Judge De­sai’s find­ings

CityPress - - Business -

EAOs are of­ten mis­un­der­stood. They in­volve two sep­a­rate le­gal pro­cesses. First, there is a judg­ment against a debtor who de­faults. That judg­ment is then ex­e­cuted through a court or­der, the EAO, against the debtor’s em­ployer. The em­ployer is tech­ni­cally called the “gar­nishee” in this ar­range­ment, lead­ing to the col­lo­quial term “gar­nishee or­der”.

The judg­ment in the high court does not ban EAOs al­to­gether, but will al­most cer­tainly lead to a dra­matic de­crease in the use of this method of debt col­lec­tion af­ter two abu­sive short cuts that had been used by Flemix were de­clared un­law­ful.

By law, or­ders have to be ob­tained against em­ploy­ers at the mag­is­trates’ court clos­est to them. In­stead, Flemix “fo­rum-shopped” for courts where it was eas­i­est to get them, of­ten us­ing courts as far afield as Kim­ber­ley to ef­fect debt judg­ments in Stel­len­bosch, mak­ing any real ac­cess to the courts for the debtors and their em­ploy­ers un­likely.

The or­ders were ob­tained off the back of judg­ments against debtors, which were in turn ob­tained us­ing con­sent forms rather than any ac­tual ju­di­cial process. This time-sav­ing de­vice is the­o­ret­i­cally use­ful to spare peo­ple the cost and bother of court, but the ap­pli­cants were all de­ceived or ca­joled into sign­ing such con­sents, ruled Judge De­sai. The fact that the ap­pli­cants had ap­par­ently “con­sented” to in­cred­i­bly un­af­ford­able re­pay­ment terms made it clear that there was no real free and in­formed con­sent, he found.

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