Introduction
The process of attaching a bank account of an execution debtor to satisfy a judgment debt is a critical mechanism for judgment creditors seeking to enforce court orders. This procedure involves specific legal steps that ensure the debtor’s bank account, as a form of incorporeal movable property, is lawfully seized to fulfil the judgment debt. Understanding this process is essential for both creditors and legal practitioners to navigate the complexities of debt recovery effectively. The following discussion is divided into three parts: first, the focus is on whether a bank account is an incorporeal thing in terms of Rule 162 of Legal Notice 65 of 2024. Thereafter, it outlines the procedure for attaching incorporeal property in terms of Rules 162(1), 162(4) and 163(1) of LN 65 of 2024. Finally, it draws a conclusion from the main findings.
The Bank Account as Incorporeal Property
Incorporeal property (or incorporeal thing) refers to an intangible asset or right that does not have a physical form but has value (res in commercio) and can be owned or transferred to a third party. Incorporeal things may be classified as movable or immovable depending on the nature of the object to which they relate. To understand the classification, it is necessary to ascertain whether the right associated with the incorporeal property is personal or real. When the right is personal, as in the case of a monetary debt, the incorporeal property is considered movable; otherwise, it is immovable.
A bank account embodies a debt accruing to the client of a bank if the balance on the bank statement is a credit. A debt entails a right to demand performance from the debtor under the contract. The right to demand performance is personal in nature since it may be demanded by only the creditor against the debtor (unless legally transferred to a third party). Therefore, a bank account is incorporeal movable property. Having ascertained that a debt accruing to a judgement debtor in the form of the right to money kept in a bank account constitutes incorporeal property, the procedure for attaching such property is apposite when attaching a bank account.
The Procedure for Attaching Incorporeal Property
The attachment of an incorporeal thing is two-pronged: the deputy sheriff must first attach the debt accruing to the judgement debtor from a third party, and then serve a notice requiring payment of a sum or sums sufficient to pay off the judgement debt in full.
The Garnishee
The deputy sheriff must serve a notice requiring satisfaction of the debt from a third party who is in possession of a debt accruing to the judgement debtor. In terms of Rule 163 (1) of LN 65 of 2024, upon knowing that there are debts accruing from a third person to the judgment debtor, the deputy-sheriff may upon request by the judgment creditor, proceed to attach those debts. After that, the deputy sheriff must serve upon the third person, referred to as the garnishee, a notice requiring payment of money sufficient to satisfy the writ of execution.
The two steps that the deputy sheriff must take were clearly identified in the case of South African Congo Oil Co v Identiguard International (2012 5 SA 125 (SCA)), in which judgment was granted by default against the Democratic Republic of Congo (DRC) for payment of judgement debts with interest and costs of suit. A writ of execution was issued pursuant to the judgment, and the respondent sold an aircraft of the DRC in execution. The sale amount did not satisfy the writ in full and the balance of the judgment debt was still owing. The respondent instituted garnishee proceedings against the appellant since the latter owed the DRC a sum of US$2 million when the proceedings began. The court concluded (para 23):
“that it is indeed a necessary requirement of rule 45(12)(a) that the sheriff attach the debt in accordance [with] rule 45(8)(c). Such attachment coupled with service of the garnishee notice has the effect, as in English law and other foreign jurisdictions, of prohibiting the person upon whom the garnishee notice is served from parting or dealing with the debt pending the outcome of the garnishee proceedings. It is by virtue of the attachment that the garnishee becomes obliged to pay not the judgment debtor but the judgment creditor”
Rule 45(12)(a) of the South African Uniform Rules of Court is substantially similar to Rule 163(1) of LN 65 of 2024. Rule 45(12)(a) requires attachment of the debts under the procedure laid down in Rule 45(8)(c), which is also substantially similar to Rule 162(4) of LN 65 of 2024. Thus, Rule 163(1) requires the attachment of incorporeal property in terms of Rules 162(1) read with 162(4) of LN 65 of 2024. Thereafter, the deputy sheriff must serve a notice upon the garnishee requiring payment. The rule requires a two-step approach to attaching incorporeal property in the form of debts, and apart from notice to the garnishee, there must be attachment of the debt.
The Attachment
The deputy sheriff must effect the attachment referred to in Rule 163(1) in terms of the procedure prescribed for incorporeal property. Rules 162(1) and 164(4) lay down such procedure. Rule 162(1) provides that there is no need for further application to Court when movable incorporeal property is available for attachment. Rule 162(4) provides that when the property is not mentioned in Rules 162(2) (lease, bill of exchange, promissory note, bond or other security for the payment of money) and 162(3) (interest of the execution debtor in property pledged, leased or sold under a suspensive condition to or by a third person), the attachment is complete only when the deputy sheriff has, first, notified all interested parties. Secondly, the deputy sheriff must take possession of the document proving accrual of the debt to the judgement debtor or state when the document is not found. Thirdly, the deputy sheriff may enter the premises where the debt is kept and make an inventory and evaluate the debt, upon producing the original warrant of execution to the third party in “possession of property in which incorporeal rights exist” (i.e. the garnishee).
It can be deduced from reading Rule 163(1) that not only existing debts are subject to attachment but future debts may also be attached pursuant to re-issues of the writ of execution. Having attached the debt that accrues to the judgement debtor as aforesaid, any further income of the judgement debtor that registers in the bank account may be subject to attachment until the judgement debt is paid in full. The phrase: “requiring payment by him to the deputy-sheriff of so much of the debt as may be sufficient to satisfy the writ”, is of importance in this regard. It empowers the sheriff to make demands upon the garnishee to furnish future debts accruing to the judgement debtor. So long as the writ is not satisfied entirely, the garnishee remains liable to surrender all debts accruing to the judgement debtor which are in the garnishee’s possession. Therefore, the garnishee becomes liable to the judgement creditor instead of the judgement debtor for payment of the debts owing to the judgement debtor. A bank account as incorporeal movable property is attached as aforesaid.
Conclusion
Attaching a bank account to satisfy a judgment debt is a powerful tool in the enforcement of court orders. By following the prescribed legal procedures, the judgment creditor can ensure that the debt is recovered in a manner that is both lawful and efficient. This method not only secures the creditor’s rights but also reinforces the integrity of the legal system in ensuring that judgments are honoured.
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