ConCourt rewrites rules governing attachment orders

In what is a victory for the poor‚ the Constitutional Court has changed certain sections of the Magistrates’ Court Act dealing with emoluments attachment orders (EAO) to bring them in line with the Constitution‚ with the effect of better protecting debtors.

The Constitutional Court on Tuesday ruled that a judge must give oversight to the issuing of an EAO – which allows for an automatic salary deduction and is used mostly by unsecured lenders to collect on unpaid debt – to ensure that it is just and equitable.

This follows a Western Cape High Court order handed down in July last year which saw certain sections of the Magistrates’ Court Act declared unconstitutional by Judge Siraj Desai to the extent that they failed to provide for judicial oversight at the point where an EAO is granted.

The University of Stellenbosch’s Legal Aid Clinic (LAC) brought the High Court application – together with Webber Wentzel’s pro bono practice and support from businesswoman Wendy Appelbaum – against 13 credit providers and the law firm Flemix & Associates‚ which had administered EAOs on their behalf.

The applicants sought to have the High Court order confirmed by the Constitutional Court.

The court did not confirm Desai’s order of constitutional invalidity concerning section 65J of the Magistrates’ Court Act‚ but opted instead to change the wording to make it consistent with the Constitution.

Importantly‚ Justice Raymond Zondo ordered that an EAO shall not be issued unless the judgment debtor has consented in writing and the court has authorised the order‚ satisfying itself that it is just and equitable that an EAO be issued and that the amount to be deducted is appropriate.

The court decided that the order‚ which comes into effect on Tuesday‚ should apply only to future EAOs.

It upheld Judge Desai’s ruling in regard to jurisdiction. Desai ordered that the Magistrates’ Court Act authorises parties to credit agreements under the National Credit Act to consent only to magistrates’ courts where the debtor lives or works.

Cases brought before Judge Desai by the LAC showed that Flemix was obtaining EAOs in courts far removed from where debtors lived or work‚ meaning their right to approach those courts was effectively denied.

Having had their counter-applications dismissed by the High Court‚ Flemix and the Association of Debt Recovery Agents (Adra) opposed the application for confirmation in the Constitutional Court and sought leave from the Constitutional Court to appeal the High Court’s order in respect of jurisdiction.

They argued that judicial oversight occurred when the judgment on which an EAO was based was granted.

However‚ the Constitutional Court found that a debtor’s circumstances might change between a judgment being granted and an EAO being issued.

In determining how a debt would be paid‚ judicial oversight was a “constitutionally indispensable requisite” and would alleviate the harsh effect of EAOs on distinctly vulnerable‚ low-income individuals‚ the court found.

Flemix and Adra’s appeals were dismissed and they have been ordered to pay the applicants’ costs‚ including the cost of three counsel.

— TMG Digital/BDlive