Legal Review - Attaching rent to collect levy arrears
When judgment is obtained against a defaulting owner for payment of arrear levies, there are various "tools" at one’s disposal to collect the judgment amount.
Normally a warrant of execution will be issued to start the process. It often happens that the sheriff will furnish a return of non-service due to the fact that tenants, and not the owner (herein referred to as “the judgment debtor”), are residing in the property.
In circumstances where a tenant resides in the premises, Section 72 of the Magistrates Court Act can be of assistance wherein any debt payable to the benefit of the judgment debtor can be attached. In terms of the mentioned section an interim order will be obtained on an ex parte basis.
An ex parte application is an application where only the applicant is before the court and no notice of the application was given to the parties against whom legal relief is sought.
This application is also known as an unilateral application and the court will grant a return date wherein the party against whom the legal relief is sought will have an opportunity to furnish the court with reasons why the interim order should not be made a final order of court.
The tenant, who is referred to as the “garnishee”, is compelled in terms of the order to pay rentals (the attached debt) to the judgment creditor.
The garnishee order will be served on the garnishee with a return date wherein the judgment debtor and/or garnishee will have the opportunity to provide the court with reasons why the garnishee order must not be upheld as an order of court with the effect that the rent gets paid to the judgment creditor (the Body Corporate).
In terms of Section 72(2) of the act, it will be possible for the judgment debtor (owner) to furnish the court reasons why the garnishee order should be set aside or amended, wherein only a minimal amount of the debt should be paid to the judgment creditor.
The judgment debtor has to prove to the court that there will be no sufficient means to maintain him/herself and those dependent upon him/her after satisfaction of the garnishee order.
In theory, this procedure seems like an easy and hassle free measure to collect the judgment amount.
Practice has taught, however, that this is seldom an effective way of collecting the judgment amount, due to the fact that a third party (tenant/garnishee) is involved.
One relies on the garnishee’s cooperation and even though the garnishee is compelled, by an order of court, to effect payment of the rentals to the judgment creditor, the garnishee will rarely adhere to the order.
The court rules provide that should the garnishee default, a warrant of execution may be issued against the garnishee. The garnishee may also be prosecuted for contempt of court due to his/her non-compliance to the court order.
The Section 72 procedure is timeconsuming, seeing as the court should first be approached on an ex parte basis, to thus enable the judgment creditor to obtain a garnishee order.
Once this order has been obtained by the judgment creditor, the sheriff has to serve the relevant order on the judgment debtor and garnishee, where personal service (delivery of the order) on the garnishee is required. Thereafter the mentioned parties will have an opportunity to approach the court on the return date to “oppose” the order.
This process is also costly, seeing that the court will be approached on two different occasions which will double the attendance fees. The sheriff’s costs will increase due to the fact that the application must be served on the garnishee and judgment debtor. The Sheriffs’ first attempts are often unsuccessful.
The risks involved when making use of the Section 72 procedure should also be considered, seeing that the garnishee can move out of the premises at any time and without notice.
The garnishee may cancel the lease agreement and find alternative accommodation due to the unforeseen action taken against him/her, meaning that the mentioned process should be repeated as soon as a new tenant occupies the premises.
It’s also possible that the judgment debtor evicts the garnishee (by taking the law into his/her own hands) in cases where the garnishee is complying with the court order or to cancel the lease and get a new tenant, which renders the court order ineffective.
Considering the above, one soon realizes that there are sharper and stronger tools at one’s disposal in order to collect the judgment debt effectively.
Source: Nama News
Article by: Werner Loock (EY Stuart Inc)