Legal activists get garnishee orders canned
AS they trickled out of the court building on Wednesday, the applicants in the high-profile emolument attachment orders (EAOs) case looked over at a small crowd that had gathered around Andile Lili, head of Ses’khona Movement, perplexed to hear him sing the praises of the ANC for its role in the case.
Asked for comment, one of the applicants later said: “Why was he saying that? The ANC did nothing for us.”
The team led by business women Wendy Appelbaum that had done everything for them had gathered away from the limelight to discuss how to secure the day’s win in court.
Dressed in khaki fatigues, Lili, who led Ses’khona’s highprofile poo protest, was praising the ANC for the latest victory in its ongoing “fight for the rights of the poor”.
He was referring to Wednesday’s ruling in a case challenging the legality of EAOs, or garnishee orders, that left some of the most vulnerable citizens with barely enough to live on.
The ruling handed down by Judge Siraj Desai minutes earlier declared EAOs issued against 15 people by debt collection attorneys Flemix & Associates to be “unlawful, invalid and of no force and effect”.
EAOs, which were intended to secure spousal maintenance payments, oblige an employer to pay a portion of an employee’s salary to a creditor.
The politically non-aligned group that had brought the case to challenge how EAOs were granted included Stellenbosch University’s Legal Aid Clinic director Kruger van der Walt, Clark Gardner, the CEO of Summit Financial Partners, Odette Geldenhuys, a senior associate at Webber Wentzel, and advocate Anton Katz.
Appelbaum was responsible for putting the motley crew together after she was forced to deduct 80% off the take-home pay of one of her employees.
“The law didn’t allow us not to make the deductions,” explains Appelbaum. She reviewed the National Credit Act and the Magistrates’ Court Act to see how she could change the process. That was in January 2013.
“It’s scandalous; the abuse of EAOs by unsecured lenders makes this by far the most secure form of lending.”
Appelbaum, who successfully reshaped the auction industry in 2012 when she took on Rael Levitt of Auction Alliance, is nothing if not driven, particularly when she detects abuses of power.
After making inquiries, she identified Gardner as the authority on EAOs, met up with him and, over the following months, learnt everything she could from him.
Gardner and Appelbaum soon realised the most effective and possibly quickest way to address the problem was to take legal action against those they deemed the worst offenders.
Appelbaum knew of the Legal Aid Clinic’s work and contacted it with a view to combining forces to launch a legal challenge. It took two more years of hard slog to put together a case that was as close to unassailable as is possible.
“Wendy made it all happen, she initiated it and got us all working together,” said the clinic’s Mathilda Rosslee, who co-ordinated the cases.
On Wednesday, after the ruling, the group was together again outside the Cape Town High Court. There was no time for victory speeches; instead, they were planning the next stage of their campaign.
This week, they will apply to the Constitutional Court for confirmation of certain orders contained in the ruling.
This requirement follows from Desai’s contention that sections of the Magistrates’ Court Act were constitutionally invalid because they allowed clerks of the court, rather than magistrates, to issue EAOs.
This meant there was no judicial oversight of the process, which, in turn, meant it was open to abuse by debt collectors who might unscrupulously secure the necessary consent from the debtor.
This week, the lawyers will also start looking into the possibility of obtaining refunds for the 15 applicants.
If Flemix and its co-respondent, the Association of Debt Recovery Agents (Adra), are unsuccessful in their appeal, then the legal team, who acted for the applicants on a pro bono basis, can look forward to some payment for their months of work, and Gardner, who indemnified the LAC against costs, will be off a very expensive hook.
Marius Jonker, the CEO of Adra, said the association was still considering its options.
“The judgment is vague and confusing,” said Jonker.
“It contains some errors which have been compounded by misconceptions in the press; for example, this is not just a microfinance issue, all financial institutions make use of EAOs. We are considering an appeal.”
Appelbaum was scathing about the seeming inability of the Department of Trade and Industry and the National Credit Regulator to effectively oversee the unsecured lending industry but was delighted about the ability of civil society to effect change.
“You can’t just sit and complain and not do anything.”
The abuse of EAOs makes this by far the most secure form of lending