Check on garnishee order abuse
Although the ruling is not retrospective, debtors can have their emoluments attachment orders scrutinised by a court
The Constitutional Court of South Afric, in a landmark decision on September 13 2016, engaged in some nimble judicial crafting to cure the impugned portions of section 65J (2) of the Magistrates’ Court Act 32 of 1944.
The case stems from an application brought by the University of Stellenbosch Legal Aid Clinic in 2015 to the Western Cape High Court on behalf of 15 low-income consumers, who were struggling under the burden of emoluments attachment orders that had been issued against them. An emolument attachment order (EAO) is a court order that allows a debtor’s earnings to be deducted from their wages in execution of a judgment debt. An emolument attachment order is also colloquially known as a garnishee order.
The cardinal question the Constitutional Court had to grapple with was whether the Magistrates’ Court Act provides for judicial oversight when an EAO is issued against a judgment debtor in favour of a judgment creditor.
Writing for the majority, Justice Zondo held that a reading of the Magistrates’ Court Act makes it plain that it permits EAOs to be issued without the authorisation of the court. Thus, he held that, to the extent that the Magistrates’ Court Act makes provision for the issuance of EAOs without judicial oversight, it fell foul of section 34 of the Constitution and therefore could not pass constitutional muster.
Section 34 of the Constitution, in guaranteeing and protecting the right to access to justice, states that: “Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.” The argument put to the Constitutional Court was that Section 34 is contravened by the issuing of EAOs without judicial oversight. Issuing an EAO without judicial oversight is not the resolution of a dispute in a court, or in any other independent and impartial tribunal or forum.
The best way to cure the defect, according to Justice Zondo, was to adopt a two-pronged remedy of severance and reading-in additional words into the impugned portions of section 65J(2) of the Magistrates’ Court Act 32 of 1944.
The reason why this approach is favourable is because the constitutional defect was as a result of a legislative omission of words that require judicial oversight in the issuance of an EAO.
Accordingly, Justice Zondo did not confirm the order of constitutional invalidity made by the High Court, but rather ordered the reading-in, and severance of, certain words in section 65J(2)(a) and (b) in order to remedy the constitutional defect. He held that his order was prospective as opposed to being retrospective.
In essence, it means, as from September 13 2016, no emoluments attachment order may be issued unless the court has authorised the issuing of such emoluments attach- ment order after satisfying itself that it is just and equitable and that the amount is appropriate. The court in this case means only a magistrate and not a clerk of the court.
The reasons why the court decided against fashioning a retrospective order are captured in Justice Cameron’s separate majority judgment. Justice Cameron held that the issue of retrospectively in these circumstances was “one of considerable complexity”, which the court was not best placed to deal with.
Thus, the court had to revert to the inured practice and principle that an order of legislative invalidity operates from the time of the order only. But Justice Cameron did not close the door for aggrieved judgment debtors to approach a court of law individually to challenge past EAOs that might have been unscrupulously procured or issued.
The net effect of the Constitutional Court’s ruling is that judicially unsanctioned enforcement of judgment debts is now a thing of the past. This means that an EAO can no longer be granted without judicial oversight, meaning that it can no longer be issued by anyone else but a judicial officer, in this case the magistrate.
Further, a jurisdictional link now attaches to the judgment debtor. That is, proceedings brought by a creditor for the enforcement of any credit agreement should only be brought in the court where the debtor resides or is employed. This is in line with the Latin maxim actor sequitur forum rei, a general principle regarding jurisdiction. In this particular case, the creditor must bring his or her application in the magistrate’s court that has jurisdiction in respect of the person of the debtor, that is, either where the debtor resides or works.
The commercial credit industry in South Africa has burgeoned. Court papers filed before the Constitutional Court revealed that as at June 2013 the total debtors’ book of Flemix was estimated at R1.47-trillion, of which R168-billion comprised unsecured debts. The National Credit Regulator reports that, of the 19-million creditactive consumers in South Africa, 50% had impaired credit records and are three months plus in arrears. It cannot be gainsaid that this form of debt collection mechanism, the EAO system, has been fraught with irregularities resulting in the exploitation of debtors.
Also in light of the fact that the Constitutional Court fashioned a prospective order, various stakeholders such as the department of justice and constitutional development, the Law Society of South Africa and community advice offices working in conjunction with each other on a pro bono basis ought to conduct access to justice weeks before allowing anyone who is bound to an emolument attachment order to have that EAO scrutinised.
Employers are also duty-bound to train their payroll staff to help them to be better able to administer emoluments attachment orders to avoid any irregularities that might have a negative impact on any employees who are beholden to an EAO.
The department of trade and industry working with institutions such as the National Credit Regulator, should augment consumer literacy and wellness programmes geared towards educating consumers on their rights. Trade unions ought to do their bit as well by being more actively involved in capacitating the workers on debt-connected matters and financial management.
The Law societies should also be proactive in dealing with members that abuse this debt recovery mechanism. The South African Human Rights Commission remains committed to working with like-minded organisations in this arduous but important quest to eradicate any untoward behaviour or conduct in the EAO system, which impairs the dignity of the poor.
This mammoth task requires a collective effort to mitigate the further marginalisation of the significant numbers of our people who end up in tremendous poverty because of the egregious abuses of the EAO system.