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Introduction and First Reading

Bill introduced, on motion by Mr J.A. McGinty (Attorney General), and read a first time.

Second Reading

MR J.A. McGINTY (Fremantle - Attorney General) [4.56 pm]: I move -

That the Bill be now read a second time.

This Bill assists in achieving the objective of providing an efficient, flexible, unified and statewide civil judgments enforcement system in the Magistrates, District and Supreme Courts. The Bill is part of the State Government’s legislative reform package that will help thousands of people who are owed money but who presently struggle to recover debts from recalcitrant debtors. It is those people who are severely disadvantaged under current civil enforcement laws. Every year, even though a court order for payment has been made, approximately 13 000 Western Australians must take further action to recover outstanding civil debts. That causes financial hardship to creditors and their families, many of whom own small businesses. The Bill, by improving this State’s civil enforcement system, will give them practical help in recovering moneys owed to them.
A unified civil judgment enforcement system throughout the Magistrates, District and Supreme Courts will provide a range of changes to improve efficiency, including a wider choice of enforcement options and an enhanced garnishee system. It provides an opportunity to those seeking to recover a judgment debt by allowing judgment creditors the same option that is available in all States and Territories; namely, the appropriation of a part of a judgment debtor’s earnings. This will be an attachment order. Of course, these new provisions have appropriate mechanisms to protect the debtor’s privacy and employment rights, as well as to protect employers from unnecessary burdens. Further, an attachment order cannot exceed 10 per cent of the debtor’s earnings. Therefore, there are benefits for the creditor, and income protection and protection from undue hardship for the debtor.

The Bill implements the Western Australian Law Reform Commission’s recommendations to allow for the appropriation of all debts, whether those debts are present or arising in the future, as well as debts in which the debtor has a joint interest or state debts. Money in banks and other financial institutions is included.

Imprisonment is a penalty of last resort. Prisons are not a place for recalcitrant debtors. The Law Reform Commission’s recommendation that an imprisonment order should not be made on the first examination is in this legislation. Use of imprisonment in civil debt enforcement will be restricted to cases in which debtors wilfully default in their payments and disregard court orders.

Finally, it is important to note that the Bill not only introduces new remedies but also removes the antiquated and seldom-used remedies of sequestration and charging orders. Sequestration orders are court orders where judgment creditors can apply to the District or Supreme Courts to take possession of property and keep that property until the judgment debtor complies with the court order. Generally, this procedure is taken following the judgment debtor’s failure to pay a court judgment within a specified time. A sequestration order is, in essence, a remedy for contempt of the court’s order to pay the judgment. Currently, sequestration orders can be instituted only in the District and Supreme Courts. Very few actions for sequestration have been instituted since the enactment of the commonwealth Bankruptcy Act 1966.

Charging orders are actions, instituted in the District or Supreme Courts by judgment creditors, to attach stocks and shares. In this context, a stop order also can be obtained to prevent the payment of dividends to the judgment debtor or the transfer of those stocks and shares from the debtor to a third party. After six months, an application can be made to the court to sell the stocks and shares to satisfy the judgment debt. Currently, a Local Court judgment creditor must obtain a Supreme Court order transferring the Local Court action into the Supreme Court before charging and stop orders can be obtained. This procedure is rarely, if ever, used by Local Court judgment creditors. In contrast, the new enforcement remedies provided by this Bill are modern, flexible and effective remedies available in all courts.

Judgment creditors will be able to obtain orders requiring judgment debtors or persons in control of judgment debtors’ assets to deliver those assets to a person named in the order, to cease doing specified acts in relation to those assets, and prohibiting the disposal or other dealings with those assets. For example, courts will be able to make orders that facilitate the appropriation or realisation of an asset, including stocks and shares. The Bill, therefore, is an important aspect of the Government’s reforms to this State’s justice system. I commend the Bill to the House.

Debate adjourned, on motion by Mr R.F. Johnson.