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Garnishee Orders: A concerted effort required to tackle abuse of emoluments attachment orders

06 August 2015

By Commissioner Shafie Ameermia, Commissioner responsible for Access to Justice & Housing
In a recent ruling by the Western Cape High Court, Judge Siraj Desai, noted that, “[t]he facts underpinning this application relate to the debt collection procedure employed by the micro-lending industry and give rise to significant disquiet, if not alarm.”
He declared unlawful and invalid certain emoluments attachment orders and ruled that certain provisions of the Magistrates’ Courts Act 32 of 1944 were unconstitutional to the extent that they failed to provide for judicial oversight over the issuance of emoluments attachment orders (EAOs).
An EAO, which is sometimes referred to as a garnishee order, is a court order that allows a debtor’s earnings to be deducted from their wages in execution of a judgment debt. Judge Desai highlighted a litany of loopholes in the current EAO system which has led to widespread abuse of this debt recovery mechanism. He noted that the current EAO system did not provide for affordability assessment, judicial oversight, statutory limit on the amount that can be deducted and the statutory limit on the number of EAOs which can be granted against a particular debtor.
This widespread abuse of EAOs was noted as far back as 2013 by the then Minister of Finance, Pravin Gordhan, who voiced his concern at the abuse of emoluments attachment orders and called upon “… all employers, including the public sector, to [sic], play a role and assist their workers to manage their finances and to interrogate all emolument attachment or garnishee orders to ensure that they have been properly issued…” The Minister also called upon the “various law societies to take action against members who abuse the system”. In that same year, an Emoluments Attachment Order Task Team, chaired by the Credit Ombud was established. Unfortunately, the comprehensive report of the Emoluments Attachment Order Task Team which was submitted to the National Treasury and contained a list of principles regarding attachment orders has not been acted upon to date.
However, it is not all doom and gloom for the millions of people who are saddled with emoluments attachment orders, some of which might not have been legally obtained. This is because the Department of Justice and Constitutional Development in a media statement announced that it was finalising a Magistrates’ Court Amendment Bill to curb the widespread abuses prevalent in this form of debt collection mechanism. The most frequent abuses with regards to EAOs relate to inter alia consumers being required to consent to judgments and EAOs before a loan is granted; fraudulent judgment orders and obtaining of consent to jurisdiction of a magistrate’s court that would ordinarily not have jurisdiction over the consumer. In light of these, the proposed Magistrates’ Courts Amendment Bill should provide for jurisdiction to the person, and provide for the attachment order to be served on the debtor, which is not currently the case.
The ball is not only in the court of the Department of Justice and Constitutional Development, but rather on everyone. This is because the micro-lending industry in South Africa continues to burgeon as it jumped from R41 billion in 2007 to R159 billion in 2013(a growth of 31% in just 5 years). Although enabling access to credit, micro-lending has also led to high levels of indebtedness and thereby creating perpetual poverty traps for millions of our people. Therefore, all of us as a collective have a duty to liberate our people from the trappings of poverty and ensure that we alleviate the plight of the significant portions of our people who end up in extreme poverty, as a result of exploitation through such unconscionable practices. Employers should train their payroll staff to help them to be better able to administer emoluments attachment orders. In light of the fact that all law societies must protect the public against unprofessional and irresponsible conduct by attorneys, all law societies must play a more active role in punitively dealing with their members who abuse this debt recovery mechanism. A working group incorporating government departments, such as the Department of Trade and Industry together with other role players such as the National Credit Regulator, the Credit Ombud, the Law Society of South Africa, the Debt Collectors Council, relevant Chapter 9 institutions, relevant civil society organisation and law clinics, must be established. The purpose of this working group will be to share insights into how the widespread abuse in the debt recovery system should be dealt with. For it is only when we all put our shoulders to the wheel, that we can win the battle against poverty and social deprivation of the poor and the marginalised.
Adv. Ameermia is SAHRC Commissioner responsible for Housing and Access to Justice

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