ATC170221: Report of the Select Committee on Security and Justice on the Courts of Law Amendment Bill [B 8B – 2016] (National Assembly – sec 75), dated 21 June 2017
Report of the Select Committee on Security and Justice on the Courts of Law Amendment Bill [B 8B – 2016] (National Assembly – sec 75), dated 21 June 2017:
The National Assembly referred the Courts of Law Amendment Bill [B 8B – 2016] (National Assembly – sec 75) (hereinafter referred to as the Amendment Bill) to the National Council of Provinces for concurrence on 6 June 2017. The National Council of Provinces referred the Amendment Bill for consideration and report to the Select Committee on Security and Justice on 6 June 2017.
Subject of the Amendment Bill
The purpose of the Courts of Law Amendment Bill [B 8B – 2016] (National Assembly – sec 75), is to amend various sections of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944) in order to address alleged abuses in the emoluments attachment order system. It further seeks to amend the sections of the Magistrates’ Courts Act dealing with the rescission or abandonment of court judgments to accommodate the Department of Trade and Industry’s removal of adverse consumer credit information project. The amendments have a bearing on civil debts and are aimed at protecting debtors who often find themselves in financial difficulties as a result of debts incurred by them and who cannot escape the “debt trap” due to the abuses that seem to be taking place in this area of the law. The Amendment Bill also seeks to put in place measures that will assist persons in overcoming the effects of court judgments relating to their continued indebtedness. The Amendment Bill further amends the Superior Courts Act, 2013 (Act No. 10 of 2013), to provide for the rescission of judgments with the consent of the judgment creditor and for the rescission of judgments where the judgment debt has been settled.
LAMOSA[1] Judgment and the public participation process
The NCOP developed a practice note to address the shortcomings in the public participation process highlighted in the Lamosa Judgement that dealt with Section 76 Bills. The LAMOSA judgement dealt with the Section 76 process and did not test the Section 75 process. However, the judgment noted that it is incumbent on each house to facilitate public involvement in all legislation referred to it. The Constitutional process for Section 75 does not require the NCOP to receive mandates from the provinces, as a S75 Bill, by its nature, does not affect provinces directly. The Committee is required to enquire into the subject of the Amendment Bill and facilitate public involvement in the legislative process and does so by advertising the Amendment Bill for public comment.
The Committee advertised the Amendment Bill on 14 June 2017 on Parliament’s electronic platforms, in all the official languages, and on radio broadcasts, in all official languages, calling for public comment on the Amendment Bill. The Committee received two submissions on the Amendment Bill.
Enquiry into the subject of the Amendment Bill
The Select Committee invited the Department of Justice and Constitutional Development to brief the Select Committee on the purpose and content of the Amendment Bill on 14 June 2017. The Department briefed the Committee on the two submissions received on 21 June 2017.
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COMMENTS/ RECOMMENDATIONS: LSSA
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DOJCD RESPONSE
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CLAUSE 5 AND 6
(a)The court will be in an invidious position as it will be unable to consider the circumstances of the judgment debtor at the time the credit agreement was entered into.
(b) the Court is not in a position to effectively consider issues pertaining the financial position of the defendant at the time the judgment is requested.
Proposes that the proposed section 57(2B)(b) and 58(1(C)(c) be deleted.
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These comments were submitted by the LSSA when the Portfolio Committee considered the Bill. The Department reiterates those responses which were made during those deliberations, as follows:
“..The provisions in question were inserted to provide substantive provisions in the Magistrates’ Courts Act, in line with what is already provided for in rule 12(5) of the Magistrates’ Courts Rules, namely, that the registrar or clerk of the court must refer to the court any request for judgment on a claim founded on any cause of action arising out of or based on an agreement governed by the National Credit Act. Due to different interpretations of the law, it appeared that rule 12(5) was not adhered to by all magistrates’ courts. Sections 57 and 58 are amended further to provide that only a court may grant judgments in terms of these sections, as opposed to the current provisions that a clerk of the court must grant these judgments.
… It is uncertain as to why a court will not be in a position to consider the financial position of a debtor at the time the credit agreement was entered into. The plaintiff will be in possession of the supporting documents necessary to conduct an affordability assessment before the credit agreement was entered into. How will a court be able to consider whether there was reckless lending as is provided for in the National Credit Act?”
The Department stands by these responses as given above, and does not agree with the LSSA’s proposal.
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CLAUSE 9
(a) The proposed 25% cap
(b) The proposed 5% commission
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This was also considered by the Portfolio Committee when it considered the Bill. The Department reiterates those responses which were made during those deliberations, as follows:
“(a) (i) The rationale behind the cap is the hardship caused to employees and their dependants when their take home salaries are reduced to minimal amounts.
(ii) The dti contends that a cap can co-exist with a sufficient means-test. Capping is done to prevent abuse and affordability is also done to ensure the debtor or consumer will be in a position to afford the garnishee. Granting a garnishee order without checking if the consumer will afford the future garnishee will further put the already overburdened consumer in a very disadvantageous position. Affordability implies that a number of creditors will have to share on the 25% capped amount. In essence, capping is part of the affordability assessment criteria because after having calculated the 25%, one still needs to determine how much a consumer will be left with, in order to determine affordability in relation to other financial commitments. Higher income earners are likely to have other assets that may be attached in execution to satisfy a debt. An EAO in these instances is not the only way to collect a debt.”
The Department does not agree with the submission of the LSSA with regard to the 25% cap.
Further, it is noted that the cap is only in respect of emoluments as it impacts on the take-home salary of a debtor. There are other means to collect a debt from those who have the means to settle them, such as execution. Setting a cap on all means to collect a debt will have unintended consequences.
(b) the LSSA also made the submission with regard to the 5% commission to the Portfolio and the response of the Department was as follows:
“…Section 65J(10)(a) provides that a garnishee may recover from the judgment creditor a commission of up to five per cent of all amounts deducted from the debtor’s salary in respect of an EAO. This is the current provision in section 65J(10).
… The Department has already responded to this issue by stating that the debtor already has to pay collection commission. Furthermore, this provision, which is an existing provision, cannot simply be amended without thorough investigation and consultation.”
We reiterate that the provision to recover 5% collection commission from the judgment creditor IS AN EXISTING PROVISION.
In any event, suggesting that a debtor, who is already over-indebted, pay an additional 5% will add 5% to an already growing debt (interest and other legal costs), which further exacerbates the cycle of debt.
The Department does not agree with the submission of the LSSA with regard to the 5% commission.
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COMMENTS/ RECOMMENDATIONS: FIRST RAND BANK (FRB)
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Proposed Insertion of Section 55A
Change “must” to “may”
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The Department disagrees with the proposal. A magistrate has a discretion in considering other relevant factors. The proposed amendment does not limit the factors to those grounds that have been listed. The factors that must be considered are those factors that will enable magistrates to arrive a just and equitable order. These are the bare minimum that must be considered, and it will lead to greater certainty and consistency in arriving at just and equitable orders in the Magistrates’ courts.
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Proposed Section 65J (2C)(c)(i):
(a) Concern is expressed that the employer of a judgment debtor will not be able to provide the certificate proposed.
Proposed Section 65J(10)(b):
(b) Concern is expressed that the provision is onerous with regard to the garnishee / employer in so far as the employer is liable to pay the debtor additional costs and interest, where the employer unreasonably (our emphasis) fails to deduct or stop an EAO. It is proposed that the garnishee / employer should have the right to claim any amounts paid above the judgment debt and costs from the judgment creditor.
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(a) Proposed section 65J(2C)(c)(i) relates to a notice of opposition filed by the debtor or the employer against the granting of an EAO. The information required that led to the opposition of the granting of an EAO will be within the employers’ knowledge, as the employer is deducting money from the salary of an employee. The employer must therefore produce the necessary information to support an opposition.
The Department does not agree that the proposal amendment is too onerous.
(b) The insertion of this provision must be seen in light of proposed amendment section 65 J (4) (b), which requires quarterly statements to be submitted by the judgment creditor to the employer, which sets out the payments received and the balance owing. This report puts the employer in a possession of the required information to enable the employer to continue deducting or to stop an EAO.
The proposed amendment is inserted to ensure accountability of the employer in so far as the making or stopping an EAO is concerned. It must be reiterated that the provision will only apply where the employer “unreasonably” fails to deduct or stop an EAO. This implies that where an employer did not have the required information, the employer cannot be said to have acted unreasonably. During the PC deliberation, a similar question was raised, and the word “unreasonably” was subsequently inserted.
The Department does not agree that the proposed amendment is too onerous, and does not agree with the suggestion of FRB.
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Consideration of the Amendment Bill
The Select Committee on Security and Justice having deliberated on and considered the subject of the Courts of Law Amendment Bill [B 8B – 2016] (National Assembly – sec 75), referred to it, reports that it has agreed to the Amendment Bill without proposing further amendments.
Report to be considered.
[1] Land Access Movement of South Africa and Others v Chairperson of the National Council of Provinces and Others CCT 40/15
