Legal Aid Clinic Brings Application in Respect of Emoluments Attachment Orders
On 24 November 2014, the Legal Aid Clinic, University of Stellenbosch and fifteen impoverished people with Emoluments Attachment Orders (EAOs) brought an application at the High Court, Western Cape Division, Cape Town, for orders [inter alia]:
- Condoning the applicant’s non-compliance with the Uniform Rules relating to time-periods, forms and service; and
- the words “the judgment debtor has consented thereto in writing or” in section 6J(1)(1) of the Magistrates’ Court Act of 1944; and
- section 65J(2)(b)(i) and section 65J(2)(b)(ii) of the Act above to be inconsistent with the Constitution of the RSA , (Act 108 of 1996) and invalid to the extent that they fall to provide for judicial oversight over the issuing of an EAO against a judgment debtor;
- Declaring that in the proceedings brought by a judgment creditor for the enforcement of any credit agreement to which the NCA (Act 34 of 2005) applies, section 45 of the Magistrates’ Court Act does not permit a judgment debtor to consent in writing to the jurisdiction of a magistrates’ court other than that in which that judgment debtor resides or is employed;
- Declaring the EAOs herein to be unlawful, invalid and of no force and effect;
There are two distinct issues which need to be highlighted:
- the link between emoluments attachment orders and maintenance orders; and
- a consideration of the various initiatives in relation to emoluments attachment order irregularities.
- The system of emoluments attachment orders in terms of sections 58 and 65J of the Magistrates’ Court Act is a popular way to ensure the repayment of unsecured loans.
- The attachment of wages for the purpose of satisfying a maintenance order is regulated by section 29(3) of the Maintenance Act 99 of 1998. Any amendment to the current emoluments attachment order system in terms of sections 58 and 65J of the Magistrates’ Court Act will therefore not have an adverse impact on maintenance payments as they are regulated by the provisions of the Maintenance Act.
- It is relevant to note that attachment of wages is also provided for in other statutes for different purposes, eg:
- Section 34(1)(b) of the Basic Conditions of Employment Act 75 of 1997,
- Section 165 of the Children’s Act 38 of 2008
- Section 99 of the Income Tax Act 58 of 1962
- Section 74(d) of the Magistrates’ Court Act 32 of 1944
Recent initiatives and their progress re irregularities in relation to EAOs
- The University of Pretoria Law Clinic published a research report in 2008, ‘The Incidence of and the Undesirable Practices relating to Garnishee Orders in South Africa (Frans Haupt and Hermie Coetzee, 2008). This published research identified a number of abuses in the debt collecting process, specifically regarding emoluments attachment orders. The report also suggested a number of legislative and industry reforms.
- The report did not result in either legislative amendments or changes in practice.
- Extensive media coverage was given in 2012 and 2013 to fraudulent practices conducted in the emoluments attachment order process at certain magistrates’ courts. Linkages were also made between reckless lending practices and the use and abuse of emoluments attachment orders and the Marikana tragedy in August 2012. The Minister of Trade and Industry, Rob Davies, referred to “outright preying on the vulnerabilities of low income and working people”. (p4, UP Report 2013).
- The Minister of Finance and the Banking Association of South Africa (BASA) issued a joint statement in October 2012, which statement included the following undertaking, “…BASA members commit not to use garnishee orders against credit defaulters, as they believe the use of such orders for credit is inappropriate.” (p5, UP Report 2013)
- The announced ban on the use of emolument attachment orders has not been implemented by the banks.
- A meeting of role players in the credit and debt collecting industry, dubbed “Safari into garnishment of wages”, made a set of comprehensive proposals on 13 February 2013. This is contained in paper ‘Safari into garnishment of wages – 13 February 2013’.
- This meeting resolved that a task team, chaired by the Credit Ombud, Manie van Schalkwyk, would investigate the reported abuses and draft a code of conduct in an effort to stamp out abuses. (p5, UP Report 2013)
- The Emoluments Attachment Order Task Team, chaired by the Credit Ombud, Mr Manie van Wyk, was established to investigate current practices around EAOs. According to the Credit Ombud Annual Report 2013, the Task Team had finalised its work, submitted a comprehensive report, and at the time of publishing its Annual Report, was awaiting feedback from National Treasury. The EAO Task Team provided a list of principles to Treasury.
- The University of Pretoria Law Clinic published a further research report in 2013, ‘The Incidence of and the Undesirable Practices relating to “Garnishee Orders” – a follow up report’. which reported again, and in detail highlighted, to quote the report, “the shortcomings and irregularities in the emolument attachment order process”. Among others, the report reported on irregularities that still prevailed since 2008, as well as newly identified abuses of the process.
- The Department of Justice and Constitutional Development drafted amendments to the Magistrate’s Court Act. The deadline for comments on the provisional proposals was 28 March 2013. The proposed amendments are contained in a document, ‘Working Document: Magistrates’ Courts Amendment Bill 21 February 2013.
- The Treasury and the Department of Trade and Industry (DTI) were authorised by Cabinet during December 2013 to take measures to assist over-indebted households and also prevent them from becoming over-indebted in the future. This is reflected in “Media Statement: Government moves to protect consumers and assist over-indebted households”, issued by the Ministries of Finance, Trade and Industry, 12 December 2013.
- The irregularities with the current EAO system were identified at least six years ago (in the University of Pretoria study), were reconfirmed and expanded in the University of Pretoria report of 2013, and have been the subject of a number of initiatives. Yet the consistent highlighting of irregularities, numerous statements of intent and undertakings have come to nought.
Extract from MEMO by Senior Council: Odette Geldenhuys Webber Wentzel
The postponement application
Judge Desai briefly heard all the parties. He had familiarised himself with the matter and expressly stated this matter raises issues which are in the national interest. He was therefore of the view that for this reason it is necessary for issues to be properly ventilated, and therefore that a “bit of a delay” must be tolerated. He then proposed, which was accepted, the following dates: 15 December 2014 by which the respondents must file their answering affidavits; 15 January 2015 by which the applicants must file their replying affidavits; and 16 to 20 February or 18 to 23 February 2015 for the hearing of the matter.
Senior Council: Odette Geldenhuys Webber Wentzel