Debt Order Ruling Shows SU’S Impact On Society, Says Rector

The High Court ruling on Wednesday (8 July 2015) in favour of an application by the Stellenbosch University (SU) Legal Aid Clinic about emoluments attachment orders (EAOs, also known as garnishee orders) “is an illustration of SU’s endeavour to make a positive impact on society.”

So said SU Rector and Vice-Chancellor Prof Wim de Villiers in reaction to the ruling. He congratulated the Legal Aid Clinic and other participants in the case.

“We like to use our knowledge to help find solutions to societal challenges. SU took up this case in the public interest.”

Businesswoman Wendy Appelbaum, who was the driving force behind the case, welcomed the ruling. She first approached the Legal Aid Clinic in 2012 when she found out EAOs had been obtained against some of the workers on her wine farm, De Morgenzon.

“I started doing my own research and realised a great injustice was being done. The Legal Aid Clinic had been handling a lot of these cases, and it was fantastic to work with them to make it a broader case with constitutional grounds and far-reaching implications,” she said.

The Legal Aid Clinic was the first applicant in the case, along with 15 of its clients – farmworkers, cleaners and security guards from Stellenbosch and surrounds who had sought help after micro-lenders had obtained EAOs against them, seizing a large portion of their salaries.

Justice Siraj Desai of the High Court in Cape Town declared the EAOs in question “unlawful, invalid and of no force and effect”. He also found that sections of the Magistrates’ Court Act are “inconsistent with the Constitution”.

“The ruling is a great victory – not just for the applicants, but for the poor in general. It sets a precedent that will hopefully clean up the lending industry. And it focuses the state’s attention on its duty to ensure that justice is done for all,” Appelbaum said.

In his judgment, Desai raised two sets of objections. On the one hand there is insufficient “judicial oversight” over EAOs when they are issued by a clerk of the court without the involvement of a magistrate. The Magistrates’ Court Act makes provision for such a procedure, but only if debtors give their written consent. However, Desai found debtors are routinely influenced to sign forms that they do not understand, or that their signatures are blatantly forged.

He strongly criticized what he called “predatory lending practices by credit providers” and urged the Ministers of Justice and of Trade and Industry, as well as the National Credit Regulator, the Human Rights Commission and the Law Society to “take whatever steps they deem necessary to alert debtors as to their rights in terms of this judgment.”

Desai’s other main objection was that orders of this nature are often obtained in courts far removed from the applicants homes and places of work. He found that this “effectively denied” debtors the “right to approach the courts” and was also based on a misinterpretation of the Magistrates’ Court Act.

The ruling outlines the circumstances that led to the predicament of the debtors in question. They are described as “low income earners” supporting “themselves and their families on salaries of between R1 200 and R8 000 per month. They got loans to keep the pot boiling – “at interest rates of 60% per annum”.

“The individual applicants were granted the loans with the repayments at times exceeding 50% of their monthly income. The affordability assessment was either perfunctory or non-existent. These were quite obviously reckless loans and unsurprisingly the applicants defaulted on their repayments.”