1. Courts of Law Amendment Bill
BRIEFING TO SELECT COMMITTEE ON SECURITY AND JUSTICE ON 14 JUNE 2017

2. Purpose of Bill
Amends various sections of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944)(MCA) mainly —
to address alleged abuses in the civil debt recovery system and to provide for more judicial oversight over judgments and emoluments attachment orders (EAOs);
to provide for the rescission of judgment where the judgment debt has been paid;
to transfer regional courts judgments to district courts for the debt collection process

3. Purpose of Bill continued
Amends the Superior Courts Act, 2013 (Act No. 10 of 2013) by the insertion of a new section 23A which provide for the rescission of judgment with the consent of a judgment creditor and for the rescission of judgment where the judgment debt has been paid

4. Background in respect of amendments to the Magistrates’ Courts Act
There is widespread abuse of the civil debt recovery system in the magistrates’ courts
Constitutional Court judgment in University of Stellenbosch Legal Aid Clinic and others
Department of Trade and Industry’s (dti) removal of adverse consumer credit information project, includes proposals for the rescission or abandonment of judgments where the debt has been paid

5. Clause 2 Amendment of section 36
The dti suggested an automatic procedure to enable judgment debtors to rescind a judgment where the judgment debt has been paid, in line with section 71A of the NCA, but reports of fraudulent rescissions have emerged and a automatic rescission process does not seem appropriate
A simple application procedure is inserted which provides for the rescission of a judgment where the judgment debt has been paid—
Application is brought by way of a prescribed form;
May be heard in chambers;
The court may make a cost order it deems fit

6. Clause 3 Amendment of section 45
Section 45 is abused by requiring consumers to consent to the jurisdiction of a court far away from where the consumer stays, carries on business or is employed, making it difficult for that consumer to challenge a judgment or order made at that court
Parties may consent to the jurisdiction of either the court for a district or court for a regional division, to determine any action or proceeding otherwise beyond its jurisdiction in terms of section 29(1)
Consent given in proceedings in terms of section 57, 58, 65 or 65J by a defendant or judgment debtor to the jurisdiction of a court that does not have jurisdiction in terms of section 28, is of no force and effect

7. Clause 3 Amendment of section 45 continued/
University of Stellenbosch-case
Court declared that section 45 does not permit a debtor to consent to the jurisdiction of a magistrate’s court other than that in which the debtor resides or is employed in respect of the enforcement of a credit agreement in terms of the NCA

8. Clause 4 Insertion of section 55A
The Constitutional Court ordered that the court must authorise an EAO after satisfying itself that it is just and equitable that an EAO be issued and that the amount is appropriate
Section 55A seeks to provide guidance to courts as to the factors a court must take into consideration when deciding if an order is just and equitable

9. Clause 5 Amendment of section 57
The court must enter judgments and authorise instalment orders, and not the clerk of the court
More documentary proof of income and expenditure of debtor is required
If the claim is based on the NCA, it must be dealt with in terms of that Act
Court may authorise an EAO if the defendant is employed and the court is satisfied that it is just and equitable that an EAO be issued and the amount is appropriate
The court can make a cost order as it deems fit in order to curb excessive costs charged by attorneys

10. Clause 6 Amendment of section 58
The court must enter judgment and make an instalment order, not the clerk of the court
More documentary proof of income and expenditure of the debtor is required
If the claim is based on the NCA, it must be dealt with in terms of that Act
Court may authorise an EAO if the defendant is employed and the court is satisfied that it is just and equitable that an EAO be issued and the amount is appropriate

11. Clause 7 Amendment of section 65
Court must order the judgment debtor to pay the judgment debt in instalments, not the clerk of the court
More documentary proof of income and expenditure of the debtor is required
If the claim is based on the NCA, it must be dealt with in terms of that Act
Court may authorise an EAO if the defendant is employed and the court is satisfied that it is just and equitable that an EAO be issued and the amount is appropriate

12. Clause 8 Amendment of section 65E
Section 65E(1)(c) – the reference to consent to an EAO is removed and the court must be satisfied that it is just and equitable that an EAO be issued and the amount is appropriate

13. Clause 9 Amendment of section 65J
An EAO must be issued from the court where the judgment debtor resides, carries on business or is employed
An EAO may only be issued after authorisation by the court
Amount or total amount of instalments payable may not exceed 25% of the debtor’s basic salary
Provision is made for the division of the amount to be committed to an EAO where there is more than one EAO
A notice of intention to have an EAO issued must be served on the debtor and employer who may file notice of opposition
If creditor or attorney does not accept reasons for opposition, matter may be set down in court for hearing

14. Clause 9 Amendment of section 65J continued/
The court may rescind or amend the EAO or make any order including an order as to the division of the amount available
Judgment creditor or attorney must furnish the garnishee (employer) and debtor with quarterly statements containing particulars of payments received and balance owing, free of charge
After service of an EAO, if a garnishee believes or becomes aware or it is otherwise shown that the debtor will not have sufficient means left or that the amounts claimed are erroneous or not in accordance with the law, the judgment creditor or attorney must be notified without delay

15. Clause 9 Amendment of section 65J continued/
The judgment creditor or attorney must, if he or she does not accept the reasons for believing or knowing that the debtor will not have sufficient means, set the matter down for hearing
The court may rescind or amend the EAO or make any order including an order as to the division of the amount available
A garnishee who unreasonably fails to timeously deduct the amount of the EAO or unreasonably fails to timeously stop deductions after the full debt has been paid, is liable to repay additional costs and interest or any amount deducted after the debt has been paid, to the judgment debtor

16. Clause 10 Amendment of section 65M
Section 65A(1) - implies regional courts cannot conduct financial enquiries
The amendment provides for the transfer of judgments of regional courts to district courts to conduct financial enquiries, similar to position with regard to High Court judgments

17. Clause 13 Insertion of section 106C
Section 106C - offences relating to judgments, EAOs and instalment orders
It will be an offence if a person requires another person who applies for a loan, to consent to judgment or any instalment order or EAO prior to the granting of the loan: Penalty is a fine or imprisonment not exceeding three years
It will be an offence if a person fraudulently obtains or issues a judgment or instalment order or EAO: Penalty is a fine or imprisonment not exceeding three years

18. Clause 14 Insertion of section 23A in the SCA
Section 23A provides for the rescission of judgment with the consent of the judgment creditor and where the judgment debt has been paid
Similar to section 36 of the MCA

19. Clause 15 Transitional provisions
All legal proceedings in terms of the sections to be amended by the Bill, which were instituted prior to the commencement of the Bill, must be continued and concluded as if Bill had not been passed: Provided that the original judgment, instalment order or EAO upon which the proceedings are based, was obtained and granted in accordance with the law
An investigation or prosecution or other legal proceedings in respect of conduct which would have constituted an offence in terms of section 106C, which was initiated before the commencement of the Act, must be concluded, instituted and continued as if the Act had not been passed

20. Clause 15 Transitional provisions continued/
Provision is made for a judgment creditor or a judgment debtor or any other person affected by a default judgment and subsequent order which is believed to have been irregularly obtained, to apply for the review thereof
Prescribed form in Schedule
Assistance by clerk or registrar of the court
Operation of subsection ceases after a period of three years from the date on which the Act or the last provisions of the Act has come into operation, to avoid possible abuse of the provisions

21. Clause 16 Short title and commencement Comes into force on a date fixed by proclamation in the Gazette and different dates may be fixed in respect of different provisions

22. Thank you