The Court was dealing with the case of a group of low income earners living in Stellenbosch who were represented by the University of Stellenbosch Legal Aid Clinic in these confirmation proceedings. They had fallen into arrears, and their salaries attached by the micro lenders through a debt collection mechanism known as emoluments attachment orders (EAOs). The central question that the Constitutional Court had to determine in this matter was whether the Magistrates’ Court Act 32 of 1944 (MCA), which governs the issuing of EAOs, provides for judicial oversight when an EAO is issued against a judgment debtor in favour of a judgment creditor. Thus, the Court had to decide whether this form of debt collection mechanism strikes a constitutionally compliant balance between the rights of creditors to recover debts and the rights of debtors, who are subject to such processes, particularly the debtors’ right to have access to court. The Western Cape High Court had ruled certain sections of the Magistrates’ Court Act 32 of 1944 (MCA) to be inconsistent with the Constitution of the Republic of South Africa Act, 1996 and invalid to the extent that they fail to provide for judicial oversight over the issuing of an emolument attachment order against a judgment debtor. Further, it had been held that in proceedings brought by a creditor for the enforcement of any credit agreement to which the National Credit Act 34 of 2005 applies, section 45 of the Magistrates' Courts Act does not permit a debtor to consent in writing to the jurisdiction of a magistrates' court other than that in which that debtor resides or is employed.

Section 65J of the Magistrates' Court Act 32 of 1944 permits the attachment of a debtor's earnings and obliges his employer (the garnishee) to pay out of such earnings specific instalments to the judgment creditor or his attorney. The nub of the concern was the fact that the MCA permits in certain circumstances the issuance of   EAOs without any court intervention.

The applicants, the University of Stellenbosch Legal Aid Clinic and various individuals, supported the judgment of the court a quo, and requested that the order be confirmed. Further, they opposed the application for leave to appeal by Flemix and Association of Debt Recovery Agents (ADRA). Flemix and ADRA opposed the application for confirmation. In opposing the confirmation, they argued that the Western Cape High Court had erred in ruling that the impugned provisions which had been declared invalid did not allow judicial oversight when EAOs were issued. It was their argument that judicial oversight is a step preceding the issuing of EAOs. Thus, they argued that these provisions did provide for judicial oversight, as such, there was no basis for the declaration of invalidity made by the court a quo.

Flemix and ADRA also sought leave to appeal against the other orders granted by the court a quo. The SAHRC represented by the Legal Resources Centre (LRC) was admitted as a friend of the court. The SAHRC argued that the court should confirm the order of the High Court. The SAHRC made submissions on the treatment of EAOs in international law and other jurisdictions, as well as the appropriate remedy for the court to order in these circumstances. Gleaning from international law, the SAHRC submitted that courts must be vested with supervisory oversight powers prior to an EAO being granted. This is because any deprivation of wages/income had a detrimental effect on a number of human rights.

The SAHRC also argued that other jurisdictions have protective mechanisms which place restrictions in the issuance of EAOs. Also, in other jurisdictions the evaluation of the debtor’s circumstances and needs are considered at the time that the EAO is imposed. Thus, this removes the onerous requirement for a debtor, who is already facing financial woes, to return to court to review or challenge the EAO.
In his majority judgment, Zondo J, held that under the MCA there are cases were EAOs are issued without court intervention. He thus concluded that to the extent that the MCA makes provision for EAOs to be issued without judicial oversight it is inconsistent with section 34 of the Constitution (access to courts), and is therefore constitutionally invalid. In his order, Zondo J, amended the impugned provisions of the MCA in order for them to pass constitutional muster.

In a separate, concurring judgment, Cameron J, highlighted the egregious impact of EAOs on debtors, and how EAOs threaten the livelihood and dignity of low-income earners who are a distinctly vulnerable and marginalised group in our society. Therefore, in light of the burdensome nature and impact of the EAO, Cameron J, noted that in principle the execution of court orders such as the attachment of a debtor’s income is part of the judicial process, and therefore, requires judicial oversight. This view was reinforced by the fact that on its plain reading, the MCA permits judicially unsanctioned enforcement of judgment debts. Thus, he confirmed the order of the High Court that section 65J (1) is inconsistent with the Constitution.

The SAHRC welcomes this judgment as it has struck a constitutionally appropriate balance between the rights of creditors to recover debts through the judicial system, and the protection of the rights of debtors. The Court has clarified the law, which the SAHRC believes will provide guidance to the courts and ameliorate the human rights violations that are currently occurring. The SAHRC notes that the Ministry of Justice and Correctional Services through the Department of Justice and Constitutional Development have introduced the Courts of Law Amendment Bill to Parliament which seeks to address and remedy abuses of the EAO system. The SAHRC applauds both the Department of Justice and Constitutional Development and Parliament for this legislative intervention and urges Parliament to accelerate this process of legislative reform and to incorporate the dictum of the Constitutional Court in the envisaged Bill to ameliorate the plight of the poor, vulnerable and marginalised who are subject to such egregious abuses in the EAO system.

ENDS

Issued by the South African Human Rights Commission and the Legal Resources Centre
Gail Smith – Spokesperson, SAHRC
For more information contact Gushwell Brooks on 082 645 8573