this state. I rise today to introduce a bill to amend section 6(2) of the Enforcement of Judgments Act.

It is a bill for everyday South Australians, and it aims to punish dodgy debtors who are a burden on everyday people, but more so to install more confidence in the civil justice system. On the face of it, this bill makes a small substitution of the existing subsection (2), but it is an important amendment for everyday people and local businesses in South Australia.

The background to this bill comes from two real-life scenarios in my electorate. The first was where a person had their car run into by a neighbour, made a claim in the Magistrates Court civil jurisdiction minor claims division and found it quite difficult to obtain funds after they sought successful judgement. The second issue that came up in the electorate in relation to this section was where a landlord was chasing unpaid rent and, again, could not satisfactorily obtain funds of under $1,000, as the person involved actually fled and went interstate.

For the benefit of members who are not aware, a garnishee order is a court order directing that money or property of a third party be seized to satisfy debt owed by a debtor to a plaintiff creditor. Typically, a garnishee order is made by a court on application by a judgement creditor. The garnishee order may be made over the judgement debtor's bank account, the debtor's wages or people who owe money to the debtor.

All states, including South Australia, allow for garnishee orders to be made. It is a primary way in which a court can ensure that a judgement creditor receives their awarded damages from a debtor who refuses to pay their debt, but, as the law stands in South Australia, under section 6(2) a garnishee order can only be issued with respect to wages and salaries if the affected party consents to that order.

However, 'dodgy debtors', as I call them, rarely give the court that consent. In my two real-life examples of constituents in Hartley being affected, I can tell you that consent certainly was not given. In fact, in one example, as I mentioned, the dodgy debtor actually fled South Australia to reside in Queensland specifically to make it harder for him to be found. This results in rogue defendants racking up debts that remain unpaid, often indefinitely, and this obviously leaves the creditor and the state empty-handed. South Australia is out of step with much of Australia in that an adjudicator needs the permission of the debtor to make such an order to garnish salaries.

There are a number of ways in which a court can enforce a judgement and ensure that the judgement creditor pays their debt to the judgement debtor. They obviously include an order for payment of instalments, seizure and sale of property or a charging order over property. A problem arises, however, when the debtor refuses to meet those instalments or has no real property that can be the subject of a court order despite the judgement debtor being fully capable of meeting that debt.

This bill will actually give the courts an additional option to ensure that the judgement creditor receives money to which they are entitled. A garnishee order will not be made as a matter of course. The adjudicator will have due regard to the circumstances of the debtor and, if another less imposing order can be made to recover the debt, the court will take that into account when deciding what type of order to impose on the judgement debtor.

Typically, a garnishee order over wages or salary will be imposed if the debtor has not complied with an instalment order and, more importantly, has the capacity to pay but chooses not to pay. I want to emphasise that this will apply where people can pay but they simply choose not to pay. The amendment will also provide courts with an intermediary option between imposing an instalment order and the seizure and sale of property.

It may well be that a garnishee order is in the best interests of the judgement debtor. However, for whatever reason, consent may not be given, and at this point the court would have no option but perhaps to seize the property of the debtor, which could have a significant impact on the debtor and their dependants. Not only this, but seizing property is expensive, and what this amendment aims to do is to allow easier debt collection without additional bureaucracy. It also has the effect of serving as a deterrent to dodgy debtors.

The current irregularity with the Enforcement of Judgments Act will have a significant impact on businesses once corrected, big and small. In Hartley alone, I have over 1,500 small businesses and there are well over 100,000 small businesses in South Australia. Obviously, cash is king in this climate and cash flow is king for these small businesses. When that cash is not paid, it means that someone's wages are not being paid, someone's goods and services are not being paid, and it goes on and on. Any act that assists small enterprise as being able to recoup their debts when collated across the state will certainly go a long way.

As far as I am aware, no information exactly on how much South Australians owe in civil debts has been ever fully or properly calculated. However, it would have to be in the hundreds of millions of dollars, one would think. While the scope for accruing fines is broader amongst the community, the anticipated costs owed by civil parties over many decades could also be many millions of dollars. That is many thousands of ordinary, hardworking South Australians who are out of pocket.

This is a small amendment, but its effects will have a significant impact on our local community—just go and ask local tradies who are not being paid at the moment, local contractors who are not being paid at the moment. Currently, the largest amount owed by an individual, if we want to talk about fines, is over $170,000. The largest amount owed by a company, again in relation to traffic offences, is $149,000 or more. As you can see, the debts can be significant and they may take an extended period of time to pay off.

I would like to talk a little bit about the government's new unit, that is, the Fines Enforcement and Recovery Unit of South Australia which was established on 3 February 2014. Whilst this service—and a good service at that—assists the government in recovery and enforcement of debts, the measures that it can apply often result in much cost and delay on the public purse. If anything, this amendment will serve as a deterrent to debt dodgers and it would actually assist the fines enforcement unit. The types of enforcement actions the unit can engage in, the state can engage in, include:

restriction of transacting business with the Registrar of Motor Vehicles;

suspension of driver's licences;

clamping and impounding of vehicles;

garnishment;

seizing and sale of property;

publication of names; and

charges on land.

Many of these, however, are extremely costly. Let's face it, it is not worth putting a caveat on someone's property if $700 is due. In the case of my resident in Felixstow, it simply was not worth going to the Magistrates Court time and time again and every time being hit with over a $100 court application to obtain a sum which was under $1,000; it is simply not feasible. Many of these means are costly and allowing the amendment will ensure that these dodgy debtors who can pay but choose not to pay are more easily captured under the law so that these above measures are not required, freeing up time in the Public Service and in the unit.

The bill can apply to all judicial matters before any court covered under the act but in practice the remedy will be most applicable to the Magistrates Court minor civil claims division. The Magistrates Court deals with over 90 per cent of all court work in South Australia, and a plaintiff creditor who seeks damages in that division and is awarded favourable judgement and damages is currently unable to enforce that judgement by garnishee of wages without the consent of the judgement debtor.

This subsection makes a mockery of our judicial system. It gives dodgy debtors the power to prevent a magistrate from making a garnishee order on the basis that they simply do not want to pay the debt, even if they can. What does this say about our court system? Well, it needs improving.

South Australia's is lagging behind when it comes to updating its legislation to reflect the modern day. We have seen examples as recently as yesterday, where SACAT is finally following the example of other states. Other states do allow for a garnishee order to be made with respect to salary and/or earnings of the debtor, but I found no provision so onerous as ours, which specifically requires a court to seek permission from the debtor so openly to make an order against them.

The current unique position in South Australia is that, if you do not want to pay your debts, do not worry about it. I care: I care about law-abiding citizens, people who are using the courts, going about their business the right way, the sole traders, the mums and dads, the hardworking South Australians who do make claims in the Magistrates Court but cannot recoup what they are owed because of some loophole in the system. It is no wonder our unemployment rate is so high. It is no wonder our current business confidence is so low. This goes to the heart of the sovereign risks in terms of dealing with South Australian businesses.

The amendment I put to the house today will stop the protection of these dodgy debtors, and it will better enable businesses and individuals to recover the money they are owed. I would encourage anyone who values the efforts of hardworking South Australians—mums and dads, tradesmen, small business people—over dodgy debtors to support this bill.

I would like to alleviate any fears people may have in regard to this amendment. There may be concerns for those, some may say, who are already struggling with the rising costs of living, with their power bills, etc. However, I would like to alleviate any concerns the house may have for these people struggling with the rising costs of living. I want to emphasise that people's welfare payments will not be touched under this amendment.

People's welfare payments will not be touched—let's be clear about that. The court will, and always will, have ultimate discretion. The court will always have ultimate discretion. The court will hear from both the debtor and the creditor before the garnishee order is made. It is important that the court has the ultimate discretion because in Australia we follow the Westminster system and believe in the separation of powers. That doctrine is an important one and needs to be upheld.

The court will have regard to any evidence placed well before it as to the judgement debtor's means of satisfying that order, and the court will have regard to the necessary living expenses of the judgement debtor and their dependants, as well as any other liabilities the judgement debtor may have. As is currently the case, the amendment will not adversely affect those who are struggling to make ends meet—it will not. The court will consider their financial position when making a garnishee order. This amendment will help ensure that those who can afford to pay their debts pay those debts, so it complements the units already set up by the current government.

In conclusion, the amendment will give our courts more scope to recover these debts which are such a burden on everyday, hardworking South Australians and, in some cases, the state. It will apply an order that is most appropriate in the circumstances. I would encourage the government to seriously consider supporting this bill. It is not a bill I have plucked from thin air. I have gone to the electorate, listened to the electorate and heard the electorate, and the electorate is telling us that this is a very sensible amendment, and I hope the government will support it. It is a bill that touches real, everyday people on an everyday basis, and I ask that anyone who values the efforts of those hardworking South Australians over dodgy debtors support this bill, and I commend it to the house.

Debate adjourned on motion of Hon. T.R. Kenyon.